File No: 333-
CIK #897014
Securities and Exchange Commission
Washington, D.C. 20549-1004
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 47
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:
Van Kampen American Capital
Chapman And Cutler 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 undivided fractional beneficial interests 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: Not Applicable
H. Approximate date of proposed sale to the public:
As Soon As Practicable After The Effective Date Of The Registration
Statement
______________________________________________________________________
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a) may determine.
Van Kampen American Capital Equity Opportunity Trust
Series 47
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 ) Fund Administration
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
) Risk Factors
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Fund
) Trust Portfolios
) Risk Factors
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 ) Trust Portfolios
underwriter, trustee or any )
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 )
securities ) *
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
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
Preliminary Prospectus Dated December 11, 1996
Subject To Completion
January 6, 1997
VAN KAMPEN AMERICAN CAPITAL
Van Kampen American Capital Equity Opportunity Trust, Series 47
Strategic Ten Trust Strategic Five Trust
United States Portfolio, Series 12 United States Portfolio, Series 6
United Kingdom Portfolio, Series 12 Strategic Thirty Trust
Hong Kong Portfolio, Series 12 Global Portfolio, Series 1
Strategic Fifteen Trust
Global Portfolio, Series 1
The Fund. Van Kampen American Capital Equity Opportunity Trust, Series 47 (the
"Fund") is comprised of six underlying separate unit investment trusts
set forth above (the "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 three Strategic Ten Trusts consist of common
stocks of the ten companies in the respective index for each Trust having the
highest dividend yield as of the close of business three days prior to the
Initial Date of Deposit. The Strategic Ten Trust United States Portfolio,
United Kingdom Portfolio and Hong Kong Portfolio consist of common stocks of
companies included in the Dow Jones Industrial Average (the "DJIA"),
the Financial Times Industrial Ordinary Share Index (the "FT Index")
and the Hang Seng Index, respectively*. The Strategic Five United States Trust
consists of common stocks of the five companies with the 2nd through 6th
lowest per share stock prices 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 Thirty
Global Trust consists of a combined portfolio of the thirty common stocks
included in each of the three Strategic Ten Trusts. The Strategic Fifteen
Global Trust consists of fifteen common stocks which are components of the
DJIA, FT Index or Hang Seng Index*. The fifteen common stocks in the Strategic
Fifteen Global Trust include the five stocks in each of the DJIA, FT Index and
Hang Seng Index* with the 2nd through 6th lowest per share stock prices of the
ten companies in each index 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 February 9, 1998 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 a subsequent Series of
each Trust, 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 securities traded on a foreign securities exchange, these
amounts are computed on the basis of the applicable exchange rate.
Units of the Trusts 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, that portion of distributions treated as United States source income
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, that portion of
distributions not treated as United States source income 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. The
objective of the Strategic Thirty 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 the thirty common stocks included in each of the three
Strategic Ten Trusts. The objective of the Strategic Fifteen 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 fifteen common stocks
comprised of the five stocks in each of the DJIA, FT Index and Hang Seng Index
with the 2nd through 6th lowest per share stock price of the ten companies in
each index having the highest dividend yield as of the close of business three
business days prior to the Initial Date of Deposit. See "Objectives and
Securities Selection". 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% of the Public Offering Price of the Strategic
Ten, Strategic Thirty and Strategic Fifteen Trusts and 2.7% of the Public
Offering Price of the Strategic Five Trust) 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 February 11, 1997 and will continue to
accrue through December 10, 1997. The monthly deferred sales charge will be
charged to each Trust, in arrears, commencing March 11, 1997 and will be
charged on the 11th day of each month thereafter through December 11, 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 Global Trusts, the
Public Offering Price per Unit is based on the aggregate value of the foreign
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. 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 time stated in the "Summary of Essential Financial
Information", 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 Distributions. Distributions of dividends and capital, if
any, received by a Trust will be reinvested into additional Units, if then
available, 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". Unitholders may also elect to receive cash
distributions as provided under "Rights of Unitholders--Reinvestment
Option." The estimated initial distribution for each Trust will be that
amount set forth under "Summary of Essential Financial
Information--Estimated Initial Distribution" and will be made on July 25,
1997 to Unitholders of record on July 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 July
11, 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 Fund, 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 Fund (the
"1998 Fund"), if one is offered, at a reduced sales charge
(anticipated to be 1.9% of the Public Offering Price of the 1998 Fund). The
Sponsor may, however, stop offering units of the 1998 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 1998 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 trusts included in the 1998 Fund are expected to
contain portfolios consisting of component stocks of the DJIA, FT Index or
Hang Seng Index selected in accordance with the indexing strategies of the
Trusts in the current Series of the 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 1998 Fund. The Sponsor
currently anticipates that a new series of the Fund will be created each month.
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 47
Summary of Essential Financial Information
At the close of the relevant stock market on January 3, 1997
or January 6, 1997 (for the United Kingdom and Hong Kong 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
Ten Strategic
United Ten United Strategic Ten
States Kingdom Hong Kong
GENERAL INFORMATION Trust Trust Trust
<S> <C> <C> <C>
Number of Units <F1>......................................................
Fractional Undivided Interest in the Trust per Unit <F1>..................
Public Offering Price:
Aggregate Value of Securities in Portfolio <F2>........................... $ $ $
Aggregate Value of Securities per Unit.................................... $ $ $
Maximum Sales Charge <F3>................................................. $ $ $
Less Deferred Sales Charge per Unit....................................... $ $ $
Public Offering Price per Unit <F3><F4>................................... $ $ $
Redemption Price per Unit <F5>............................................ $ $ $
Initial Secondary Market Repurchase Price per Unit <F5>................... $ $ $
Excess of Public Offering Price per Unit over Redemption Price per Unit... $ $ $
Estimated Initial Distribution............................................ $ $ $
Estimated Annual Dividends per Unit <F6>.................................. $ $ $
Estimated Annual Organizational Expenses per Unit <F7>.................... $ $ $
Maximum of $.0025 per
Supervisor's Annual Supervisory Fee ...................................... Unit
Maximum of $.0025 per
Evaluator's Annual Evaluation Fee......................................... Unit
Rollover Notification Date ............................................... January 9, 1998
Special Redemption Date................................................... February 9, 1998
Mandatory Termination Date ............................................... February 9, 1998
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
Minimum Termination Value................................................. $3,000,000.
Trustee's Annual Fee <F8>................................................. $.008 per Unit
July 10, 1997 and
Income and Capital Account Record Dates................................... February 9, 1998
July 25, 1997 and
Income and Capital Account Distribution Dates............................. February 19, 1998
Close of the relevant
stock market (generally
4:00 P.M. New York time
for a United States,
Strategic Thirty or
Strategic Fifteen Trust,
11:30 A.M. New York time
for the United Kingdom
Trust and 3:30 A.M. New
York time for the Hong
Evaluation Time........................................................... Kong Trust)
</TABLE>
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 47
Summary of Essential Financial Information
At the close of the relevant stock market on January 3, 1997
or January 6, 1997 (for the United Kingdom and Hong Kong 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
Five Strategic
United Thirty Strategic
States Global Fifteen
GENERAL INFORMATION Trust Trust Global Trust
<S> <C> <C> <C>
Number of Units <F1>......................................................
Fractional Undivided Interest in the Trust per Unit <F1>..................
Public Offering Price:
Aggregate Value of Securities in Portfolio <F2>........................... $ $ $
Aggregate Value of Securities per Unit.................................... $ $ $
Maximum Sales Charge <F3>................................................. $ $ $
Less Deferred Sales Charge per Unit....................................... $ $ $
Public Offering Price per Unit <F3><F4>................................... $ $ $
Redemption Price per Unit <F5>............................................ $ $ $
Initial Secondary Market Repurchase Price per Unit <F5>................... $ $ $
Excess of Public Offering Price per Unit over Redemption Price per Unit... $ $ $
Estimated Initial Distribution............................................ $ $ $
Estimated Annual Dividends per Unit <F6>.................................. $ $ $
Estimated Annual Organizational Expenses per Unit <F7>.................... $ $ $
Supervisor's Annual Supervisory Fee ...................................... Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee......................................... Maximum of $.0025 per Unit
Rollover Notification Date ............................................... January 9, 1998
Special Redemption Date................................................... February 9, 1998
Mandatory Termination Date ............................................... February 9, 1998
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
Minimum Termination Value................................................. than $3,000,000.
Trustee's Annual Fee <F8>................................................. $.008 per Unit
July 10, 1997 and February
Income and Capital Account Record Dates................................... 9, 1998
July 25, 1997 and February
Income and Capital Account Distribution Dates............................. 19, 1998
Close of the relevant stock
market (generally 4:00 P.M.
New York time for a United
States, Strategic Thirty or
Strategic Fifteen 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
Evaluation Time........................................................... 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 Global Trusts represents the U.S. dollar value
based on the offering side value of the currency exchange rates for the
related currency, at the applicable Evaluation Time on the date of this "
Summary of Essential Financial Information".
<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% of the Public Offering Price of the Strategic Ten, Strategic
Thirty and Strategic Fifteen Trusts and 2.7% of the Public Offering Price of
the Strategic Five Trust) 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% of
the Public Offering Price (2.987% of the aggregate value of the Securities
less the deferred sales charge) for the Strategic Ten, Strategic Thirty and
Strategic Fifteen Trusts, and 2.7% of the Public Offering Price (2.775% of the
aggregate value of the Securities less the deferred sales charge) for the
Strategic Five Trust. 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 Global Trusts, the Public Offering Price per Unit is based on the
aggregate value of the foreign Securities computed on the basis of the
offering side value of the relevant currency exchange rate expressed in U.S.
dollars.
<F5>The 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 Global Trusts, the Redemption Price per Unit is based on
the aggregate value of the foreign Securities computed on the basis of the bid
side value of the relevant currency exchange rate expressed in U.S. dollars.
<F6>Estimated annual dividends are based on the most recently declared dividends
or, in the case of the foreign Securities in the Global 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 $, $, $, $, $ and $ for the Strategic Ten United
States, Strategic Ten United Kingdom, Strategic Ten Hong Kong, Strategic Five
United States, Strategic Thirty Global and Strategic Fifteen Global 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 Strategic Ten Hong Kong, Strategic Thirty and Strategic
Fifteen Trusts the Trustee will receive additional annual compensation,
payable at the end of the initial offering and in monthly installments
thereafter, of $1.10 per $1,000 of market value of Equity Securities traded on
the Hong Kong Stock Exchange held in a sub-custodian account at month end.
</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.
<TABLE>
<CAPTION>
Strategic Ten Strategic Ten Strategic Ten
United States United Hong Kong
Trust Kingdom Trust Trust
----------------- ----------------- -----------------
<S> <C> <C> <C>
Unitholder Transaction Expenses (as a percentage of offering price)
Initial Sales Charge Imposed on Purchase<F1>................................ 1.00% 1.00% 1.00%
Deferred Sales Charge<F2>................................................... 1.90% 1.90% 1.90%
----------------- ----------------- -----------------
Maximum Sales Charge........................................................ 2.90% 2.90% 2.90%
================= ================= =================
Maximum Sales Charge Imposed on Reinvested Dividends<F3>.................... 1.90% 1.90% 1.90%
================= ================= =================
Estimated Annual Fund Operating Expenses (as a percentage of aggregate value)
Trustee's Fee...............................................................
Portfolio Supervision and Evaluation Fees...................................
Organizational Costs........................................................
----------------- ----------------- -----------------
Total.......................................................................
================= ================= =================
</TABLE>
<TABLE>
Example
<CAPTION>
An investor would pay
the following expenses
on a $1,000
investment, assuming a
5% annual return and
redemption at the end
of each time period.
<S> <C> <C> <C>
Cumulative Expenses
Paid for Period of: Strategic Ten United States Trust Strategic Ten United Kingdom Trust Strategic Ten Hong Kong Trust
------------------------------------ ------------------------------------- --------------------------------
1 Year................$ $ $
3 Years...............$ $ $
5 Years............... N/A N/A N/A
10 Years.............. N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Strategic Five Strategic Strategic
United States Fifteen Global Thirty Global
Trust Trust Trust
------------------ ------------------ -----------------
<S> <C> <C> <C>
Unitholder Transaction Expenses (as a percentage of offering price)
Initial Sales Charge Imposed on Purchase<F1>.............................. 0.80% 1.00% 1.00%
Deferred Sales Charge<F2>................................................. 1.90% 1.90% 1.90%
------------------ ------------------ -----------------
Maximum Sales Charge...................................................... 2.70% 2.90% 2.90%
================== ================== =================
Maximum Sales Charge Imposed on Reinvested Dividends<F3>.................. 1.90% 1.90% 1.90%
================== ================== =================
Estimated Annual Fund Operating Expenses (as a percentage of aggregate
value)
Trustee's Fee.............................................................
Portfolio Supervision and Evaluation Fees.................................
Organizational Costs......................................................
------------------ ------------------ -----------------
Total.....................................................................
================== ================== =================
</TABLE>
<TABLE>
Example
<CAPTION>
An investor would pay the
following expenses on a
$1,000 investment,
assuming a 5% annual
return and redemption at
the end of each time
period.
<S> <C> <C> <C>
Cumulative Expenses Paid
for Period of: Strategic Five United States Trust Strategic Fifteen Global Trust Strategic Thirty Global Trust
------------------------------------- --------------------------------- --------------------------------
1 Year...................$ $ $
3 Years..................$ $ $
5 Years.................. N/A N/A N/A
10 Years................. N/A N/A N/A
</TABLE>
The 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.
- ----------
The Initial Sales Charge is actually the difference between Maximum Sales
Charge (2.9% of the Public Offering Price of the Strategic Ten, Strategic
Thirty and Strategic Fifteen Trusts and 2.7% of the Public Offering Price of
the Strategic Five Trust) and the maximum deferred sales charge ($.19 per
Unit) and would exceed 1.00% or 0.80%, as applicable, if the Public Offering
Price exceeds $10 per Unit.
The actual fee is $0.019 per Unit per month, irrespective of purchase or
redemption price, deducted over the 10 months commencing April 6, 1997. 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".
THE FUND
- --------------------------------------------------------------------------
Van Kampen American Capital Equity Opportunity Trust, Series 47 is comprised
of the following separate underlying unit investment trusts: Strategic Ten
Trust United States Portfolio, Series 12 (the "Strategic Ten United States
Trust"), Strategic Ten Trust United Kingdom Portfolio, Series 12 (the "
Strategic Ten United Kingdom Trust"), Strategic Ten Trust Hong Kong
Portfolio, Series 12 (the "Strategic Ten Hong Kong Trust"), Strategic
Five Trust United States Portfolio, Series 6 (the "Strategic Five United
States Trust"), Strategic Thirty Trust Global Portfolio, Series 1 (the
"Strategic Thirty Global Trust") and Strategic Fifteen Global
Portfolio, Series 1 (the "Strategic Fifteen Global Trust"). The
Strategic Ten United States Trust, Strategic Ten United Kingdom Trust and
Strategic Ten Hong Kong Trust are referred to herein as the "Strategic Ten
Trusts," the Strategic Five United States Trust is referred to herein as
the "Strategic Five Trust," the Strategic Thirty Global Trust is
referred to herein as the "Strategic Thirty Trust," and the Strategic
Fifteen Global Trust is referred to herein as the "Strategic Fifteen
Trust." The Strategic Ten United States Trust and Strategic Five United
States Trusts are referred to herein as the "United States Trusts,"
the Strategic Ten United Kingdom Trust is referred to herein as the "
United Kingdom Trust" and the Strategic Ten Hong Kong Trust is referred to
herein as the "Hong Kong Trust." The Strategic Ten United Kingdom
Trust, Strategic Ten Hong Kong Trust, Strategic Thirty Global Trust and
Strategic Fifteen Global Trust are referred to herein as the "Global
Trusts".
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. The
Strategic Thirty Trust consists of a combined portfolio of the thirty common
stocks included in each of the three Strategic Ten Trusts. The Strategic
Fifteen Trust consists of fifteen common stocks which are components of the
DJIA, FT Index or Hang Seng Index. The fifteen common stocks in the Strategic
Fifteen Trust include the five stocks in each of the DJIA, FT Index and Hang
Seng Index with the 2nd through 6th lowest per share stock price of the ten
companies in each index 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
indexes described herein 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 the Trusts, 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 (i) additional Securities, (ii) contracts to purchase securities
together with cash or irrevocable letters of credit or (iii) cash (including a
letter of credit) with instructions to purchase additional Securities. As
additional Units are issued by a Trust, 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 or cash with instructions to purchase
additional 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. If the Sponsor deposits cash, however, existing
and new investors may experience a dilution of their investments and a
reduction in their anticipated income because of fluctuations in the prices of
the Securities between the time of the cash deposit and the purchase of the
Securities and because the Trust will pay the associated brokerage or
acquisition fees. To minimize this effect, the Trust will attempt to purchase
the Securities as close to the Evaluation Time or as close to the evaluation
prices as possible.
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. The objective of the Strategic Thirty 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 the thirty common stocks
included in each of the three Strategic Ten Trusts. The objective of the
Strategic Fifteen 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
fifteen common stocks comprised of the five stocks in each of the DJIA, FT
Index and Hang Seng Index with the 2nd through 6th lowest per share stock
price of the ten companies in each index 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 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 XX of the last 25 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 XX 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 XX of the last 20
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 XX of the last 25 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 Global Trusts may be 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 XX 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 Global 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 foreign currencies in
which the foreign Securities are denominated relative to the U.S. dollar will
adversely affect the value of the related Global 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. The Strategic Thirty Trust consists of a
combined portfolio of the thirty common stocks included in each of the three
Strategic Ten Trusts. The Strategic Fifteen Trust consists of fifteen common
stocks which are components of the DJIA, FT Index and Hang Seng Index. The
fifteen common stocks in the Strategic Fifteen Trust include the five stocks
in each of the DJIA, FT Index and Hang Seng Index with the 2nd through 6th
lowest per share stock price of the ten companies in each index 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 securities traded on the New York Stock Exchange, 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 securities traded on a foreign securities exchange, 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.
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
AT&T Corporation 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:
[PORTFOLIO TO COME]
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>
1972 % %
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
</TABLE>
* 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.
- ----------
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.
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, twenty
and twenty-five years periods was XX%, XX%, XX%, XX% and XX%, 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, twenty and twenty-five year periods was XX%, XX%, XX%, XX% and XX%,
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 XX of the last 25 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 XX% and XX% 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>
<CAPTION>
Value of $10,000 Invested
January 1, 1972
- ---------------------------------
Period DJIA Ten DJIA
- --------- ------------- ---------
<S> <C> <C>
1972 $ $
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
</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:
[PORTFOLIO TO COME]
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>
<CAPTION>
COMPARISON OF
TOTAL RETURNS*
DJIA Five Dow Jones Industrial Average
------------------------- ----------------------------
Year Total Return <F1> Total Return <F1>
- -------- ------------------------- ----------------------------
<S> <C> <C>
1972 % %
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
</TABLE>
* 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.
- ----------
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.
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, twenty
and twenty-five years periods was XX%, XX%, XX%, XX% and XX%, 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, twenty and twenty-five year periods was XX%, XX%, XX%, XX% and XX%,
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 XX of the last
25 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 XX% and XX% 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, 1972
- ----------------------------------
Period DJIA Five DJIA
- --------- -------------- ---------
<S> <C> <C>
1972 $ $
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
</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 Glaxo Wellcome Plc
Allied Domecq Plc Grand Metropolitan
BICC Plc Guest Keen & Nettlefolds (GKN) Plc
BOC Group Guinness
BTR Plc Hanson Plc
Blue Circle Industries Plc Imperial Chemical Industries Plc
Boots Co Lucas Industries Plc
British Airways Marks & Spencer
British Gas Plc National Westminster Bank Plc
British Petroleum Peninsular & Oriental Steam Navigation Company
British Telecom Plc Reuters Holdings
Cadbury Schweppes Royal & Sun Alliance Insurance Group Plc
Courtaulds Plc SmithKline Beecham
EMI Group Plc Tate & Lyle
General Electric Plc Vodaphone Group 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:
[PORTFOLIO TO COME]
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
the companies included in the FT Index, 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*
Financial Times Industrial Ordinary
FT Ten Share Index
--------------- -------------------------------------
Total Return
Year <F1> Total Return <F1>
- -------- --------------- -------------------------------------
<S> <C> <C>
1977 % %
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
* 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 XX%, XX%, XX% and XX%, 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 XX%, XX%, XX% and XX%, 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 XX 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 XX% and XX% 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, 1977<F1><F2>
- -----------------------------------
Period FT Ten FT Index
- --------- ----------- -------------
<S> <C> <C>
1977 $ $
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
- ----------
<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 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. Hopewell Holdings
Bank of East Asia HSBC Holdings Plc
Cathay Pacific Airways Hutchison Whampoa
Cheung Kong (Holdings) Ltd. Hysan Development Company Ltd.
China Light & Power Co. Ltd. Johnson Electric Holdings
Citic Pacific New World Development Co. Ltd.
First Pacific Company Ltd. Oriental Press Group
Great Eagle Holdings Shangri-La Asia Ltd.
Guangdong Investment Shun Tak Holdings Ltd.
Hang Lung Development Company Sino Land Co. Ltd.
Hang Seng Bank Ltd. South China Morning Post (Holdings) Ltd.
Henderson Investment Ltd. Sun Hung Kai Properties Ltd.
Henderson Land Development Co. Ltd. Swire Pacific (A)
Hong Kong and China Gas TV Broadcasts
Hong Kong Electric Holdings Ltd. Wharf Holdings
Hong Kong and Shanghai Hotels Wheelock & Co.
Hong Kong Telecommunications Ltd.
</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:
[PORTFOLIO TO COME]
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 20 years, as of December 31 in
each of those years. The Hang Seng Index statistics are based on a geometric,
unweighted average of the companies included in the Hang Seng Index, 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>
1977 % %
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
</TABLE>
* 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.
- ----------
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.
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
twenty year periods was XX%, XX%, XX% and XX%, 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 twenty year periods was XX%, XX%, XX% and XX%, 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 XX of the last 20 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 XX% and XX% 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,
1977<F1><F2>
- ------------------------------------------------
Period Hang Seng Ten Hang Seng Index
- ------------------------------------------------
<S> <C> <C>
1977 $ $
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
</TABLE>
- ----------
The $10,000 initial investment was converted into Hong Kong dollars using the
opening exchange rate at the beginning of each period.
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.
Strategic Thirty Global Trust
- --------------------------------------------------------------------------
Strategic Thirty Trust Portfolio
The Strategic Thirty Trust consists of a combined portfolio of the thirty
common stocks included in each of the three Strategic Ten Trusts. The
Strategic Thirty Trust consists of common stocks of the following thirty
companies:
[PORTFOLIO TO COME]
The following table compares the actual performance of the combined DJIA, FT
Index and Hang Seng Index and the thirty stocks in these indices selected in
accordance with the Strategic Ten Trust investment strategy in each of the
past 20 years (the "Combined Thirty"), as of December 31 in each of
those years. The combined DJIA, FT Index and Hang Seng Index statistics are
based on a geometric, unweighted average of the companies included in such
indices, while the statistics for the Combined Thirty are based on an
approximately equal distribution (based on market price) of each of the thirty
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 combined DJIA, FT Index and Hang Seng
Index may not be the same stocks from year to year and may not be the same
common stocks as those included in the Strategic Thirty Global Trust.
Based on the total returns set forth in the table above, the average annual
total returns for the Combined Thirty for the most recent three, five, ten and
twenty year periods was XX%, XX%, XX% and XX%, respectively. On the other
hand, based on the total returns set forth in the table above, the average
annual total returns for the combined DJIA, FT Index and Hang Seng Index for
the most recent three, five, ten and twenty year periods was XX%, XX%, XX% and
XX%, 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 Thirty Global 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 combined DJIA, FT Index and Hang Seng Index
in _____ of the last 20 years and there can be no assurance that such Trust
will outperform the related indices over the life of such Trust or over
consecutive rollover periods, if available. A Unitholder in the Strategic
Thirty Global 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 Combined Thirty and may not be fully invested at all times.
The chart below represents past performance of the combined DJIA, FT Index and
Hang Seng Index and the Combined Thirty (but not the Strategic Thirty Global
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 _____% and _____% for
the Combined Thirty and the combined DJIA, FT Index and Hang Seng Index,
respectively. There can be no assurance that the Strategic Thirty Global Trust
will outperform the related indices over its life or over consecutive rollover
periods, if available.
<TABLE>
<CAPTION>
Value of $10,000 Invested January 1, 1977<F1><F2>
- ----------------------------------------------------------------
DJIA,
Period FT Index and Hang Seng Index Combined Thirty
- --------- --------------------------------- --------------------
<S> <C> <C>
1977 $ $
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
</TABLE>
- ----------
The $10,000 initial investment was converted into British pounds sterling and
Hong Kong dollars, as applicable, using the opening exchange rate at the
beginning of each period.
The year-end total in British pounds sterling and Hong Kong dollars, as
applicable, was converted into U.S. dollars using the ending exchange rate.
This amount was then converted back into British pounds sterling and Hong Kong
dollars, as applicable, using the opening exchange rate at the beginning of
the next period.
Strategic Fifteen Global Trust
- --------------------------------------------------------------------------
Strategic Fifteen Trust Portfolio
The Strategic Fifteen Trust consists of common stocks of fifteen companies
comprising the five stocks in each of the DJIA, FT Index and Hang Seng Index
with the 2nd through 6th lowest per share stock price of the ten companies in
each index having the highest dividend yield as of the close of business three
business days prior to the Initial Date of Deposit. The Strategic Fifteen
Trust consists of common stocks of the following fifteen companies:
[PORTFOLIO TO COME]
The following table compares the actual performance of the combined DJIA, FT
Index and Hang Seng Index and the fifteen stocks comprised of the five stocks
in each of the DJIA, FT Index or Hang Seng Index with the 2nd through 6th
lowest per share stock price of the ten companies in each index having the
highest dividend yield in each of the past 20 years (the "Combined
Fifteen"), as of December 31 in each of those years. The combined DJIA, FT
Index and Hang Seng Index statistics are based on a geometric, unweighted
average of the companies included in such indices, while the statistics for
the Combined Fifteen are based on an approximately equal distribution (based
on market price) of each of the fifteen 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 combined
DJIA, FT Index and Hang Seng Index may not be the same stocks from year to
year and may not be the same common stocks as those included in the Strategic
Fifteen Global Trust.
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 XX%, XX%, XX% and XX%, respectively. On the other hand, based
on the total returns set forth in the table above, the average annual total
returns for the combined DJIA, FT Index and Hang Seng Index for the most
recent three, five, ten and twenty year periods was XX%, XX%, XX% and XX%,
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 Fifteen 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 combined DJIA, FT Index and Hang Seng Index in
_____ of the last 20 years and there can be no assurance that such Trust will
outperform the related indices over the life of such Trust or over consecutive
rollover periods, if available. A Unitholder in the Strategic Fifteen Global
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 Combined
Fifteen and may not be fully invested at all times.
The chart below represents past performance of the combined DJIA, FT Index and
Hang Seng Index and the Combined Fifteen (but not the Strategic Fifteen Global
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 _____% and _____% for
the Combined Fifteen and the combined DJIA, FT Index and Hang Seng Index,
respectively. There can be no assurance that the Strategic Fifteen Global
Trust will outperform the related indices over its life or over consecutive
rollover periods, if available.
<TABLE>
<CAPTION>
Value of $10,000 Invested January 1, 1977<F1><F2>
- -----------------------------------------------------------------
DJIA,
Period FT Index and Hang Seng Index Combined Fifteen
- --------- --------------------------------- ---------------------
<S> <C> <C>
1977 $ $
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
- ----------
<FN>
<F1>The $10,000 initial investment was converted into British pounds sterling and
Hong Kong dollars, as applicable, using the opening exchange rate at the
beginning of each period.
<F2>The year-end total in British pounds sterling and Hong Kong dollars, as
applicable, was converted into U.S. dollars using the ending exchange rate.
This amount was then converted back into British pounds sterling and Hong Kong
dollars, as applicable, 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 Global 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>
$ $ $ $
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
</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 Ten 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>
$ $ $ $
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
</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.
The Trust Agreement authorizes the Sponsor to increase the size of each Trust
and the number of Units thereof by the deposit of additional Securities, or
cash (including a letter of credit) with instructions to purchase additional
Securities, in the Trust and the issuance of a corresponding number of
additional Units. If the Sponsor deposits cash, existing and new investors may
experience a dilution of their investments and a reduction in their
anticipated income because of fluctuations in the prices of the Securities
between the time of the cash deposit and the purchase of the Securities and
because each Trust will pay the associated brokerage fees. To minimize this
effect, each Trust will attempt to purchase the Securities as close to the
Evaluation Time or as close to the evaluation prices as possible.
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.
Foreign Securities. Since certain Equity Securities included in the United
Kingdom Trust, Hong Kong Trust, Strategic Thirty Trust and Strategic Fifteen
Trust 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 Trusts 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 Global 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 the Global 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 Global
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.
Global 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 Global Trusts.
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 fifteen 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, Strategic Thirty and
Strategic Fifteen Trusts. It should be noted by investors that the Strategic
Ten Hong Kong, Strategic Thirty and Strategic Fifteen Trusts terminate after
the July 1, 1997 reversion to the sovereignty of China. The Sponsor is unable
to predict the level of market liquidity or volatility which may occur after
the reversion to sovereignty, both of which may negatively impact the
Strategic Ten Hong Kong, Strategic Thirty and Strategic Fifteen Trusts and the
value of the Units.
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 renewed China's status for another year. 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, Strategic Thirty and Strategic Fifteen Trusts.
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, Strategic Thirty and
Strategic Fifteen Trusts.
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. During 1994, the
Hang Seng Index lost approximately 31% of its value. The Hang Seng Index is
subject to change, and delisting of any issues or removal of issuers from the
Hang Seng Index may have an adverse impact on the performance of the Strategic
Ten Hong Kong, Strategic Thirty and Strategic Fifteen Trusts, although
delisting or removal would not necessarily result in the disposal of the stock
of these companies, nor would it prevent the Strategic Ten Hong Kong,
Strategic Thirty and Strategic Fifteen Trusts from purchasing additional
Equity Securities. In recent years, a number of companies, comprising
approximately 10% of the total capitalization of the Hang Seng Index, have
delisted. In addition to these delistings, as of August 30, 1996, two issuers,
Hong Kong Aircraft Engineering Co. Ltd. and Miramar Hotel and Investment, were
removed from the Hang Seng Index. These issuers were replaced by First Pacific
Company Ltd. and Henderson Investments Ltd. No assurance can be made that
future changes in the composition of the Hang Seng Index will not occur. The
Strategic Ten Hong Kong, Strategic Thirty and Strategic Fifteen Trusts may be
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, Strategic Thirty and Strategic Fifteen Trusts.
Exchange Rate. The Global 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>
<CAPTION>
FOREIGN EXCHANGE RATES
Range of Fluctuations in
Foreign Currencies
- ---------------------------------------------
United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar 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
1996
</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 Hong United Kingdom Hong
Pound Sterling/ Kong/U.S. Pound Sterling/ Kong/U.S.
Monthly Period U.S. Dollar Dollar Monthly Period U.S. Dollar Dollar
- ----------------- -------------------- ------------- ------------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
1992 1994 (Continued)
January .559 7.762 July .648 7.725
February .569 7.761 August .652 7.728
March .576 7.740 September .634 7.727
April .563 7.757 October .611 7.724
May .546 7.749 November .639 7.731
June .525 7.731 December .639 7.738
July .519 7.732 1995
August .503 7.729 January .633 7.732
September .563 7.724 February .631 7.730
October .641 7.736 March .617 7.733
November .659 7.742 April .620 7.742
December .662 7.744 May .630 7.735
1993 June .627 7.736
January .673 7.734 July .626 7.738
February .701 7.734 August .645 7.741
March .660 7.731 September .631 7.732
April .635 7.730 October .633 7.727
May .640 7.724 November .652 7.731
June .671 7.743 December .645 7.733
July .674 7.761 1996
August .670 7.755 January .661 7.728
September .668 7.734 February .653 7.731
October .676 7.733 March .655 7.734
November .673 7.725 April .664 7.735
December .677 7.723 May .645 7.736
1994 June .644 7.741
January .664 7.724 July .642 7.735
February .673 7.727 August .640 7.733
March .674 7.737 September .639 7.733
April .659 7.725 October .615 7.732
May .662 7.726 November .595 7.732
June .648 7.730 December
</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, Strategic Thirty and Strategic Fifteen Trusts 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 such Trusts 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 "1998 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 1998 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 1998 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
1998 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.
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 LLP, 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, Strategic Thirty or Strategic Fifteen Trusts 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 such
Trusts 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, Strategic
Thirty or Strategic Fifteen Trusts.
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
such a U.S. Unitholder of Units in the United Kingdom, Strategic Thirty or
Strategic Fifteen Trusts to claim such a Treaty Payment is unclear where
dividend payments are made directly to an entity such as the United Kingdom,
Strategic Thirty or Strategic Fifteen Trusts. 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, Strategic Thirty or Strategic Fifteen
Trusts 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, Strategic Thirty
or Strategic Fifteen Trusts 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,
Strategic Thirty or Strategic Fifteen Trusts, 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, Strategic Thirty or Strategic Fifteen
Trusts, 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, Strategic Thirty or Strategic Fifteen Trusts.
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, Strategic Thirty or Strategic Fifteen Trusts. 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,
Strategic Thirty or Strategic Fifteen Trusts applicable to their particular
circumstances.
Taxation of Dividends. Amounts in respect of dividends paid to Unitholders of
the Hong Kong, Strategic Thirty or Strategic Fifteen Trusts are not taxable
and therefore will not be subject to the deduction of any withholding tax.
Profits Tax. A Unitholder of the Hong Kong, Strategic Thirty or Strategic
Fifteen Trusts (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, Strategic Thirty or Strategic
Fifteen Trusts 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 the end of the
initial offering period at which time such calculation is based on the number
of Units of each Trust outstanding on such date) and in connection with the
Global 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, (h) accrual of costs associated with liquidating the foreign securities
held in a Trust portfolio and (i) 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% of the Public
Offering Price of the Strategic Ten, Strategic Thirty and Strategic Fifteen
Trusts and 2.7% of the Public Offering Price of the Strategic Five Trust) 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 February 11,
1997 and will continue to accrue through July 10, 1997. The monthly deferred
sales charge will be charged to each Trust, in arrears, commencing March 11,
1997 and will be charged on the 11th day of each month thereafter through July
11, 1997. If any deferred sales charge payment date is not a business day, the
payment will be charged to the Trusts on the next business day. 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
Unitholder on a per Unit basis will be 2.9% of the Public Offering Price
(2.987% of the aggregate value of the Securities less the deferred sales
charge) for the Strategic Ten, Strategic Thirty and Strategic Fifteen Trusts,
and 2.7% of the Public Offering Price (2.775% of the aggregate value of the
Securities less the deferred sales charge) for the Strategic Five Trust. In
the case of the Global Trusts, such underlying value is based on the aggregate
value of the foreign 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. 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>
Percentage
of Sales
Charge
Aggregate Number of Reduction
Units Purchased * 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
*The breakpoint sales charges are
also applied on a dollar basis
utilizing a breakpoint equivalent in
the above table of $10 per Unit and
will be applied on whichever basis is
more favorable to the investor. The
breakpoints will be adjusted to take
into consideration purchase orders
stated in dollars which cannot be
completely fulfilled due to the
Trusts' requirement that only whole
Units be issued.
</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 ("immediate family members") 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 Trusts may utilize proceeds received upon termination or upon
redemption immediately preceding termination of such unaffiliated trust to
purchase Units of a 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 Global 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.
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 January 3, 1997
or January 6, 1997 (for the United Kingdom and Hong Kong 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. In connection with the Strategic
Thirty and Strategic Fifteen Trusts, the term "business day" shall
exclude any day on which Securities representing greater than 20% of the
aggregate value of a Trust are not traded on the principal trading exchange
for such Securities due to a customary business holiday on such exchange;
accordingly, purchases or redemptions of Units in such Trusts on such a day
will be based on the next determination of price of the Securities (and the
price of such Units would be the next computed Unit price). 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
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
July 11, 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 or foreign
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. The evaluation of a foreign
Security in either the Strategic Thirty Trust or the Strategic Fifteen Trust
will take into consideration any event or announcement occurring after the
close of the related foreign securities exchange and prior to the Evaluation
Time of such Trust which could have a material affect on the value of such
Security. If the Equity Securities are not listed on a national or foreign
securities exchange 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 Global Trusts, the value of the
Equity Securities during the initial offering period is based on the aggregate
underlying value of the foreign Securities computed on the basis of the
offering side value of the relevant currency exchange rate expressed in U.S.
dollars as of the related Evaluation Time.
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>
<CAPTION>
Initial Offering
Period
Concession or
Agency
Commission per
Unit
---------------------------------------------------------------------
Strategic Ten, Strategic
Aggregate Number of Thirty and Strategic Fifteen
Units Purchased* 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
*The breakpoint concessions or agency commissions are also applied on a dollar basis
utilizing a breakpoint equivalent in the above table of $10 per Unit and will be applied on
whichever basis is more favorable to the broker, dealer or agent. The breakpoints will be
adjusted to take into consideration purchase orders stated in dollars which cannot be
completely fulfilled due to the Trusts' requirement that only whole Units be issued.
</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% per Unit for the Strategic Ten,
Strategic Thirty and Strategic Fifteen Trusts and 1.8% per Unit for the
Strategic Five Trust. 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% of the Public Offering Price of the Strategic Ten,
Strategic Thirty and Strategic Fifteen Trusts and 2.7% of the Public Offering
Price of the Strategic Five Trust, 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 "Notes to
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 July 11,
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
Global 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 Global 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. Unitholders
will initially receive their distributions in the form of an automatic
reinvestment into additional Units unless the Unitholder elects to receive
distributions in cash. See "Rights of Unitholders--Reinvestment
Option." 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). 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 or his or her broker or
agent must file with the Trustee a written notice of election, together with
any certificate representing Units and other documentation that the Trustee
may then require, 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 Global 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 foreign Securities will continue to trade on
those days and thus the value of the Global 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 Global 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 or foreign 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 Global Trusts, the value of the Equity Securities in the secondary
market is based on the aggregate value of the foreign 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 Global 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 Trust (and the Distribution
Agent on behalf of Rollover Unitholders) can sell Securities to a New Series
if those Securities continue to meet the related investment strategy of the
respective Series. 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 Fund (the "1998 Fund"), if then being offered, the
trusts of which will contain portfolios consisting of component stocks of the
DJIA, FT Index or Hang Seng Index selected in accordance with the indexing
strategies of the Trusts in the current Series of the Fund. The proceeds of
redemption will be used to buy 1998 Fund units in the appropriate portfolio as
the proceeds become available.
The Sponsor intends to create the 1998 Fund shortly prior to the Special
Redemption Date, dependent upon the availability and reasonably favorable
prices of the Securities included in the 1998 Fund portfolios, and it is
intended that Rollover Unitholders will be given first priority to purchase
the 1998 Fund units. There can be no assurance, however, as to the exact
timing of the creation of the 1998 Fund units or the aggregate number of 1998
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 1998 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 1998 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 1998 Fund units, the proceeds of the sales (and any other cash
distributed upon redemption) will be invested in the 1998 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 1998 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 1998 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 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 1998 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 1998 Fund or any subsequent
series of the Fund. The Sponsor may also modify the terms of the Special
Redemption and Rollover in the 1998 Fund upon notice to the Unitholders prior
to the Rollover Notification Date specified in the related "Summary of
Essential Financial Information".
FUND ADMINISTRATION
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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 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 Trusts. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. On October 31, 1996, VK/AC Holding, Inc.
became a wholly owned indirect subsidiary of Morgan Stanley Group Inc.
pursuant to the closing of an Agreement and Plan of Merger among Morgan
Stanley Group Inc., MSAM Holding II, Inc. and MSAM Acquisition Inc., whereby
MSAM Acquisition Inc. was merged with and into VK/AC Holding, Inc. and VK/AC
Holding, Inc. was the surviving corporation (the "Acquisition"). As a
result of the Acquisition, VK/AC holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser ("MASM"), Morgan Stanley
& Co. Incorporated, a registered broker-dealer and investment adviser, and
Morgan Stanley International, are engaged in a wide range of financial
services. Their principal businesses include securities underwriting,
distribution and trading: merger, acquisition, restructuring and other
corporate finance advisory activities; merchant banking; stock brokerage and
research services; asset management; trading of futures, options, foreign
exchange commodities and swaps (involving foreign exchange, commodities,
indices and interest raters); real estate advice, financing and investing; and
global custody, securities clearance services and securities lending. As of
September 30, 1996, MSAM, together with its affiliated investment advisory
companies, had approximately $104.5 billion of assets under management and
fiduciary advice. Prior to October 31, 1996, VK/AC Holding, Inc. was
controlled, through the ownership of a substantial majority of its common
stock, by The Clayton & Dubilier Private Equity IV Limited Partnership. 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 September 30, 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 September 30, 1996, the Sponsor and its affiliates managed or supervised
approximately $58.6 billion of investment products, of which over $23.0
billion is invested in municipal securities. The Sponsor and its affiliates
managed $47.1 billion of assets, consisting of $28.8 billion for 60 open end
mutual funds (of which 48 are distributed by Van Kampen American Capital
Distributors, Inc.), $12.6 billion for 38 closed-end funds and $5.6 billion
for 114 institutional accounts. The Sponsor has also deposited approximately
$26 billion of unit investment trusts. All of Van Kampen American Capital's
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 unit investment trust
division 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 LLP 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 47:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen American Capital Equity Opportunity Trust, Series 47
as of January 6, 1997. 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 47 as of January 6, 1997, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
January 6, 1997
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 47
STATEMENTS OF CONDITION
As of January 6, 1997
<CAPTION>
Strategic Ten Strategic Ten
INVESTMENT IN SECURITIES United States United Kingdom Strategic Ten Hong
Trust Trust Kong Trust
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Contracts to purchase Securities <F1>.......... $ $ $
Organizational costs <F2>......................
Total.......................................... $ $ $
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued organizational costs <F2>.............. $ $ $
Deferred sales charge liability <F3>...........
Interest of Unitholders--
Cost to investors <F4>.........................
Less: Gross underwriting commission <F4><F5>...
Net interest to Unitholders <F4>...............
Total.......................................... $ $ $
==========
<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 $, $, and $ which
have been deposited with the Trustee with respect to the Strategic Ten United
States Trust, Strategic Ten United Kingdom Trust and Strategic Ten Hong Kong
Trust, respectively.
<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 $, $ and $ for the Strategic Ten United States Trust, Strategic Ten
United Kingdom Trust and Strategic Ten Hong Kong Trust, respectively. 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>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 47
STATEMENTS OF CONDITION (Continued)
As of January 6, 1997
<CAPTION>
Strategic
INVESTMENT IN SECURITIES Five United Strategic Thirty Strategic Fifteen
States Trust Global Trust Global Trust
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Contracts to purchase Securities <F1>.......... $ $ $
Organizational costs <F2>......................
Total.......................................... $ $ $
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued organizational costs <F2>.............. $ $ $
Deferred sales charge liability <F3>...........
Interest of Unitholders--
Cost to investors <F4>.........................
Less: Gross underwriting commission <F4><F5>...
Net interest to Unitholders <F4>...............
Total.......................................... $ $ $
==========
<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 $, $ and $ which
have been deposited with the Trustee with respect to the Strategic Five United
States Trust, Strategic Thirty Global Trust and Strategic Fifteen Global
Trust, respectively.
<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 $, $ and $ for the Strategic Five United States Trust, Strategic
Thirty Global Trust and Strategic Fifteen Global Trust, respectively. 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 12
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 47)
as of the Initial Date of Deposit: January 6, 1997
<CAPTION>
Estimated
Market Value Annual Cost of
Number per Share Dividends per Securities to
of Shares Name of Issuer <F1> <F2> Share <F2> Trust <F2>
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $
- ------------
$
============
</TABLE>
<TABLE>
STRATEGIC TEN TRUST UNITED KINGDOM PORTFOLIO, SERIES 12
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 47)
as of the Initial Date of Deposit: January 6, 1997
<CAPTION>
Estimated
Market Value Annual Cost of
Number per Share Dividends per Securities to
of Shares Name of Issuer <F1> <F2> Share <F2> Trust <F2>
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $
- ------------
$
============
</TABLE>
<TABLE>
STRATEGIC TEN TRUST HONG KONG PORTFOLIO, SERIES 12
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 47)
as of the Initial Date of Deposit: January 6, 1997
<CAPTION>
Estimated
Market Value Annual Cost of
Number per Share Dividends per Securities to
of Shares Name of Issuer <F1> <F2> Share <F2> Trust <F2>
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $
- ------------
$
============
</TABLE>
<TABLE>
STRATEGIC FIVE TRUST UNITED STATES PORTFOLIO, SERIES 6
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 47)
as of the Initial Date of Deposit: January 6, 1997
<CAPTION>
Estimated
Market Value Annual Cost of
Number per Share Dividends per Securities to
of Shares Name of Issuer <F1> <F2> Share <F2> Trust <F2>
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $
- ------------
$
============
</TABLE>
<TABLE>
STRATEGIC THIRTY TRUST GLOBAL PORTFOLIO, SERIES 1
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 47)
as of the Initial Date of Deposit: January 6, 1997
<CAPTION>
Estimated
Market Value Annual Cost of
Number per Share Dividends per Securities to
of Shares Name of Issuer <F1> <F2> Share <F2> Trust <F2>
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $
- ------------
$
============
</TABLE>
<TABLE>
STRATEGIC FIFTEEN TRUST GLOBAL PORTFOLIO, SERIES 1
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 47)
as of the Initial Date of Deposit: January 6, 1997
<CAPTION>
Estimated
Market Value Annual Cost of
Number per Share Dividends per Securities to
of Shares Name of Issuer <F1> <F2> Share <F2> Trust <F2>
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $
- ------------
$
============
</TABLE>
NOTES TO PORTFOLIOS
- --------------------------------------------------------------------------
(1) 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 XXXX XX, 1997
and XXXX XX, 1997 and are expected to settle on XXXX XX, 1997 and XXXX XX,
1997. (see "The Fund").
(2) 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 in the
case of the Global 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 Global
Trusts. Estimated annual dividends are based on the most recently declared
dividends or, in the case of the Global 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). The aggregate value of the Securities
on the day prior to the Initial Date of Deposit for the Global Trusts (based
on the closing sale price of each Security and, if applicable, converted into
U.S. dollars at the bid side of the related currency exchange rate at the
Evaluation Time) was $, $, $ and $ for the United Kingdom Trust, Hong Kong
Trust, Strategic Thirty Trust and Strategic Fifteen Trust, respectively. This
is the basis on which the Redemption Price per Unit will be determined. The
offer side exchange rates of the Securities in the Global Trusts (the basis on
which the Public Offering Price per Unit will be determined during the initial
offering period) is greater than the related bid side values. 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 Global Trusts), is as follows:
<TABLE>
<CAPTION>
Aggregate
Profit Estimated
Cost To (Loss) To Annual
Sponsor Sponsor Dividends
----------- ------------ ----------
<S> <C> <C> <C>
Strategic Ten United States Trust $ $ $
Strategic Ten United Kingdom Trust $ $ $
Strategic Ten Hong Kong Trust $ $ $
Strategic Five United States Trust $ $ $
Strategic Thirty Global Trust $ $ $
Strategic Fifteen Global Trust $ $ $
</TABLE>
An affiliate of the Sponsor may have participated as issuer, sole underwriter,
managing underwriter or member of an underwriting syndicate in a public
offering of one or more of the stocks in the Trust. An affiliate of the
Sponsor may serve as a specialist in the stocks in the Trust on one or more
stock exchanges and may have a long or short position in any of these stocks
or in options on any of these stocks, and may be on the opposite side of
public orders executed on the floor of an exchange where such stocks are
listed. An officer, director or employee of the Sponsor or an affiliate may be
an officer or director of one or more of the issuers of the stocks in the
Trusts. An affiliate of the Sponsor may trade for its own account as an
odd-lot dealer, market maker, block positioner and/or arbitrageur in any
stocks or options relating thereto. The Sponsor, its affiliates, directors,
elected officers and employee benefit programs may have either a long or short
position in any stock or option of the issuers.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
<S> <C>
Summary of Essential Financial
Information............................. 5
The Fund................................. 10
Objectives and Securities Selection...... 11
Trust Portfolios......................... 13
Risk Factors............................. 32
Taxation................................. 40
Fund Operating Expenses.................. 46
Public Offering.......................... 47
Rights of Unitholders.................... 53
Fund Administration...................... 58
Other Matters............................ 63
Report of Independent Certified Public
Accountants............................. 63
Statements of Condition ................. 64
Portfolios............................... 66
Notes to Portfolios...................... 70
</TABLE>
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
January 6, 1997
Van Kampen American Capital
Equity Opportunity Trust, Series 47
Strategic Ten Trust
United States Portfolio, Series 12
Kingdom Portfolio, Series 12
Kong Portfolio, Series 12
Strategic Five Trust
United States Portfolio, Series 6
Strategic Thirty Trust
Global Portfolio, Series 1
Strategic Fifteen Trust
Global Portfolio, Series 1
A Wealth of Knowledge A Knowledge of Wealth(sm)
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.
When Units of the Trusts are no longer available, or for investors who will
reinvest into subsequent series of the Trusts, this Prospectus may be used as
a preliminary prospectus for a future series, in which case investors would
note the following:
Information contained herein is subject to completion or amendment. A
registration statement relating to securities of a future series has been
filed with the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. The Prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such State.
Contents Of Registration Statement
This 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 Proposed form of Trust Agreement (to be supplied by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be supplied by amendment).
3.2 Opinion and consent of counsel as to New York tax status of
securities being registered (to be supplied by amendment).
3.3 Opinion and consent of counsel as to United Kingdom tax status of
securities being registered (to be supplied by amendment).
4.1 Consent of Interactive Data Corporation (to be supplied by
amendment).
4.2 Consent of Grant Thornton LLP (to be supplied by amendment).
EX-27 Financial Data Schedule (to be supplied by amendment).
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
47 has duly caused this 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 11th day of December, 1996.
Van Kampen American Capital Equity
Opportunity Trust, Series 47
(Registrant)
By Van Kampen American Capital
Distributors, Inc.
(Depositor)
Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on December 11, 1996.
Signature Title
Don G. Powell Chairman, 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 Fund, Multi-Series 203 (File No. 33-65744)
and 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.
