File No. 333-06279
CIK #897000
Securities and Exchange Commission
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: Van Kampen American Capital Equity
Opportunity Trust, Series 35
B. Name of Depositor: Van Kampen American Capital Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen American Capital Distributors, Inc.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: An indefinite
number of Units of proportionate interest pursuant to Rule 24f-2
under the Investment Company Act of 1940
F. Proposed maximum offering price to the public of the securities
being registered: Indefinite
G. Amount of registration fee: $500 (previously paid)
H. Approximate date of proposed sale to the public:
As Soon As Practicable After the Effective Date of the
Registration Statement
/ X / Check box if it is proposed that this filing will become effective
on July 8, 1996 pursuant to Rule 487.
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
Van Kampen American Capital Equity Opportunity Trust
Series 35
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Fund Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Fund Administration
4. Name and address of principal ) *
underwriter
5. Organization of trust ) The Fund
6. Execution and termination of ) The Fund
Trust Indenture and Agreement ) Fund Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and
Securities of the Trust
10. General information regarding ) The Fund
trust's securities and ) Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Fund Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Fund
) Trust Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Portfolios
)
) Fund Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or ) Fund Operating Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received ) Public Offering
by depositor, principal ) *
underwriter, trustee or any ) Trust Portfolios
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Fund
underlying securities ) Rights of Unitholders
) Fund Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Fund Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special funds ) Fund Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Fund Administration
20. Certain miscellaneous provisions ) Fund Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Fund Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Fund Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Fund Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities ) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Fund Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Fund Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Fund Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Fund Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Fund Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Fund Operating Expenses
50. Trustee's lien ) Fund Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's ) Cover Page
securities ) Fund Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Fund Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Fund Administration
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Taxation
VII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions ) Report of Independent Certified
1(c) to Form S-6) ) Public Accountants
) Statements of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
July 8, 1996
VAN KAMPEN AMERICAN CAPITAL
Van Kampen American Capital Equity Opportunity Trust, Series 35
Strategic Ten Trust
United States Portfolio, Series 9
Hong Kong Portfolio, Series 9
United Kingdom Portfolio, Series 9
Strategic Five Trust
United States Portfolio, Series 3
The Fund. Van Kampen American Capital Equity Opportunity Trust, Series 35 (the
"Fund" ) is comprised of four underlying separate unit investment
trusts designated as Strategic Ten Trust United States Portfolio, Series 9
(the "Strategic Ten United States Trust" ), Strategic Ten Trust United
Kingdom Portfolio, Series 9 (the "Strategic Ten United Kingdom Trust"
), Strategic Ten Trust Hong Kong Portfolio, Series 9 (the "Strategic Ten
Hong Kong Trust" ) and Strategic Five Trust United States Portfolio, Series
3 (the "Strategic Five United States Trust" ). The various trusts are
collectively referred to herein as the "Trusts" and are individually
referred to herein as a "Trust" . The Strategic Ten United States
Trust, Strategic Ten United Kingdom Trust and Strategic Ten Hong Kong Trust
are collectively referred herein to as the "Strategic Ten Trusts" ,
while the Strategic Five United States Trust is referred to herein as the "
Strategic Five Trust" . The Strategic Ten United States Trust and the
Strategic Five United States Trust are referred to herein as the "United
States Trusts." The United Kingdom and Hong Kong Trusts are sometimes
collectively referred to herein as the "Foreign Trusts" . The Trusts
offer investors the opportunity to purchase Units representing proportionate
interests in a fixed, diversified portfolio of actively traded equity
securities, including common stocks of foreign issuers. The Strategic Ten
United States Trust consists of common stocks of the ten companies in the Dow
Jones Industrial Average* having the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. The
Strategic Ten United Kingdom Trust consists of common stocks of the ten
companies in the Financial Times Industrial Ordinary Share Index* (the "FT
Index" ) having the highest dividend yield as of the close of business
three business days prior to the Initial Date of Deposit. The Strategic Ten
Hong Kong Trust consists of common stocks of the ten companies in the Hang
Seng Index* having the highest dividend yield as of the close of business
three business days prior to the Initial Date of Deposit. The Strategic Five
United States Trust consists of common stocks of the five companies with the
2nd through 6th lowest per share stock price of the ten companies in the Dow
Jones Industrial Average* having the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. The
publishers of these indexes have not participated in any way in the creation
of the Trusts or in the selection of stocks included in the Trusts and have
not approved any information herein relating thereto. Unless terminated
earlier, the Trusts will terminate on August 12, 1997 and any securities then
held will, within a reasonable time thereafter, be liquidated or distributed
by the Trustee. Any Securities liquidated at termination will be sold at the
then current market value for such Securities; therefore, the amount
distributable in cash to a Unitholder upon termination may be more or less
than the amount such Unitholder paid for his Units. Upon liquidation,
Unitholders may choose to reinvest their proceeds into the next Strategic Ten
Series or the next Strategic Five Series, if available, at a reduced sales
charge, to receive a cash distribution, or, in the case of a United States
Trust, to receive a pro rata distribution of the securities then included in
such a Trust (if they own the requisite number of Units).
Unless otherwise indicated, all amounts herein are stated in U.S. dollars. In
the case of the United Kingdom and Hong Kong Trusts, these amounts are
computed on the basis of the exchange rate for British pounds sterling or Hong
Kong dollars, as applicable, on the Initial Date of Deposit.
Units of the Trust are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured or otherwise protected by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency and involve investment risk, including the loss of the principal
amount invested.
* The publishers of these indexes have not granted to the Fund or the Sponsor
a license to use these indexes and are not affiliated with the Sponsor.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Attention Foreign Investors. If you are not a United States citizen or
resident, distributions from the United States Trusts will generally be
subject to U.S. federal withholding taxes; however, under certain
circumstances treaties between the United States and other countries may
reduce or eliminate such withholding tax. However, distributions from the
Foreign Trusts will generally not be subject to U.S. federal withholding tax.
See "Taxation." Such investors should consult their tax advisers
regarding the imposition of U.S. withholding on distributions.
Objective of the Fund. The objective of each Strategic Ten Trust is to provide
an above average total return through a combination of potential capital
appreciation and dividend income, consistent with the preservation of invested
capital, by investing in a portfolio of actively traded equity securities
having the highest dividend yield in their respective stock exchange index as
of the close of business three business days prior to the Initial Date of
Deposit. The objective of the Strategic Five Trust is to provide an above
average total return through a combination of potential capital appreciation
and dividend income, consistent with the preservation of invested capital, by
investing in a portfolio of five actively traded equity securities having the
2nd through 6th lowest per share price of the ten companies in the Dow Jones
Industrial Average having the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. See "
Portfolios" . Each Trust seeks to achieve better performance than the
relevant index for such Trust. There is, of course, no guarantee that the
objective of the Fund will be achieved.
Public Offering Price.The Public Offering Price of the Units of a Trust during
the initial offering period and for secondary market transactions after the
initial offering period includes the aggregate underlying value of the
Securities in such Trust's portfolio, the initial sales charge described
below, and cash, if any, in the Income and Capital Accounts held or owned by
such Trust. The initial sales charge is equal to the difference between the
maximum total sales charge (2.9% and 2.7% of the Public Offering Price of the
Strategic Ten and Strategic Five Trusts, respectively) and the maximum
deferred sales charge ($0.19 per Unit). The monthly deferred sales charge
($0.019 per Unit) will begin accruing on a daily basis on September 9, 1996
and will continue to accrue through July 8, 1997. The monthly deferred sales
charge will be charged to each Trust, in arrears, commencing October 9, 1996
and will be charged on the 9th day of each month thereafter through July 9,
1997. Unitholders will be assessed that portion of the deferred sales charge
accrued from the time they became Unitholders of record. Units purchased
subsequent to the initial deferred sales charge payment will be subject only
to that portion of the deferred sales charge payments not yet collected. This
deferred sales charge will be paid from funds in the Capital Account, if
sufficient, or from the periodic sale of Securities. The total maximum sales
charge assessed to Unitholders on a per Unit basis will be subject to
reduction as set forth in "Public Offering--General" . In the case of
the Foreign Trusts, the Public Offering Price per Unit is based on the
aggregate value of the Securities computed on the basis of the offering side
value of the relevant currency exchange rate expressed in U.S. dollars during
the initial offering period and on the bid side value for secondary market
transactions and includes the commissions and stamp taxes associated with
acquiring the Securities during the initial offering period and the
liquidation costs associated with selling Securities to meet redemptions or
upon Trust termination. During the initial offering period, the sales charge
is reduced on a graduated scale for sales involving at least 2,500 Units of a
Trust. If Units were available for purchase at the opening of business on the
Initial Date of Deposit (except for the United Kingdom Trust as of 11:30 a.m.
New York time on the Initial Date of Deposit), the Public Offering Price per
Unit for each Trust would have been that amount set forth under "Summary
of Essential Financial Information" . Except as provided in "Public
Offering--Unit Distribution" , the minimum purchase is 100 Units. See "
Public Offering" .
Additional Deposits. The Sponsor may, from time to time for approximately two
months after the Initial Date of Deposit, deposit additional Securities in the
Trusts as provided under "The Fund" .
Dividend and Capital Gains Distributions. Distributions of dividends and
realized capital gains, if any, received by a Trust will be paid in cash on
the applicable Distribution Date to Unitholders of record of such Trust on the
record date as set forth in the "Summary of Essential Financial
Information" . The estimated distribution for each Trust will be $.14,
$.22, $.23 and $.14 per Unit for the Strategic Ten United States Trust,
Strategic Ten United Kingdom Trust, Strategic Ten Hong Kong Trust and
Strategic Five United States Trust, respectively, and will be made on January
25, 1997 to Unitholders of record on January 10, 1997. Gross dividends
received by a Trust will be distributed to Unitholders. Expenses of a Trust
will be paid with proceeds from the sale of Securities. For the consequences
of such sales, see "Taxation" and "Risk Factors."
Additionally, upon surrender of Units for redemption or termination of a
Trust, the Trustee will distribute to each Unitholder his pro rata share of
such Trust's assets, less expenses, in the manner set forth under "Rights
of Unitholders--Distributions of Income and Capital" .
Secondary Market For Units. Although not obligated to do so, the Sponsor
currently intends to maintain a market for Units of the Trusts through January
8, 1997 and offer to repurchase such Units at prices which are based on the
aggregate underlying value of Equity Securities in the applicable Trust
(generally determined by the closing sale prices of the Securities) plus or
minus cash, if any, in the Capital and Income Accounts of such Trust. If a
secondary market is not maintained, a Unitholder may redeem Units at prices
based upon the aggregate underlying value of the Equity Securities in the
applicable Trust plus or minus a pro rata share of cash, if any, in the
Capital and Income Accounts of such Trust. See "Rights of
Unitholders--Redemption of Units" . Units sold or tendered for redemption
prior to such time as the entire deferred sales charge on such Units has been
collected will be assessed the amount of the remaining deferred sales charge
at the time of sale or redemption.
A Unitholder in a United States Trust tendering 1,000 or more Units for
redemption may request a distribution of shares of Securities (reduced by
customary transfer and registration charges) in lieu of payment in cash. See
"Rights of Unitholders--Redemption of Units" .
Termination. The Fund will terminate approximately thirteen months after the
Initial Date of Deposit regardless of market conditions at that time.
Commencing on the Mandatory Termination Date, Securities will begin to be sold
in connection with the termination of the Trusts. The Sponsor will determine
the manner, timing and execution of the sale of the Securities. Written notice
of any termination of the Trusts shall be given by the Trustee to each
Unitholder at his address appearing on the registration books of the Trusts
maintained by the Trustee. At least 30 days prior to the Mandatory Termination
Date the Trustee will provide written notice thereof to all Unitholders and in
the case of a United States Trust will include with such notice a form to
enable Unitholders of such Trust to elect a distribution of shares of the
Securities (reduced by customary transfer and registration charges) if such
Unitholder owns at least 1,000 Units of a United States Trust, rather than to
receive payment in cash for such Unitholder's pro rata share of the amounts
realized upon the disposition of such Securities. Unitholders will receive
cash in lieu of any fractional shares. To be effective, the election form, and
any other documentation required by the Trustee, must be returned to the
Trustee at least five business days prior to the Mandatory Termination Date.
Unitholders of each of the Trusts may elect to become Rollover Unitholders as
described in "Special Redemption and Rollover in New Fund" below.
Rollover Unitholders will not receive the final liquidation distribution but
will receive units of a new Series of the Strategic Ten Trust or Strategic
Five Trust, if one is being offered. Unitholders not electing the Rollover
Option or a distribution of shares of Securities (in the case of a United
States Trust) will receive a cash distribution from the sale of the remaining
Securities within a reasonable time after the Trusts are terminated. See "
Fund Administration--Amendment or Termination" .
Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales
charge to the extent stated in the related prospectus (which may be deferred
in certain cases).
Unitholders will initially have their distributions reinvested into additional
Units of the applicable Trust subject only to the remaining deferred sales
charge payments as set forth below, if Units are available at the time of
reinvestment, or, upon request, either reinvested into an open-end management
investment company as described herein or distributed in cash. See "Rights
of Unitholders--Reinvestment Option" .
Special Redemption and Rollover in New Fund. Unitholders will have the option
of specifying by the Rollover Notification Date stated in "Summary of
Essential Financial Information" to have all of their Units redeemed and
the distributed Securities sold by the Trustee, in its capacity as
Distribution Agent, on the Special Redemption Date. (Unitholders so electing
are referred to herein as "Rollover Unitholders" .) The Distribution
Agent will appoint the Sponsor as its agent to determine the manner, timing
and execution of sales of underlying Securities. The proceeds of the
redemption will then be invested in Units of a new Series of the Strategic Ten
Trust or Strategic Five Trust (the "1997 Fund" ), if one is offered, at
a reduced sales charge (anticipated to be 1.9% of the Public Offering Price of
the 1997 Fund). The Sponsor may, however, stop offering units of the 1997 Fund
at any time in its sole discretion without regard to whether all the proceeds
to be invested have been invested. Cash which has not been invested on behalf
of the Rollover Unitholders in the 1997 Fund will be distributed shortly after
the Special Redemption Date. However, the Sponsor anticipates that sufficient
Units will be available, although moneys in this Fund may not be fully
invested on the next business day. The portfolios of the 1997 Fund are
expected to contain the ten common stocks in each of the Dow Jones Industrial
Average, FT Index, and Hang Seng Index having the highest dividend yield as of
the close of business three business days prior to the initial date of deposit
of the 1997 Fund, and the five companies with the 2nd through 6th lowest per
share stock price of the ten companies in the Dow Jones Industrial Average
having the highest dividend yield as of the close of business three business
days prior to the initial date of deposit of the 1997 Fund. Rollover
Unitholders will receive the amount of dividends in the applicable Income
Account of each Trust which will be included in the reinvestment in units of
the 1997 Fund.
Risk Factors. An investment in the Fund should be made with an understanding
of the risks associated therewith, including the possible deterioration of
either the financial condition of the issuers or the general condition of the
stock market and currency fluctuations, the lack of adequate financial
information concerning an issuer and exchange control restrictions impacting
foreign issuers. An investment in the Strategic Five Trust may subject a
Unitholder to additional risk due to the relative lack of diversity in its
portfolio because the portfolio contains only five stocks. Accordingly, Units
of the Strategic Five Trust may be subject to greater market risk than other
trusts which contain a more diversified portfolio of securities. For certain
risk considerations related to the Trusts, see "Risk Factors" .
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 35
Summary of Essential Financial Information
At the close of the relevant stock market on July 5, 1996
(for the United States Trusts) or July 8, 1996 (for the Foreign Trusts)
Sponsor: Van Kampen American Capital Distributors, Inc.
Supervisor: Van Kampen American Capital Investment Advisory Corp.
(An affiliate of the Sponsor)
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
Strategic Strategic Strategic Strategic
Ten Ten Ten Five
United United Hong United
States Kingdom Kong States
GENERAL INFORMATION Trust Trust Trust Trust
<S> <C> <C> <C> <C>
Number of Units <F1>...................................................... 15,000 15,000 25,000 15,000
Fractional Undivided Interest in the Trust per Unit <F1>.................. 1/15,000 1/15,000 1/25,000 1/15,000
Public Offering Price: ...................................................
Aggregate Value of Securities in Portfolio <F2>.......................... $ 145,177 $ 148,569 $ 241,871 $ 145,020
Aggregate Value of Securities per Unit................................... $ 9.68 $ 9.90 $ 9.67 $ 9.67
Maximum Sales Charge <F3>................................................ $ .28 $ .29 $ .29 $ .26
Less Deferred Sales Charge per Unit....................................... $ .19 $ .19 $ .19 $ .19
Public Offering Price per Unit <F3><F4>.................................. $ 9.77 $ 10.00 $ 9.77 $ 9.74
Maximum Redemption Price per Unit <F5>.................................... $ 9.49 $ 9.70 $ 9.44 $ 9.48
Initial Secondary Market Repurchase Price per Unit <F5>................... $ 9.49 $ 9.71 $ 9.48 $ 9.48
Excess of Public Offering Price per Unit over Redemption Price per Unit... $ .28 $ .30 $ .33 $ .26
Estimated Annual Dividends per Unit <F6>.................................. $ .31448 $ .56499 $ .46488 $ .28484
Estimated Annual Organizational Expenses per Unit <F7>.................... $ .01514 $ .09388 $ .07115 $ .01954
Supervisor's Annual Supervisory Fee ...................................... Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee......................................... Maximum of $.0025 per Unit
Rollover Notification Date ............................................... July 11, 1997
Special Redemption Date................................................... August 12, 1997
Mandatory Termination Date ............................................... August 12, 1997
Minimum Termination Value................................................. Each Trust may be terminated if the net asset value of
such Trust is less than $500,000 unless the net asset
value of such Trust's deposits has exceeded
$15,000,000, then the Trust Agreement may be
terminated if the net asset value of the Trust is less
than $3,000,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee <F8>.............................................. $.008 per Unit
Income and Capital Account Record Dates ............................... January 10, 1997 and August 12, 1997
Income and Capital Account Distribution Dates.......................... January 25, 1997 and August 22, 1997
Evaluation Time........................................................ Close of the relevant stock market
(generally 4:00 P.M. New York time for a
United States Trust, 11:30 A.M. New York
time for the United Kingdom Trust and 3:30
A.M. New York time for the Hong Kong Trust)
<FN>
<F1>As of the close of business on any day on which the Sponsor is the sole
Unitholder of a Trust, the number of Units of such Trust may be adjusted so
that the Public Offering Price per Unit will equal approximately $10.
Therefore, to the extent of any such adjustment the fractional undivided
interest per Unit will increase or decrease accordingly from the amounts
indicated above.
<F2>Each Equity Security is valued at the closing sale price. The aggregate value
of Securities in each of the Foreign Trusts represents the U.S. dollar value
based on the offering side value of the currency exchange rates for the
related currency, at the relevant Evaluation Time on the date of this "
Summary of Essential Financial Information" and includes the commissions
and stamp taxes associated with acquiring such Securities.
<F3>The Maximum Sales Charge consists of an initial sales charge and a deferred
sales charge. The initial sales charge is applicable to all Units and
represents an amount equal to the difference between the Maximum Sales Charge
for a Trust (2.9% and 2.7% of the Public Offering Price for the Strategic Ten
and Strategic Five Trusts, respectively) and the amount of the maximum
deferred sales charge ($0.19 per Unit). Subsequent to the Initial Date of
Deposit, the amount of the initial sales charge will vary with changes in the
aggregate value of the Securities in the Trust. Units purchased subsequent to
the initial deferred sales charge payment will be subject only to that portion
of the deferred sales charge payments not yet collected. These deferred sales
charge payments will be paid from funds in the Capital Account, if sufficient,
or from the periodic sale of Securities. The total maximum sales charge will
be 2.9% and 2.7% of the Public Offering Price (2.987% and 2.775% of the
aggregate value of the Securities less the deferred sales charge for the
Strategic Ten and Strategic Five Trusts, respectively). See the "Fee
Table" below and "Public Offering--Offering Price" .
<F4>On the Initial Date of Deposit there will be no cash in the Income or Capital
Accounts. Anyone ordering Units after such date will have included in the
Public Offering Price a pro rata share of any cash in such Accounts. In the
case of the Foreign Trusts, the Public Offering Price per Unit is based on the
aggregate value of the Securities computed on the basis of the offering side
value of the relevant currency exchange rate expressed in U.S. dollars and
includes the commissions and stamp taxes associated with acquiring such
Securities.
<F5>The Maximum Redemption Price per Unit and the Initial Secondary Market
Repurchase Price per Unit are reduced by the unpaid portion of the deferred
sales charge. In the case of the Foreign Trusts, the Redemption Price per Unit
is based on the aggregate value of the Securities computed on the basis of the
bid side value of the relevant currency exchange rate expressed in U.S.
dollars and includes each Trust's estimated costs of liquidating Securities to
meet redemptions (approximately $0.01 and $0.046 per Unit for the United
Kingdom Trust and Hong Kong Trust, respectively).
<F6>Estimated annual dividends are based on the most recently declared dividends
or, in the case of the Foreign Trusts, on the most recent interim and final
dividends declared. Estimated Annual Dividends per Unit are based on the
number of Units, the fractional undivided interest in the Securities per Unit
and the aggregate value of the Securities per Unit as of the Initial Date of
Deposit. Investors should note that the actual annual dividends received per
Unit will vary from the estimated amount due to changes in the factors
described in the preceding sentence and actual dividends declared and paid by
the issuers of the Securities.
<F7>Each Trust (and therefore Unitholders of the respective Trust) will bear all
or a portion of its organizational costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and states, the
initial audit of the Trust portfolio and the initial fees and expenses of the
Trustee but not including the expenses incurred in the preparation and
printing of brochures and other advertising materials and any other selling
expenses) as is common for mutual funds. Total organizational expenses will be
amortized over the life of the Trusts. See "Fund Operating Expenses"
and "Statements of Condition" . Historically, the sponsors of unit
investment trusts have paid all of the costs of establishing such trusts.
Estimated Annual Organizational Expenses per Unit have been estimated based on
a projected trust size of $30,000,000, $3,000,000, $3,000,000 and $15,000,000
for the Strategic Ten United States, Strategic Ten United Kingdom, Strategic
Ten Hong Kong and Strategic Five United States Trusts. To the extent a Trust
is larger or smaller, the actual organizational expenses paid by such Trust
(and therefore by its Unitholders) will vary from the estimated amount set
forth above.
<F8>In connection with the Foreign Trusts the Trustee will receive additional
annual compensation, payable at the end of the initial offering and in monthly
installments thereafter, of $.30 per $1,000 and $1.10 per $1,000 of market
value of Equity Securities held in a sub-custodian account at month end, for
the Strategic Ten United Kingdom Trust and Strategic Ten Hong Kong Trust,
respectively.
</TABLE>
FEE TABLE
This Fee Table is intended to assist investors in understanding the costs and
expenses that an investor in a Trust will bear directly or indirectly. See
"Public Offering--Offering Price" and "Fund Operating Expenses" . Although
each Trust has a term of approximately thirteen months, and is a unit
investment trust rather than a mutual fund, this information is presented
to permit a comparison of fees. The examples below assume that the principal
amount of and distributions on an investment are rolled over each year into
a new Series subject only to the anticipated reduced sales charge applicable
to Rollover Unitholders. See "Right of Unitholders--Special Redemption and
Rollover in New Fund." Investors should note that while these examples are
based on the public offering price and the estimated fees for the current
Trust series, the actual public offering price and fees for any new Series
created in the future periods indicated could vary from those of the
current Trust series.
Strategic Ten United States Trust
<TABLE>
<CAPTION>
Unitholder Transaction Expenses (as of the Initial Date of Deposit) Amount Per
(as a percentage of offering price) 100 Units
<S> <C> <C>
Initial Sales Charge Imposed on Purchase 1.00%<F1> $ 9.00
Deferred Sales Charge 1.90%<F2> 19.00
2.90% $ 28.00
Maximum Sales Charge Imposed on Reinvested Dividends 1.90%<F3> $ 19.00
Estimated Annual Fund Operating Expenses (as of the Initial Date of Deposit)
(as a percentage of net assets)
Trustee's Fee 0.083% $ 0.80
Portfolio Supervision and Evaluation Fees 0.052% 0.50
Organizational Costs 0.156% 1.51
Other Operating Expenses 0.036% 0.35
Total 0.327% $ 3.16
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for Period of:
10
1 Year 3 Years 5 Years Years
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each time period $ 32 $ 78 N/A N/A
</TABLE>
Strategic Ten United Kingdom Trust
<TABLE>
<CAPTION>
Unitholder Transaction Expenses (as of the Initial Date of Deposit) Amount Per
(as a percentage of offering price) 100 Units
<S> <C> <C>
Initial Sales Charge Imposed on Purchase 1.00%<F1> $ 10.00
Deferred Sales Charge 1.90%<F2> 19.00
2.90% $ 29.00
Maximum Sales Charge Imposed on Reinvested Dividends 1.90%<F3> $ 19.00
Estimated Annual Fund Operating Expenses (as of the Initial Date of Deposit)
(as a percentage of net assets)
Trustee's Fee 0.081% $ 0.80
Portfolio Supervision and Evaluation Fees 0.051% 0.50
Organizational Costs 0.948% 9.39
Other Operating Expenses 0.066% 0.65
Total 1.146% $ 11.34
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for Period of:
10
1 Year 3 Years 5 Years Years
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each time period $ 40 $ 102 N/A N/A
</TABLE>
Strategic Ten Hong Kong Trust
<TABLE>
<CAPTION>
Unitholder Transaction Expenses (as of the Initial Date of Deposit) Amount Per
(as a percentage of offering price) 100 Units
<S> <C> <C>
Initial Sales Charge Imposed on Purchase 1.00%<F1> $ 10.00
Deferred Sales Charge 1.90%<F2> 19.00
2.90% $ 29.00
Maximum Sales Charge Imposed on Reinvested Dividends 1.90%<F3> $ 19.00
Estimated Annual Fund Operating Expenses (as of the Initial Date of Deposit)
(as a percentage of net assets)
Trustee's Fee 0.083% $ 0.80
Portfolio Supervision and Evaluation Fees 0.052% 0.50
Organizational Costs 0.736% 7.12
Other Operating Expenses 0.146% 1.41
Total 1.017% $ 9.83
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for Period of:
10
1 Year 3 Years 5 Years Years
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each time period $ 39 $ 97 N/A N/A
</TABLE>
Strategic Five United States Trust
<TABLE>
<CAPTION>
Unitholder Transaction Expenses (as of the Initial Date of Deposit) Amount Per
(as a percentage of offering price) 100 Units
<S> <C> <C>
Initial Sales Charge Imposed on Purchase 0.80%<F1> $ 7.00
Deferred Sales Charge 1.90%<F2> 19.00
2.70% $ 26.00
Maximum Sales Charge Imposed on Reinvested Dividends 1.90%<F3> $ 19.00
Estimated Annual Fund Operating Expenses (as of the Initial Date of Deposit)
(as a percentage of net assets)
Trustee's Fee 0.083% $ 0.80
Portfolio Supervision and Evaluation Fees 0.052% 0.50
Organizational Costs 0.202% 1.95
Other Operating Expenses 0.036% 0.35
Total 0.373% $ 3.60
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for Period of:
10
1 Year 3 Years 5 Years Years
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each time period $ 31 $ 77 N/A N/A
<FN>
<F1>he examples assume reinvestment of all dividends and distributions and
utilize a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. For purposes of the
examples, the deferred sales charge imposed on reinvestment of dividends is
not reflected until the year following payment of the dividend; the cumulative
expenses would be higher if sales charges on reinvested dividends were
reflected in the year of reinvestment. The examples should not be considered
representations of past or future expenses or annual rate of return; the
actual expenses and annual rate of return may be more or less than those
assumed for purposes of the examples.
<F2>The Initial Sales Charge is actually the difference between 2.9% and 2.7% for
the Strategic Ten and Strategic Five Trusts, respectively, and the maximum
deferred sales charge ($19.00 per 100 Units) and would exceed 1.00% or 0.80%,
as applicable, if the Public Offering Price exceeds $1,000 per 100 Units.
<F3>The actual fee is $1.90 per month per 100 Units, irrespective of purchase or
redemption price, deducted over the 10 months commencing October 9, 1996. If a
holder sells or redeems Units before all of these deductions have been made,
the balance of the deferred sales charge payments remaining will be deducted
from the sales or redemption proceeds. If Unit price exceeds $10 per Unit, the
deferred portion of the sales charge will be less than 1.90%; if Unit price is
less than $10 per Unit, the deferred portion of the sales charge will exceed
1.90%. Units purchased subsequent to the initial deferred sales charge payment
will be subject to only that portion of the deferred sales charge payments not
yet collected.
Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment. See "Rights of
Unitholders--Reinvestment Option" .
</TABLE>
THE FUND
Van Kampen American Capital Equity Opportunity Trust, Series 35 is comprised
of the following separate underlying unit investment trusts: Strategic Ten
Trust United States Portfolio, Series 9, Strategic Ten Trust United Kingdom
Portfolio, Series 9, Strategic Ten Trust Hong Kong Portfolio, Series 9 and
Strategic Five Trust United States Portfolio, Series 3. The Fund was created
under the laws of the State of New York pursuant to a Trust Indenture and
Trust Agreement (the "Trust Agreement" ), dated the date of this
Prospectus (the "Initial Date of Deposit" ), among Van Kampen American
Capital Distributors, Inc., as Sponsor, Van Kampen American Capital Investment
Advisory Corp., as Supervisor, The Bank of New York, as Trustee, and American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., as Evaluator.
The Fund offers investors the opportunity to purchase Units representing
proportionate interests in portfolios of actively traded equity securities
which are components of the Dow Jones Industrial Average, the FT Index, or the
Hang Seng Index. The Strategic Ten Trusts consist of common stocks of the ten
companies in these indexes having the highest dividend yield as of the close
of business three business days prior to the Initial Date of Deposit. The
Strategic Five Trust consists of common stocks of the five companies having
the 2nd through 6th lowest per share price of the ten companies in the Dow
Jones Industrial Average having the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. These
yields are historical and there is no assurance that any dividends will be
declared or paid in the future on the Securities in the Trusts. See "Risk
Factors" . As used herein the terms "Equity Securities" and "
Securities" mean the securities (including contracts to purchase such
securities) listed in "Portfolio" for each Trust and any additional
securities deposited into each Trust as provided herein. The publishers of the
Dow Jones Industrial Average, FT Index, and Hang Seng Index have not
participated in any way in the creation of the Fund or in selection of the
stocks included in the Trusts and have not approved any information herein
relating thereto. The Fund may be an appropriate medium for investors who
desire to participate in portfolios of common stocks with greater
diversification than they might be able to acquire individually and who are
seeking to achieve a better performance than the related indexes through an
investment in the highest dividend yielding stocks of these indexes. An
investment in approximately equal values of such stocks each year has in most
instances provided a higher total return than investments in all of the stocks
which are components of the respective indexes. See "Trust Portfolios"
. Unless terminated earlier, the Trusts will terminate on the Mandatory
Termination Date set forth under "Summary of Essential Financial
Information" and any securities then held will, within a reasonable time
thereafter, be liquidated or distributed by the Trustee. Any Securities
liquidated at termination will be sold at the then current market value for
such Securities; therefore, the amount distributable in cash to a Unitholder
upon termination may be more or less than the amount such Unitholder paid for
his Units. Upon liquidation, Unitholders may choose either to reinvest their
proceeds into a subsequent Series of Strategic Ten Trust or Strategic Five
Trust, if available, at a reduced sales charge, to receive, in the case of a
United States Trust, a pro rata distribution of the Securities then included
in such Trust (if they own the requisite minimum number of Units) or to
receive a cash distribution.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolios" herein, including delivery
statements relating to contracts for the purchase of certain such Securities
and an irrevocable letter of credit issued by a financial institution in the
amount required for such purchases. Thereafter, the Trustee, in exchange for
such Securities (and contracts) so deposited, delivered to the Sponsor
documentation evidencing the ownership of that number of Units of the Trusts
indicated in "Summary of Essential Financial Information" . Unless
otherwise terminated as provided in the Trust Agreement, the Trusts will
terminate on the Mandatory Termination Date, and Securities then held will
within a reasonable time thereafter be liquidated or distributed by the
Trustee.
Additional Units of a Trust may be issued at any time by depositing in such
Trust additional Securities or contracts to purchase securities together with
irrevocable letters of credit or cash. As additional Units are issued by a
Trust as a result of the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in such Trust will be increased and the
fractional undivided interest in such Trust represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits of Securities
into a Trust following the Initial Date of Deposit, provided that such
additional deposits will be in amounts which will maintain, as nearly as
practicable, the same percentage relationship among the number of shares of
each Equity Security in such Trust's portfolio that existed immediately prior
to any such subsequent deposit. Any deposit by the Sponsor of additional
Equity Securities will duplicate, as nearly as is practicable, this actual
proportionate relationship and not the original proportionate relationship on
the Initial Date of Deposit, since the actual proportionate relationship may
be different than the original proportionate relationship. Any such difference
may be due to the sale, redemption or liquidation of any of the Equity
Securities deposited in a Trust on the Initial, or any subsequent, Date of
Deposit.
Each Unit of a Trust initially offered represents an undivided interest in
such Trust. To the extent that any Units are redeemed by the Trustee or
additional Units are issued as a result of additional Securities being
deposited by the Sponsor, the fractional undivided interest in a Trust
represented by each unredeemed Unit will increase or decrease accordingly,
although the actual interest in such Trust represented by such fraction will
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objective of each Strategic Ten Trust is to provide an above average total
return through a combination of potential capital appreciation and dividend
income by investing in a portfolio of common stocks of the ten companies in
the Dow Jones Industrial Average, FT Index, and Hang Seng Index, respectively,
having the highest dividend yield as of the close of business three business
days prior to the Initial Date of Deposit. The objective of the Strategic Five
Trust is to provide an above average total return through a combination of
potential capital appreciation and dividend income, consistent with the
preservation of invested capital, by investing in a portfolio of five actively
traded equity securities having the 2nd through 6th lowest per share price of
the ten companies in the Dow Jones Industrial Average having the highest
dividend yield as of the close of business three business days prior to the
Initial Date of Deposit. In seeking the Trusts' objectives, the Sponsor also
considered the ability of the Equity Securities to outpace inflation. While
inflation is currently relatively low, the United States has historically
experienced periods of double-digit inflation. While the prices of equity
securities will fluctuate, over time equity securities have outperformed the
rate of inflation, and other less risky investments, such as government bonds
and U.S. Treasury bills. Past performance is, however, no guarantee of future
results.
The Fund will terminate approximately thirteen months from the date of this
Prospectus. The companies represented in the Trusts are some of the most
well-known and highly capitalized companies in the United States, the United
Kingdom and Hong Kong. An investment in approximately equal values of the ten
highest yielding stocks in the Dow Jones Industrial Average for a period of
one year would have, in 14 of the last 20 years, yielded a higher total return
than an investment in all of the stocks comprising the Dow Jones Industrial
Average. A similar investment in the ten highest yielding stocks in the FT
Index for a period of one year would have, in 13 of the last 20 years, yielded
a higher total return than an investment in all of the stocks comprising the
FT Index. Furthermore, a similar investment in the ten highest yielding stocks
in the Hang Seng Index for a period of one year would have, in 11 of the last
18 years, yielded a higher total return than an investment in all of the
stocks comprising the Hang Seng Index. An investment in approximately equal
values of the five companies having the 2nd through 6th lowest per share price
of the ten highest yielding stocks in the Dow Jones Industrial Average for a
period of one year would have, in 13 of the last 20 years, yielded a higher
total return than an investment in all of the stocks comprising the Dow Jones
Industrial Average. See the table entitled "Comparison of Total
Returns" for the applicable Trust under "Trust Portfolios" . It
should be noted that the foregoing yield comparisons do not take into account
any expenses or sales commissions which would arise from an investment in
Units of the Trusts. The Trusts seek to achieve better performances than the
related indexes through similar investment strategy. Investment in a number of
companies having high dividends relative to their stock prices (usually
because their stock prices are undervalued) is designed to increase each
Trust's potential for higher returns. There is, of course, no assurance that a
Trust (which includes expenses and sales charges) will achieve its objective.
The Strategic Ten United Kingdom Trust and the Strategic Ten Hong Kong Trust
may be particularly suitable for investors who seek to diversify their equity
holdings with investments in foreign equity securities. Today's international
market offers many opportunities. Foreign equity markets (as measured by the
Morgan Stanley Capital International Europe, Asia, Far East Index) have
outperformed U.S. markets (as measured by the Standard & Poor's 500 Index) in
16 of the past 25 years. International markets can experience different
performances and while some markets may be experiencing rapid growth, others
may be in temporary declines. These market movements may offer attractive
growth potential and possible portfolio diversification for investors seeking
to add to their existing equity portfolio. The Foreign Trusts seek to combine
the growth potential of undervalued stocks with the strength of stocks listed
on a foreign stock market index. Typically, companies listed on a major market
index are widely recognized, firmly established and financially strong.
Therefore, when undervalued, these stocks may provide investors with
significant growth opportunities.
Investors will be subject to taxation on the dividend income received by the
Trusts and on gains from the sale or liquidation of Securities. The tax
consequences affecting Unitholders will vary in each of the respective Trusts
(see "Taxation" ). Investors should be aware that there is not any
guarantee that the objective of the Trusts will be achieved because it is
subject to the continuing ability of the respective issuers to declare and pay
dividends and because the market value of the Securities can be affected by a
variety of factors. Common stocks may be especially susceptible to general
stock market movements and to volatile increases and decreases of value as
market confidence in and perceptions of the issuers change. Investors should
be aware that there can be no assurance that the value of the underlying
Securities will increase or that the issuers of the Securities will pay
dividends on outstanding common shares. Any distribution of income will
generally depend upon the declaration of dividends by the issuers of the
Securities and the declaration of any dividends depends upon several factors
including the financial condition of the issuers and general economic
conditions. In addition, a decrease in the value of the British pound sterling
or Hong Kong dollar relative to the U.S. dollar will adversely affect the
value of the relevant Trust's assets and income and the value of the Units of
that Trust. See "Risk Factors" .
Investors should note that the above criteria were applied to the Securities
for inclusion in the Trusts as of three business days prior to the Initial
Date of Deposit. Subsequent to this date, the Securities may no longer be
included in the Dow Jones Industrial Average, FT Index, or Hang Seng Index,
may not be providing one of the ten highest dividend yields within these
indexes or may not have one of the 2nd through 6th lowest per share prices
within the relevant index. Should a Security no longer be included in these
indexes or meet the criteria used for selection for a Trust, such Security
will not as a result thereof be removed from a Trust portfolio.
Investors should be aware that the Fund is not a "managed" fund and as
a result the adverse financial condition of a company will not result in its
elimination from the portfolio except under extraordinary circumstances (see
"Fund Administration--Portfolio Administration" ). In addition,
Securities will not be sold by a Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the Securities were selected by the Sponsor three
business days prior to the date the Securities were purchased by the Trusts.
The Trusts may continue to hold Securities originally selected through this
process even though the evaluation of the attractiveness of the Securities may
have changed and, if the evaluation were performed again at that time, the
Securities would not be selected for the Trusts.
TRUST PORTFOLIOS
Each Strategic Ten Trust consists of the ten common stocks of the respective
indices having the highest dividend yield as of the close of business three
business days prior to the Initial Date of Deposit. The Strategic Five Trust
consists of the five common stocks with the 2nd through 6th lowest per share
stock price of the ten companies in the Dow Jones Industrial Average having
the highest dividend yield as of the close of business three business days
prior to the Initial Date of Deposit. In the case of the United States Trusts,
the yield for each Equity Security was calculated by annualizing the last
dividend paid and dividing the result by the market value of the Equity
Security as of the close of business three business days prior to the Initial
Date of Deposit. In the case of Foreign Trusts, the yield for each Equity
Security was calculated by adding together the most recent interim and final
dividends paid (foreign companies generally pay one interim and one final
dividend per fiscal year) and dividing the result by the market value of the
Equity Security as of the close of business three business days prior to the
Initial Date of Deposit. An investment in each Trust involves the purchase of
a quality portfolio of attractive equities with high dividend yields in one
convenient purchase.
Each Trust consists (a) of the Equity Securities (including contracts for the
purchase thereof) listed under the applicable "Portfolio" as may
continue to be held from time to time in such Trust, (b) any additional Equity
Securities acquired and held by such Trust pursuant to the provisions of the
Trust Agreement and (c) any cash held in the related Income and Capital
Accounts. Neither the Sponsor nor the Trustee shall be liable in any way for
any failure in any of the Equity Securities. However, should any contract for
the purchase of any of the Equity Securities initially deposited hereunder
fail, the Sponsor will, unless substantially all of the moneys held in such
Trust to cover such purchase are reinvested in substitute Equity Securities in
accordance with the Trust Agreement, refund the cash and sales charge
attributable to such failed contract to all Unitholders on or before the next
scheduled distribution date.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in each Trust portfolio as of the date
indicated above. Since the Sponsor may deposit additional Equity Securities
which were originally selected through this process, the Sponsor may continue
to sell Units of a Trust even though yields on these Equity Securities may
have changed subsequent to the Initial Date of Deposit or the Equity
Securities may no longer be included in the respective index, and therefore
the Equity Securities would no longer be chosen for deposit into a Trust if
the selection process were to be made again at a later time.
The United States Trusts
The Dow Jones Industrial Average. The Dow Jones Industrial Average ("
DJIA" ) was first published in The Wall Street Journal in 1896. Initially
consisting of just 12 stocks, the DJIA expanded to 20 stocks in 1916 and its
present size of 30 stocks on October 1, 1928. The companies which make up the
DJIA have remained relatively constant over the life of the DJIA. Taking into
account name changes, 9 of the original DJIA companies are still in the DJIA
today. For two periods of 17 consecutive years, March 14, 1939-July 1956 and
June 1, 1959-August 6, 1976, there were no changes to the list. The following
is the list as it currently appears:
<TABLE>
<CAPTION>
<S> <C>
Allied Signal Goodyear Tire & Rubber Company
Aluminum Company of America International Business Machines Corporation
American Express Company International Paper Company
American Telephone & Telegraph Company McDonald's Corporation
Bethlehem Steel Corporation Merck & Company, Inc.
Boeing Company Minnesota Mining & Manufacturing Company
Caterpillar, Inc. J.P. Morgan & Company, Inc.
Chevron Corporation Philip Morris Companies, Inc.
Coca-Cola Company Procter & Gamble Company
Walt Disney Company Sears, Roebuck and Company
E.I. du Pont de Nemours & Company Texaco, Inc.
Eastman Kodak Company Union Carbide Corporation
Exxon Corporation United Technologies Corporation
General Electric Company Westinghouse Electric Corporation
General Motors Corporation Woolworth Corporation
</TABLE>
Strategic Ten United States Trust Portfolio
The Strategic Ten United States Trust consists of common stocks of those ten
companies in the Dow Jones Industrial Average which had the highest dividend
yield as of the close of business three business days prior to the Initial
Date of Deposit. The Strategic Ten United States Trust consists of common
stocks of the following ten companies:
Caterpillar, Inc. Caterpillar, Inc. designs, manufactures and markets
earthmoving, construction and materials handling machinery. Products include
track and wheel loaders, lift trucks, backhoe loaders and related equipment.
The company also produces diesel and natural gas engines and turbines and
electric power generation systems. Products are sold through a worldwide
network of independent dealers.
Chevron Corporation. Chevron Corporation is an international oil company with
activities in the United States and abroad. The company is involved in
worldwide, integrated petroleum operations which consist of exploring for,
developing and producing petroleum liquids and natural gas as well as
transporting the products. The company is also active in the mineral and
chemical industry.
E.I. du Pont de Nemours & Company. E.I. du Pont de Nemours & Company is a
research and technology-based company offering products including chemicals,
polymers, fibers and petroleum. The company serves worldwide markets in the
aerospace, agriculture, apparel, automotive, construction, electronics,
packaging, refining and transportation industries. The company's brands
consist of "Teflon" , "Lycra" and others.
Exxon Corporation. Exxon Corporation explores for and produces crude oil and
natural gas and manufactures petroleum products. The company explores for and
mines coal and minerals, and transports/sells crude oil, natural gas and
petroleum products. Operations are both domestic and international, and
include a representative office in Almaty, Kazakhstan (former Soviet Union).
General Motors Corporation. General Motors Corporation manufactures and sells
vehicles worldwide under the brands "Chevrolet" , "Buick" , "
Cadillac" , "Oldsmobile" , "Pontiac" , "Saturn" and
"GMC" trucks.
International Paper Company. International Paper Company manufactures paper,
paperboard, packaging products, wood pulp, lumber, photosensitive films and
chemicals. The company produces writing and office supply products, envelopes,
business forms, photographic supplies and building products. International
Paper sells its products worldwide.
Minnesota Mining & Manufacturing Company. Minnesota Mining & Manufacturing
Company is a diversified manufacturer of industrial, commercial and healthcare
products. The company produces and markets more than 60,000 products worldwide.
J.P. Morgan & Company, Inc. J. P. Morgan & Company, Inc., through
subsidiaries, offers financial services to corporations, governments,
financial institutions, institutional investors, professional firms,
privately-held companies and individuals. The company offers loans, advises on
mergers, acquisitions and privatizations, underwrites debt and equity issues
and deals in government-issued securities worldwide.
Philip Morris Companies, Inc. Philip Morris Companies, Inc. has five principal
operating companies which include Philip Morris U.S.A., Philip Morris
International, Inc., Kraft Foods, Inc., Miller Brewing Company and Philip
Morris Capital Corporation. Philip Morris Capital Corporation provides
financial services.
Texaco, Inc. Texaco, Inc. and its subsidiaries, explore for, produce,
transport, refine and market crude oil, natural gas and petroleum products,
including petrochemicals, worldwide. The company owns, leases or has interests
in extensive production, manufacturing, marketing, transportation and other
facilities throughout the world.
The following table sets forth a comparison of the total return of the ten
highest yielding DJIA common stocks (the "DJIA Ten" ) with those of all
common stocks comprising the DJIA. It should be noted that the common stocks
comprising the DJIA Ten may not be the same stocks from year to year and may
not be the same common stocks as those included in the Strategic Ten United
States Trust.
The following table sets forth a comparison of the total return of the ten
highest yielding DJIA common stocks (the "DJIA Ten" ) with those of all
common stocks comprising the DJIA. It should be noted that the common stocks
comprising the DJIA Ten may not be the same stocks from year to year and may
not be the same common stocks as those included in the Strategic Ten United
States Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS*
DJIA Ten Dow Jones Industrial Average
Year Total Return <F1> Total Return <F1>
<S> <C> <C>
1976 34.93% 22.72%
1977 (1.75) (12.70)
1978 0.11 2.69
1979 12.96 10.52
1980 27.23 21.41
1981 7.42 (3.40)
1982 26.05 25.79
1983 38.76 25.65
1984 9.55 1.08
1985 29.45 32.78
1986 35.77 26.92
1987 5.93 6.02
1988 24.64 15.95
1989 25.08 31.71
1990 (7.57) (0.58)
1991 33.97 23.93
1992 7.84 7.35
1993 27.01 16.74
1994 4.01 4.95
1995 36.58 36.49
* Source: Barron's, Bloomberg L.P. and Dow Jones Corporation. The Sponsor has
not independently verified this data but has no reason to believe that this
data is incorrect in any material respect. Reasonable assumptions were relied
on where data was either unavailable or only partially available and these
assumptions could have a material impact on the historical performance
calculations.
<FN>
<F1>The DJIA Ten for each period were identified by ranking the dividend yield for
each of the stocks in the DJIA by annualizing the last dividend paid (the last
dividend declared was used in cases when the stock was trading ex-dividend as
of the last day of the year) and dividing the result by the stock's market
value on the first day of trading on the New York Stock Exchange in the
period. Total Return for each period was calculated by taking the difference
between period-end prices and prices at the end of the following period
(adjusted for any stock splits and corporate spinoffs) and adding dividends
for the period. Historical total returns thus represent actual stocks and real
time; the results illustrate what an investor would have obtained had the
investor been invested in the related stocks in the periods indicated. Total
Return does not take into consideration any sales charges, commissions,
expenses or taxes that will be incurred by the Trust.
</TABLE>
Based on the total returns set forth in the table above, the average annual
total returns for the DJIA Ten for the most recent three, five, ten and twenty
years periods was 21.74%, 21.12%, 18.37% and 18.01%, respectively. On the
other hand, based on the total returns set forth in the table above, the
average annual total returns for the DJIA for the most recent three, five, ten
and twenty year periods was 18.70%, 17.34%, 16.35% and 14.00%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Ten United States Trust. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. Had
the portfolio been available over the periods indicated in the above table,
after deductions for expenses and sales charges and not accounting for taxes,
it would have underperformed the DJIA in 10 of the last 20 years and there can
be no assurance that the Strategic Ten United States Trust will outperform the
DJIA over the life of such Trust or over consecutive rollover periods, if
available. A Unitholder in the Strategic Ten United States Trust would not
necessarily realize as high a total return on an investment in the stocks upon
which the returns shown above are based. The total return figures shown above
do not reflect sales charges, commissions, Trust expenses or taxes, and such
Trust may not be able to invest equally in the DJIA Ten and may not be fully
invested at all times.
The chart below represents past performance of the DJIA and the DJIA Ten (but
does not represent possible performance of the Strategic Ten United States
Trust which, as indicated above, includes certain expenses and commissions not
included in the chart) and should not be considered indicative of future
results. Further, results are hypothetical. The chart assumes that all
dividends during a year (including those on stocks trading ex-dividend as of
the last day of the year) are reinvested at the end of that year and does not
reflect sales charges, commissions, expenses or income taxes. Based on the
foregoing assumptions, the average annual returns (which represent the
percentage return derived by taking the sum of the initial investment and all
appreciation and dividends for the specified investment period) during the
period referred to in the table were 18.01% and 14.00% for the DJIA Ten and
the DJIA, respectively. There can be no assurance that the Strategic Ten
United States Trust will outperform the DJIA over its life or over consecutive
rollover periods, if available.
<TABLE>
Value of $10,000 Invested
January 1, 1976
<CAPTION>
Period DJIA Ten DJIA
<S> <C> <C>
1976 $ 13,493 $12,272
1977 13,257 10,713
1978 13,271 11,002
1979 14,991 12,159
1980 19,074 14,762
1981 20,489 14,260
1982 25,826 17,938
1983 35,836 22,539
1984 39,259 22,783
1985 50,821 30,251
1986 68,999 38,394
1987 73,091 40,706
1988 91,000 47,198
1989 113,948 62,165
1990 105,322 61,804
1991 141,100 76,594
1992 152,163 82,224
1993 193,262 95,988
1994 201,012 100,739
1995 274,542 137,499
</TABLE>
Strategic Five United States Trust Portfolio
The Strategic Five United States Trust consists of common stocks of those five
companies which had the 2nd through 6th lowest per share stock price of the
ten companies in the Dow Jones Industrial Average which had the highest
dividend yield as of the close of business three business days prior to the
Initial Date of Deposit. Historically, the lowest priced stock in the Dow
Jones Industrial Average has been a company experiencing difficulties. The
Strategic Five United States Trust consists of common stocks of the following
five companies:
Caterpillar, Inc. Caterpillar, Inc. designs, manufactures and markets
earthmoving, construction and materials handling machinery. Products include
track and wheel loaders, lift trucks, backhoe loaders and related equipment.
The company also produces diesel and natural gas engines and turbines and
electric power generation systems. Products are sold through a worldwide
network of independent dealers.
Chevron Corporation. Chevron Corporation is an international oil company with
activities in the United States and abroad. The company is involved in
worldwide, integrated petroleum operations which consist of exploring for,
developing and producing petroleum liquids and natural gas as well as
transporting the products. The company is also active in the mineral and
chemical industry.
E.I. du Pont de Nemours & Company. E.I. du Pont de Nemours & Company is a
research and technology-based company offering products including chemicals,
polymers, fibers and petroleum. The company serves worldwide markets in the
aerospace, agriculture, apparel, automotive, construction, electronics,
packaging, refining and transportation industries. The company's brands
consist of "Teflon" , "Lycra" and others.
General Motors Corporation. General Motors Corporation manufactures and sells
vehicles worldwide under the brands "Chevrolet" , "Buick" , "
Cadillac" , "Oldsmobile" , "Pontiac" , "Saturn" and
"GMC" trucks.
Minnesota Mining & Manufacturing Company. Minnesota Mining & Manufacturing
Company is a diversified manufacturer of industrial, commercial and healthcare
products. The company produces and markets more than 60,000 products worldwide.
The following table sets forth a comparison of the total return of the 2nd
through 6th lowest priced stocks of the ten highest yielding DJIA common
stocks (the "DJIA Five" ) with those of all common stocks comprising
the DJIA. It should be noted that the common stocks comprising the DJIA Five
may not be the same stocks from year to year and may not be the same common
stocks as those included in the Strategic Five United States Trust.
<TABLE>
COMPARISON OF TOTAL RETURNS*
<CAPTION>
DJIA Five Dow Jones Industrial Average
Year Total Return <F1> Total Return <F1>
<S> <C> <C>
1976 31.66% 22.72%
1977 1.85 (12.70)
1978 (1.86) 2.69
1979 11.31 10.52
1980 31.07 21.41
1981 10.26 (3.40)
1982 19.91 25.79
1983 53.14 25.65
1984 1.20 1.08
1985 28.47 32.78
1986 36.04 26.92
1987 5.52 6.02
1988 21.16 15.95
1989 36.02 31.71
1990 (17.66) (0.58)
1991 23.09 23.93
1992 28.44 7.35
1993 38.38 16.74
1994 2.70 4.95
1995 42.57 36.49
* Source: Barron's, Bloomberg L.P. and Dow Jones Corporation. The Sponsor has
not independently verified this data but has no reason to believe that this
data is incorrect in any material respect. Reasonable assumptions were relied
on where data was either unavailable or only partially available and these
assumptions could have a material impact on the historical performance
calculations.
<FN>
<F1>The DJIA Five for each period were identified by ranking the dividend yield
for each of the stocks in the DJIA by annualizing the last dividend paid (the
last dividend declared was used in cases when the stock was trading
ex-dividend as of the last day of the year) and dividing the result by the
stock's market value on the first day of trading on the New York Stock
Exchange in the period. The top ten highest dividend yielding stocks were then
ranked by price from highest to lowest. The absolute lowest priced stock was
eliminated and the next five lowest priced stocks were selected for the
comparison. Total Return for each period was calculated by taking the
difference between period-end prices and prices at the end of the following
period (adjusted for any stock splits and corporate spinoffs) and adding
dividends for the period. Historical total returns thus represent actual
stocks and real time; the results illustrate what an investor would have
obtained had the investor been invested in the related stocks in the periods
indicated. Total Return does not take into consideration any sales charges,
commissions, expenses or taxes that will be incurred by the Trust.
</TABLE>
Based on the total returns set forth in the table above, the average annual
total returns for the DJIA Five for the most recent three, five, ten and
twenty years periods was 26.54%, 26.22%, 20.09% and 18.83%, respectively. On
the other hand, based on the total returns set forth in the table above, the
average annual total returns for the DJIA for the most recent three, five, ten
and twenty year periods was 18.70%, 17.34%, 16.35% and 14.00%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Five United States Trust. Among
other factors, both stock prices (which may appreciate or depreciate) and
dividends (which may be increased, reduced or eliminated) will affect the
returns. Had the portfolio been available over the periods indicated in the
above table, after deductions for expenses and sales charges and not
accounting for taxes, it would have underperformed the DJIA in 9 of the last
20 years and there can be no assurance that the Strategic Five United States
Trust will outperform the DJIA over the life of such Trust or over consecutive
rollover periods, if available. A Unitholder in the Strategic Five United
States Trust would not necessarily realize as high a total return on an
investment in the stocks upon which the returns shown above are based. The
total return figures shown above do not reflect sales charges, commissions,
Trust expenses or taxes, and such Trust may not be able to invest equally in
the DJIA Five and may not be fully invested at all times.
The chart below represents past performance of the DJIA and the DJIA Five (but
does not represent possible performance of the Strategic Five United States
Trust which, as indicated above, includes certain expenses and commissions not
included in the chart) and should not be considered indicative of future
results. Further, results are hypothetical. The chart assumes that all
dividends during a year (including those on stocks trading ex-dividend as of
the last day of the year) are reinvested at the end of that year and does not
reflect sales charges, commissions, expenses or income taxes. Based on the
foregoing assumptions, the average annual returns (which represent the
percentage return derived by taking the sum of the initial investment and all
appreciation and dividends for the specified investment period) during the
period referred to in the table were 18.83% and 14.00% for the DJIA Five and
the DJIA, respectively. There can be no assurance that the Strategic Five
United States Trust will outperform the DJIA over its life or over consecutive
rollover periods, if available.
<TABLE>
<CAPTION>
Value of $10,000 Invested
January 1, 1976
<S> <C> <C>
Period DJIA Five DJIA
1976 $ 13,166 $ 12,272
1977 13,410 10,713
1978 13,160 11,002
1979 14,649 12,159
1980 19,200 14,762
1981 21,170 14,260
1982 25,385 17,938
1983 38,874 22,539
1984 39,341 22,783
1985 50,541 30,251
1986 68,756 38,394
1987 72,551 40,706
1988 87,903 47,198
1989 119,566 62,165
1990 98,450 61,804
1991 121,182 76,594
1992 155,647 82,224
1993 215,384 95,988
1994 221,199 100,739
1995 315,364 137,499
</TABLE>
United Kingdom Trust
The Financial Times Industrial Ordinary Share Index. The Financial Times
Industrial Ordinary Share Index (the "FT Index" ) is comprised of 30
common stocks chosen by the editors of The Financial Times as representative
of British industry and commerce. The FT Index began as the Financial News
Industrial Ordinary Share Index in London in 1935 and became the Financial
Times Industrial Ordinary Share Index in 1947. The following stocks are
currently represented in the FT Index:
<TABLE>
<CAPTION>
<S> <C>
ASDA Group Grand Metropolitan
Allied Domecq Plc Guest Keen & Nettlefolds (GKN) Plc
BICC Plc Guinness
BOC Group Hanson Plc
BTR Plc Imperial Chemical Industries Plc
Blue Circle Industries Plc Lucas Industries Plc
Boots Co Marks & Spencer
British Gas Plc National Westminster Bank Plc
British Petroleum Peninsular & Oriental Steam Navigation Company
British Telecom Plc Reuters Holdings
British Airways Royal Insurance Holdings Plc
Cadbury Schweppes SmithKline Beecham
Courtaulds Plc Tate & Lyle
General Electric Plc Thorn EMI
Glaxo Wellcome Plc Vodaphone Plc
</TABLE>
United Kingdom Trust Portfolio
The United Kingdom Trust consists of common stocks of those ten companies in
the Financial Times Industrial Ordinary Share Index which had the highest
dividend yield as of the close of business three business days prior to the
Initial Date of Deposit. The United Kingdom Trust consists of common stocks of
the following ten companies:
Allied Domecq Plc. Allied Domecq Plc is an international food, drink and
hospitality group. The company owns the "Baskin Robbins" ice cream and
"Dunkin' Donuts" food chains and "Firkin" pubs chain. Through
Hiram Walker, the company also produces a wide range of brands, including
"Ballantine's" scotch whiskey, "Canadian Club" Canadian whiskey,
"Kahlua" , "Tia Maria" , "Beefeater Gin" and other brands.
BICC Plc. BICC Plc manufactures cables and provides construction and
engineering services. The company's construction and engineering activities
are primarily located in North America and Asia-Pacific while the cable
business is managed through regional operations based in Europe, North
America, Australia and Asia-Pacific. BICC serves the power, communications,
transport and building sectors.
BTR Plc. BTR Plc is a holding company with subsidiaries in industrial,
transportation, construction, control systems and electrical and consumer
related divisions. The company produces and sells building products,
agricultural equipment and aircraft equipment and distributes electrical,
health care, environmental control and paper and printing products.
British Gas Plc. British Gas Plc buys, transmits and distributes gas. The
company supplies gas and services to customers in Great Britain and markets
gas appliances. British Gas also explores for and produces oil and gas in the
United Kingdom and overseas.
British Telecom Plc. British Telecom Plc provides telecommunications services.
The company provides local and long-distance telephone call products and
services in the United Kingdom, telephone exchange lines to homes and
businesses, international telephone calls to and from the United Kingdom and
telecommunications equipment for customers' premises. The company has
operations internationally.
Glaxo Wellcome Plc. Glaxo Wellcome Plc researches, develops, manufactures and
markets pharmaceuticals. Over half of the company's sales are derived from
"Zantac," an anti-ulcer drug. In the United States, Glaxo, Inc.
researches, develops and produces prescription medicines that treat
gastrointestinal, respiratory, infectious and cardiovascular diseases. The
company also produces AZT for the treatment of AIDS.
Hanson Plc. Hanson Plc is an industrial management company with operations in
the United Kingdom, the United States and to a lesser extent in Australia,
South Africa and other regions of the world. Some of the company's business
activities include the manufacture and sale of chemicals, building materials
and consumer and recreational products, the mining of coal, house building and
the sale and distribution of propane.
National Westminster Bank Plc. National Westminster Bank Plc, a London-based
retail bank, provides a variety of banking and financial services to both the
domestic and international markets. The bank operates 2,223 branches in the
United Kingdom. In addition the bank provides worldwide corporate and
investment banking, asset management and financing.
Peninsular & Oriental Steam Navigation Company. Peninsular & Oriental Steam
Navigation Company's primary activities include container and bulk shipping,
house building, property investment, construction and development and cruise,
ferry and transport services. Peninsular & Oriental operates worldwide.
Royal Insurance Holdings Plc. Royal Insurance Holdings Plc is a holding
company for businesses that offer all forms of insurance and provide financial
services. Royal Insurance offers general life insurance and reinsurance and
conducts investment and asset management services. Royal Insurance operates in
the United Kingdom, the United States, Canada and elsewhere.
The following table compares the actual performance of the FT Index and the
ten stocks in the FT Index having the highest dividend yield in each of the
past 20 years (the "FT Ten" ), as of December 31 in each of those
years. The FT Index statistics are based on a geometric, unweighted average of
30 companies, while the statistics for the FT Ten are based on an
approximately equal distribution (based on market price) of each of the ten
stocks. The figures have been adjusted to take into account the effect of
currency exchange rate fluctuations of the U.S. dollar. It should be noted
that the common stocks comprising the FT Ten may not be the same stocks from
year to year and may not be the same common stocks as those included in the
United Kingdom Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS*
FT Ten Financial Times Industrial Ordinary Share Index
Year Total Return <F1> Total Return <F1>
<S> <C> <C>
1976 (18.99)% (13.90)%
1977 74.74 50.33
1978 9.99 8.57
1979 4.56 10.46
1980 28.21 29.14
1981 (5.56) (3.50)
1982 4.23 2.81
1983 44.54 17.25
1984 7.81 (5.45)
1985 75.73 51.91
1986 27.21 21.51
1987 46.38 37.94
1988 12.66 7.52
1989 25.66 21.82
1990 15.02 9.23
1991 8.95 22.39
1992 4.72 (4.19)
1993 36.41 16.07
1994 2.49 3.39
1995 11.46 17.34
* Source: Datastream International, Inc. and Extell Financial LTD. The Sponsor
has not independently verified this data but has no reason to believe that
this data is incorrect in any material respect. Reasonable assumptions were
relied on where data was either unavailable or only partially available and
these assumptions could have a material impact on the historical performance
calculations.
<FN>
<F1>The FT Ten for each period were identified by ranking the dividend yield for
each of the stocks in the FT Index by adding together the interim and final
dividends paid in the prior period and dividing the result by that stock's
market value on the first trading day on the London Stock Exchange in the then
current period. Total Return for each period was calculated by taking the
difference between the market value of such stocks as of the last trading day
on the London Stock Exchange in the period from the market value of such
stocks as of the first trading day in that period (adjusted for any stock
splits and corporate spinoffs), and adding dividends for the period.
Historical total returns thus represent actual stocks and real time; the
results illustrate what an investor would have obtained had the investor been
invested in the related stocks in the periods indicated. Total Return does not
take into consideration any sales charges, commissions, expenses or taxes that
will be incurred by the United Kingdom Trust.
</TABLE>
Based on the total returns set forth in the table above, the average annual
total returns for the FT Ten for the most recent three, five, ten and twenty
year periods was 14.86%, 12.20%, 18.35% and 18.60%, respectively. On the other
hand, based on the total returns set forth in the table above, the average
annual total returns for the FT Index for the most recent three, five, ten and
twenty year periods was 11.04%, 10.55%, 14.75% and 13.80%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the United Kingdom Trust. Among other factors,
both stock prices (which may appreciate or depreciate) and dividends (which
may be increased, reduced or eliminated) will affect the returns. Had the
portfolio been available over the periods indicated in the above table, after
deductions for expenses and sales charges and not accounting for taxes, it
would have underperformed the FT Index in 10 of the last 20 years and there
can be no assurance that such Trust will outperform the FT Index over the life
of such Trust or over consecutive rollover periods, if available. A Unitholder
in the United Kingdom Trust would not necessarily realize as high a total
return on an investment in the stocks upon which the returns shown above are
based. The total return figures shown above do not reflect sales charges,
commissions, Trust expenses or taxes, and such Trust may not be able to invest
equally in the FT Ten and may not be fully invested at all times.
The chart below represents past performance of the FT Index and the FT Ten
(but not the United Kingdom Trust which as indicated above includes certain
expenses and commissions not included in the chart) and should not be
considered indicative of future results. Further, results are hypothetical.
The chart assumes that all dividends during a year are reinvested at the end
of that year and does not reflect commissions, custodial fees or income taxes.
The annual figures in the following table have been adjusted to take into
account the effect of currency exchange rate fluctuations of the U.S. dollar
as described in the footnotes below. Based on the foregoing assumptions, the
compound annual returns (which represent the percentage return derived by
taking the sum of the initial investment and all appreciation and dividends
for the specified investment period) during the period referred to in the
table were 18.60% and 13.80% for the FT Ten and the FT Index, respectively.
There can be no assurance that the United Kingdom Trust will outperform the FT
Index over its life or over consecutive rollover periods, if available.
<TABLE>
<CAPTION>
Value of $10,000 Invested
January 1, 1976<F1><F2>
<S> <C> <C>
Period FT Ten FT Index
1976 $ 8,101 $ 8,610
1977 14,156 12,943
1978 15,570 14,052
1979 16,280 15,522
1980 20,872 20,045
1981 19,713 19,344
1982 20,546 19,887
1983 29,697 23,318
1984 32,016 22,047
1985 56,262 33,491
1986 71,570 40,697
1987 104,761 56,138
1988 118,028 60,358
1989 148,316 73,530
1990 170,596 80,316
1991 185,858 98,299
1992 194,627 94,182
1993 265,498 109,315
1994 272,113 113,023
1995 303,288 132,626
<FN>
<F1>The $10,000 initial investment was converted into British pounds sterling
using the opening exchange rate at the beginning of each period.
<F2>The year-end total in British pounds sterling was converted into U.S. dollars
using the ending exchange rate. This amount was then converted back into
British pounds sterling using the opening exchange rate at the beginning of
the next period.
</TABLE>
Hong Kong Trust
The Hang Seng Index. The Hang Seng Index, first published in 1969, consists of
33 of the 358 stocks currently listed on the Stock Exchange of Hong Kong Ltd.
(the "Hong Kong Exchange" ). The Hang Seng Index, which is
representative of commerce and industry, finance, properties and utilities, is
comprised of the following companies:
<TABLE>
<CAPTION>
<S> <C>
Amoy Properties Ltd. HSBC Holdings Plc
Bank of East Asia Hutchison Whampoa
Cathay Pacific Airways Hysan Development Company Ltd.
Cheung Kong Johnson Electric Holdings
China Light & Power Miramar Hotel and Investment
Citic Pacific New World Development Co. Ltd.
Great Eagle Holdings Oriental Press Group
Guangdong Investment Shangri-La Asia Ltd.
Hang Lung Development Company Shun Tak Holdings Ltd.
Hang Seng Bank Sino Land Co. Ltd.
Henderson Land Development Co. Ltd. South China Morning Post (Holdings)
Hong Kong Aircraft Engineering Co. Ltd. Sun Hung Kai Properties Ltd.
Hong Kong and China Gas Swire Pacific (A)
Hong Kong Electric Holdings Ltd. TV Broadcasts
Hong Kong and Shanghai Hotels Wharf Holdings
Hong Kong Telecommunications Wheelock & Co.
Hopewell Holdings
</TABLE>
Hong Kong Trust Portfolio
The Hong Kong Trust consists of common stocks of those ten companies in the
Hang Seng Index which had the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. The Hong
Kong Trust consists of common stocks of the following ten companies:
Amoy Properties Ltd. Amoy Properties Ltd. is a property investment company and
a subsidiary of Hang Lung Development Company Ltd. The company invests in
commercial, office, residential and industrial properties in Hong Kong. The
company is also involved in car park management and property management.
China Light & Power Company. China Light & Power Company supplies electricity
to Kowloon and the New Territories in Hong Kong. The company also exports
power supplies to Guangdong Province in the People's Republic of China.
Hang Lung Development Company. Hang Lung Development Company is an investment
holding company. Its subsidiary Amoy Properties invests in commercial, office,
residential and industrial properties. Another subsidiary Grand Hotel Holdings
operates hotels in Hong Kong. Its associated companies operate department
stores, restaurants and dry cleaners. The company mainly operates in Hong
Kong, and plans to extend to Shanghai, China.
Hong Kong Aircraft Engineering Co. Ltd. Hong Kong Aircraft Engineering Co.
Ltd. maintains and overhauls commercial aircraft. The company performs
comprehensive checks, refurbishments and reconfigurations of airframes and
engines. Hong Kong Aircraft Engineering Company has contracts with several
airways. The ultimate holding company is Swire Pacific Ltd., a company
incorporated and listed in Hong Kong.
Hong Kong Electric Holdings Ltd. Hong Kong Electric Holdings Ltd. generates
and supplies electricity, engineering consultancy and project management.
Hong Kong Telecommunications. Hong Kong Telecommunications provides
telecommunication, computer, engineering, and other services in Hong Kong. The
company also sells and rents telecommunication equipment.
Hysan Development Company Ltd. Hysan Development Company Ltd. is an investment
holding company. Its subsidiaries are active in the field of property
investment, property development and capital market investment. The company's
revenues mainly come from commercial rental income and luxury residential
property located in Hong Kong.
Oriental Press Group. Oriental Press Group is an investment holding company.
The company publishes newspapers and magazines and is involved in property
investment and building management. Publication titles include "Oriental
Daily News" , "Oriental Sunday" , "Sun Racing Journal" , "
Jade Magazine" , "Eastweek" and "Eastern Express" .
Shun Tak Holdings Ltd. Shun Tak Holdings Ltd. is involved in shipping,
property, restaurants, air transportation and hotels in the Asia-Pacific
region. The company operates jet-foil services, develops residential and
commercial properties in Hong Kong, Macau and Australia, has interests in
three restaurants and five hotels and operates air cargo services to nine
destinations in Europe and Asia.
South China Morning Post (Holdings). South China Morning Post (Holdings)
publishes, prints and distributes the "South China Morning Post" , "
South China Sunday Morning Post" and Wah Kiu Yat Po. The company also has
operations in book selling, magazine publishing and distribution. All of their
activities are based in Hong Kong, with 90% of the company's turnover
resulting from publishing and printing of newspapers.
The following table compares the actual performance of the Hang Seng Index and
the ten stocks in the Hang Seng Index having the highest dividend yield (the
"Hang Seng Ten" ) in each of the past 18 years, as of December 31 in
each of those years. The Hang Seng Index statistics are based on a geometric,
unweighted average of 33 companies, while the statistics for the Hang Seng Ten
are based on an approximately equal distribution (based on market price) of
each of the ten stocks. The figures have been adjusted to take into account
the effect of currency exchange rate fluctuations of the U.S. dollar. It
should be noted that the common stocks comprising the Hang Seng Ten may not be
the same stocks from year to year and may not be the same common stocks as
those included in the Hong Kong Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS*
Hang Seng Ten Hang Seng Index
Year Total Return <F1> Total Return <F1>
<S> <C> <C>
1978 17.92% 10.64%
1979 67.81 70.76
1980 38.03 49.08
1981 (5.87) (12.81)
1982 (38.76) (52.64)
1983 (3.30) (10.44)
1984 57.36 29.12
1985 43.29 46.45
1986 62.35 58.93
1987 (1.22) (11.57)
1988 43.24 29.90
1989 7.85 11.27
1990 6.03 3.73
1991 51.11 48.91
1992 38.79 34.76
1993 109.72 121.59
1994 (35.63) (30.91)
1995 16.07 26.34
* Source: Datastream International, Inc. and The Hong Kong Stock Exchange. The
Sponsor has not independently verified this data but has no reason to believe
that this data is incorrect in any material respect. Reasonable assumptions
were relied on where data was either unavailable or only partially available
and these assumptions could have a material impact on the historical
performance calculations.
<FN>
<F1>The Hang Seng Ten for each period were identified by ranking the dividend
yield for each of the stocks in the Hang Seng Index by adding together the
interim and final dividends paid in the prior period and dividing the result
by that stock's market value on the first trading day on the Hong Kong Stock
Exchange in the then current period. Total Return for each period was
calculated by taking the difference between the market value of such stocks as
of the last trading day on the Hong Kong Stock Exchange in the period from the
market value of such stocks as of the first trading day in that period
(adjusted for any stock splits and corporate spinoffs), and adding dividends
for the period. Historical total returns thus represent actual stocks and real
time; the results illustrate what an investor would have obtained had the
investor been invested in the related stocks in the periods indicated. Total
Return does not take into consideration any sales charges, commissions,
expenses or taxes that will be incurred by the Hong Kong Trust.
</TABLE>
Based on the total returns set forth in the table above, the average annual
total returns for the Hang Seng Ten for the most recent three, five, ten and
eighteen year periods was 16.14%, 26.86%, 24.05% and 18.46%, respectively. On
the other hand, based on the total returns set forth in the table above, the
average annual total returns for the Hang Seng Index for the most recent
three, five, ten and eighteen year periods was 24.59%, 31.16%, 23.39% and
16.70%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Hong Kong Trust. Among other factors, both
stock prices (which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect the returns. Had the portfolio
been available over the periods indicated in the above table, after deductions
for expenses and sales charges and not accounting for taxes, it would have
underperformed the Hang Seng Index in 11 of the last 18 years and there can be
no assurance that the Hong Kong Trust will outperform the Hang Seng Index over
the life of such Trust or over consecutive rollover periods, if available. A
Unitholder in the Hong Kong Trust would not necessarily realize as high a
total return on an investment in the 10 stocks upon which the returns shown
above are based. The total return figures shown above do not reflect sales
charges, commissions, Trust expenses or taxes, and such Trust may not be able
to invest equally in the Hang Seng Ten and may not be fully invested at all
times.
The chart below represents past performance of the Hang Seng Index and the
Hang Seng Ten (but not the Hong Kong Trust which as indicated above includes
certain expenses and commissions not included in the chart) and should not be
considered indicative of future results. Further, results are hypothetical.
The chart assumes that all dividends during a year are reinvested at the end
of that year and does not reflect commissions, custodial fees or income taxes.
The annual figures in the following table have been adjusted to take into
account the effect of currency exchange rate fluctuations on the U.S. dollar
as described in the footnotes below. Based on the foregoing assumptions, the
compound annual returns (which represent the percentage return derived by
taking the sum of the initial investment and all appreciation and dividends
for the specified investment period) during the period referred to in the
table were 18.46% and 16.70% for the Hang Seng Ten and the Hang Seng Index,
respectively. There can be no assurance that the Hong Kong Trust will
outperform the Hang Seng Index over its life or over consecutive rollover
periods, if available.
<TABLE>
<CAPTION>
Value of $10,000
Invested January 1, 1978<F1><F2>
Period Hang Seng Ten Hang Seng Index
<S> <C> <C>
1978 $ 11,792 $ 11,064
1979 19,788 18,893
1980 27,314 28,166
1981 25,712 24,559
1982 15,745 11,632
1983 15,226 10,418
1984 23,961 13,451
1985 34,334 19,698
1986 55,743 31,306
1987 55,060 27,683
1988 78,867 35,961
1989 85,057 40,013
1990 90,182 41,507
1991 136,271 61,809
1992 189,132 83,294
1993 396,649 184,574
1994 255,313 127,519
1995 296,334 161,108
<FN>
<F1>The $10,000 initial investment was converted into Hong Kong dollars using the
opening exchange rate at the beginning of each period.
<F2>The year-end total in Hong Kong dollars was converted into U.S. dollars using
the ending exchange rate. This amount was then converted back into Hong Kong
dollars using the opening exchange rate at the beginning of the next period.
</TABLE>
Combined Strategies
The following tables compare cumulative performances of hypothetical
investments. Combined Strategy 1 illustrates both a single investment of
$10,000 in each of the DJIA Ten, FT Ten and the Hang Seng Ten, and a single
investment of $10,000 diversified among all three index strategies. Combined
Strategy 2 illustrates both a single investment of $10,000 in each of the DJIA
Five, FT Ten and the Hang Seng Ten, and a single investment of $10,000
diversified among all three index strategies. These figures do not reflect
commissions or taxes, nor the performance of the Fund, which is subject to
sales charges and expenses. This represents past performance and should not be
considered indicative of future results. Both stock prices (which may
appreciate or depreciate) and dividends (which may be increased, reduced or
eliminated) will affect future returns. Also, in the case of the Foreign
Trusts there are additional risks associated with investments denominated in
foreign currencies. All figures in the following tables have been adjusted by
taking into account currency exchange rates for U.S. dollars as of the end of
each period shown.
Combined Strategy 1
<TABLE>
<CAPTION>
Combined
DJIA Ten FT Ten Hang Seng Ten Strategy 1
Value of Value of Value of Value of
Year Investment Investment Investment Investment
<S> <C> <C> <C> <C>
$ 10,000 $ 10,000 $ 10,000 $ 10,000
1978 10,011 10,999 11,792 10,934
1979 11,308 11,501 19,788 14,199
1980 14,388 14,745 27,314 18,816
1981 15,455 13,926 25,712 18,364
1982 19,481 14,514 15,745 16,580
1983 27,032 20,979 15,226 21,079
1984 29,614 22,617 23,961 25,397
1985 38,335 39,745 34,334 37,471
1986 52,048 50,559 55,743 52,783
1987 55,134 74,006 55,060 61,400
1988 68,719 83,378 78,867 76,988
1989 85,954 104,774 85,057 91,928
1990 79,447 120,513 90,182 96,714
1991 106,436 131,295 136,271 124,667
1992 114,780 137,490 189,132 147,134
1993 145,782 187,555 396,649 243,329
1994 151,628 192,228 255,313 199,723
1995 207,094 214,251 296,334 239,226
</TABLE>
The total returns from the three indices are taken from the previous $10,000
investment strategies charts. Therefore, all figures are presented in U.S.
dollars. For a complete computation of the information presented in this
table, investors are encouraged to review the tables entitled "Value of
$10,000 Invested" . This data has been obtained from a variety of sources
(including Bloomberg LP, Barron's, Dow Jones Corporation, Extell Financial
LTD, Datastream International, Inc., and the Hong Kong Stock Exchange) and is
generally considered reliable. However, reasonable assumptions were relied on
where data was either unavailable or only partially available and these
assumptions could have a material impact on the historical performance
calculations.
Combined Strategy 2
<TABLE>
<CAPTION>
Combined
DJIA Five FT Ten Hang Seng Ten Strategy 2
Value of Value of Value of Value of
Year Investment Investment Investment Investment
<S> <C> <C> <C> <C>
$ 10,000 $ 10,000 $ 10,000 $ 10,000
1978 9,814 10,999 11,792 10,868
1979 10,924 11,501 19,788 14,071
1980 14,318 14,745 27,314 18,792
1981 15,787 13,926 25,712 18,475
1982 18,930 14,514 15,745 16,397
1983 28,990 20,979 15,226 21,732
1984 29,338 22,617 23,961 25,305
1985 37,690 39,745 34,334 37,256
1986 51,274 50,559 55,743 52,525
1987 54,104 74,006 55,060 61,057
1988 65,552 83,378 78,867 75,933
1989 89,164 104,774 85,057 92,999
1990 73,418 120,513 90,182 94,705
1991 90,370 131,295 136,271 119,312
1992 116,071 137,490 189,132 147,565
1993 160,620 187,555 396,649 248,274
1994 164,956 192,228 255,313 204,166
1995 235,178 214,251 296,334 248,588
</TABLE>
The total returns from the three indices are taken from the previous $10,000
investment strategies charts. Therefore, all figures are presented in U.S.
dollars. For a complete computation of the information presented in this
table, investors are encouraged to review the tables entitled "Value of
$10,000 Invested" . This data has been obtained from a variety of sources
(including Bloomberg LP, Barron's, Dow Jones Corporation, Extell Financial
LTD, Datastream International, Inc., and the Hong Kong Stock Exchange) and is
generally considered reliable. However, reasonable assumptions were relied on
where data was either unavailable or only partially available and these
assumptions could have a material impact on the historical performance
calculations.
RISK FACTORS
General. An investment in Units of a Trust should be made with an
understanding of the risks which an investment in common stocks entails,
including the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market may worsen and
the value of the Equity Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock market
movements and to volatile increases and decreases of value as market
confidence in and perceptions of the issuers change. These perceptions are
based on unpredictable factors including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic or
banking crises. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate to
those of creditors of, or holders of debt obligations or preferred stocks of,
such issuers. Shareholders of common stocks of the type held by the Trusts
have a right to receive dividends only when and if, and in the amounts,
declared by each issuer's board of directors and have a right to participate
in amounts available for distribution by such issuer only after all other
claims on such issuer have been paid or provided for. Common stocks do not
represent an obligation of the issuer and, therefore, do not offer any
assurance of income or provide the same degree of protection of capital as do
debt securities. The issuance of additional debt securities or preferred stock
will create prior claims for payment of principal, interest and dividends
which could adversely affect the ability and inclination of the issuer to
declare or pay dividends on its common stock or the rights of holders of
common stock with respect to assets of the issuer upon liquidation or
bankruptcy. The value of common stocks is subject to market fluctuations for
as long as the common stocks remain outstanding, and thus the value of the
Equity Securities in a portfolio may be expected to fluctuate over the life of
a Trust to values higher or lower than those prevailing on the Initial Date of
Deposit.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison
with the rights of creditors of, or holders of debt obligations or preferred
stocks issued by, the issuer. Cumulative preferred stock dividends must be
paid before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stockholders are also generally entitled to rights
on liquidation which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity Securities
will be maintained or of the liquidity of the Equity Securities in any markets
made. In addition, the Trusts may be restricted under the Investment Company
Act of 1940 from selling Equity Securities to the Sponsor. The price at which
the Equity Securities may be sold to meet redemption, and the value of a
Trust, will be adversely affected if trading markets for the Equity Securities
are limited or absent.
As described under "Fund Operating Expenses," all of the expenses of
the Trusts will be paid from the sale of the Securities in such Trust. It is
expected that such sales will be made at the end of the initial offering
period and each month thereafter through termination of the Trust. Such sales
will result in capital gains or losses (both of which will generally be
characterized for U.S. federal income tax purposes as short term capital gains
or losses) and may be made at times and prices which adversely affect the
Trust. For a discussion of the tax consequences of such sales, see "
Taxation."
Unitholders will be unable to dispose of any of the Equity Securities in a
Trust, as such, and will not be able to vote the Equity Securities. As the
holder of the Equity Securities, the Trustee will have the right to vote all
of the voting stocks in each Trust and will vote such stocks in accordance
with the instructions of the Sponsor. In the absence of any such instructions
by the Sponsor, the Trustee will vote such stocks so as to insure that the
stocks are voted as closely as possible in the same manner and the same
general proportion as are stocks held by owners other than the Trust.
Petroleum Companies. The Trusts may include securities which are issued by
companies engaged in refining and marketing oil and related products.
According to the U.S. Department of Commerce, the factors which will most
likely shape the industry to 1996 and beyond include the price and
availability of oil from the Middle East, changes in United States
environmental policies and the continued decline in U.S. production of crude
oil. Possible effects of these factors may be increased U.S. and world
dependence on oil from the Organization of Petroleum Exporting Countries ("
OPEC" ) and highly uncertain and potentially more volatile oil prices.
Factors which the Sponsor believes may increase the profitability of oil and
petroleum operations include increasing demand for oil and petroleum products
as a result of the continued increases in annual miles driven and the
improvement in refinery operating margins caused by increases in average
domestic refinery utilization rates. The existence of surplus crude oil
production capacity and the willingness to adjust production levels are the
two principal requirements for stable crude oil markets. Without excess
capacity, supply disruptions in some countries cannot be compensated for by
others. Surplus capacity in Saudi Arabia and a few other countries and the
utilization of that capacity prevented during the Persian Gulf crisis, and
continue to prevent, severe market disruption. Although unused capacity
contributed to market stability in 1990 and 1991, it ordinarily creates
pressure to overproduce and contributes to market uncertainty. The likely
restoration of a large portion of Kuwait and Iraq's production and export
capacity over the next few years could lead to such a development in the
absence of substantial growth in world oil demand. Formerly, OPEC members
attempted to exercise control over production levels in each country through a
system of mandatory production quotas. Because of the crisis in the Middle
East, the mandatory system has since been replaced with a voluntary system.
Production under the new system has had to be curtailed on at least one
occasion as a result of weak prices, even in the absence of supplies from
Kuwait and Iraq. The pressure to deviate from mandatory quotas, if they are
reimposed, is likely to be substantial and could lead to a weakening of
prices. In the longer term, additional capacity and production will be
required to accommodate the expected large increases in world oil demand and
to compensate for expected sharp drops in U.S. crude oil production and
exports from the Soviet Union. Only a few OPEC countries, particularly Saudi
Arabia, have the petroleum reserves that will allow the required increase in
production capacity to be attained. Given the large-scale financing that is
required, the prospect that such expansion will occur enough to meet the
increased demand is uncertain.
Declining U.S. crude oil production will likely lead to increased dependence
on OPEC oil, putting refiners at risk of continued and unpredictable supply
disruptions. Increasing sensitivity to environmental concerns will also pose
serious challenges to the industry over the coming decade. Refiners are likely
to be required to make heavy capital investments and make major production
adjustments in order to comply with increasingly stringent environmental
legislation, such as the 1990 Amendments to the Clean Air Act. If the cost of
these changes is substantial enough to cut deeply into profits, smaller
refiners may be forced out of the industry entirely. Moreover, lower consumer
demand due to increases in energy efficiency and conservation, due to gasoline
reformulations that call for less crude oil, due to warmer winters or due to a
general slowdown in economic growth in this country and abroad could
negatively affect the price of oil and the profitability of oil companies. No
assurance can be given that the demand for or prices of oil will increase or
that any increases will not be marked by great volatility. Some oil companies
may incur large cleanup and litigation costs relating to oil spills and other
environmental damage. Oil production and refining operations are subject to
extensive federal, state and local environmental laws and regulations
governing air emissions and the disposal of hazardous materials. Increasingly
stringent environmental laws and regulations are expected to require companies
with oil production and refining operations to devote significant financial
and managerial resources to pollution control. General problems of the oil and
petroleum products industry include the ability of a few influential producers
significantly to affect production, the concomitant volatility of crude oil
prices and increasing public and governmental concern over air emissions,
waste product disposal, fuel quality and the environmental effects of
fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of energy
and fuels or legislative changes relating to the energy industry or the
environment could have a negative impact on the petroleum products industry.
While legislation has been enacted to deregulate certain aspects of the oil
industry, no assurances can be given that new or additional regulations will
not be adopted. Each of the problems referred to could adversely affect the
financial stability of the issuers of any petroleum industry stocks in the
Trusts. The Trusts may also include securities which are issued by companies
engaged in the exploration for and mining of various minerals, including coal,
and/or the manufacture, transportation, or marketing of chemical products and
plastics. The problems faced by such companies are similar to those discussed
with regard to petroleum companies.
Other Equity Risks. Since the Equity Securities included in the United Kingdom
Trust and the Hong Kong Trust (the "Foreign Trusts" ) consist of
securities of foreign issuers, an investment in these Trusts involves certain
investment risks that are different in some respects from an investment in the
United States Trust which invests entirely in the securities of domestic
issuers. These investment risks include future political or governmental
restrictions which might adversely affect the payment or receipt of payment of
dividends on the relevant Equity Securities, the possibility that the
financial condition of the issuers of the Equity Securities may become
impaired or that the general condition of the relevant stock market may worsen
(both of which would contribute directly to a decrease in the value of the
Equity Securities and thus in the value of the Units), the limited liquidity
and relatively small market capitalization of the relevant securities market,
expropriation or confiscatory taxation, economic uncertainties and foreign
currency devaluations and fluctuations. In addition, for foreign issuers that
are not subject to the reporting requirements of the Securities Exchange Act
of 1934, there may be less publicly available information than is available
from a domestic issuer. Also, foreign issuers are not necessarily subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic issuers. The
securities of many foreign issuers are less liquid and their prices more
volatile than securities of comparable domestic issuers. In addition, fixed
brokerage commissions and other transaction costs on foreign securities
exchanges are generally higher than in the United States and there is
generally less government supervision and regulation of exchanges, brokers and
issuers in foreign countries than there is in the United States. However, due
to the nature of the issuers of the Equity Securities selected for the Foreign
Trusts, the Sponsor believes that adequate information will be available to
allow the Supervisor to provide portfolio surveillance for each Trust.
Equity securities issued by non-U.S. issuers generally pay dividends in
foreign currencies and are principally traded in foreign currencies.
Therefore, there is a risk that the United States dollar value of these
securities will vary with fluctuations in the U.S. dollar foreign exchange
rates for the various Equity Securities. See "Exchange Rate" below.
On the basis of the best information available to the Sponsor at the present
time, none of the Equity Securities in either the United Kingdom or Hong Kong
Trusts are subject to exchange control restrictions under existing law which
would materially interfere with payment to the Trusts of dividends due on, or
proceeds from the sale of, the Equity Securities. However, there can be no
assurance that exchange control regulations might not be adopted in the future
which might adversely affect payment to either Trust. In addition, the
adoption of exchange control regulations and other legal restrictions could
have an adverse impact on the marketability of international securities in the
Foreign Trusts and on the ability of such Trusts to satisfy their obligation
to redeem Units tendered to the Trustee for redemption.
Investors should be aware that it may not be possible to buy all Equity
Securities at the same time because of the unavailability of any Equity
Security, and restrictions applicable to the Trusts relating to the purchase
of an Equity Security by reason of the federal securities laws or otherwise.
Foreign securities generally have not been registered under the Securities Act
of 1933 and may not be exempt from the registration requirements of such Act.
Sales of non-exempt Equity Securities by a Trust in the United States
securities markets are subject to severe restrictions and may not be
practicable. Accordingly, sales of these Equity Securities by a Trust will
generally be effected only in foreign securities markets. Although the Sponsor
does not believe that a Trust will encounter obstacles in disposing of the
Equity Securities, investors should realize that the Equity Securities may be
traded in foreign countries where the securities markets are not as developed
or efficient and may not be as liquid as those in the United States. The value
of the Equity Securities will be adversely affected if trading markets for the
Equity Securities are limited or absent.
Foreign Trust Information. The information provided below details certain
important factors which impact the economies of both the United Kingdom and
Hong Kong. This information has been extracted from various governmental and
private publications, but no representation can be made as to its accuracy;
furthermore, no representation is made that any correlation exists between the
economies of the United Kingdom and Hong Kong and the value of the Equity
Securities held by the United Kingdom and Hong Kong Trusts, respectively.
United Kingdom. The emphasis of United Kingdom's economy is in the private
services sector, which includes the wholesale and retail sector, banking,
finance, insurance, and tourism. Services as a whole account for a majority of
the United Kingdom's gross national product and makes a significant
contribution to the country's balance of payments. The United Kingdom
experienced a recovery of output in 1993-1994 accompanied by falling rates of
inflation despite expectations to the contrary. Quarterly changes in real
gross domestic product in the United Kingdom grew moderately during 1994 and
1995 with an approximate .5% increase in the last quarter of 1995 over the
previous quarter. The average quarterly rate of GDP growth in the United
Kingdom (as well as in Europe generally) has been decelerating since 1994.
The United Kingdom is a member of the European Union (the "EU" ),
formerly known as the European Economic Community (the "EEC" ). The EU
was created through the formation of the Maastricht Treaty on European Union
in late 1993. It is expected that the Treaty will have the effect of
eliminating most remaining trade barriers between the 15 member nations and
make Europe one of the largest common markets in the world. The EU has the
potential to become a powerful trade bloc with a population of over 350
million people and an annual gross national product of more than $4 trillion.
However, the effective implementation of the Treaty provisions and the rate at
which trade barriers are eliminated is uncertain at this time. Furthermore,
the rapid political and social change throughout Europe make the extent and
nature of future economic development in the United Kingdom and Europe and the
impact of such development upon the value of the Equity Securities in the
United Kingdom Trust impossible to predict. Volatility in oil prices could
slow economic development throughout Western Europe. Moreover, it is not
possible to accurately predict the effect of the current political and
economic situation upon long-term inflation and balance of trade cycles and
how these changes would affect the currency exchange rate between the U.S.
dollar and the British pound sterling.
Hong Kong. Hong Kong, established as a British colony in the 1840's, is
currently ruled by the British Government through an appointed Governor. Hong
Kong will revert to Chinese sovereignty effective July 1, 1997 with Hong Kong
becoming a Special Administrative Region ("SAR" ) of China. The current
Hong Kong government generally follows a laissez-faire policy towards
industry. There are currently no major import, export or foreign exchange
restrictions. At the present time, regulation of business is generally minimal
with certain exceptions, including regulated entry into certain sectors of the
economy and a fixed exchange rate regime by which the Hong Kong dollar has
been pegged to the U.S. dollar. Over the ten year period between 1983 and
1993, real gross domestic product increased at an average annual rate of
approximately 6%.
Although China has committed by treaty to preserve for 50 years the economic
and social freedoms currently enjoyed in Hong Kong, the continuation of the
economic system in Hong Kong after the reversion will be dependent on the
Chinese government and there can be no assurances that the commitment made by
China regarding Hong Kong will be maintained. Legislation has been enacted in
Hong Kong that will extend democratic voting procedures for Hong Kong's
legislature. China has expressed disagreement with this legislation which it
states is in contravention of the principles evidenced in the Basic Law of the
Hong Kong SAR. The National People's Congress of China has passed a resolution
to the effect that the Legislative Council and certain other councils and
boards of the Hong Kong Government will be terminated on June 30, 1997. It is
expected that such bodies will be subsequently reconstituted in accordance
with China's interpretation of the Basic Law. China and Great Britain have
also yet to resolve their differences on other issues relating to the
reversion to sovereignty. Any increase in uncertainty as to the future
economic and political status of Hong Kong could have a materially adverse
effect on the value of the Strategic Ten Hong Kong Trust.
China currently enjoys a most favored nation status from the United States,
which is subject to annual review by the President of the United States.
President Clinton recently signed an executive order which renewed China's
status for another year. Congress, which has to review China's standing every
year, is also expected to renew the most favored nation status. However,
revocation of such status would have a severe effect on China's trade and thus
could have a materially adverse effect on the value of the Strategic Ten Hong
Kong Trust.
The performance of certain companies listed on the Hong Kong Stock Exchange is
linked to the economic climate of China. For example, between 1985 and 1990,
Hong Kong businesses invested $20 billion in the nearby Chinese province of
Guangdong to take advantage of the lower property and labor costs than were
available in Hong Kong. Recently, however, high economic growth in this area
(industrial production grew at an annual rate of about 20% in 1991, 24% in
1992 and 36.5% in 1993) has been associated with rising inflation and concerns
about the devaluation of the Chinese currency. Any downturn in economic growth
or increase in the rate of inflation in China could have a materially adverse
effect on the value of the Strategic Ten Hong Kong Trust.
Securities prices on the Hong Kong Exchange and, specifically the Hang Seng
Index, can be highly volatile and are sensitive to developments in Hong Kong
and China, as well as other world markets. For example, in 1989, the Hang Seng
Index dropped 1,216 points (approximately 58%) in early June following the
events at Tiananmen Square. The Hang Seng Index gradually climbed in
subsequent months but fell by 181 points on October 13, 1989 (approximately
6.5%) following a substantial fall in the U.S. stock markets. Despite these
events, the Hang Seng 1989 year-end closing price of 2,837 was ahead of its
1988 year-end level. The Strategic Ten Hong Kong Trust is considered to be
concentrated in common stocks of companies engaged in real estate asset
management, development, leasing, property sale and other related activities.
Investment in securities issued by these real estate companies should be made
with an understanding of the many factors which may have an adverse impact on
the equity securities of a particular company or industry. Generally, these
include economic recession, the cyclical nature of real estate markets,
competitive overbuilding, unusually adverse weather conditions, changing
demographics, changes in governmental regulations (including tax laws and
environmental, building, zoning and sales regulation), increases in real
estate taxes or costs of material and labor, the inability to secure
performance guarantees or insurance as required, the unavailability of
investment capital and the inability to obtain construction financing or
mortgage loans at rates acceptable to builders and purchasers of real estate.
With recent Chinese economic development and reform, certain Hong Kong real
estate companies and other investors began purchasing and developing real
estate in southern China. By 1992, however, southern China began to experience
a rise in real estate prices and construction costs, a growing supply of real
estate and a tightening of credit markets. Any worsening of these conditions
could affect the profitability and financial condition of Hong Kong real
estate companies and could have a materially adverse effect on the value of
the Strategic Ten Hong Kong Trust.
Exchange Rate. The Foreign Trusts are comprised of Equity Securities that are
principally traded in foreign currencies and as such involve investment risks
that are substantially different from an investment in a fund which invests in
securities that are principally traded in United States dollars. The United
States dollar value of a portfolio (and hence of the Units) and of the
distributions from the portfolio will vary with fluctuations in the United
States dollar foreign exchange rates for the relevant currencies. Most foreign
currencies have fluctuated widely in value against the United States dollar
for many reasons, including supply and demand of the respective currency, the
rate of inflation in the respective economies compared to the United States,
the impact of interest rate differentials between different currencies on the
movement of foreign currency rates, the balance of imports and exports of
goods and services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries.
The post-World War II international monetary system was, until 1973, dominated
by the Bretton Woods Treaty, which established a system of fixed exchange
rates and the convertibility of the United States dollar into gold through
foreign central banks. Starting in 1971, growing volatility in the foreign
exchange markets caused the United States to abandon gold convertibility and
to effect a small devaluation of the United States dollar. In 1973, the system
of fixed exchange rates between a number of the most important industrial
countries of the world, among them the United States and most Western European
countries, was completely abandoned. Subsequently, major industrialized
countries have adopted "floating" exchange rates, under which daily
currency valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have continued to
"peg" their currencies to the United States dollar although there has
been some interest in recent years in "pegging" currencies to "
baskets" of other currencies or to a Special Drawing Right administered by
the International Monetary Fund. Since 1983, the Hong Kong dollar has been
pegged to the U.S. dollar. In Europe a European Currency Unit ("ECU" )
has been developed. Currencies are generally traded by leading international
commercial banks and institutional investors (including corporate treasurers,
money managers, pension funds and insurance companies). From time to time,
central banks in a number of countries also are major buyers and sellers of
foreign currencies, mostly for the purpose of preventing or reducing
substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of actual
and proposed government policies on the value of currencies, interest rate
differentials between the currencies and the balance of imports and exports of
goods and services and transfers of income and capital from one country to
another. These economic factors are influenced primarily by a particular
country's monetary and fiscal policies (although the perceived political
situation in a particular country may have an influence as well--particularly
with respect to transfers of capital). Investor psychology may also be an
important determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative strength or
weakness of a particular currency may sometimes exercise considerable
speculative influence on currency exchange rates by purchasing or selling
large amounts of the same currency or currencies. However, over the long term,
the currency of a country with a low rate of inflation and a favorable balance
of trade should increase in value relative to the currency of a country with a
high rate of inflation and deficits in the balance of trade.
The following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and end of
month equivalent U.S. dollar rates of exchange for the United Kingdom pound
sterling and the Hong Kong dollar:
<TABLE>
FOREIGN EXCHANGE RATES
Range of Fluctuations in
Foreign Currencies
<CAPTION>
United Kingdom
Annual Period Pound Sterling/U.S. Dollar Hong Kong/U.S. Dollar
<S> <C> <C>
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
</TABLE>
Source: Bloomberg L.P.
<TABLE>
<CAPTION>
End of Month Exchange Rates End of Month Exchange Rates
for Foreign Currencies for Foreign Currencies (Continued)
United Kingdom United Kingdom
Pound Sterling/ Hong Kong/ Pound Sterling/ Hong Kong/
Monthly Period U.S. Dollar U.S. Dollar Monthly Period U.S. Dollar U.S. Dollar
<S> <C> <C> <C> <C> <C>
1992 1994 (Continued)
January .559 7.762 April .659 7.725
February .569 7.761 May .662 7.726
March .576 7.740 June .648 7.730
April .563 7.757 July .648 7.725
May .546 7.749 August .652 7.728
June .525 7.731 September .634 7.727
July .519 7.732 October .611 7.724
August .503 7.729 November .639 7.731
September .563 7.724 December .639 7.738
October .641 7.736 1995
November .659 7.742 January .633 7.732
December .662 7.744 February .631 7.730
1993 March .617 7.733
January .673 7.734 April .620 7.742
February .701 7.734 May .630 7.735
March .660 7.731 June .627 7.736
April .635 7.730 July .626 7.738
May .640 7.724 August .645 7.741
June .671 7.743 September .631 7.732
July .674 7.761 October .633 7.727
August .670 7.755 November .652 7.731
September .668 7.734 December .645 7.733
October .676 7.733 1996
November .673 7.725 January .661 7.728
December .677 7.723 February .653 7.731
1994 March .655 7.734
January .664 7.724 April .664 7.735
February .673 7.727 May .645 7.736
March .674 7.737 June .644 7.741
</TABLE>
Source: Bloomberg L.P.
The Evaluator will estimate current exchange rates for the relevant currencies
based on activity in the various currency exchange markets. However, since
these markets are volatile and are constantly changing, depending on the
activity at any particular time of the large international commercial banks,
various central banks, large multi-national corporations, speculators and
other buyers and sellers of foreign currencies, and since actual foreign
currency transactions may not be instantly reported, the exchange rates
estimated by the Evaluator may not be indicative of the amount in United
States dollars a Trust would receive had the Trustee sold any particular
currency in the market. The foreign exchange transactions of a Trust will be
concluded by the Trustee with foreign exchange dealers acting as principals on
a spot (i.e., cash) buying basis. Although foreign exchange dealers trade on a
net basis, they do realize a profit based upon the difference between the
price at which they are willing to buy a particular currency (bid price) and
the price at which they are willing to sell the currency (offer price).
TAXATION
United States Federal Taxation
General. The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as capital
assets (generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986 (the "Code" ). Unitholders
should consult their tax advisers in determining the federal, state, local and
any other tax consequences of the purchase, ownership and disposition of Units
in a Trust.
The Sponsor has been advised by the Trustee that U.S. Unitholders may not be
able to obtain directly Treaty Payments (as described in "United Kingdom
Taxation" below) to which they are entitled under the U.K./U.S. Treaty but
that the U.K. Inland Revenue has approved a special procedure whereby the
Trustee can claim Treaty Payments on behalf of U.S. Unitholders of the United
Kingdom Trust and distribute those payments to Unitholders. To the extent the
Trustee obtains Treaty Payments, U.S. Unitholders will report as gross income
earned their pro rata portion of dividends received by the United Kingdom
Trust as well as the amount of the associated tax credit. Because, under the
grantor trust rules, an investor is deemed to have paid directly his share of
foreign tax credits that have been paid or accrued, if any, an investor may be
entitled to a foreign tax credit or deduction for United States tax purposes
with respect to such taxes. Investors should consult their tax advisers with
respect to foreign withholding taxes and foreign tax credits.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. Each Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro
rata portion of each of the assets of a Trust under the Code; and the income
of each Trust will be treated as income of the Unitholders thereof under the
Code. Each Unitholder will be considered to have received his pro rata share
of income derived from each Security when such income is considered to be
received by a Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his pro rata portion of each Equity Security when such dividends are
received by a Trust regardless of whether such dividends are used to pay a
portion of the deferred sales charge. Unitholders will be taxed in this manner
regardless of whether distributions from a Trust are actually received by the
Unitholder or are automatically reinvested (see "Rights of
Unitholders--Reinvestment Option" ).
3. Each Unitholder will have a taxable event when a Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent
an in kind distribution of stock is received by such Unitholder from a Trust
as described below). The price a Unitholder pays for his Units generally,
including sales charges, is allocated among his pro rata portion of each
Security held by a Trust (in proportion to the fair market values thereof on
the valuation date closest to the date the Unitholder purchases his Units) in
order to determine his tax basis for his pro rata portion of each Security
held by a Trust. For federal income tax purposes, a Unitholder's pro rata
portion of dividends as defined by Section 316 of the Code paid with respect
to a Security held by a Trust is taxable as ordinary income to the extent of
such corporation's current and accumulated "earnings and profits" . A
Unitholder's pro rata portion of dividends paid on such Security which exceed
such current and accumulated earnings and profits will first reduce a
Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Security shall generally be treated as
capital gain. In general, any such capital gain will be short-term unless a
Unitholder has held his Units for more than one year.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by a Trust will generally be
considered a capital gain except in the case of a dealer or a financial
institution and, will generally be long-term if the Unitholder has held his
Units for more than one year (the date on which the Units are acquired (i.e.,
the "trade date" ) is excluded for purposes of determining whether the
Units have been held for more than one year). A Unitholder's portion of loss,
if any, upon the sale or redemption of Units or the disposition of Securities
held by a Trust will generally be considered a capital loss (except in the
case of a dealer or a financial institution) and, in general, will be
long-term if the Unitholder has held his Units for more than one year.
Unitholders should consult their tax advisers regarding the recognition of
gains and losses for federal income tax purposes. In particular, a Rollover
Unitholder should be aware that a Rollover Unitholder's loss, if any, incurred
in connection with the exchange of Units for units in the next new series of
the Strategic Ten Trust or Strategic Five Trust (the "1997 Fund" ) will
generally be disallowed with respect to the disposition of any Securities
pursuant to such exchange to the extent that such Unitholder is considered the
owner of substantially identical securities under the wash sale provisions of
the Code taking into account such Unitholder's deemed ownership of the
securities underlying the Units in the 1997 Fund in the manner described
above, if such substantially identical securities were acquired within a
period beginning 30 days before and ending 30 days after such disposition.
However, any gains incurred in connection with such an exchange by a Rollover
Unitholder would be recognized.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes sales
charges, and such charges are not deductible. A portion of the sales charge
for the Trusts is deferred. It is possible that for federal income tax
purposes a portion of the deferred sales charge may be treated as interest
which would be deductible by a Unitholder subject to limitations on the
deduction of investment interest. In such a case, the non-interest portion of
the deferred sales charge would be added to the Unitholder's tax basis in his
Units. The deferred sales charge could cause the Unitholder's Units to be
considered to be debt-financed under Section 246A of the Code which would
result in a small reduction of the dividends-received deduction. In any case,
the income (or proceeds from redemption) a Unitholder must take into account
for federal income tax purposes is not reduced by amounts deducted to pay the
deferred sales charge. Unitholders should consult their own tax advisers as to
the income tax consequences of the deferred sales charge.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by a Trust (to the extent
such dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such
corporation directly owned the Securities paying such dividends (other than
corporate shareholders, such as "S" corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and
the personal holding corporation tax). However, a corporation owning Units
should be aware that Sections 246 and 246A of the Code impose additional
limitations on the eligibility of dividends for the 70% dividends received
deduction. These limitations include a requirement that stock (and therefore
Units) must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been recently issued which address
special rules that must be considered in determining whether the 46 day
holding period requirement is met. Moreover, the allowable percentage of the
deduction will be reduced from 70% if a corporate Unitholder owns certain
stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. It should be noted that various
legislative proposals that would affect the dividends received deduction have
been introduced. Unitholders should consult with their tax advisers with
respect to the limitations on and possible modifications to the dividends
received deduction.
To the extent dividends received by a Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by
an individual only to the extent they exceed 2% of such individual's adjusted
gross income. Unitholders may be required to treat some or all of the expenses
of the Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by a Trust
or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by a Trust or if the
Unitholder disposes of a Unit (although losses incurred by Rollover
Unitholders may be subject to disallowance, as discussed above). For taxpayers
other than corporations, net capital gains are subject to a maximum marginal
stated tax rate of 28%. However, it should be noted that legislative proposals
are introduced from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act" )
raised tax rates on ordinary income while capital gains remain subject to a
28% maximum stated rate for taxpayers other than corporations. Because some or
all capital gains are taxed at a comparatively lower rate under the Tax Act,
the Tax Act includes a provision that recharacterizes capital gains as
ordinary income in the case of certain financial transactions that are "
conversion transactions" effective for transactions entered into after
April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust involved including his
pro rata portion of all Securities represented by a Unit.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of a United States Trust. As discussed in "Rights of
Unitholders--Redemption of Units," under certain circumstances a
Unitholder in a United States Trust tendering Units for redemption may request
an In Kind Distribution. A Unitholder in a United States Trust may also under
certain circumstances request an In Kind Distribution upon the termination of
such Trust. See "Rights of Unitholders--Redemption of Units" . The
Unitholder requesting an In Kind Distribution will be liable for expenses
related thereto (the "Distribution Expenses" ) and the amount of such
In Kind Distribution will be reduced by the amount of the Distribution
Expenses. See "Rights of Unitholders--Redemption of Units" . As
previously discussed, prior to the redemption of Units or the termination of
such Trust, a Unitholder is considered as owning a pro rata portion of each of
such Trust assets for federal income tax purposes. The receipt of an In Kind
Distribution will result in a United States Trust Unitholder receiving an
undivided interest in whole shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution
with respect to each Security owned by a United States Trust will depend on
whether or not a Unitholder receives cash in addition to Securities. A "
Security" for this purpose is a particular class of stock issued by a
particular corporation. A Unitholder will not recognize gain or loss if a
Unitholder only receives Securities in exchange for his or her pro rata
portion in the Securities held by the Trust. However, if a Unitholder also
receives cash in exchange for a fractional share of a Security held by the
Trust, such Unitholder will generally recognize gain or loss based upon the
difference between the amount of cash received by the Unitholder and his tax
basis in such fractional share of a Security held by the Trust.
Because each United States Trust will own many Securities, a Unitholder who
requests an In Kind Distribution will have to analyze the tax consequences
with respect to each Security owned by such United States Trust. The amount of
taxable gain (or loss) recognized upon such exchange will generally equal the
sum of the gain (or loss) recognized under the rules described above by such
Unitholder with respect to each Security owned by such Trust. Unitholders who
request an In Kind Distribution are advised to consult their tax advisers in
this regard.
As discussed in "Rights of Unitholders--Special Redemption and Rollover in
New Fund," a Unitholder may elect to become a Rollover Unitholder. To the
extent a Rollover Unitholder exchanges his Units for Units of the 1997 Fund in
a taxable transaction, such Unitholder will recognize gains, if any, but
generally will not be entitled to a deduction for any losses recognized upon
the disposition of any Securities pursuant to such exchange to the extent that
such Unitholder is considered the owner of substantially identical securities
under the wash sale provisions of the Code taking into account such
Unitholder's deemed ownership of the securities underlying the Units in the
1997 Fund in the manner described above, if such substantially identical
securities were acquired within a period beginning 30 days before and ending
30 days after such disposition under the wash sale provisions contained in
Section 1091 of the Code. In the event a loss is disallowed under the wash
sale provisions, special rules contained in Section 1091(d) of the Code apply
to determine the Unitholder's tax basis in the securities acquired. Rollover
Unitholders are advised to consult their tax advisers.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax basis
in his Units will generally equal the price paid by such Unitholder for his
Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of
each Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary
income as described above.
Other Matters. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified that payments to the Unitholder are subject
to back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by a
Trust to such Unitholder (including amounts received upon the redemption of
Units) will be subject to back-up withholding. Distributions by a Trust (other
than those that are not treated as United States source income, if any) will
generally be subject to United States income taxation and withholding in the
case of Units held by non-resident alien individuals, foreign corporations or
other non-United States persons. Such persons should consult their tax
advisers. On December 7, 1995 the U.S. Treasury Department released proposed
legislation that, if adopted, could affect the United States Federal income
taxation of such non-United States Unitholders and the portion of the Trust's
income allocable to non-United States Unitholders. Similar language, which
would be effective on the date of enactment, was included in the Health
Insurance Reform Bill passed by the U.S. Senate on April 23, 1996.
In general, income that is not effectively connected to the conduct of a trade
or business within the United States that is earned by non-U.S. Unitholders
and derived from dividends of foreign corporations will not be subject to U.S.
withholding tax provided that less than 25 percent of the gross income of the
foreign corporation for a three-year period ending with the close of its
taxable year preceding payment was not effectively connected to the conduct of
a trade and business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the
United States and a foreign country. Non-U.S. Unitholders should consult their
own tax advisers regarding the imposition of U.S. withholding on distributions
from a Trust.
It should be noted that payments to the Trusts of dividends on Securities that
are attributable to foreign corporations may be subject to foreign withholding
taxes and Unitholders should consult their tax advisers regarding the
potential tax consequences relating to the payment of any such withholding
taxes by the Trusts. Any dividends withheld as a result thereof will
nevertheless be treated as income to the Unitholders. Because, under the
grantor trust rules, an investor is deemed to have paid directly his share of
foreign taxes that have been paid or accrued, if any, an investor may be
entitled to a foreign tax credit or deduction for United States tax purposes
with respect to such taxes. Investors should consult their tax advisers with
respect to foreign withholding taxes and foreign tax credits.
At the termination of a Trust, the Trustee will furnish to each Unitholder of
such Trust a statement containing information relating to the dividends
received by such Trust on the Securities, the gross proceeds received by such
Trust from the disposition of any Security (resulting from redemption or the
sale of any Security), and the fees and expenses paid by such Trust. The
Trustee will also furnish annual information returns to Unitholders and to the
Internal Revenue Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of Kroll & Tract, special counsel to the Fund for New York tax
matters, each Trust is not an association taxable as a corporation and the
income of the Trusts will be treated as the income of the Unitholders under
the existing income tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
("U.S. Unitholders" ) with regard to federal and certain aspects of New
York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers
in this regard. As used herein, the term "U.S. Unitholder" means an
owner of a Unit in one of the Trusts that (a) is (i) for United States federal
income tax purposes a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof, or (iii) an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source or (b) does not qualify as a U.S. Unitholder
in paragraph (a) but whose income from a Unit is effectively connected with
such Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable.
United Kingdom Taxation
Tax Consequences of Ownership of Ordinary Shares. In the opinion of Linklaters
& Paines, United Kingdom special counsel to the Sponsor, based on the terms of
the United Kingdom Trust as described in the Prospectus and on certain
representations made by special U.S. counsel to the Sponsor, the following
summary accurately describes the U.K. tax consequences to certain U.S.
Unitholders who beneficially hold Units of the United Kingdom Trust as capital
assets. This summary is based upon current U.S. law, U.K. taxation law and
Inland Revenue practice in the U.K., the U.S./U.K. convention relating to
taxes on income and capital gains ("the Treaty" ), and the U.S./U.K.
convention relating to estate and gift taxes (the "Estate Tax Treaty"
). The summary is a general guide only and is subject to any changes in U.K.
or U.S. law, or the practice relating thereto and in the Treaty or Estate Tax
Treaty occurring after the date of this Prospectus which may affect (including
possibly on a retroactive basis) the tax consequences described herein.
Accordingly, Unitholders should consult their own tax advisers as to the U.K.
tax consequences applicable to their particular circumstances of ownership of
the Units of the United Kingdom Trust.
Taxation of Dividends. Where a U.K. resident receives a dividend from a U.K.
corporation (other than a foreign income dividend (see below)), such resident
is generally entitled to a tax credit, which may be offset against such
resident's U.K. taxes, or, in certain circumstances, repaid. Under the Treaty,
a U.S. Unitholder, who is resident in the U.S. for the purposes of the Treaty,
may, in appropriate circumstances, be entitled to a repayment of that tax
credit, but any such repayment is subject to U.K. withholding tax at the rate
of 15% of the sum of the dividend and the credit. The tax credit, before such
withholding, is equal to one quarter of the dividend (the "Tax Credit
Amount" ). Although such a U.S. Unitholder who is resident in the U.S. for
the purposes of the Treaty and who held shares directly in a corporation
resident in the U.K. for the purposes of the Treaty, could generally claim a
refund of a portion of the Tax Credit Amount attributable to the dividend (a
"Treaty Payment" ) pursuant to the terms of the Treaty, the ability of
a U.S. Unitholder of Units in the United Kingdom Trust to claim such a Treaty
Payment is unclear where dividend payments are made directly to an entity such
as the United Kingdom Trust. Any claim for such a Treaty Payment would have to
be supported by evidence of such U.S. Unitholder's entitlement to the relevant
dividend. There is no established procedure for proving such entitlement where
the U.K. corporation pays the dividend to a person such as the United Kingdom
Trust unless a specific procedure is negotiated in advance with the U.K.
Inland Revenue. In the absence of agreeing such a special procedure,
Unitholders who are U.S. Persons should note that they may not in practice be
able to claim a Treaty Payment from the U.K. Inland Revenue.
Certain U.K. corporations which themselves receive income from other
jurisdictions which is subject to withholding of tax at source may elect to
pay some or all of their distributions as foreign income dividends. If a
company the shares of which are held in the United Kingdom Trust pays a
foreign income dividend, no tax credit will be attributable to such dividend.
Accordingly, a U.S. Unitholder would not be entitled to any repayment of a tax
credit under the Treaty.
Taxation of Capital Gains. U.S. Unitholders who are not resident nor
ordinarily resident for tax purposes in the U.K. will not be liable for U.K.
tax on capital gains realized on the disposal of their Units unless such Units
are used, held or acquired for the purposes of a trade, profession or vocation
carried on in the U.K. through a branch or agency or for the purposes of such
branch or agency.
U.K. Inheritance Tax. An individual Unitholder who is domiciled in the U.S.
for the purposes of the Estate Tax Treaty and who is not a national of the
U.K. for the purposes of the Estate Tax Treaty will generally not be subject
to U.K. inheritance tax in respect of Units in the United Kingdom Trust on the
individual's death or on a gift or other non-arm's length transfer of such
Units during the individual's lifetime provided that any applicable U.S.
federal gift or estate tax liability is paid, unless the Units are part of the
business property of a permanent establishment of the individual in the U.K.
or pertain to a fixed base in the U.K. used by an individual for the
performance of independent personal services. Where the Units have been placed
in trust by a settlor, the Units will generally not be subject to U.K.
inheritance tax if the settlor, at the time of settlement, was domiciled in
the U.S. for the purposes of the Estate Tax Treaty and was not a U.K.
national, provided that any applicable U.S. federal gift or estate tax
liability is paid. In the exceptional case where the Units are subject both to
U.K. inheritance tax and to U.S. federal gift or estate tax, the Estate Tax
Treaty generally provides for the tax paid in the U.K. to be credited against
tax paid in the U.S. or for tax paid in the U.S. to be credited against tax
payable in the U.K. based on priority rules set out in that Treaty.
Stamp Tax. In connection with a transfer of Securities in the United Kingdom
Trust, there is generally imposed a U.K. stamp duty or stamp duty reserve tax
payable upon transfer, which tax is usually imposed on the purchaser of such
Securities. Upon acquisition of the Securities in the United Kingdom Trust,
the Trust paid such tax. It is anticipated that upon the sale of such
Securities such tax will be paid by the purchaser thereof and not by the
United Kingdom Trust.
Hong Kong Taxation
The Sponsor has been advised that the following summary accurately describes
the Hong Kong tax consequences under existing law to U.S. Unitholders of Units
of the Hong Kong Trust. This discussion is for general purposes only and
assumes that such Unitholder is not carrying on a trade, profession or
business in Hong Kong and has no profits sourced in Hong Kong arising from the
carrying on of such trade, profession or business. Unitholders should consult
their tax advisers as to the Hong Kong tax consequences of ownership of the
Units of the Hong Kong Trust applicable to their particular circumstances.
Taxation of Dividends. Amounts in respect of dividends paid to Unitholders of
the Hong Kong Trust are not taxable and therefore will not be subject to the
deduction of any withholding tax.
Profits Tax. A Unitholder of the Hong Kong Trust (other than a person carrying
on a trade, profession or business in Hong Kong) will not be subject to
profits tax on any gain or profits made on the realization or other disposal
of his units.
Hong Kong Estate Duty. Units of the Hong Kong Trust will not give rise to a
liability to Hong Kong estate duty.
FUND OPERATING EXPENSES
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Fund. However, Van Kampen
American Capital Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive an annual supervisory fee, which is not to exceed the
amount set forth under "Summary of Essential Financial Information" ,
for providing portfolio supervisory services for the Fund. Such fee (which is
based on the number of Units of each Trust outstanding on January 1 of each
year except during the initial offering period in which event the calculation
is based on the number of Units of each Trust outstanding at the end of the
month of such calculation) may exceed the actual costs of providing such
supervisory services for these Trusts, but at no time will the total amount
received for portfolio supervisory services rendered to Series 1 and
subsequent series of Van Kampen Merritt Equity Opportunity Trust or its
successors (Van Kampen American Capital Equity Opportunity Trust) and to any
other unit investment trusts sponsored by the Sponsor for which the Supervisor
provides portfolio supervisory services in any calendar year exceed the
aggregate cost to the Supervisor of supplying such services in such year. In
addition, American Portfolio Evaluation Services, which is a division of Van
Kampen American Capital Investment Advisory Corp., shall receive for regularly
providing evaluation services to the Fund the annual per Unit evaluation fee
set forth under "Summary of Essential Financial Information" (which is
based on the number of Units of each Trust outstanding on January 1 of each
year for which such compensation relates except during the initial offering
period in which event the calculation is based on the number of Units of each
Trust outstanding at the end of the month of such calculation) for regularly
evaluating the Fund portfolios. The foregoing fees are payable as described
under "General" below. Both of the foregoing fees may be increased
without approval of the Unitholders by amounts not exceeding proportionate
increases under the category "All Services Less Rent of Shelter" in
the Consumer Price Index published by the United States Department of Labor
or, if such category is no longer published, in a comparable category. The
Sponsor will receive sales commissions and may realize other profits (or
losses) in connection with the sale of Units and the deposit of the Securities
as described under "Public Offering--Sponsor and Other Compensation" .
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from each Trust set forth under "Summary of Essential Financial
Information" (which is based on the number of Units of each Trust
outstanding at the end of the month of such calculation until September 8,
1996 at which time such calculation is based on the number of Units of each
Trust outstanding on such date) and in connection with the Foreign Trusts the
additional amounts set forth in footnote (8) in the "Summary of Essential
Financial Information" . The Trustee's fees are payable as described under
"General" below. The Trustee benefits to the extent there are funds
for future distributions, payment of expenses and redemptions in the Capital
and Income Accounts since these Accounts are non-interest bearing and the
amounts earned by the Trustee are retained by the Trustee. Part of the
Trustee's compensation for its services to each Trust is expected to result
from the use of these funds. Such fees may be increased without approval of
the Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. For a discussion of the
services rendered by the Trustee pursuant to its obligations under the Trust
Agreement, see "Rights of Unitholders--Reports Provided" and "Fund
Administration" .
Miscellaneous Expenses. Expenses incurred in establishing each Trust,
including the cost of the initial preparation of documents relating to such
Trust (including the Prospectus, Trust Agreement and closing documents),
federal and state registration fees, the initial fees and expenses of the
Trustee, legal and accounting expenses, payment of closing fees and any other
out-of-pocket expenses, will be paid by such Trust and amortized over the life
of such Trust. The following additional charges are or may be incurred by a
Trust: (a) normal expenses (including the cost of mailing reports to
Unitholders) incurred in connection with the operation of such Trust, (b) fees
of the Trustee for extraordinary services, (c) expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the
Sponsor, (d) various governmental charges, (e) expenses and costs of any
action taken by the Trustee to protect a Trust and the rights and interests of
Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of a Trust without negligence, bad
faith or wilful misconduct on its part, (g) foreign custodial and transaction
fees and (h) expenditures incurred in contacting Unitholders upon termination
of a Trust. The expenses set forth herein are payable as described under "
General" below.
General. During the initial offering period of each Trust, all of the fees and
expenses of such Trust will accrue on a daily basis and will be charged to
such Trust, in arrears, at the end of the initial offering period. After the
initial offering period, all of the fees and expenses of each Trust will
accrue on a daily basis and will be charged to such Trust, in arrears, on a
monthly basis on or before the tenth day of each month. The fees and expenses
are payable out of the Capital Account of the related Trust. When such fees
and expenses are paid by or owing to the Trustee, they are secured by a lien
on the related Trust's portfolio. It is expected that the balance in the
Capital Account of each Trust will be insufficient to provide for amounts
payable by the related Trust, and that Equity Securities will be sold from
such Trust to pay such amounts. These sales will result in capital gains or
losses to Unitholders. See "Taxation" and "Risk Factors" .
PUBLIC OFFERING
General. Units are offered at the Public Offering Price. During the initial
offering period and for secondary market transactions after the initial
offering period the Public Offering Price is based on the aggregate underlying
value of the Securities in each Trust's portfolio, the initial sales charge
described below, and cash, if any, in the Income and Capital Accounts held or
owned by such Trust. The initial sales charge is equal to the difference
between the maximum total sales charge for a Trust (2.9% and 2.7% of the
Public Offering Price for the Strategic Ten and Strategic Five Trusts,
respectively) and the maximum deferred sales charge ($0.19 per Unit). The
monthly deferred sales charge ($0.019 per Unit) will begin accruing on a daily
basis on September 9, 1996 and will continue to accrue through July 8, 1997.
The monthly deferred sales charge will be charged to each Trust, in arrears,
commencing October 9, 1996 and will be charged on the 9th day of each month
thereafter through July 9, 1997. Unitholders will be assessed that portion of
the deferred sales charge accrued from the time they became Unitholders of
record. Units purchased subsequent to the initial deferred sales charge
payment will be subject to only that portion of the deferred sales charge
payments not yet collected. This deferred sales charge will be paid from funds
in the Capital Account, if sufficient, or from the periodic sale of
Securities. The total maximum sales charge assessed to Unitholders on a per
Unit basis will be 2.90% and 2.70% of the Public Offering Price for the
Strategic Ten and Strategic Five Trusts, respectively (2.987% and 2.775% of
the aggregate value of the Securities in such Trusts less the deferred sales
charge). In the case of the Foreign Trusts, such underlying value is based on
the aggregate value of the Securities computed on the basis of the offering
side value of the relevant currency exchange rate expressed in U.S. dollars as
of the Evaluation Time during the initial offering period and on the bid side
value for secondary market transactions and in each case includes the
estimated costs of acquiring or liquidating the Securities, as the case may
be. The initial sales charge applicable to quantity purchases is reduced on a
graduated basis to any person acquiring 2,500 or more Units as follows:
<TABLE>
<CAPTION>
Aggregate Number of Percentage of Sales Charge
Units Purchased Reduction Per Unit
<S> <C>
2,500-4,999 0.15%
5,000-9,999 0.30
10,000-24,999 0.65
25,000 or more 0.90
</TABLE>
The sales charge reduction will primarily be the responsibility of the selling
broker, dealer or agent. This reduced sales charge structure will apply on all
purchases by the same person from any one dealer of units of Van Kampen
American Capital-sponsored unit investment trusts which are being offered in
the initial offering period (a) on any one day (the "Initial Purchase
Date" ) or (b) on any day subsequent to the Initial Purchase Date if (1)
the units purchased are of a unit investment trust purchased on the Initial
Purchase Date, and (2) the person purchasing the units purchased a sufficient
amount of units on the Initial Purchase Date to qualify for a reduced sales
charge on such date. In the event units of more than one trust are purchased
on the Initial Purchase Date, the aggregate dollar amount of such purchases
will be used to determine whether purchasers are eligible for a reduced sales
charge. Such aggregate dollar amount will be divided by the public offering
price per unit (on the day preceding the date of purchase) of each respective
trust purchased to determine the total number of units which such amount could
have purchased of each individual trust. Purchasers must then consult the
applicable trust's prospectus to determine whether the total number of units
which could have been purchased of a specific trust would have qualified for a
reduced sales charge and, if so qualified, the amount of such reduction.
Assuming a purchaser qualified for a sales charge reduction or reductions, to
determine the applicable sales charge reduction or reductions it is necessary
to accumulate all purchases made on the Initial Purchase Date and all
purchases made in accordance with (b) above. Units purchased in the name of
the spouse of a purchaser or in the name of a child of such purchaser under 21
years of age will be deemed for the purposes of calculating the applicable
sales charge to be additional purchases by the purchaser. The reduced sales
charges will also be applicable to a trustee or other fiduciary purchasing
securities for one or more trust estate or fiduciary accounts.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Public Offering--Unit
Distribution" ) by (1) investors who purchase Units through registered
investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management service, or provide such
services in connection with the establishment of an investment account for
which a comprehensive "wrap fee" charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who for at least 90 days, has been an
officer, director or bona fide employee of any firm offering Units for sale to
investors or their immediate family members (as described above) and (4)
officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive sales charge reductions for
quantity purchases.
During the initial offering period, unitholders of any Van Kampen American
Capital-sponsored unit investment trust may utilize their redemption or
termination proceeds to purchase Units of a Strategic Ten or Strategic Five
Trust subject to a reduced sales charge of 1.9% of the Public Offering Price
(all of which will be deferred as provided herein).
During the initial offering period of the Trusts, unitholders of unaffiliated
unit investment trusts having an investment strategy similar to the investment
strategy of the Strategic Ten or Strategic Five Trusts may utilize proceeds
received upon termination or upon redemption immediately preceding termination
of such unaffiliated trust to purchase Units of a Strategic Ten or Strategic
Five Trust subject to a sales charge of 1.9% of the Public Offering Price (all
of which will be deferred as provided herein).
Employees of Van Kampen American Capital Distributors, Inc. and its affiliates
may purchase Units of a Trust at the current Public Offering Price less the
underwriting commission or the dealer's concession in the absence of an
underwriting commission. Registered representatives of selling brokers,
dealers, or agents may purchase Units of a Trust at the current Public
Offering Price less the dealer's concession during the initial offering period
and for secondary market transactions.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
accordance with fluctuations in the prices of the underlying Securities in the
Trusts. In the case of the Foreign Trusts, the Public Offering Price per Unit
is based on the aggregate value of the Securities computed on the basis of the
offering side or bid side value of the relevant currency exchange rate
expressed in U.S. dollars during the initial offering period or secondary
market, respectively, and in each case includes the estimated costs of
acquiring or liquidating the Securities.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities in each
Trust an amount equal to the difference between the maximum total sales charge
for a Trust and the maximum deferred sales charge for a Trust and dividing the
sum so obtained by the number of Units in each Trust outstanding. In addition,
the Public Offering Price shall include the proportionate share of any cash
held in the Income and Capital Accounts in each Trust. Such price
determination as of the close of the relevant stock market on July 5, 1996
(for the United States Trusts) and July 8, 1996 (for the Foreign Trusts) was
made on the basis of an evaluation of the Securities in the Trusts prepared by
Interactive Data Corporation, a firm regularly engaged in the business of
evaluating, quoting or appraising comparable securities. Thereafter, the
Evaluator on each business day will appraise or cause to be appraised the
value of the underlying Securities in the applicable Trust as of the relevant
Evaluation Time and will adjust the Public Offering Price of the Units
commensurate with such valuation. Such Public Offering Price will be effective
for all orders received prior to the Evaluation Time on each such day. Orders
received by the Trustee or Sponsor for purchases, sales or redemptions after
that time, or on a day which is not a business day for the related Trust, will
be held until the next determination of price. The term "business day"
, as used herein and under "Rights of Unitholders--Redemption of Units"
, shall exclude Saturdays, Sundays and the following holidays as observed by
the New York Stock Exchange, Inc.: New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas
Day. In addition, for the United Kingdom Trust, "business day" shall
exclude the following U.K. holidays: Easter Monday, Bank Holiday, Spring Bank
Holiday, Summer Bank Holiday, and Boxing Day, and for the Hong Kong Trust "
business day" shall exclude the following Hong Kong holidays: Lunar New
Year's Day and the two following days, Ching Ming Festival, Easter Monday,
Queen's Birthday Holiday, Tuen Ng Festival, Summer Bank Holiday, Liberation
Day, Chinese Mid-Autumn Festival and the following day, Chang Yeung Festival,
Christmas Day and the following weekday. Unitholders who purchase Units
subsequent to the Initial Date of Deposit will pay an initial sales charge
equal to the difference between the maximum total sales charge of 2.9% of and
2.7% the Public Offering Price for the Strategic Ten and Strategic Five
Trusts, respectively, and the maximum deferred sales charge ($0.19 per Unit)
and will be assessed a deferred sales charge of $0.019 per Unit on each of the
remaining deferred sales charge payment dates as set forth in "Public
Offering--General" . The Sponsor currently does not intend to maintain a
secondary market after January 8, 1997.
The aggregate underlying value of the Equity Securities during the initial
offering period is determined on each business day by the Evaluator in the
following manner: if the Equity Securities are listed on a national securities
exchange, this evaluation is generally based on the closing sale prices on
that exchange (unless it is determined that these prices are inappropriate as
a basis for valuation) or, if there is no closing sale price on that exchange,
at the closing ask prices. If the Equity Securities are not so listed or, if
so listed and the principal market therefore is other than on the exchange,
the evaluation shall generally be based on the current ask price on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the value of
the Equity Securities on the ask side of the market or (c) by any combination
of the above. In the case of the Foreign Trusts, the value of the Equity
Securities during the initial offering period is based on the aggregate
underlying value of the Securities computed on the basis of the offering side
value of the relevant currency exchange rate expressed in U.S. dollars as of
the Evaluation Time and includes the costs of acquiring the Securities.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities in the Trusts
but rather the entire pool of Securities, taken as a whole, which are
represented by the Units.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by the Sponsor, broker-dealers and others at the
Public Offering Price. Upon the completion of the initial offering period,
Units repurchased in the secondary market, if any, may be offered by this
Prospectus at the secondary market Public Offering Price in the manner
described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Brokers, dealers and others will be allowed a concession or agency commission
in connection with the distribution of Units during the initial offering
period as set forth in the following table. A portion of such concessions or
agency commissions represents amounts paid by the Sponsor to such brokers,
dealers and others out of its own assets as additional compensation.
<TABLE>
Initial Offering Period
Concession or Agency Commission per Unit
<CAPTION>
Aggregate Number of
Units Purchased Strategic Ten Trusts Strategic Five Trust
<S> <C> <C>
1 - 2,499............. 2.00% 1.80%
2,500 - 4,999......... 1.85 1.65
5,000 - 9,999......... 1.70 1.50
10,000 - 24,999....... 1.45 1.30
25,000 or more........ 1.35 1.20
</TABLE>
Any quantity discount provided to investors will be borne by the selling
dealer or agent as indicated under "General" above. For transactions
involving Rollover Unitholders the total concession or agency commission will
amount to 1.0% per Unit (or such lesser amount resulting from quantity sales
discounts). For all secondary market transactions the total concession or
agency commission will amount to 2.0% and 1.8% per Unit for the Strategic
Ten and Strategic Five Trusts, respectively. Notwithstanding anything to
the contrary herein, in no case shall the total of any concessions, agency
commissions and any additional compensation allowed or paid to any broker,
dealer or other distributor of Units with respect to any individual
transaction exceed the total sales charge applicable to such transaction.
Certain commercial banks are making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge (equal to the
agency commission referred to above) is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units except as stated
herein. In connection with fully disclosed transactions with the Sponsor, the
minimum purchase requirement will be that number of Units set forth in the
contract between the Sponsor and the related broker or agent. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase
of Units and to change the amount of the concession or agency commission to
dealers and others from time to time. Brokers and dealers of a Trust, banks
and/or others are eligible to participate in a program in which such firms
receive from the Sponsor a nominal award for each of their registered
representatives who have sold a minimum number of units of unit investment
trusts created by the Sponsor during a specified time period. In addition, at
various times the Sponsor may implement other programs under which the sales
forces of brokers, dealers, banks and/or others may be eligible to win other
nominal awards for certain sales efforts, or under which the Sponsor will
reallow to any such brokers, dealers, banks and/or others that sponsor sales
contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by
such person at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying brokers, dealers, banks
and/or others for certain services or activities which are primarily intended
to result in sales of Units of the Fund. Such payments are made by the Sponsor
out of its own assets and not out of the assets of the Fund. These programs
will not change the price Unitholders pay for their Units or the amount that a
Trust will receive from the Units sold.
Sponsor and Other Compensation. The Sponsor will receive the gross sales
commission equal to 2.9% and 2.7% of the Public Offering Price of the Units in
the Strategic Ten and Strategic Five Trusts, respectively, less any reduced
sales charge for quantity purchases as described under "General"
above. Any such quantity discount provided to investors will be borne by the
selling dealer or agent.
In addition, the Sponsor will realize a profit or will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Securities by the Sponsor and the cost of such Securities to each Trust on the
Initial Date of Deposit as well as on subsequent deposits. See "
Portfolios" . The Sponsor has not participated as sole underwriter or as
manager or as a member of the underwriting syndicates or as an agent in a
private placement for any of the Securities in the Fund portfolios. The
Sponsor may further realize additional profit or loss during the initial
offering period as a result of the possible fluctuations in the market value
of the Securities in the Trusts after a date of deposit, since all proceeds
received from purchasers of Units.
Broker-dealers of the Trusts, banks and/or others may be eligible to
participate in a program in which such firms receive from the Sponsor a
nominal award for each of their representatives who have sold a minimum number
of units of unit investment trusts created by the Sponsor during a specified
time period. In addition, at various times the Sponsor may implement other
programs under which the sales forces of brokers, dealers, banks and/or others
may be eligible to win other nominal awards for certain sales efforts, or
under which the Sponsor will reallow to such brokers, dealers, banks and/or
others that sponsor sales contests or recognition programs conforming to
criteria established by the Sponsor, or participate in sales programs
sponsored by the Sponsor, an amount not exceeding the total applicable sales
charges on the sales generated by such persons at the public offering price
during such programs. Also, the Sponsor in its discretion may from time to
time pursuant to objective criteria established by the Sponsor pay fees to
qualifying entities for certain services or activities which are primarily
intended to result in sales of Units of the Trusts. Such payments are made by
the Sponsor out of its own assets, and not out of the assets of any Trust.
These programs will not change the price Unitholders pay for their Units or
the amount that a Trust will receive from the Units sold.
Cash, if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor currently intends
to maintain a secondary market for Units of the Trusts for the period
indicated. In so maintaining a market, the Sponsor will also realize profits
or sustain losses in the amount of any difference between the price at which
Units are purchased and the price at which Units are resold (which price
includes the applicable sales charge). In addition, the Sponsor will also
realize profits or sustain losses resulting from a redemption of such
repurchased Units at a price above or below the purchase price for such Units,
respectively.
Public Market. Although it is not obligated to do so, the Sponsor currently
intends to maintain a market for the Units offered hereby through January 8,
1997 and offer continuously to purchase Units at prices, subject to change at
any time, based upon the aggregate underlying value of the Equity Securities
in the Trusts (computed as indicated under "Offering Price" above and
"Rights of Unitholders--Redemption of Units" ). In the case of the
Foreign Trusts, the aggregate underlying value of the Equity Securities is
computed on the basis of the bid side value of the relevant currency exchange
rate (offer side during the initial offering period) expressed in U.S.
dollars. If the supply of Units exceeds demand or if some other business
reason warrants it, the Sponsor may either discontinue all purchases of Units
or discontinue purchases of Units at such prices. In the event that a market
is not maintained for the Units and the Unitholder cannot find another
purchaser, a Unitholder desiring to dispose of his Units will be able to
dispose of such Units by tendering them to the Trustee for redemption at the
Redemption Price. See "Rights of Unitholders--Redemption of Units" . A
Unitholder who wishes to dispose of his Units should inquire of his broker as
to current market prices in order to determine whether there is in existence
any price in excess of the Redemption Price and, if so, the amount thereof.
Units sold prior to such time as the entire deferred sales charge on such
Units has been collected will be assessed the amount of the remaining deferred
sales charge at the time of sale.
Tax-Sheltered Retirement Plans. Units of the Trusts are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for the individuals, Simplified Employee
Pension Plans for employees, qualified plans for self-employed individuals,
and qualified corporate pension and profit sharing plans for employees. The
purchase of Units of the Trusts may be limited by the plans' provisions and
does not itself establish such plans.
RIGHTS OF UNITHOLDERS
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trusts will be evidenced by certificates unless a
Unitholder or the Unitholder's registered broker-dealer makes a written
request to the Trustee that ownership be in book entry form. Units are
transferable by making a written request to the Trustee and, in the case of
Units evidenced by a certificate, by presentation and surrender of such
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign such written
request, and such certificate or transfer instrument, exactly as his name
appears on the records of the Trustee and on the face of any certificate
representing the Units to be transferred with the signature guaranteed by a
participant in the Securities Transfer Agents Medallion Program ("
STAMP" ) or such other signature guarantee program in addition to, or in
substitution for, STAMP as may be accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Certificates will be
issued in denominations of one Unit or any whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Income and Capital. Any dividends received by a Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account of such Trust. Other receipts (e.g., capital gains, proceeds
from the sale of Securities, etc.) are credited to the Capital Account of such
Trust. Proceeds from the sale of Securities made to meet redemptions of Units
shall be segregated within the Capital Account of a Trust from proceeds from
the sale of Securities made to satisfy the fees, expenses and charges of such
Trust. In the case of the Foreign Trusts, dividends to be credited to such
accounts are first converted into U.S. dollars at the applicable exchange rate.
The Trustee will distribute any income received with respect to any of the
Securities in a Trust on or about the Income Account Distribution Dates to
Unitholders of record on the preceding Income Account Record Dates. See "
Summary of Essential Financial Information" . Proceeds received on the sale
of any Securities in a Trust, to the extent not used to meet redemptions of
Units, pay the deferred sales charge or pay fees and expenses, will be
distributed semi-annually on the Capital Account Distribution Dates to
Unitholders of record on the preceding Capital Account Record Dates. Proceeds
received from the disposition of any of the Securities after a record date and
prior to the following distribution date will be held in the Capital Account
of the appropriate Trust and not distributed until the next distribution date
applicable to such Capital Account. The Trustee is not required to pay
interest on funds held in the Capital or Income Accounts (but may itself earn
interest thereon and therefore benefits from the use of such funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account. Persons who
purchase Units will commence receiving distributions only after such person
becomes a record owner. Notification to the Trustee of the transfer of Units
is the responsibility of the purchaser, but in the normal course of business
such notice is provided by the selling broker-dealer.
At the end of the initial offering period for each Trust and on or before the
tenth day of each month thereafter, the Trustee will deduct from the Capital
Account of the appropriate Trust amounts necessary to pay the fees and
expenses of such Trust (as determined on the basis set forth under "Fund
Operating Expenses" ). The Trustee also may withdraw from the Income and
Capital Accounts such amounts, if any, as it deems necessary to establish a
reserve for any governmental charges payable out of each Trust. Amounts so
withdrawn shall not be considered a part of such Trust's assets until such
time as the Trustee shall return all or any part of such amounts to the
appropriate accounts. In addition, the Trustee may withdraw from the Income
and Capital Accounts of the appropriate Trust such amounts as may be necessary
to cover redemptions of Units.
It is anticipated that the deferred sales charge will be collected from the
Capital Account. To the extent that amounts in the Capital Account are
insufficient to satisfy the then current deferred sales charge obligation,
Equity Securities will be sold to meet such shortfall. Distributions of
amounts necessary to pay the deferred portion of the sales charge will be made
to an account maintained by the Trustee for purposes of satisfying
Unitholders' deferred sales charge obligations.
Reinvestment Option. Unitholders of a Trust will initially have each
distribution of dividend income, capital gains and/or principal on their Units
automatically reinvested in additional Units of such Trust under the "
Automatic Reinvestment Option" (to the extent Units may be lawfully
offered for sale in the state in which the Unitholder resides). Brokers and
dealers who distribute Units to Unitholders pursuant to the Automatic
Reinvestment Option must do so via the Dividend Reinvestment Service through
the Depository Trust Company. In order for a broker or dealer to utilize the
Automatic Reinvestment Option on behalf of a Unitholder, the broker or dealer
must have a PTS terminal equipped with the Elective Dividend System function
(EDS) prior to the first Record Date set forth under "Summary of Essential
Financial Information" . Unitholders receiving Units of a Trust pursuant to
participation in the Automatic Reinvestment Option will be subject to the
remaining deferred sales charge payments due on Units (assuming for these
purposes such Units had been outstanding during the primary offering period).
Unitholders may also elect to receive distributions of dividend income,
capital gains and/or principal on their Units in cash. To receive cash, a
Unitholder may either contact his or her broker or agent or file with the
Trustee a written notice of election at least five days prior to the Record
Date for which the first distribution is to apply. A Unitholder's election to
receive cash will apply to all Units of a Trust owned by such Unitholder and
such election will remain in effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market" ) or,
until such time as additional Units cease to be issued by a Trust (see "
The Fund" ), distributions may be reinvested in such additional Units. If
Units are unavailable in the secondary market, distributions which would
otherwise have been reinvested shall be paid in cash to the Unitholder on the
applicable Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made at the net asset value for Units of a Trust as of the Evaluation Time on
the related Income or Capital Account Distribution Dates. Under the
reinvestment plan, a Trust will pay the Unitholder's distributions to the
Trustee which in turn will purchase for such Unitholder full and fractional
Units of a Trust and will send such Unitholder a statement reflecting the
reinvestment.
Unitholders may also elect to have each distribution of interest income,
capital gains and/or principal on their Units automatically reinvested in
shares of any Van Kampen American Capital mutual funds (except for B shares)
which are registered in the Unitholder's state of residence. Such mutual funds
are hereinafter collectively referred to as the "Reinvestment Funds" .
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181. Texas residents who desire to reinvest may request that a
broker-dealer registered in Texas send the prospectus relating to the
respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date. Unitholders with an existing Guaranteed Reinvestment
Option (GRO) Program account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new GRO
account which allows purchases of Reinvestment Fund shares at net asset value
as described above. Confirmations of all reinvestments by a Unitholder into a
Reinvestment Fund will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
The Sponsor, each Reinvestment Fund, and its investment adviser shall have the
right to suspend or terminate the reinvestment plan at any time.
Reports Provided. The Trustee shall furnish Unitholders of a Trust in
connection with each distribution a statement of the amount of income and the
amount of other receipts (received since the preceding distribution), if any,
being distributed, expressed in each case as a dollar amount representing the
pro rata share of each Unit of a Trust outstanding. Within a reasonable period
of time after the end of each calendar year, the Trustee shall furnish to each
person who at any time during the calendar year was a registered Unitholder of
a Trust a statement (i) as to the Income Account: income received, deductions
for applicable taxes and for fees and expenses of such Trust, for redemptions
of Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Capital Account: the
dates of disposition of any Securities and the net proceeds received
therefrom, deductions for payment of applicable taxes, fees and expenses of
such Trust held for distribution to Unitholders of record as of a date prior
to the determination and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Securities held by such Trust
and the number of Units of such Trust outstanding on the last business day of
such calendar year; (iv) the Redemption Price per Unit of such Trust based
upon the last computation thereof made during such calendar year; and (v)
amounts actually distributed during such calendar year from the Income and
Capital Accounts of such Trust, separately stated, expressed as total dollar
amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its unit investment trust division office at 101
Barclay Street, 20th Floor, New York, New York 10286 and, in the case of Units
evidenced by a certificate, by tendering such certificate to the Trustee, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as described above (or by providing satisfactory indemnity, as in
connection with lost, stolen or destroyed certificates) and by payment of
applicable governmental charges, if any. No redemption fee will be charged. On
the third business day following such tender, the Unitholder will be entitled
to receive in cash (unless the redeeming Unitholder in a United States Trust
elects an In Kind Distribution as described below) an amount for each Unit
equal to the Redemption Price per Unit next computed after receipt by the
Trustee of such tender of Units and in the case of the Foreign Trusts
converted into U.S. dollars as of the Evaluation Time set forth under "
Summary of Essential Financial Information" . The "date of tender"
is deemed to be the date on which Units are received by the Trustee, except
that with respect to Units received after the applicable Evaluation Time the
date of tender is the next business day as defined under "Public
Offering--Offering Price" and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption price
computed on that day. The London Stock Exchange and the Hong Kong Exchange are
open for trading on certain days which are U.S. holidays on which the Fund
will not transact business. The Securities will continue to trade on those
days and thus the value of the Foreign Trusts may be significantly affected on
days when a Unitholder cannot sell or redeem his Units.
The Trustee is empowered to sell Securities of a Trust in order to make funds
available for redemption if funds are not otherwise available in the Capital
and Income Accounts of such Trust to meet redemptions. The Securities to be
sold will be selected by the Trustee from those designated on a current list
provided by the Supervisor for this purpose. Units so redeemed shall be
cancelled. Units tendered for redemption prior to such time as the entire
deferred sales charge on such Units has been collected will be assessed the
amount of the remaining deferred sales charge at the time of redemption.
Unitholders in a United States Trust tendering 1,000 or more Units for
redemption may request from the Trustee in lieu of a cash redemption an in
kind distribution ("In Kind Distribution" ) of an amount and value of
Securities per Unit equal to the Redemption Price per Unit as determined as of
the evaluation next following the tender. An In Kind Distribution on
redemption of Units will be made by the Trustee through the distribution of
each of the Securities in book-entry form to the account of the Unitholder's
bank or broker-dealer at Depository Trust Company. The tendering Unitholder
will receive his pro rata number of whole shares of each of the Securities
comprising a United States Trust portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Unitholder is entitled.
The Trustee may adjust the number of shares of any issue of Securities
included in a Unitholder's In Kind Distribution to facilitate the distribution
of whole shares, such adjustment to be made on the basis of the value of
Securities on the date of tender. If funds in the Capital Account are
insufficient to cover the required cash distribution to the tendering
Unitholder, the Trustee may sell Securities according to the criteria
discussed above.
To the extent that Securities are redeemed in kind or sold, the size of a
Trust will be, and the diversity of such Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result
in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the portfolio at the time of
redemption. Special U.S. federal income tax consequences will result if a
Unitholder in a United States Trust requests an In Kind Distribution. See "
Taxation" .
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the aggregate underlying value of
the Equity Securities in each Trust, plus or minus cash, if any, in the Income
and Capital Accounts of such Trust (net of applicable commissions and stamp
taxes in the case of the Foreign Trusts). On the Initial Date of Deposit, the
Public Offering Price per Unit (which includes the sales charge) exceeded the
values at which Units could have been redeemed by the amounts shown under "
Summary of Essential Financial Information" . The Redemption Price per Unit
is the pro rata share of each Unit in each Trust determined on the basis of
(i) the cash on hand in such Trust, (ii) the value of the Securities in such
Trust and (iii) dividends receivable on the Equity Securities of such Trust
trading ex-dividend as of the date of computation, less (a) amounts
representing taxes or other governmental charges payable out of such Trust and
(b) the accrued expenses of such Trust. The Evaluator may determine the value
of the Equity Securities in a Trust in the following manner: if the Equity
Securities are listed on a national securities exchange, this evaluation is
generally based on the closing sale prices on that exchange (unless it is
determined that these prices are inappropriate as a basis for valuation) or,
if there is no closing sale price on that exchange, at the closing bid prices.
If the Equity Securities of a Trust are not so listed or, if so listed and the
principal market therefore is other than on the exchange, the evaluation shall
generally be based on the current bid price on the over-the-counter market
(unless these prices are inappropriate as a basis for evaluation). If current
bid prices are unavailable, the evaluation is generally determined (a) on the
basis of current bid prices for comparable securities, (b) by appraising the
value of the Equity Securities of such Trust on the bid side of the market or
(c) by any combination of the above. In the case of the Foreign Trusts, the
value of the Equity Securities in the secondary market is based on the
aggregate value of the Securities computed on the basis of the bid side value
of the relevant currency exchange rate expressed in U.S. dollars as of the
Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in a Trust is not reasonably practicable, or for such other periods
as the Securities and Exchange Commission may by order permit.
Special Redemption and Rollover in New Fund. It is expected that a special
redemption will be made of all Units of each Trust held by any Unitholder (a
"Rollover Unitholder" ) who affirmatively notifies the Trustee in
writing that he desires to rollover his Units by the Rollover Notification
Date specified in the "Summary of Essential Financial Information" .
All Units of Rollover Unitholders will be redeemed on the Special Redemption
Date and the underlying Securities will be distributed to the Distribution
Agent on behalf of the Rollover Unitholders. On the Special Redemption Date
(as set forth in "Summary of Essential Financial Information" ), the
Distribution Agent will be required to sell all of the underlying Securities
on behalf of Rollover Unitholders. The sales proceeds will be net of brokerage
fees, governmental charges or any expenses involved in the sales.
The Distribution Agent will attempt to sell the Securities as quickly as is
practicable on the Special Redemption Date. The Sponsor does not anticipate
that the period will be longer than one day given that the Securities are
usually highly liquid. However, certain of the factors discussed under "
Risk Factors" could affect the ability of the Sponsor to sell the
Securities of the Foreign Trusts and thereby affect the length of the sale
period somewhat. The liquidity of any Security depends on the daily trading
volume of the Security and the amount that the Sponsor has available for sale
on any particular day.
Pursuant to an exemptive order, each terminating Strategic Ten Trust or
Strategic Five Trust (and the Distribution Agent on behalf of Rollover
Unitholders) can sell Securities to a New Series if those Securities continue
to meet the Strategic Ten Strategy or Strategic Five Strategy by remaining
among the ten highest dividend-yielding securities in their respective index
or the 2nd through 6th lowest share price of the ten highest dividend-yielding
securities of the respective index. The exemption will enable each Trust to
eliminate commission costs on these transactions. The price for those
securities will be the closing sale price on the sale date on the exchange
where the Securities are principally traded, as certified by the Trustee.
The Rollover Unitholders' proceeds will be invested in the next subsequent
series of the Strategic Ten Trust or Strategic Five Trust (the "1997
Fund" ), if then being offered, the portfolios of which will contain the
ten highest yielding stocks in the Dow Jones Industrial Average, FT Index, and
Hang Seng Index, respectively, as of the close of business three business days
prior to the initial date of deposit of the 1997 Fund and the stocks having
the 2nd through 6th lowest share price of the ten highest yielding stocks in
the Dow Jones Industrial Average as of such date. The proceeds of redemption
will be used to buy 1997 Fund units in the appropriate portfolio as the
proceeds become available.
The Sponsor intends to create the 1997 Fund shortly prior to the Special
Redemption Date, dependent upon the availability and reasonably favorable
prices of the Securities included in the 1997 Fund portfolios, and it is
intended that Rollover Unitholders will be given first priority to purchase
the 1997 Fund units. There can be no assurance, however, as to the exact
timing of the creation of the 1997 Fund units or the aggregate number of 1997
Fund units in each trust portfolio which the Sponsor will create. The Sponsor
may, in its sole discretion, stop creating new units in each trust portfolio
at any time it chooses, regardless of whether all proceeds of the Special
Redemption have been invested on behalf of Rollover Unitholders. Cash which
has not been invested on behalf of the Rollover Unitholders in 1997 Fund units
will be distributed shortly after the Special Redemption Date.
Any Rollover Unitholder may thus be redeemed out of the Fund and become a
holder of an entirely different unit investment trust in the 1997 Fund with a
different portfolio of Securities. The Rollover Unitholders' Units will be
redeemed and the distributed Securities shall be sold on the Special
Redemption Date. In accordance with the Rollover Unitholders' offer to
purchase the 1997 Fund units, the proceeds of the sales (and any other cash
distributed upon redemption) will be invested in the 1997 Fund in the
appropriate portfolio at the public offering price, including the applicable
sales charge per Unit (which for Rollover Unitholders is currently expected to
be 1.9% of the Public Offering Price of the 1997 Fund units).
This process of redemption and rollover into a new trust is intended to allow
for the fact that the portfolios selected by the Sponsor are chosen on the
basis of growth and income potential only for a year, at which point a new
portfolio is chosen. It is contemplated that a similar process of redemption
and rollover in new unit investment trusts will be available for the 1997 Fund
and each subsequent series of the Fund, approximately a year after that
Series' creation.
There can be no assurance that the redemption and rollover will avoid any
negative market price consequences stemming from the trading of large volumes
of securities and of the underlying Securities. The above procedures may be
insufficient or unsuccessful in avoiding such price consequences. In fact,
market price trends may make it advantageous to sell or buy more quickly or
more slowly than permitted by these procedures.
It should also be noted that Rollover Unitholders may realize taxable capital
gains on the Special Redemption and Rollover but, in certain circumstances,
will not be entitled to a deduction for certain capital losses and, due to the
procedures for investing in the subsequent Strategic Ten Trust or Strategic
Five Trust, no cash would be distributed at that time to pay any taxes.
Included in the cash for the Special Redemption and Rollover will be any
amount of cash attributable to the last distribution of dividend income;
accordingly, Rollover Unitholders also will not have such cash distributed to
pay any taxes. See "Taxation" . Unitholders who do not inform the
Distribution Agent that they wish to have their Units so redeemed and
liquidated will not realize capital gains or losses due to the Special
Redemption and Rollover and will not be charged any additional sales charge.
The Sponsor may for any reason, in its sole discretion, decide not to sponsor
the 1997 Fund or any subsequent series of the Fund, without penalty or
incurring liability to any Unitholder. If the Sponsor so decides, the Sponsor
shall notify the Unitholders before the Special Redemption Date would have
commenced. The Sponsor may modify the terms of the 1997 Fund or any subsequent
series of the Fund. The Sponsor may also modify the terms of the Special
Redemption and Rollover in the 1997 Fund upon notice to the Unitholders prior
to the Rollover Notification Date specified in the related "Summary of
Essential Financial Information" .
FUND ADMINISTRATION
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any Units
tendered for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The portfolios of the Fund are not "managed"
by the Sponsor, Supervisor or the Trustee; their activities described herein
are governed solely by the provisions of the Trust Agreement. Traditional
methods of investment management for a managed fund typically involve frequent
changes in a portfolio of securities on the basis of economic, financial and
market analyses. The Fund, however, will not be managed. The Trust Agreement,
however, provides that the Sponsor may (but need not) direct the Trustee to
dispose of an Equity Security in certain events such as the issuer having
defaulted on the payment on any of its outstanding obligations or the price of
an Equity Security has declined to such an extent or other such credit factors
exist so that in the opinion of the Sponsor the retention of such Securities
would be detrimental to a Trust. Pursuant to the Trust Agreement and with
limited exceptions, the Trustee may sell any securities or other properties
acquired in exchange for Equity Securities such as those acquired in
connection with a merger or other transaction. If offered such new or
exchanged securities or property, the Trustee shall reject the offer. However,
in the event such securities or property are nonetheless acquired by a Trust,
they may be accepted for deposit in such Trust and either sold by the Trustee
or held in such Trust pursuant to the direction of the Sponsor (who may rely
on the advice of the Supervisor). Proceeds from the sale of Securities (or any
securities or other property received by the Fund in exchange for Equity
Securities) are credited to the Capital Account for distribution to
Unitholders, pay an accrued deferred sales charge or to meet redemptions.
Except as stated under "Trust Portfolios" for failed securities and as
provided in this paragraph, the acquisition by a Trust of any securities other
than the Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Securities designated by the Supervisor, or if no
such designation has been made, in its own discretion, for the purpose of
redeeming Units of a Trust tendered for redemption and the payment of expenses.
The Supervisor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares of
individual issues of Equity Securities in a Trust. To the extent this is not
practicable, the composition and diversity of the Equity Securities in such
Trust may be altered. In order to obtain the best price for a Trust, it may be
necessary for the Supervisor to specify minimum amounts (generally 100 shares)
in which blocks of Equity Securities are to be sold.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor
and the Trustee), provided, however, that the Trust Agreement may not be
amended to increase the number of Units (except as provided in the Trust
Agreement). The Trust Agreement may also be amended in any respect by the
Trustee and Sponsor, or any of the provisions thereof may be waived, with the
consent of the holders representing 51% of the Units of a Trust then
outstanding, provided that no such amendment or waiver will reduce the
interest in such Trust of any Unitholder without the consent of such
Unitholder or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of all Unitholders. The Trustee shall
advise the Unitholders of any amendment promptly after execution thereof.
A Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units of such Trust then outstanding or by the Trustee when the
value of the Equity Securities owned by a Trust, as shown by any evaluation,
is less than that amount set forth under Minimum Termination Value in the "
Summary of Essential Financial Information." A Trust will be liquidated by
the Trustee in the event that a sufficient number of Units of such Trust not
yet sold are tendered for redemption by the Sponsor, so that the net worth of
such Trust would be reduced to less than 40% of the value of the Securities at
the time they were deposited in such Trust. If a Trust is liquidated because
of the redemption of unsold Units by the Sponsor, the Sponsor will refund to
each purchaser of Units the entire sales charge paid by such purchaser. The
Trust Agreement will terminate upon the sale or other disposition of the last
Security held thereunder, but in no event will it continue beyond the
Mandatory Termination Date stated under "Summary of Essential Financial
Information" .
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Fund. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. The Sponsor shall direct the liquidation of the Securities in such
manner as to effectuate orderly sales and a minimal market impact. In the
event the Sponsor does not so direct, the Securities shall be sold within a
reasonable period and in such manner as the Trustee, in its sole discretion,
shall determine. At least 30 days before the Mandatory Termination Date the
Trustee will provide written notice of any termination to all Unitholders of
the appropriate Trust and in the case of a United States Trust will include
with such notice a form to enable Unitholders owning 1,000 or more Units to
request an In Kind Distribution rather than payment in cash upon the
termination of such Trust. To be effective, this request must be returned to
the Trustee at least five business days prior to the Mandatory Termination
Date. On the Mandatory Termination Date (or on the next business day
thereafter if a holiday) the Trustee will deliver each requesting Unitholder's
pro rata number of whole shares of each of the Securities in a United States
Trust to the account of the broker-dealer or bank designated by the Unitholder
at Depository Trust Company. The value of the Unitholder's fractional shares
of the Securities will be paid in cash. Unitholders with less than 1,000
Units, Unitholders in a United States Trust with 1,000 or more Units not
requesting an In Kind Distribution and Unitholders who do not elect the
Rollover Option will receive a cash distribution from the sale of the
remaining Securities within a reasonable time following the Mandatory
Termination Date. Regardless of the distribution involved, the Trustee will
deduct from the funds of the appropriate Trust any accrued costs, expenses,
advances or indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee, costs of liquidation and any amounts required as
a reserve to provide for payment of any applicable taxes or other governmental
charges. Any sale of Securities in a Trust upon termination may result in a
lower amount than might otherwise be realized if such sale were not required
at such time. The Trustee will then distribute to each Unitholder of each
Trust his pro rata share of the balance of the Income and Capital Accounts of
such Trust.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent series of the Strategic Ten and Strategic Five Trusts
pursuant to the Rollover Option (see "Rights of Unitholders--Special
Redemption and Rollover in New Fund" ). There is, however, no assurance
that units of any new series of such Fund will be offered for sale at that
time, or if offered, that there will be sufficient units available for sale to
meet the requests of any or all Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence in the performance of their
duties or by reason of their reckless disregard of their obligations and
duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason of
the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and shall not be liable for any action taken by it in good faith
under the Trust Agreement. The Trustee shall not be liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or
upon the interest thereon or upon it as Trustee under the Trust Agreement or
upon or in respect of a Trust which the Trustee may be required to pay under
any present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Trust Agreement
contains other customary provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. Van Kampen American Capital
Distributors, Inc. is primarily owned by Clayton, Dubilier & Rice, Inc., a New
York-based private investment firm. Van Kampen American Capital Distributors,
Inc. management owns a significant minority equity position. On June 21, 1996
VK/AC Holding, Inc., the indirect corporate parent of the Sponsor, entered
into an Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM
Holdings II, Inc. and MSAM Acquisition Inc., pursuant to which MSAM
Acquisition Inc. will be merged with and into VK/AC Holding, Inc. and VK/AC
Holding, Inc. will be the surviving corporation. MSAM Acquisition Inc. is a
wholly owned subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly
owned subsidiary of Morgan Stanley Group Inc. Subject to a number of
conditions being met, it is currently anticipated that a closing will occur in
November of 1996. Thereafter, VK/AC Holding, Inc. and its affiliated entities,
including the Sponsor, shall be part of the Morgan Stanley Group Inc. Van
Kampen American Capital Distributors, Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds with roots in money
management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (708) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of March 31, 1996 the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$123,020,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trusts. The information is included herein only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations. More detailed financial
information will be made available by the Sponsor upon request.)
As of March 31, 1996, the Sponsor and its affiliates managed or supervised
approximately $57.2 billion of investment products, of which over $24.8
billion is invested in municipal securities. The Sponsor and its affiliates
managed $45.4 billion of assets, consisting of $22.5 billion for 63 open-end
mutual funds (of which 47 are distributed by Van Kampen American Capital
Distributors, Inc.), $11.9 billion for 38 closed-end funds and $5.6 billion
for 93 institutional accounts. The Sponsor has also deposited approximately
$26 billion of unit investment trusts. All Van Kampen American Capital
open-end funds, closed-end funds and unit investment trusts are professionally
distributed by leading financial firms nationwide. Based on cumulative assets
deposited, the Sponsor believes that it is the largest sponsor of insured
municipal unit investment trusts, primarily through the success of its Insured
Municipals Income Trust(R)or the IM-IT(R)trust. The Sponsor also
provides surveillance and evaluation services at cost for approximately $13
billion of unit investment trust assets outstanding. Since 1976, the Sponsor
has serviced over two million investor accounts, opened through retail
distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (i) appoint
a successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286 (800) 221-7668. The Bank of New York is
subject to supervision and examination by the Superintendent of Banks of the
State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for each Trust. Such
records shall include the name and address of, and the number of Units of each
Trust held by, every Unitholder of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute,
rule or regulation (see "Rights of Unitholders--Reports Provided" ).
The Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Kroll & Tract has acted as counsel for the Trustee.
Independent Certified Public Accountants. The statements of condition and the
related securities portfolios at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton LLP, independent certified
public accountants, as set forth in their report in this Prospectus, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Equity Opportunity Trust,
Series 35:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen American Capital Equity Opportunity Trust, Series 35
as of July 8, 1996. The statements of condition and portfolios are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of irrevocable letters of credit deposited to
purchase securities by correspondence with the Trustee. An audit also includes
assessing the accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen American Capital
Equity Opportunity Trust, Series 35 as of July 8, 1996, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
July 8, 1996
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 35
STATEMENTS OF CONDITION
As of July 8, 1996
<CAPTION>
Strategic Strategic Strategic Strategic
Ten Ten Ten Five
United United Hong United
INVESTMENT IN SECURITIES States Kingdom Kong States
Trust Trust Trust Trust
<S> <C> <C> <C> <C>
Contracts to purchase Securities <F1>.......... $ 145,177 $ 148,569 $ 241,871 $ 145,020
Organizational costs <F2>...................... 45,423 28,165 21,345 29,303
Total.......................................... $ 190,600 $ 176,734 $ 263,216 $ 174,323
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--..................................
Accrued organizational costs <F2>.............. $ 45,423 $ 28,165 $ 21,345 $ 29,303
Deferred sales charge liability <F3>........... 2,850 2,850 4,750 2,850
Interest of Unitholders-- .....................
Cost to investors <F4>......................... 146,550 150,000 244,250 146,100
Less: Gross underwriting commission <F4><F5>... 4,223 4,281 7,129 3,930
Net interest to Unitholders <F4>............... 142,327 145,719 237,121 142,170
Total.......................................... $ 190,600 $ 176,734 $ 263,216 $ 174,323
<FN>
<F1>The aggregate value of the Securities listed under "Portfolios" herein
and their cost to each Trust are the same. The value of the Securities is
determined by Interactive Data Corporation on the bases set forth under "
Public Offering--Offering Price" . The contracts to purchase Securities are
collateralized by separate irrevocable letters of credit of $145,177,
$148,569, $241,871 and $145,020 which have been deposited with the Trustee
with respect to the Strategic Ten United States Trust, Strategic Ten United
Kingdom Trust, Strategic Ten Hong Kong Trust and Strategic Five United States
Trust.
<F2>Each Trust will bear all or a portion of its organizational costs, which will
be deferred and amortized to interest to Unitholders over the life of such
Trust. Organizational costs have been estimated based on a projected Trust
size of $30,000,000, $3,000,000, $3,000,000 and $15,000,000 for the
Strategic Ten United States Trust, Strategic Ten United Kingdom Trust,
Strategic Ten Hong Kong Trust and Strategic Five United States Trust. To the
extent a Trust is larger or smaller, the estimate will vary. Securities will
be sold to pay organizational costs.
<F3>Represents the amount of mandatory distributions from a Trust on the bases set
forth under "Public Offering" .
<F4>The aggregate public offering price and the aggregate initial sales charge are
computed on the bases set forth under "Public Offering--Offering Price"
and "Public Offering--Sponsor and Other Compensation" and assume all
single transactions involve less than 2,500 Units. For single transactions
involving 2,500 or more Units, the sales charge is reduced (see "Public
Offering--General" ) resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
<F5>Assumes the maximum sales charge.
</TABLE>
<TABLE>
STRATEGIC TEN TRUST UNITED STATES PORTFOLIO, SERIES 9
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 35)
as of the Initial Date of Deposit: July 8, 1996
<CAPTION>
Estimated
Annual Cost of
Number Market Value Dividends per Securities
of Shares Name of Issuer <F1> per Share <F2> Share <F2> to Trust <F2>
<S> <C> <C> <C> <C>
212 Caterpillar, Inc. $ 68.125 $ 1.60 $ 14,442.50
247 Chevron Corporation 58.875 2.00 14,542.13
185 E.I. du Pont de Nemours & Company 78.625 2.28 14,545.63
166 Exxon Corporation 88.000 3.16 14,608.00
285 General Motors Corporation 50.125 1.60 14,285.63
391 International Paper Company 37.250 1.00 14,564.75
215 Minnesota Mining & Manufacturing Company 67.750 1.96 14,566.25
171 J.P. Morgan & Company, Inc. 84.125 3.24 14,385.38
142 Philip Morris Companies, Inc. 101.875 4.00 14,466.25
171 Texaco, Inc. 86.375 3.20 14,770.13
2,185 $ 145,176.65
</TABLE>
<TABLE>
STRATEGIC TEN TRUST UNITED KINGDOM PORTFOLIO, SERIES 9
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 35)
as of the Initial Date of Deposit: July 8, 1996
<CAPTION>
Estimated
Annual
Dividends Cost of
Number Market Value per Share Securities
of Shares Name of Issuer <F1> per Share <F2> <F2> to Trust <F2>
<S> <C> <C> <C> <C>
2,123 Allied Domecq Plc $ 7.006 $ 0.35 $ 14,872.82
3,062 BICC Plc 4.847 0.21 14,842.45
3,812 BTR Plc 3.862 0.26 14,723.54
5,273 British Gas Plc 2.807 0.24 14,799.95
2,792 British Telecom Plc 5.347 0.31 14,930.16
1,077 Glaxo Wellcome Plc 13.651 0.58 14,701.97
5,518 Hanson Plc 2.682 0.20 14,797.35
1,519 National Westminster Bank Plc 9.788 0.42 14,868.64
1,994 Peninsular & Oriental Steam Navigation Company 7.505 0.50 14,965.34
2,391 Royal Insurance Holdings Plc 6.301 0.26 15,066.37
29,561 $ 148,568.59
</TABLE>
<TABLE>
STRATEGIC TEN TRUST HONG KONG PORTFOLIO, SERIES 9
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 35)
as of the Initial Date of Deposit: July 8, 1996
<CAPTION>
Estimated
Annual Cost of
Number Market Value Dividends per Securities
of Shares Name of Issuer <F1> per Share <F2> Share <F2> to Trust <F2>
<S> <C> <C> <C> <C>
20,500 Amoy Properties Ltd. $ 1.181 $ 0.06 $ 24,204.25
5,500 China Light & Power Company 4.411 0.17 24,262.64
13,000 Hang Lung Development Company 1.861 0.09 24,204.38
8,400 Hong Kong Aircraft Engineering Co. Ltd. 2.854 0.10 23,977.19
7,500 Hong Kong Electric Holdings Ltd. 3.159 0.14 23,695.00
14,000 Hong Kong Telecommunications 1.739 0.09 24,340.48
8,000 Hysan Development Company Ltd. 2.952 0.14 23,614.62
46,000 Oriental Press Group 0.542 0.02 24,917.84
40,000 Shun Tak Holdings Ltd. 0.600 0.04 24,003.14
38,000 South China Morning Post 0.649 0.04 24,651.88
200,900 $ 241,871.42
</TABLE>
<TABLE>
STRATEGIC FIVE TRUST UNITED STATES PORTFOLIO, SERIES 3
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 35)
as of the Initial Date of Deposit: July 8, 1996
<CAPTION>
Estimated
Annual Cost of
Number Market Value Dividends per Securities
of Shares Name of Issuer <F1> per Share <F2> Share <F2> to Trust <F2>
<S> <C> <C> <C> <C>
424 Caterpillar, Inc. $ 68.125 $ 1.60 $ 28,885.00
495 Chevron Corporation 58.875 2.00 29,143.13
371 E.I. du Pont de Nemours & Company 78.625 2.28 29,169.88
571 General Motors Corporation 50.125 1.60 28,621.38
431 Minnesota Mining & Manufacturing Company 67.750 1.96 29,200.25
2,292 $ 145,019.64
NOTES TO PORTFOLIOS
<FN>
<F1>All of the Securities are represented by "regular way" contracts for
the performance of which an irrevocable letter of credit has been deposited
with the Trustee. At the Initial Date of Deposit, the Sponsor has assigned to
the Trustee all of its right, title and interest in and to such Securities.
Contracts to acquire Securities were entered into on July 5, 1996 and July 8,
1996 and are expected to settle on July 10 , 1996 and July 15, 1996. (see "
The Fund" ).
<F2>The market value of each of the Equity Securities is based on the closing sale
price of each Security on the applicable exchange (converted into U.S. dollars
at the offer side of the exchange rate at the Evaluation Time and includes the
commissions and stamp taxes associated with acquiring the Securities in the
case of the Foreign Trusts) on the day prior to the Initial Date of Deposit
for the United States Trusts and on the Initial Date of Deposit for the
Foreign Trusts. Estimated annual dividends are based on the most recently
declared dividends or, in the case of the Foreign Trusts, on the most recent
interim and final dividends declared (converted into U.S. dollars at the offer
side of the exchange rate at the Evaluation Time). Other information regarding
the Securities in the Fund, as of the Initial Date of Deposit (converted into
U.S. dollars at the offer side of the exchange rate at the Evaluation Time in
the case of the Foreign Trusts), is as follows:
</TABLE>
<TABLE>
<CAPTION>
Aggregate
Cost To Profit (Loss) Estimated Annual
Sponsor To Sponsor Dividends
<S> <C> <C> <C>
Strategic Ten United States Trust $ 145,177 $ -- $ 4,717
Strategic Ten United Kingdom Trust $ 148,931 $ (362) $ 8,475
Strategic Ten Hong Kong Trust $ 242,127 $ (256) $ 11,622
Strategic Five United States Trust $ 145,020 $ -- $ 4,273
</TABLE>
<TABLE>
<CAPTION>
Title Page
<S> <C>
Summary of Essential Financial Information 5
The Fund 10
Objectives and Securities Selection 11
Trust Portfolios 12
Risk Factors 29
Taxation 37
Fund Operating Expenses 42
Public Offering 44
Rights of Unitholders 49
Fund Administration 54
Other Matters 59
Report of Independent Certified Public
Accountants 59
Statements of Condition 60
Portfolios 61
Notes to Portfolios 63
</TABLE>
TABLE OF CONTENTS
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Fund has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Fund, the Sponsor or the Underwriters. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state
to any person to whom it is not lawful to make such offer in such state.
PROSPECTUS
July 8, 1996
Van Kampen
American Capital
Equity Opportunity
Trust, Series 35
Strategic Ten Trust
United States Portfolio,
Series 9
United Kingdom Portfolio,
Series 9
Hong Kong Portfolio,
Series 9
Strategic Five Trust
United States Portfolio,
Series 3
A Wealth of Knowledge . A Knowledge of Wealth
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
Contents of Registration Statement
This Amendment of Registration Statement comprises the following
papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of Counsel as to the Federal Income tax status of securities
being registered.
3.3 Opinion and consent of counsel as to New York tax status of
securites being registered.
3.4 Opinion and consent of counsel as to certain United Kingdom tax
matters.
4.1 Consent of Interactive Data Corporation
4.2 Consent of Independent Certified Public Acountants.
Financial Data Schedules.
Signatures
The Registrant, Van Kampen American Capital Equity Opportunity
Trust, Series 35, hereby identifies Van Kampen Merritt Equity Opportunity
Trust, Series 4 and Van Kampen American Capital Equity Opportunity Trust,
Series 13 and Series 14 for purposes of the representations required by
Rule 487 and represents the following: (1) that the portfolio securities
deposited in the series as to the securities of which this Registration
Statement is being filed do not differ materially in type or quality from
those deposited in such previous series; (2) that, except to the extent
necessary to identify the specific portfolio securities deposited in, and
to provide essential financial information for, the series with respect
to the securities of which this Registration Statement is being filed,
this Registration Statement does not contain disclosures that differ in
any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined by
the Commission or the staff; and (3) that it has complied with Rule 460
under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
35 has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Chicago and State of Illinois on the 8th day of July, 1996.
Van Kampen American Capital Equity
Opportunity Trust, Series 35
By Van Kampen American Capital
Distributors, Inc.
By Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on July 8, 1996.
Signature Title
Don G. Powell Chairman and Chief Executive )
Officer )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Ronald A. Nyberg Director )
William R. Molinari Director )
Sandra A. Waterworth ) (Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 203 (File No. 33-65744)
and with the Registration Statement on Form S-6 of Insured Municipals
Income Trust, 170th Insured Multi-Series (File No. 33-55891) and the same
are hereby incorporated herein by this reference.
Exhibit 1.1
Van Kampen American Capital Equity Opportunity Trust
Series 35
Trust Agreement
Dated: July 8, 1996
This Trust Agreement among Van Kampen American Capital Distributors,
Inc., as Depositor, American Portfolio Evaluation Services, a division of
Van Kampen American Capital Investment Advisory Corp., as Evaluator, Van
Kampen American Capital Investment Advisory Corp., as Supervisory
Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Van Kampen Merritt Equity Opportunity Trust, Series 1
and Subsequent Series, Standard Terms and Conditions of Trust, Effective
November 21, 1991" (herein called the "Standard Terms and Conditions of
Trust") and such provisions as are set forth in full and such provisions
as are incorporated by reference constitute a single instrument. All
references herein to Articles and Sections are to Articles and Sections
of the Standard Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee
agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(22), listed in the
Schedule hereto, have been deposited in trust under this Trust
Agreement.
2. The fractional undivided interest in and ownership of the
Trust represented by each Unit is the amount set forth under
"Summary of Essential Financial Information - Fractional Undivided
Interest in the Trust per Unit" in the Prospectus. Such fractional
undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03, (b) increased or
decreased in connection with an adjustment to the number of Units
pursuant to Section 2.03, or (c) decreased by the number of Units
redeemed pursuant to Section 5.02.
3. Section 1.01(1) shall be amended to read as follows:
"(1) "Depositor" shall mean Van Kampen American Capital
Distributors, Inc. and its successors in interest, or any
successor depositor appointed as hereinafter provided."
4. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean American Portfolio
Evaluation Services, a division of Van Kampen American
Capital Investment Advisory Corp. and its successors in
interest, or any successor evaluator appointed as
hereinafter provided."
5. Section 1.01(4) shall be amended to read as follows:
"(4) "Supervisory Servicer" shall mean Van Kampen
American Capital Investment Advisory Corp. and its
successors in interest, or any successor portfolio
supervisor appointed as hereinafter provided."
6. Section 1.01(19) will be inapplicable for this Trust.
7. Section 1.01(34) shall be amended to read as follows:
"(34) The term "Rollover Unitholder" shall be defined as
set forth in Section 5.05, herein."
8. Section 1.01(35) shall be amended to read as follows:
"(35) The "Rollover Notification Date" shall be defined
as set forth in the Prospectus under "Summary of Essential
Information."
9. Section 1.01(36) shall be amended to read as follows:
"(36) The term "Rollover Distribution" shall be defined
as set forth in Section 5.05, herein."
10. Section 1.01(37) shall be amended to read as follows:
"(37) The term "Distribution Agent" shall refer to the
Trustee acting in its capacity as distribution agent
pursuant to Section 5.05 herein."
11. Section 1.01(38) shall be amended to read as follows:
"(38) The term "Special Redemption and Liquidation
Period" shall be as set forth in the Prospectus under
"Summary of Essential Information - Special Redemption
Date."
12. The Initial Date of Deposit for the Trust is the date
hereof.
13. Section 2.01(c) of the Standard Terms and Conditions of
Trust is hereby amended by adding the following at the conclusion
thereof:
"If any Contract Obligations requires settlement in a
foreign currency, in connection with the deposit of such
Contract Obligation the Depositor will deposit with the
Trustee either an amount of such currency sufficient to
settle the contract or a foreign exchange contract in such
amount which settles concurrently with the settlement of
the Contract Obligation and cash or a Letter of Credit in
U.S. dollars sufficient to perform such foreign exchange
contract."
14. Notwithstanding anything to the contrary appearing in the
Standard Terms and Conditions of Trust, "Van Kampen American Capital
Equity Opportunity Trust" will replace "Select Equity Trust."
15. The second sentence in the second paragraph of Section
3.11 shall be revised as follows: "However, should any issuance,
exchange or substitution be effected notwithstanding such rejection
or without an initial offer, any securities, cash and/or property
received shall be deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee unless the Depositor advises
the Trustee to keep such securities, cash or properties."
16. Article III of the Standard Terms and Conditions of Trust
is hereby amended by inserting the following paragraph which shall
be entitled Section 3.15.:
"Section 3.15. Foreign Exchange Transactions; Reclaiming
Foreign Taxes. The Trustee shall use reasonable efforts
to reclaim or recoup any amounts of non-U.S. tax paid by
the Trust or withheld from income received by the Trust to
which the Trust may be entitled as a refund."
17. Article III of the Standard Terms and Conditions of Trust
is hereby amended by inserting the following paragraph which shall
be entitled Section 3.17.:
"Section 3.17. Deferred Sales Charge. If the prospectus
related to the Trust specifies a deferred sale charge, the
Trustee shall, on the dates specified in and as permitted
by such Prospectus, withdraw from the Capital Account, an
amount per Unit specified in such Prospectus and credit
such amount to a special non-Trust account maintained at
the Trustee out of which the deferred sales charge will be
distributed to the Depositor. If the balance in the
Capital Account is insufficient to make any such
withdrawal, the Trustee shall, as directed by the
Depositor, either advance funds in an amount equal to the
proposed withdrawal and be entitled to reimbursement of
such advance upon the deposit of additional monies in the
Capital Account, sell Securities and credit the proceeds
thereof to such special Depositor's account or credit (if
permitted by law) Securities in kind to such special
Depositor's Account. If a Unitholder redeems Units prior
to full payment of the deferred sales charge, the Trustee
shall, if so provided in the related Prospectus, on the
Redemption Date, withhold from the Redemption Price
payable to such Unitholder an amount equal to the unpaid
portion of the deferred sales charge and distribute such
amount to such special Depositor's Account. The Depositor
may at any time instruct the Trustee in writing to
distribute to the Depositor cash or Securities previously
credited to the special Depositor's Account."
18. Article III of the Standard Terms and Conditions of Trust
is hereby amended by inserting the following paragraph which shall
be entitled Section 3.16.:
"Section 3.16. Foreign Exchange Transactions; Foreign
Currency Exchange. Unless the Depositor shall otherwise
direct, whenever funds are received by the Trustee in
foreign currency, upon the receipt thereof or, if such
funds are to be received in respect of a sale of
Securities, concurrently with the contract of the sale for
the Security (in the latter case the foreign exchange
contract to have a settlement date coincident with the
relevant contract of sale for the Security), the Depositor
shall enter into a foreign exchange contract for the
conversion of such funds to U.S. dollars. The Depositor
shall have no liability for any loss or depreciation
resulting from such action taken."
19. Article IV, Section 4.01(b) of the Standard Terms and
Conditions of Trust is hereby deleted and replaced in its entirety
with the following:
"(b) During the initial offering period such
Evaluation shall be made in the following manner: if the
Securities are listed on a national or foreign securities
exchange or the NASDAQ National Market System, such
Evaluation shall generally be based on the last available
sale price on or immediately prior to the Evaluation Time
on the exchange which is the principal market therefor,
which shall be deemed to be the New York Stock Exchange if
the Securities are listed thereon (unless the Evaluator
deems such price inappropriate as a basis for evaluation)
or, if there is no such available sale price on such
exchange at the mean between the last available bid and
ask prices of the Equity Securities. If the Securities
are not so listed or, if so listed, the principal market
therefor is other than on such exchange or there is no
such available sale price on such exchange, such
Evaluation shall generally be based on the following
methods or any combination thereof whichever the Evaluator
deems appropriate: (i) in the case of Equity Securities,
on the basis of the current ask price on the over-the-
counter market (unless the Evaluator deems such price
inappropriate as a basis for evaluation), (ii) on the
basis of current offering prices for the Zero Coupon
Obligations as obtained from investment dealers or brokers
who customarily deal in securities comparable to those
held by the Fund, (iii) if offering prices are not
available for the Zero Coupon Obligations or the Equity
Securities, on the basis of offering or ask price for
comparable securities, (iv) by determining the valuation
of the Zero Coupon Obligations or the Equity Securities on
the offering or ask side of the market by appraisal or (v)
by any combination of the above. If the Trust holds
Securities denominated in a currency other than U.S.
dollars, the Evaluation of such Security shall be
converted to U.S. dollars based on current offering side
exchange rates (unless the Evaluator deems such prices
inappropriate as a basis for valuation). The Evaluator
shall add to the Evaluation of each Security the amount of
any commissions and relevant taxes associated with the
acquisition of the Security. As used herein, the closing
sale price is deemed to mean the most recent closing sale
price on the relevant securities exchange immediately
prior to the Evaluation time. For each Evaluation, the
Evaluator shall also confirm and furnish to the Trustee
and the Depositor, on the basis of the information
furnished to the Evaluator by the Trustee as to the value
of all Trust assets other than Securities, the calculation
of the Trust Fund Evaluation to be computed pursuant to
Section 5.01."
20. Article IV, Section 4.01(c) of the Standard Terms and
Conditions of Trust is hereby deleted and replaced in its entirety
with the following:
"(c) After the initial offering period and both during
and after the initial offering period, for purposes of the
Trust Fund Evaluations required by Section 5.01 in
determining Redemption Value and Unit Value, Evaluation of
the Securities shall be made in the manner described in
Section 4.01(b), on the basis of current bid prices for
the Zero Coupon Obligations, the bid side value of the
relevant currency exchange rate expressed in U.S. dollars
and, except in those cases in which the Equity Securities
are listed on a national or foreign securities exchange or
the NASDAQ National Market System and the last available
sale prices are utilized, on the basis of the mean between
the last available bid and ask prices of the Equity
Securities. In addition, the Evaluator shall (i) not make
the addition specified in the fourth sentence of Section
4.01(b) and (ii) shall reduce the Evaluation of each
Security by the amount of any liquidation costs (other
than brokerage costs incurred on any national securities
exchange) and any capital gains or other taxes which would
be incurred by the Trust upon the sale of such Security,
such taxes being computed as if the Security were sold on
the date of the Evaluation."
21. Article V, Section 5.01 of the Standard Terms and
Conditions of Trust is hereby amended to add the following at the
conclusion of the first paragraph thereof:
"Amounts receivable by the Trust in foreign currency shall
be converted by the Trustee to U.S. dollars based on
current exchange rates, in the same manner as provided in
Section 4.01(b) or 4.01(c), as applicable, for the
conversion of the valuation of foreign Equity Securities,
and the Evaluator shall report such conversion with each
Evaluation made pursuant to Section 4.01."
22. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the Depositor shall
offer a subsequent series of the Trusts (the "New Series"), the
Trustee shall, at the Depositor's sole cost and expense, include in
the notice sent to Unitholders specified in Section 8.02 a form of
election whereby Unitholders, whose redemption distribution would be
in an amount sufficient to purchase at least one Unit of the New
Series, may elect to have their Units(s) redeemed in kind in the
manner provided in Section 5.02, the Securities included in the
redemption distribution sold, and the cash proceeds applied by the
Distribution Agent to purchase Units of the New Series, all as
hereinafter provided. The Trustee shall honor properly completed
election forms returned to the Trustee, accompanied by any
Certificate evidencing Units tendered for redemption or a properly
completed redemption request with respect to uncertificated Units,
by its close of business on the Rollover Notification Date.
All Units so tendered by a Unitholder (a "Rollover Unitholder")
shall be redeemed and cancelled on the Rollover Notification Date.
Subject to payment by such Rollover Unitholder of any tax or other
governmental charges which may be imposed thereon, such redemption
is to be made in kind pursuant to Section 5.02 by distribution of
cash and/or Securities to the Distribution Agent on the Rollover
Notification Date of the net asset value (determined on the basis of
the Trust Fund Evaluation as of the Rollover Notification Date in
accordance with Section 4.01) multiplied by the number of Units
being redeemed (herein called the "Rollover Distribution"). Any
Securities that are made part of the Rollover Distribution shall be
valued for purposes of the redemption distribution as of the
Rollover Notification Date.
All Securities included in a Unitholder's Rollover Distribution
shall be sold by the Distribution Agent on the Special Redemption
Date specified in the Prospectus pursuant to the Depositor's
direction, and the Distribution Agent shall employ the Depositor as
broker in connection with such sales. For such brokerage services,
the Depositor shall be entitled to compensation at its customary
rates, provided however, that its compensation shall not exceed the
amount authorized by applicable Securities laws and regulations.
The Depositor shall direct that sales be made in accordance with the
guidelines set forth in the Prospectus under the heading "Special
Redemption and Rollover in New Fund." Should the Depositor fail to
provide direction, the Distribution Agent shall sell the Securities
in the manner provided in the prospectus for "less liquid Equity
Securities." The Distribution Agent shall have no responsibility
for any loss or depreciation incurred by reason of any sale made
pursuant to this Section.
Upon each trade date for sales of Securities included in the
Rollover Unitholder's Rollover Distribution, the Distribution Agent
shall, as agent for such Rollover Unitholder, enter into a contract
with the Depositor to purchase from the Depositor Units of the New
Series (if any), at the Depositor's public offering price for such
Units on such day, and at such reduced sales charge as shall be
described in the prospectus for the Trusts. Such contract shall
provide for purchase of the maximum number of Units of the New
Series whose purchase price is equal to or less than the cash
proceeds held by the Distribution Agent for the Unitholder on such
day (including therein the proceeds anticipated to be received in
respect of Securities traded on such day net of all brokerage fees,
governmental charges and any other expenses incurred in connection
with such sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included in the
Rollover Unitholder's redemption distribution shall not be
consummated in accordance with its terms, the Distribution Agent
shall apply the cash proceeds held for such Unitholder as of the
settlement date for the purchase of Units of the New Series to
purchase the maximum number of units which such cash balance will
permit, and the Depositor agrees that the settlement date for Units
whose purchase was not consummated as a result of insufficient funds
will be extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such purchase. If
the Unitholder's Rollover Distribution will produce insufficient
cash proceeds to purchase all of the Units of the New Series
contracted for, the Depositor agrees that the contract shall be
rescinded with respect to the Units as to which there was a cash
shortfall without any liability to the Rollover Unitholder or the
Distribution Agent. Any cash balance remaining after such purchase
shall be distributed within a reasonable time to the Rollover
Unitholder by check mailed to the address of such Unitholder on the
registration books of the Trustee. Units of the New Series will be
uncertificated unless and until the Rollover Unitholder requests a
certificate. Any cash held by the Distribution Agent shall be held
in a non-interest bearing account which will be of benefit to the
Distribution Agent in accordance with normal banking procedures.
Neither the Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation resulting from
any reinvestment made in accordance with this paragraph, or for any
failure to make such reinvestment in the event the Depositor does
not make Units available for purchase.
(b) Notwithstanding the foregoing, the Depositor may, in its
discretion at any time, decide not to offer a New Series in the
future, and if so, this Section 5.05 concerning the Rollover of
Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent shall,
however, be entitled to receive reimbursement from the Trust for any
and all expenses and disbursements to the same extent as the Trustee
is permitted reimbursement hereunder."
(d) Notwithstanding the foregoing, in lieu of selling
Securities through the Depositor on the open market the Distribution
Agent may sell Securities from a terminating Trust into the
corresponding New Series if those Securities continue to meet the
New Series' strategy. The price for those Securities will be the
closing sale price on the sale date on the exchange where the
Securities are principally traded, as certified by the Sponsor.
23. Article VI, Section 6.01(e) of the Standard Terms and
Conditions of Trust is hereby amended to read as follows:
"(e) (I) Subject to the provisions of subparagraphs (II)
and (III) of this paragraph, the Trustee may employ agents, sub-
custodians, attorneys, accountants and auditors and shall not
be answerable for the default or misconduct of any such agents,
sub-custodians, attorneys, accountants or auditors if such
agents, sub-custodians, attorneys, accountants or auditors
shall have been selected with reasonable care. The Trustee
shall be fully protected in respect of any action under this
Indenture taken or suffered in good faith by the Trustee in
accordance with the opinion of counsel, which may be counsel to
the Depositor acceptable to the Trustee, provided, however,
that this disclaimer of liability shall not (i) excuse the
Trustee from the responsibilities specified in subparagraph II
below or (ii) limit the obligation of the Trustee to indemnify
the Trust under subparagraph III below. The fees and expenses
charged by such agents, sub-custodians, attorneys, accountants
or auditors shall constitute an expense of the Trust
reimbursable from the Income and Capital Accounts of the
affected Trust as set forth in section 6.04 hereof.
(II) The Trustee may place and maintain in the care of an
eligible foreign custodian (which is employed by the Trustee as
a sub-custodian as contemplated by subparagraph (I) of this
paragraph (e) and which may be an affiliate or subsidiary of
the Trustee or any other entity in which the Trustee may have
an ownership interest) the Trust's foreign securities, cash and
cash equivalents in amounts reasonably necessary to effect the
Trust's foreign securities transactions, provided that:
(1) The Trustee shall have:
(i) determined that maintaining the Trust's assets
in a particular country or countries is consistent with
the best interests of the Trust and the Unitholders;
(ii) determined that maintaining the Trust's assets
with such eligible foreign custodian is consistent with
the best interests of the Trust and the Unitholders; and
(iii) entered into a written contract which is
consistent with the best interests of the Trust and the
Unitholders and which will govern the manner in which such
eligible foreign custodian will maintain the Trust's
assets and which provides that:
(A) The Trust will be adequately indemnified
and its assets adequately insured in the event of
loss (without regard to the indemnity provided by the
Trustee under Section III hereof);
(B) The Trust's assets will not be subject to
any right, charge, security interest, lien or claim
of any kind in favor of the eligible foreign
custodian or its creditors except a claim for payment
for their safe custody or administration;
(C) Beneficial ownership of the Trust's assets
will be freely transferable without the payment of
money or value other than for safe custody or
administration;
(D) Adequate records will be maintained
identifying the assets as belonging to the Trust;
(E) The Trust's independent public accountants
will be given access to records identifying assets of
the Trust or confirmation of the contents of those
records; and
(F) The Trustee will receive periodic reports
with respect to safekeeping of the Trust's assets,
including, but not necessarily limited to,
notification of any transfer to or from the Trustee's
account.
(2) The Trustee shall establish a system to monitor such
foreign custody arrangements to ensure compliance with the
conditions of this subparagraph.
(3) The Trustee, at least annually, shall review and
approve the continuing maintenance of Trust assets in a
particular country or countries with a particular eligible
foreign custodian or particular eligible foreign custodians as
consistent with the best interests of the Trust and the
Unitholders.
(4) The Trustee shall maintain and keep current written
records regarding the basis for the choice or continued use of
a particular eligible foreign custodian pursuant to this
subparagraph, and such records shall be available for
inspection by Unitholders and the Securities and Exchange
Commission at the Trustee's offices at all reasonable times
during its usual business hours.
(5) Where the Trustee has determined that a foreign
custodian may no longer be considered eligible under this
subparagraph or that, pursuant to clause (3) above, continuance
of the arrangement would not be consistent with the best
interests of the Trust and the Unitholders, the Trust must
withdraw its assets from the care of that custodian as soon as
reasonably practicable, and in any event within 180 days of the
date when the Trustee made the determination.
As used in this subparagraph (II),
(1) "foreign securities" include: securities issued
and sold primarily outside the United States by a foreign
government, a national of any foreign country or a corporation
or other organization incorporated or organized under the laws
of any foreign country and securities issued or guaranteed by
the government of the United States or by any state or any
political subdivision thereof or by any agency thereof or by
any entity organized under the laws of the United States or of
any state thereof which have been issued and sold primarily
outside the United States.
(2) "eligible foreign custodian" means:
(a) The following securities depositories and
clearing agencies which operate transnational systems for the
central handling of securities or equivalent book entries
which, by appropriate exemptive order issued by the Securities
and Exchange Commission, have been qualified as eligible
foreign custodians for the Trust but only for so long as such
exemptive order continues in effect: Morgan Guaranty Trust
Company of New York, Brussels, Belgium, in its capacity as
operator of the Euroclear System ("Euroclear"), and Central de
Livraison de Valeurs Mobilires, S.A. ("CEDEL").
(b) Any other entity that shall have been qualified
as an eligible foreign custodian for the foreign securities of
the Trust by the Securities and Exchange Commission by
exemptive order, rule or other appropriate action, commencing
on such date as it shall have been so qualified but only for so
long as such exemptive order, rule or other appropriate action
continues in effect.
The determinations set forth above to be made by the
Trustee should be made only after consideration of all matters
which the Trustee, in carrying out its fiduciary duties, finds
relevant, including, but not necessarily limited to,
consideration of the following:
1. With respect to the selection of the country
where the Trust's assets will be maintained, the Trustee should
consider:
a. Whether applicable foreign law would restrict
the access afforded the Trust's independent public accountants
to books and records kept by an eligible foreign custodian
located in that country;
b. Whether applicable foreign law would restrict
the Trust's ability to recover its assets in the event of the
bankruptcy of an eligible foreign custodian located in that
country;
c. Whether applicable foreign law would restrict
the Trust's ability to recover assets that are lost while under
the control of an eligible foreign custodian located in that
country;
d. The likelihood of expropriation,
nationalization, freezes, or confiscation of the Trust's
assets; and
e. Whether difficulties in converting the Trust's
cash and cash equivalents to U.S. dollars are reasonably
foreseeable.
2. With respect to the selection of an eligible
foreign custodian, the Trustee should consider:
a. The financial strength of the eligible foreign
custodian, its general reputation and standing in the country
in which it is located, its ability to provide efficiently the
custodial services required and the relative cost for those
services;
b. Whether the eligible foreign custodian would
provide a level of safeguards for maintaining the Trust's
assets not materially different from that provided by the
Trustee in maintaining the Trust's securities in the United
States;
c. Whether the eligible foreign custodian has
branch offices in the United States in order to facilitate the
assertion of jurisdiction over and enforcement of judgments
against such custodian; and
d. In the case of an eligible foreign custodian
that is a foreign securities depository, the number of
participants in, and operating history of, the depository.
3. The Trustee should consider the extent of the
Trust's exposure to loss because of the use of an eligible
foreign custodian. The potential effect of such exposure upon
Unitholders shall be disclosed, if material, by the Depositor
in the Prospectus relating to the Trust.
(III) The Trustee will indemnify and hold the
Trust harmless from and against any loss that shall occur as
the result of the failure of an eligible foreign custodian
holding the foreign securities of the Trust to exercise
reasonable care with respect to the safekeeping of such foreign
securities to the same extent that the Trustee would be
required to indemnify and hold the Trust harmless if the
Trustee were holding such foreign securities in the
jurisdiction of the United States whose laws govern the
indenture, provided, however, that the Trustee will not be
liable for loss except by reason of the gross negligence, bad
faith or willful misconduct of the Trustee or the eligible
foreign custodian."
24. Notwithstanding anything to the contrary in the Standard
Terms and Conditions of Trust, the requisite number of Units needed
to be tendered to exercise an In Kind Distribution as set forth in
Sections 5.02 and 8.02 shall be that number set forth in the
Prospectus.
25. Section 8.02 is hereby revised to require an affirmative
vote of Unitholders representing 66 2/3% of the then outstanding
Units to terminate the Trust rather than the 51% indicated therein.
26. Section 3.01 of the Standard Terms and Conditions of Trust
shall be replaced in its entirety with the following:
"Section 3.01. Initial Costs. The following
organization and regular and recurring expenses of the
Trust shall be borne by the Trustee: (a) to the extent
not borne by the Depositor, expenses incurred in
establishing a Trust, including the cost of the initial
preparation and typesetting of the registration statement,
prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to the Trust,
Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation of
the portfolio and audit of the Trust, the initial fees and
expenses of the Trustee, and legal and other out-of-pocket
expenses related thereto, but not including the expenses
incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and
any other selling expenses, (b) the amount specified in
Section 3.05 and Article VIII, (c) to the extent permitted
by Section 6.02, auditing fees and, to the extent not
borne by the Depositor, expenses incurred in connection
with maintaining the Trust's registration statement
current with Federal and State authorities, (d) any
Certificates issued after the Initial Date of Deposit ;
and (e) expenses of any distribution agent. The Trustee
shall be reimbursed for those organizational expenses
referred to in clause (a) as provided in the Prospectus.
27. Section 6.01(i) of the Standard Terms and Conditions of
Trust shall be amended by adding the following to the beginning of
such Section:
"Except as provided in Sections 3.01 and 3.05,"
28. Section 8.04 is hereby amended by deleting the first word
of such Section and replacing it with the following:
"Except as provided in Sections 3.01 and 3.05, the"
29. Nothwithstanding anything to the contrary in the Standard
Terms and Conditions of Trust, the deductions specified in Section
3.05(a) shall be deducted from the Capital Account of the related
Trust; deductions from the Income Account of a Trust shall not be
made for purposes of such Section. The preceding sentence, shall
not affect any right of the Trustee to sell Securities or any lien
on a Trust otherwise created hereby.
30. Section 2.03(a) shall be replaced in its entirety by the
following:
"(a) The Trustee hereby acknowledges receipt of the deposit of
the Securities listed in the Schedules to the Trust Agreement
and referred to in Section 2.01 hereof and, simultaneously with
the receipt of said deposit, has recorded on its books the
ownership, by the Depositor or such other person or persons as
may be indicated by the Depositor, of the aggregate number of
Units specified in the Trust Agreement and has delivered, or on
the order of the Depositor will deliver, in exchange for such
Securities, documentation evidencing the ownership of the
number of Units specified and, if such Units are represented by
a Certificate, such Certificate substantially in the form above
recited, representing the ownership of those Units. The number
of Units may be increased throutgh a split of the Units or
decreased through a reverse split thereof, as directed by the
Depositor, on any day on which the Depositor is the only
Unitholder, which revised number of Units shall be recorded by
the Trustee on its books. The Trustee hereby agrees that on
the date of any Supplemental Indenture it shall acknowledge
that the additional Securities identified therein have been
deposited with it by recording on its books the ownership, by
the Depositor or such other person or persons as may be
indicated by the Depositor, of the aggregate number of Units to
be issued in respect of such additional Securities so
deposited, and shall, if so requested, execute a Certificate or
Certificates substantially in the form above recited
representing the ownership of an aggregate number of those
Units."
In Witness Whereof, Van Kampen American Capital Distributors, Inc.
has caused this Trust Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be
hereto affixed and attested by its Secretary or one of its Vice
Presidents or Assistant Secretaries, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., and Van Kampen American Capital Investment Advisory Corp., have
each caused this Trust Indenture and Agreement to be executed by their
respective President or one of their respective Vice Presidents and the
corporate seal of each to be hereto affixed and attested to by the
Secretary, Assistant Secretary or one of their respective Vice Presidents
or Assistant Vice Presidents and The Bank of New York, has caused this
Trust Agreement to be executed by one of its Vice Presidents and its
corporate seal to be hereto affixed and attested to by one of its
Assistant Treasurers all as of the day, month and year first above
written.
Van Kampen American Capital
Distributors, Inc.
By Sandra A. Waterworth
Vice President
Attest:
By Gina M. Scumaci
Assistant Secretary
American Portfolio Evaluation
Services, a division of Van Kampen
American Capital Investment
Advisory Corp.
By Dennis J. McDonnell
President
Attest
By Scott E. Martin
Assistant Secretary
Van Kampen American Capital
Investment Advisory Corp.
By Dennis J. McDonnell
President
Attest
By Scott E. Martin
Assistant Secretary
The Bank of New York
By Jeffrey Bieselin
Vice President
Attest
By Norbert Loney
Assistant Treasurer
Schedule A to Trust Agreement
Securities Initially Deposited
in
Van Kampen American Capital Equity Opportunity Trust, Series 35
(Note: Incorporated herein and made a part hereof are the "Portfolios"
as set forth in the Prospectus.)
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
July 8, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Van Kampen American Capital Equity Opportunity Trust,
Series 35
Gentlemen:
We have served as counsel for Van Kampen American Capital
Distributors, Inc. as Sponsor and Depositor of Van Kampen American
Capital Equity Opportunity Trust, Series 35 (hereinafter referred to as
the "Trust"), in connection with the preparation, execution and delivery
of a Trust Agreement dated July 8, 1996, among Van Kampen American
Capital Distributors, Inc., as Depositor, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., as Evaluator, Van Kampen American Capital Investment Advisory
Corp., as Supervisory Servicer, and The Bank of New York, as Trustee,
pursuant to which the Depositor has delivered to and deposited the
Securities listed in the Schedule to the Trust Agreement with the Trustee
and pursuant to which the Trustee has provided to or on the order of the
Depositor documentation evidencing ownership of Units of fractional
undivided interest in and ownership of the Trust (hereinafter referred to
as the "Units"), created under said Trust Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Trust have been duly authorized; and
2. The certificates evidencing the Units in the Trust,
when duly executed and delivered by the Depositor and the
Trustee in accordance with the aforementioned Trust Agreement,
will constitute valid and binding obligations of such Trust and
the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-06279) relating to the Units
referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
MJK/cjw
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
July 8, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Van Kampen American Capital Equity Opportunity Trust,
Series 35
Gentlemen:
We have acted as counsel for Van Kampen American Capital
Distributors, Inc., Depositor of Van Kampen American Capital Equity
Opportunity Trust, Series 35 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a
Trust Agreement dated July 8, 1996 (the "Indenture") among Van Kampen
American Capital Distributors, Inc., as Depositor, Van Kampen American
Capital Investment Advisory Corp., as Evaluator, Van Kampen American
Capital Investment Advisory Corp., as Supervisory Servicer, and The Bank
of New York, as Trustee. The Fund is comprised of four separate unit
investment trusts, Strategic Ten Trust United States Portfolio, Series 9,
Strategic Ten Trust United Kingdom Portfolio, Series 9, Strategic Ten
Trust Hong Kong Portfolio, Series 9 and Strategic Five Trust United
States Portfolio, Series 3.
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we
have deemed pertinent.
The assets of each Trust will consist of a portfolio of equity
securities (the "Equity Securities") as set forth in the Prospectus.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing United States Federal income tax law:
(i) Each Trust is not an association taxable as a
corporation but will be governed by the provisions of
subchapter J (relating to Trusts) of chapter 1, Internal
Revenue Code of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata
share of each asset of the particular Trust in the proportion
that the number of Units held by him bears to the total number
of Units outstanding. Under subpart E, subchapter J of chapter
1 of the Code, income of a Trust will be treated as income of
each Unitholder in the proportion described, and an item of
Trust income will have the same character in the hands of a
Unitholder as it would have in the hands of the Trustee. Each
Unitholder will be considered to have received his pro rata
share of income derived from each Trust asset when such income
is considered to be received by a Trust. A Unitholder's pro
rata portion of distributions of cash or property by a
corporation with respect to an Equity Security ("dividends" as
defined by Section 316 of the Code ) are taxable as ordinary
income to the extent of such corporation's current and
accumulated "earnings and profits." A Unitholder's pro rata
portion of dividends which exceed such current and accumulated
earnings and profits will first reduce the Unitholder's tax
basis in such Equity Security, and to the extent that such
dividends exceed a Unitholder's tax basis in such Equity
Security, shall be treated as gain from the sale or exchange of
property.
(iii) The price a Unitholder pays for his Units, generally
including sales charges, is allocated among his pro rata
portion of each Security held by a Trust (in the proportion to
the fair market values thereof on the valuation date closest to
the date the Unitholder purchases his Units), in order to
determine his tax basis for his pro rata portion of each
Security held by a Trust.
(iv) Gain or loss will be recognized to a Unitholder
(subject to various nonrecognition provisions under the code)
upon redemption or sale of his Units, except to the extent an
in kind distribution of stock is received by such Unitholder
from a Trust as discussed below. Such gain or loss is measured
by comparing the proceeds of such redemption or sale with the
adjusted basis of his Units. Before adjustment, such basis
would normally be cost if the Unitholder had acquired his units
by purchase. Such basis will be reduced, but not below zero,
by the Unitholder's pro rata portion of dividends with respect
to each Equity Security which are not taxable as ordinary
income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unitholder
(subject to various nonrecognition provisions under the code)
and the amount thereof will be measured by comparing the
Unitholder's aliquot share of the total proceeds from the
transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning
the tax basis for his Units (as of the date on which his Units
were acquired) among each of the Trust assets of such Trust (as
of the date on which his Units were acquired) ratably according
to their values as of the valuation date nearest the date on
which he purchased such Units. A Unitholder's basis in his
Units and of his fractional interest in each Trust asset must
be reduced, but not below zero, by the Unitholder's pro rata
portion of dividends with respect to each Security which are
not taxable as ordinary income.
(vi) Under the Indenture, under certain circumstances, a
Unitholder tendering Units for redemption may request an in
kind distribution of Securities upon the redemption of Units or
upon the termination of the Trust. As previously discussed,
prior to the redemption of Units or the termination of a Trust,
a Unitholder is considered as owning a pro rata portion of each
of the particular Trust's assets. The receipt of an in kind
distribution will result in a United States Unitholder
receiving an undivided interest in whole shares of stock and
possibly cash. The potential federal income tax consequences
which may occur under an in kind distribution with respect to
each Security owned by the United States Trust will depend upon
whether or not a United States Uniholder receives cash in
addition to Securities. A "Security" for this purpose is a
particular class of stock issued by a particular corporation.
A Unitholder will not recognize gain or loss if a Unitholder
only receives Securities in exchange for his or her pro rata
portion in the Securities held by the Trust. However, if a
Unitholder also receives cash in exchange for a fractional
share of a Security held by the Trust, such Unitholder will
generally recognize gain or loss based upon the difference
between the amount of cash received by the Unitholder and his
tax basis in such fractional share of a Security held by the
Trust. The total amount of taxable gains (or losses)
recognized upon such redemption will generally equal the sum of
the gain (or loss) recognized under the rules described above
by the redeeming Unitholder with respect to each Security owned
by a Trust.
Dividends received by a Trust which are attributable to a
corporation owning Units in a Trust and which are taxable as ordinary
income may be eligible for the 70% dividends received deduction pursuant
to Section 243(a) of the Code, subject to the limitations imposed by
Sections 246 and 246A of the Code. It should be noted that various
legislative proposals that would affect the dividend received deduction
have been introduced.
Section 67 of the Code provides that certain itemized deductions,
such as investment expenses, tax return preparation fees and employee
business expenses will be deductible by individuals only to the extent
they exceed 2% of such individual's adjusted gross income. Temporary
regulations have been issued which require Unitholders to treat certain
expenses of a Trust as miscellaneous itemized deductions subject to this
limitation.
A Unitholder will recognize taxable gain (or loss) when all or part
of the pro rata interest in a Security is either sold by the Trust or
redeemed or when a Unitholder disposes of his Units in a taxable
transaction, in each case for an amount greater (or less) than his tax
basis therefor.
Any gain recognized on a sale or exchange will, under current law,
generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set
forth herein, and, except as expressly set forth above, we express no
opinion with respect to any other taxes, including state or local taxes
or collateral tax consequences with respect to the purchase, ownership
and disposition of Units.
Very truly yours
Chapman and Cutler
MJK/cjw
Exhibit 3.3
Kroll & Tract
520 Madison Avenue
New York, NY 10022
July 8, 1996
Van Kampen American Capital Equity
Opportunity Trust, Series 35
c/o The Bank of New York,
as Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen American Capital
Equity Opportunity Trust, Series 35 (the "Fund") consisting of Strategic
Ten Trust United States Portfolio, Series 9, Strategic Ten Trust United
Kingdom Portfolio, Series 9, Strategic Ten Trust Hong Kong Portfolio,
Series 9 and Strategic Five Trust United States Portfolio, Series 3
(individually a "Trust" and in the aggregate the "Trusts") for purposes
of determining the applicability of certain New York taxes under the
circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the "Indenture"),
dated as of today (the "Date of Deposit") among Van Kampen American
Capital Distributors, Inc. (the "Depositor"), American Portfolio
Evaluation Services, a division of a subsidiary of Depositor, as
Evaluator, Van Kampen American Capital Investment Advisory Corp., as
Supervisory Servicer (the "Supervisory Servicer"), and The Bank of New
York, as trustee (the "Trustee"). As described in the prospectus
relating to the Fund dated today to be filed as an amendment to a
registration statement heretofore filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the
"Prospectus") (File number 333-06279, the objectives of the Fund are to
provide the potential for dividend income and capital appreciation
through investment in a fixed portfolio of actively traded New York Stock
Exchange listed equity securities and in the case of the Trust
denominated "Treasury" also to protect capital by investing a portion of
the portfolio in "zero coupon" U.S. Treasury obligations. It is noted
that no opinion is expressed herein with regard to the Federal tax
aspects of the securities, the Trust, units of Trust (the "Units"), or
any interest, gains or losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to each Trust the securities and/or contracts and cash for
the purchase thereof together with an irrevocable letter of credit in the
amount required for the purchase price of the securities comprising the
corpus of the Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities
to be deposited in the Trust, and, upon the receipt thereof, will deliver
to the Depositor a registered certificate for the number of Units
representing the entire capital of the Trust as more fully set forth in
the Prospectus. The Units, which are represented by certificates
("Certificates"), will be offered to the public upon the effectiveness of
the registration statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash
dividends received by the Fund and with the proceeds from the disposition
of securities held in the Fund and the proceeds of the treasury
obligation on maturity and the distribution of such cash dividends and
proceeds to the Unit holders. The Trustee will also maintain records of
the registered holders of Certificates representing an interest in the
Fund and administer the redemption of Units by such Certificate holders
and may perform certain administrative functions with respect to an
automatic reinvestment option.
Generally, equity securities held in the Trust may be removed
therefrom by the Trustee at the direction of the Depositor upon the
occurrence of certain specified events which adversely affect the sound
investment character of the Fund, such as default by the issuer in
payment of declared dividends or of interest or principal on one or more
of its debt obligations.
Prior to the termination of the Fund, the Trustee is empowered to
sell equity securities designated by the Supervisory Servicer only for
the purpose of redeeming Units tendered to it and of paying expenses for
which funds are not available. The Trustee does not have the power to
vary the investment of any Unit holder in the Fund, and under no
circumstances may the proceeds of sale of any equity securities held by
the Fund be used to purchase new equity securities to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on
business corporations, and, for purposes of that Article, Section 208(1)
defines the term "corporation" to include, among other things, "any
business conducted by a trustee or trustees wherein interest or ownership
is evidenced by certificate or other written instrument"
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in which interest or
ownership is evidenced by certificate or other written instrument
includes, but is not limited to, an association commonly referred to
as a "business trust" or "Massachusetts trust". In determining
whether a trustee or trustees are conducting a business, the form of
the agreement is of significance but is not controlling. The actual
activities of the trustee or trustee, not their purposes and powers,
will be regarded as decisive factors in determining whether a trust
is subject to tax under Article 9-A. The mere investment of funds
and the collection of income therefrom, which incidental replacement
of securities and reinvestment of funds, does not constitute the
conduct of a business in the case of a business conducted by a
trustee or trustees. 20 NYCRR 1-2.3(b)(2) (July 11, 1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that
where a trustee merely invests funds and collects and distributes the
income therefrom, the trust is not engaged in business and is not subject
to the franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171
(3rd Dept. 1948), order resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd
Dept. 1949).
In an Opinion of the Attorney General of the State of New York, 47
N.Y. Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the
trustee of an unincorporated investment trust was without authority to
reinvest amounts received upon the sales of securities and could dispose
of securities making up the trust only upon the happening of certain
specified events or the existence of certain specified conditions, the
trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to sell
securities contained in the corpus of the Fund and reinvest the proceeds
therefrom. Further, the power to sell such securities is limited to
circumstances in which the credit-worthiness or soundness of the issuer
of such equity security is in question or in which cash is needed to pay
redeeming Unit holders or to pay expenses, or where the Fund is
liquidated subsequent to the termination of the Indenture. In substance,
the Trustee will merely collect and distribute income and will not
reinvest any income or proceeds, and the Trustee has no power to vary the
investment of any Unit holder in the Fund.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust
will be deemed to be the owner of the trust under certain circumstances,
and therefore taxable on his proportionate interest in the income
thereof. Where this Federal tax rule applies, the income attributed to
the grantor will also be income to him for New York income tax purposes.
See TSB-M-78(9)(c), New York Department of Taxation and Finance, June 23,
1978.
By letter dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be
considered as owning a share of each asset of a Trust in the proportion
that the number of Units held by such holder bears to the total number of
Units outstanding and the income of a Trust will be treated as the income
of each Unit holder in said proportion pursuant to Subpart E of Part I,
Subchapter J of Chapter 1 of the Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we
specifically rely, we are of the opinion that under existing laws,
rulings, and court decisions interpreting the laws of the State and City
of New York:
1. Each Trust will not constitute an association taxable as a
corporation under New York law, and, accordingly, will not be
subject to tax on its income under the New York State franchise tax
or the New York City general corporation tax;
2. The income of the Trust will be treated as the income of
the Unit holders under the income tax laws of the State and City of
New York; and
3. Unit holders who are not residents of the State of New
York are not subject to the income tax laws thereof with respect to
any interest or gain derived from the Fund or any gain from the sale
or other disposition of the Units, except to the extent that such
interest or gain is from property employed in a business, trade,
profession or occupation carried on in the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name
and the reference to our firm in the Registration Statement and in the
Prospectus.
Very truly yours,
Kroll & Tract
MNS:hbm
Exhibit 3.4
Linklaters & Paines
885 Third Avenue, Suite 2600
New York, NY 10022
July 8, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Dear Sirs:
Van Kampen American Capital Equity Opportunity Trust, Series 35
(the "Fund")
1. We have acted as special United Kingdom ("UK") taxation
advisers in connection with the issue of units ("Units") in the above
Fund on the basis of directions given to us by Chapman and Cutler,
counsel to yourselves.
2. This opinion is limited to UK taxation law as applied in
practice on the date hereof by the Inland Revenue and is given on the
basis that it will be governed by and construed in accordance with
English law as enacted.
3. For the purpose of this opinion, the only documentation which
we have examined is the Van Kampen American Capital Equity Opportunity
Trust, Series 30 dated May 7, 1996 (the "Prospectus"). We have been
advised by Chapman and Cutler that there will be no material differences
between the Prospectus and the final prospectus to be issued for the
Fund.
4. We have assumed for the purposes of this opinion that:-
4.1 a holder of Units ("Unitholder") is, under the terms of
the Trust Agreement governing the Strategic Ten Trust United Kingdom
Portfolio, Series 9 (the "Trust") of the Fund, entitled to have paid
to him (subject to a deduction for annual expenses, including total
applicable custodial fees and certain other costs associated with
foreign trading and annual Trustee's, Sponsor's and administrative
fees and expenses) his pro rata share of all the income which arises
to the Trust from the investments in the Trust, and that, under the
governing law of the Trust Agreement, this is a right as against the
assets of the Trust rather than a right enforceable in damages only
against the Trustee;
4.2 for taxation purposes the Trustee is not a UK resident, is
a US resident; the general administration of the Fund will be
carried out only in the US; and no Units are registered in a
register kept in the UK by or on behalf of the Trustee;
4.3 the Trust is not treated as a corporation for US tax
purposes;
4.4 the structure, including the investment strategy of the
Fund, will be substantially the same as that set out in the
Prospectus; and
4.5 each Unitholder is neither resident nor ordinarily
resident in the UK, nor is any such Unitholder carrying on a trade
in the UK through a branch or agent.
5. We understand that the Fund will consist of four unit
investment trusts: the United States Trusts (the "Strategic Ten United
States Trust" and the "Strategic Five United States Trust"), the Trust
and the Hong Kong Trust; that the Trust will contain the ten common
stocks in the Financial Times Industrial Ordinary Share Index having the
highest dividend yield at the close of business three days prior to the
Initial Date of Deposit of the Fund; and that the Trust will hold such UK
common stocks for a period of approximately one year, after which time
the Trust will terminate and the stocks will be sold. We address UK tax
issues in relation only to the Trust.
6. Where a dividend which carries a tax credit as distinct from a
foreign income dividend (in relation to which, see 7 below) is paid by a
UK resident company to a qualifying US resident which (either alone or
together with one or more associated corporations) controls directly or
indirectly less than 10 percent of the voting stock of that UK company,
the qualifying US resident is entitled, on making a claim to the UK
Inland Revenue, to a payment of a tax credit currently equal to a quarter
of the dividend less a withholding of 15 percent of the aggregate amount
of the tax credit and the dividend. Thus, on payment by a UK company of
a dividend of 80, a tax credit of 20 arises and so a qualifying US
resident will be entitled on making such a claim to a payment from the UK
Inland Revenue of 5 (being 20 less 15 percent of (20 + 80)).
A person will be a qualifying US resident for these purposes if:-
6.1 that person is a resident of the US for the purposes of
the double tax treaty between the US and the UK (the "Treaty"). The
Trustee (in its capacity as recipient of the dividend on behalf of
the Trust) will be a resident of the US for these purposes if it is
resident in the US for the purposes of US tax. However, it will
only be a resident of the US for Treaty purposes to the extent that
the income derived by the Trust is subject to US tax as the income
of a US resident either in the hands of the Trust itself or in the
hands of its beneficiaries.
We have assumed that the Trust will not be subject to US tax on its
income and that such income will be treated as income of the
beneficiaries of the Trust for US purposes. Accordingly, the Trust
would be a US resident for the purposes of the Treaty only to the
extent that the beneficiaries would be taxable in the US on such
income or treated as so taxable by agreement between the relevant
authorities. The provisions of the Treaty have been extended to
grant resident status to tax exempt charitable trusts and pension
funds. We understand that this is confirmed on the US Treasury side
by its "Technical Explanation" of the Treaty issued on March 9,
1977;
6.2 the dividend is paid to that person. We believe that the
payment of a dividend to the Trustee and onward payment by the
Trustee should qualify as the payment of the dividend to the
Unitholder for these purposes. The position is however not
completely free from doubt, but this appears to be present Inland
Revenue practice;
6.3 the beneficial owner of the dividend is a resident of the
US for the purposes of the Treaty. The Trust will not be the
beneficial owner of any dividend for these purposes. Whether a
Unitholder is beneficial owner will depend upon the circumstances of
his ownership of the Units; and
6.4 that person satisfies the other requirements of the Treaty
including the following:-
6.4.1 that the dividend is not received in connection with
a UK permanent establishment or fixed base of that person;
6.4.2 subject to certain exemptions, that person is not a
US corporation: (a) 25% or more of whose capital is owned
directly or indirectly by persons other than individual
residents or nationals of the US; and (b) which (i) suffers
US tax on the dividend at a rate substantially less than that
which is generally imposed on corporate profits or (ii) is an
80:20 corporation for the purposes of the US Internal Revenue
Code of 1954, section 861;
6.5 that person is not a corporation resident in both the US
and the UK; and
6.6 that person is not exempt from US tax in a case where (a)
that person's interest in the UK company is not acquired for bona
fide commercial reasons and (b) if the recipient of the dividend
were a resident of the UK and exempt from UK tax, the UK exemption
would be limited or removed.
Therefore, although the position is not free from doubt, a
Unitholder, where the requirements set out above are satisfied,
should, on making an appropriate claim, be entitled to repayment of
part of the UK tax credit. However, since the UK Inland Revenue
normally require claims to be made by the beneficial owner of a
dividend, the Trustee will not, in the absence of arrangements with
the UK Inland Revenue and the Unitholders, be able to claim any such
repayment.
Moreover, in order to make a claim for repayment, the Unitholder
will need to produce evidence of the payment of the dividend and of
his interest in it. Normally this is achieved by submitting to the
Inland Revenue tax vouchers which derive directly from the UK
company paying a dividend, or which are prepared by the Trustee and
evidence to the satisfaction of the Inland Revenue the entitlement
of the Unitholder to that dividend. Where the Trustee provides
neither of these, it will in practice be difficult for the
Unitholder to establish his interest in any dividend payment and
accordingly his entitlement to any tax credit.
7. Since 1 July 1994, it is possible for a UK resident company to
elect to treat a cash dividend paid by it as a "foreign income dividend"
("FID"). If a company makes an effective election to pay a FID in
respect of shares which are held in the United Kingdom Portfolio of the
Trust, there will be no entitlement to a refundable tax credit in respect
of that FID, notwithstanding 6 above. A limited number of FIDs have now
been declared and experience to date suggests that, due to the benefits
to the payers which can result, the amounts so declared can be materially
greater than would have been the case if the company had not taken
advantage of the provisions governing the payment of FIDs.
8. The Trust may be held to be trading in stock rather than
holding stock for investment purposes by virtue, inter alia, of the
length of the time for which the stock is held. If the stock is
purchased through a UK resident agent, then if the Trust is held to be
trading in such stock, profits made on its subsequent disposal may,
subject to 9 and 10 below, be liable to United Kingdom tax on income.
9. Under current law, the Trust's liability to tax on such profits
will be limited to the amount of tax (if any) withheld from the Trust's
income provided such profits derive from transactions carried out on
behalf of the Trust by a UK agent where the following conditions are
satisfied:
9.1 the transactions from which the profits are derived are
investment transactions;
9.2 the agent carries on a business of providing investment
management services;
9.3 the transactions are carried out by the agent on behalf of
the Trust in the ordinary course of that business;
9.4 the remuneration received by the agent is at a customary
rate for the type of business concerned;
9.5 the agent acts for the Trust in an independent capacity.
The agent will act in an independent capacity if the relationship
between the agent and the Trust, taking account of its legal,
financial and commercial characteristics, is one which would exist
between independent persons dealing at arms' length. This will be
regarded as the case by the UK Inland Revenue if, for example, the
provision of services by the agent to the Trust (and any connected
person) does not form a substantial part of the agent's business
(namely where it does not exceed 70 percent of the agent's business,
by reference to fees or some other measure if appropriate).
In addition, this condition will be regarded as satisfied
by the UK Inland Revenue if interest in the Trust, a collective
fund, are freely marketed;
9.6 the agent (and persons connected with the agent) do not
have a beneficial interest in more than 20 percent of the Trust's
income derived from the investment transactions (excluding
reasonable management fees paid to the agent); and
9.7 the agent acts in no other capacity in the UK for the
Trust.
Further where stock is purchased and sold through a UK broker in the
ordinary course of a bona fide broking business carried on in the UK
by that broker and the remuneration which the broker receives for
the transactions is at a rate which is no less than that which is
customary for that class of business and the broker acts in no other
capacity for the Trust in the UK, profits arising from transactions
carried out through that broker will not be liable to UK tax.
Accordingly, unless a Unitholder is UK resident or, being non-UK
resident, has a presence in the UK (other than through an agent or a
broker acting in the manner described in 9 and 10) above in
connection with which the Units are held, the Unitholder will not be
charged to UK tax on such profits.
10. We understand that the Trustee has a branch in the UK and a
wholly-owned UK resident subsidiary. Where the Trustee has a presence in
the UK then it is technically possible that income or gains of the Fund
could be assessed upon the Trustee, whether arising from securities or
from dealings in those securities. However, we consider that any such
risk should be remote providing that:-
10.1 any income derived by the Trustee will be derived by it
(see 6.1 above) as a resident of the US for the purposes of the
Treaty; and
10.2 neither the UK branch nor the UK resident subsidiary of
the Trustee will have any involvement with establishing or managing
the Fund or its assets, nor will they derive income or gains from
the Fund or its assets.
11. Where the Trustee makes capital gains on the disposal of shares
in the UK companies in which the Trust invests, a Unitholder will not be
liable to UK capital gains tax on those gains.
12. UK stamp duty or stamp duty reserve tax will generally be
payable at the rate of 50p per 100 of the consideration (or any part) in
respect of a transfer of the shares in UK incorporated companies or in
respect of transfers to be effected on a UK share register. The tax will
generally be paid by the purchaser of shares. Under current law, no UK
stamp duty or stamp duty reserve tax should be payable on an agreement to
transfer nor a transfer of Units, provided that such transfer is neither
executed in nor brought into the UK.
13. In our opinion the taxation paragraphs contained on pages 41 to
42 of the Prospectus under the heading "United Kingdom Taxation", as
amended in accordance with the Appendix attached to this letter, which
are to be contained in the final prospectus to be issued for the Fund,
represent a fair summary of material UK taxation consequences for a US
resident Unitholder.
14. This opinion is addressed to you on the understanding that you
(and only you) may rely upon it in connection with the issue and sale of
the Units (and for no other purpose). This opinion may not be quoted or
referred to in any public document or filed with any governmental agency
or other person without our written consent. We consent however to the
reference which is to be made in the prospectus to be issued for the Fund
to our opinion as to the UK tax consequences to US persons holding Units
in the Trust.
Yours faithfully
Linklaters & Paines
Exhibit 4.1
Interactive Data
14 West Street
New York, NY 10005
July 8, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital Strategic Ten Trust, United States
Portfolio, Series 9 (A Unit Investment Trust) Registered Under
the Securities Act of 1933, File No. 333-06279
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Services, Inc.,
as the Evaluator, and to the use of the Obligations prepared by us which
are referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Interactive Data
14 West Street
New York, NY 10005
July 8, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital Strategic Five Trust, United States
Portfolio, Series 3 (A Unit Investment Trust) Registered Under
the Securities Act of 1933, File No. 333-06279
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Services, Inc.,
as the Evaluator, and to the use of the Obligations prepared by us which
are referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Interactive Data
14 West Street
New York, NY 10005
July 8, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital Strategic Ten Trust:
United Kingdom Portfolio, Series 9
Hong King Portfolio, Series 9
(A Unit Investment Trust) Registered Under the
Securities Act of 1933, File No. 333-06279
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Services, Inc.,
as the Evaluator, and to the use of the Obligations prepared by us which
are referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Independent Certified Public Accountants' Consent
We have issued our report dated July 8, 1996 on the statements of
condition and related securities portfolios of Van Kampen American
Capital Equity Opportunity Trust, Series 35 as of July 8, 1996 contained
in the Registration Statement on Form S-6 and Prospectus. We consent to
the use of our report in the Registration Statement and Prospectus and to
the use of our name as it appears under the caption "Other Matters-
Independent Certified Public Accountants.'"
Grant Thornton LLP
Chicago, Illinois
July 8, 1996
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This report reflects the current period taken from 487 on July 8, 1996 it is
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This report reflects the current period taken from 487 on July 8, 1996 it is
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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This report reflects the current period taken from 487 on July 8, 1996 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 9
<NAME> HTEN
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-12-1997
<PERIOD-START> JUL-08-1996
<PERIOD-END> JUL-08-1996
<INVESTMENTS-AT-COST> 241871
<INVESTMENTS-AT-VALUE> 241871
<RECEIVABLES> 0
<ASSETS-OTHER> 21345
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 263216
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26095
<TOTAL-LIABILITIES> 26095
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 237121
<SHARES-COMMON-STOCK> 25000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 237121
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on July 8, 1996 it is
unaudited
</LEGEND>
<SERIES>
<NUMBER> 9
<NAME> UTEN
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-12-1997
<PERIOD-START> JUL-08-1996
<PERIOD-END> JUL-08-1996
<INVESTMENTS-AT-COST> 148569
<INVESTMENTS-AT-VALUE> 148569
<RECEIVABLES> 0
<ASSETS-OTHER> 28165
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 176734
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31015
<TOTAL-LIABILITIES> 31015
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145719
<SHARES-COMMON-STOCK> 15000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 145719
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
