File No. 333-10303
CIK #897023
Securities and Exchange Commission
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: Van Kampen American Capital Utility
Income Trust, Series 8
B. Name of Depositor: Van Kampen American Capital Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen American Capital
Attention: Mark J. Kneedy Distributors, Inc.
111 West Monroe Street Attention: Don G. Powell, Chairman
Chicago, Illinois 60603 One Parkview Plaza
Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: An indefinite
number of Units of proportionate interest pursuant to Rule 24f-2
under the Investment Company Act of 1940
F. Proposed maximum offering price to the public of the securities
being registered: Indefinite
G. Amount of registration fee: $500 (previously paid)
H. Approximate date of proposed sale to the public:
As Soon As Practicable After the Effective Date of the
Registration Statement
/ X / Check box if it is proposed that this filing will become effective
on September 4, 1996 pursuant to Rule 487.
Van Kampen American Capital Utility Income Trust
Series 8
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
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) *
underwriter
5. Organization of trust ) The Trust
6. Execution and termination of ) The Trust
Trust Indenture and Agreement ) Trust 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 Trust
trust's securities and ) Federal Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trust
) Trust Portfolio
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses) Prospectus Front Cover
Page
) Summary of Essential Financial
) Information
) Trust Portfolio
)
) Trust 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) Trust Operating
Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received ) Public Offering
by depositor, principal ) *
underwriter, trustee or any ) Trust Portfolio
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 Trust
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special Trusts ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolio
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust 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 ) Trust 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
) Trust 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
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's ) Cover Page
securities ) Trust Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Trust Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying) Trust Administration
securities )
(d) Trustamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Federal 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
) Statement of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
September 4, 1996
Van Kampen American Capital
Van Kampen American Capital Utility Income Trust, Series 8
The Trust. Van Kampen American Capital Utility Income Trust, Series 8 (the
"Trust" ) is a unit investment trust which offers investors the
opportunity to purchase Units representing proportionate interests in a fixed
portfolio of equity securities issued by companies diversified within the
public utility industry ("Equity Securities" or "Securities" ).
See "Trust Portfolio" . Unless terminated earlier, the Trust will
terminate on September 3, 2001 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.
Attention Foreign Investors. If you are not a United States citizen or
resident, distributions from the Trust 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. See "Federal Taxation." Such investors should consult
their tax advisers regarding the imposition of U.S. withholding on
distributions.
Objectives of the Trust. The objectives of the Trust are to provide a high
level of dividend income and capital appreciation through investment in a
fixed portfolio of equity securities of companies diversified within the
public utility industry. Many of these companies have established a history of
paying regular dividends and of increasing their dividends over time. See "
Objectives and Securities Selection." There is, of course, no guarantee
that the objectives of the Trust will be achieved.
Public Offering Price. The Public Offering Price of the Units of the Trust
includes the aggregate underlying value of the Securities in the Trust's
portfolio, the initial sales charge described below, and cash, if any, in the
Income and Capital Accounts held or owned by the Trust. The initial sales
charge is equal to the difference between the maximum total sales charge of
4.5% of the Public Offering Price and the maximum deferred sales charge ($0.20
per Unit). The monthly deferred sales charge ($0.0333 per Unit) will begin
accruing on a daily basis on March 4, 1997 and will continue to accrue through
September 3, 1997. The monthly deferred sales charge will be charged to the
Trust, in arrears, commencing April 4, 1997 and will be charged on the 4th day
of each month thereafter through September 4, 1997. Unitholders will be
assessed only that portion of the deferred sales charge payments not yet
collected. This deferred sales charge will be paid from funds in the Capital
Account, if sufficient, or from the periodic sale of Securities. The total
maximum sales charge assessed to Unitholders on a per Unit basis will be 4.5%
of the Public Offering Price (4.712% of the aggregate value of the Securities
less the deferred sales charge), subject to reduction as set forth in "
Public Offering--General." During the initial offering period, the sales
charge is reduced on a graduated scale for sales involving at least 5,000
Units. If Units were available for purchase at the close of business on the
day before the Initial Date of Deposit, the Public Offering Price per Unit
would have been $10.03. For sales charges in the secondary market, see "
Public Offering." The minimum purchase is 100 Units except for certain
transactions described under "Public Offering--Unit Distribution" . See
"Public Offering."
Estimated Annual Distributions. The estimated annual dividend distribution to
Unitholders (based on annualizing the most recently declared dividends with
respect to the Securities in the Trust) at the opening of business of the
Initial Date of Deposit was $.42104 per Unit. The estimated annual dividend
distributions per Unit will vary with changes in dividends received and with
the sale or liquidation of Securities; therefore, there is no assurance that
the annual dividend distribution will be realized in the future.
Distributions. Distributions of dividends received by the Trust will be made
monthly. The first such distribution will be $.03 per Unit and will be made on
October 25, 1996 to Unitholders of record on October 10, 1996. Distributions
of funds in the Capital Account, if any, will be made in December of each
year. See "Rights of Unitholders--Distributions of Income and Capital" .
Units of the Trust are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured or otherwise protected by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency and involve investment risk, including the loss of the principal
amount invested.
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.
Secondary Market for Units. After the initial offering period, although not
obligated to do so, the Sponsor intends to maintain a market for Units of the
Trust and offer to repurchase such Units at prices which are based on the
aggregate underlying value of Equity Securities in the Trust (generally
determined by the closing sale or bid prices of the Securities) plus or minus
cash, if any, in the Capital and Income Accounts of the Trust. If a secondary
market is maintained during the initial offering period, the prices at which
Units will be repurchased will be based upon the aggregate underlying value of
the Equity Securities in the Trust (generally determined by the closing sale
or asked prices of the Securities) plus or minus cash, if any, in the Capital
and Income Accounts of the Trust. If a secondary market is not maintained, a
Unitholder may redeem Units through redemption at prices based upon the
aggregate underlying value of the Equity Securities in the Trust plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts of the
Trust. A Unitholder 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." Units sold or tendered for redemption
prior to such time as the entire deferred sales charge has been collected will
be assessed the amount of the remaining deferred sales charge at the time of
sale or redemption.
Termination. Commencing on the Mandatory Termination Date Equity Securities
will begin to be sold in connection with the termination of the Trust. The
Sponsor will determine the manner, timing and execution of the sale of the
Equity Securities. Written notice of any termination of the Trust specifying
the time or times at which Unitholders may surrender their certificates for
cancellation shall be given by the Trustee to each Unitholder at his address
appearing on the registration books of the Trust 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 will include with such notice a
form to enable Unitholders to elect a distribution of shares of Equity
Securities if such Unitholder owns at least 1,000 Units of the Trust, rather
than to receive payment in cash for such Unitholder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity Securities. All
Unitholders will receive cash in lieu of any fractional shares. To be
effective, the election form, together with surrendered certificates if
issued, and other documentation required by the Trustee, must be returned to
the Trustee at least five business days prior to the Mandatory Termination
Date. Unitholders not electing a distribution of shares of Equity Securities
will receive a cash distribution from the sale of the remaining Securities
within a reasonable time after the Trust is terminated. See "Trust
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 also have the opportunity to have their
distributions reinvested into an open-end management investment company as
described herein. See "Rights of Unitholders--Reinvestment Option."
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including the possible deterioration of
either the financial condition of the issuers, the general condition of the
stock market, volatile interest rates and risks related to an investment in
public utility issuers. See "Risk Factors" .
<TABLE>
VAN KAMPEN AMERICAN CAPITAL UTILITY INCOME TRUST, SERIES 8
Summary of Essential Financial Information
At the Close of Business on the day before the Initial Date of Deposit: September 3, 1996
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>
General Information
<S> <C>
Number of Units <F1>...................................................... 15,000
Fractional Undivided Interest in the Trust per Unit <F1>.................. 1/15,000
Public Offering Price: ...................................................
Aggregate Value of Securities in Portfolio <F2>.......................... $ 146,624
Aggregate Value of Securities per Unit .................................. $ 9.78
Maximum Sales Charge <F3>................................................ $ .45
Less Deferred Sales Charge per Unit...................................... $ .20
Public Offering Price Per Unit <F3><F4><F5>.............................. $ 10.03
Redemption Price per Unit <F6>............................................ $ 9.58
Secondary Market Repurchase Price per Unit <F6>........................... $ 9.58
Excess of Public Offering Price per Unit over Redemption Price per Unit... $ 0.45
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee...Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee.....Maximum of $.0025 per Unit
Evaluation Time.......................4:00 P.M. New York time
Mandatory Termination Date............September 3, 2001
The Trust may be terminated if the net asset value of the Trust is less than
$500,000 unless the net asset value of the Trust deposits has exceeded $15,000,000,
then the Trust Agreement may be terminated if the net asset value of the Trust is
Minimum Termination Value.............less than $3,000,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Estimated Annual Dividends per Unit <F7>........ $.42104
Trustee's Annual Fee............................ $.008 per Unit
Estimated Annual Organizational Expenses <F8>... $.00694 per Unit
Record Date..................................... Tenth day of each month
Distribution Date............................... Twenty-fifth of each month
- ----------
<FN>
<F1>As of the close of business on any day on which the Sponsor is the sole
Unitholder of the Trust, the number of Units 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 from the amount indicated above.
<F2>Each Equity Security listed on a national securities exchange is valued at the
closing sale price or, if the Equity Security is not listed, at the closing
ask price thereof.
<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
of 4.5% of the Public Offering Price and the amount of the maximum deferred
sales charge of $0.20 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. In addition to the initial sales charge,
Unitholders will pay a deferred sales charge of $0.0333 per Unit per month
which will begin accruing on a daily basis on March 4, 1997 and will continue
to accrue through September 3, 1997. The monthly deferred sales charge will be
charged to the Trust, in arrears, commencing April 4, 1997 and will be charged
on the 4th day of each month thereafter through September 4, 1997. Units
purchased subsequent to the initial deferred sales charge payment will be
subject only to the 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 4.5% of the Public Offering Price (4.712%
of the aggregate value of the Securities in the Trust less the deferred sales
charge). 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.
<F5>Commencing on September 4, 1997, the secondary market sales charge will not
include deferred payments but will instead include only a one-time initial
sales charge of 4.0% of the Public Offering Price and will be reduced by .5 of
1% on each subsequent September 4, to a minimum sales charge of 3.0%. See "
Public Offering."
<F6>The Redemption Price per Unit and the Secondary Market Repurchase Price per
Unit are reduced by the unpaid portion of the deferred sales charge.
<F7>Estimated annual dividends are based on annualizing the most recently declared
dividends. 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.
<F8>The Trust (and therefore Unitholders) 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
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 material and any other selling expenses) as is common for mutual
funds. Total organizational expenses will be amortized over the life of the
Trust. See "Trust Operating Expenses" and "Statement of
Condition." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts. Estimated Annual Organizational
Expenses have been estimated based on a projected trust size of $10,000,000.
To the extent the Trust is larger or smaller, the actual organizational
expenses paid by the Trust (and therefore by Unitholders) will vary from the
estimated amount set forth above.
</TABLE>
FEE TABLE
- --------------------------------------------------------------------------
This Fee Table is intended to assist investors in understanding the costs and
expenses that an investor in the Trust will bear directly or indirectly. See
"Public Offering--Offering Price" and "Trust Operating
Expenses" . Although the Trust is a unit investment trust rather than a
mutual fund, this information is presented to permit a comparison of fees.
Investors should note that while these examples are based on the public
offering price and the estimated fees for the Trust, the actual public
offering price and fees could vary from the estimated amounts below.
<TABLE>
<CAPTION>
Unitholder Transaction Expenses (as of the Initial Date of Deposit) (as a percentage of offering Amount Per
price) 100 Units
--------------
<S> <C> <C>
Initial Sales Charge Imposed on Purchase............................................................. 2.50% <F1> $ 25.00
Deferred Sales Charge................................................................................ 2.00% <F2> 20.00
------------- --------------
4.50% $ 45.00
============= ==============
Estimated Annual Fund Operating Expenses (as of the Initial Date of Deposit) (as a percentage of
Aggregate Value)
Trustee's Fee ....................................................................................... 0.82% $ 0.80
Portfolio Supervision and Evaluation Fees ........................................................... 0.51% 0.50
Organizational Costs................................................................................. 0.71% 0.69
Other Operating Expenses ............................................................................ 0.50% 0.49
------------- --------------
Total ............................................................................................... 2.54% $ 2.48
============= ==============
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for Period of:
---------------------------------------
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
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 $ 48 $ 54 $ 60 N/A
</TABLE>
The example utilizes a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. The example should
not be considered as a representation 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 example.
- ----------
The Initial Sales Charge is actually the difference between 4.50% and the
maximum deferred sales charge ($20.00 per 100 Units) and would exceed 2.5% if
the Public Offering Price exceeds $1,000 per 100 Units.
The actual fee is $0.20 per Unit, irrespective of purchase or redemption
price, deducted each month over the six months commencing April 4, 1997
(approximately $3.33 per 100 Units per month). 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 2%; if Unit price is less than $10 per
Unit, the deferred portion of the sales charge will exceed 2%. 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.
THE TRUST
- --------------------------------------------------------------------------
Van Kampen American Capital Utility Income Trust, Series 8 is a unit
investment trust created under the laws of the State of New York pursuant to a
Trust Indenture and Agreement (the "Trust Agreement" ), dated the date
of this Prospectus (the "Initial Date of Deposit" ), among Van Kampen
American Capital Distributors, Inc., as Sponsor, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory Corp.,
as Evaluator, Van Kampen American Capital Investment Advisory Corp., as
Supervisor, and The Bank of New York, as Trustee.
The Trust may be an appropriate medium for investors who desire to participate
in a portfolio of public utility equity securities with greater
diversification than they might be able to acquire individually.
Diversification of the Trust's assets will not eliminate the risk of loss
always inherent in the ownership of securities. For a breakdown of the
portfolio, see "Trust Portfolio."
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolio" 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 Trust
indicated in "Summary of Essential Financial Information." Unless
otherwise terminated as provided in the Trust Agreement, the Trust 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 the Trust may be issued at any time by depositing in the
Trust additional Securities or contracts to purchase securities together with
irrevocable letters of credit or cash. As additional Units are issued by the
Trust as a result of the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits of Securities
into the Trust for a period of up to approximately six months following the
Initial Date of Deposit, provided that such additional deposits will be in
amounts which will maintain the same proportionate relationship among the
number of shares of each Equity Security in the Trust's portfolio that existed
immediately prior to any such subsequent deposit. Any deposit by the Sponsor
of additional Equity Securities will duplicate this actual proportionate
relationship and not the original proportionate relationship on the subsequent
date of deposit, since the original proportionate relationship may be
different than the actual proportionate relationship. Any such difference may
be due to the sale, redemption or liquidation of any of the Equity Securities
deposited in the Trust on the Initial, or any subsequent, Date of Deposit.
Each Unit of the Trust initially offered represents an undivided interest in
the 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 the Trust
represented by each unredeemed Unit will increase or decrease accordingly,
although the actual interest in the 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 objectives of the Trust are to provide investors with a high level of
dividend income and capital appreciation. Investors should be aware that the
objectives of a high level of dividend income and capital appreciation are
likely to be contradictory; thus, the Trust's portfolio is comprised of
securities which result in a compromise between these objectives. The
portfolio is described under "Trust Portfolio" and in "
Portfolio" . In selecting the Securities for the Trust, the following
factors, among others, were considered by the Sponsor: (a) the quality of the
Securities, (b) the yield and price of the Securities relative to other
similar securities and (c) the likelihood that earnings and dividends will
continue or increase. In selecting the Securities, the Sponsor has utilized,
at its own expense, certain research services of its sister corporation,
McCarthy, Crisanti and Maffei, Inc. ("MCM" ).
The Trust includes securities issued by electric, gas and telephone utility
companies, many of which have an established history of regular dividend
payments that have increased over time. Because utilities are essential to the
national economy and our everyday lives, many electric, gas and telephone
stocks have the potential to perform well in varying economic climates.
Regardless of the state of the economy, consumers still need to heat their
homes and use their telephones. In addition, as the chart below illustrates,
utility stock dividends (as reflected by the companies included in the
Standard & Poor's Utility Index) have generally increased during the 15 years
from 1981-1995. The table below represents the dividends per share paid by the
companies included in the S&P Utilities Index during the period, 1981-1995. It
does not predict the potential dividend increase of the Equity Securities
selected for deposit in the Trust.
<TABLE>
<CAPTION>
Year Dividends Year Dividends
- ------- ------------ ------- ------------
<S> <C> <C> <C>
1981 $ 5.34 1989 $ 7.89
1982 5.72 1990 8.29
1983 6.05 1991 8.51
1984 6.47 1992 8.55
1985 6.73 1993 8.66
1986 7.03 1994 8.86
1987 7.38 1995 8.88
1988 7.62
</TABLE>
Inflation has consistently eroded the dollar's buying power; a dollar in 1975
is now worth less than 34 cents. By providing the potential for capital
appreciation, the Trust seeks to help investors stay ahead of inflation.
According to Ibbotson Associates and Micropal Inc., utility stocks (as
represented by the S&P Utility Index) have proven to be a hedge against
inflation, delivering an average annual growth rate of 13.62% since 1972.
Furthermore, a single 1972 dollar invested in the utility stocks represented
by the S&P Utility Index would have been worth $18.85 in 1995. At the same
time, a single dollar invested in long-term U.S. Government bonds would have
been worth $8.22, a single dollar invested in U.S. Treasury bills would have
been worth $4.98 and a single dollar growing at the rate of inflation would
have only been worth $3.62.
The historical performance of the investment categories above are shown for
illustrative purposes only; it is not meant to forecast, imply or guarantee
the future performance of the Securities or the Trust. As of December 31,
1995, the S&P Utility Index consisted of 49 stocks including 25 electric
company stocks, 13 natural gas company stocks and 11 telephone company stocks.
An investment in the Trust should be made with an understanding that the Trust
will include different Securities than those included in the S&P index. Units
are not designed to correlate with the index, nor are the prices of Units or
the Securities expected to correlate with the index. The historical
performance figures shown above do not reflect sales charges, fees and
expenses of the Trust or taxes.
General. An investor will be subject to taxation on the dividend income
received from the Trust and on gains from the sale or liquidation of
Securities (see "Federal Taxation" ). Investors should be aware that
there is not any guarantee that the objectives of the Trust will be achieved
because they are subject to the continuing ability of the respective Security
issuers to continue 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 Equity Securities will pay dividends on outstanding common shares. Any
distributions 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.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust as of the Initial Date of
Deposit. Subsequent to the Initial Date of Deposit, the Securities may no
longer meet such criteria. Should an Equity Security no longer meet such
criteria, such Equity Security will not, simply as a result of such fact, be
removed from the portfolio of the Trust.
Investors should be aware that the Trust 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 "Trust Administration--Portfolio Administration" ). In addition,
Securities will not be sold by the 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 as of the
Initial Date of Deposit. The Trust may continue to purchase or 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
Trust.
TRUST PORTFOLIO
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The Trust consists of 20 different issues of Equity Securities which are
issued by companies diversified within the public utility industry. All of the
Equity Securities are listed on a national securities exchange, the NASDAQ
National Market System or are traded in the over-the-counter market. The
following is a general description of each of the companies included in the
Trust.
ALLTEL Corporation. ALLTEL Corporation is a telecommunications and information
services holding company. The company's subsidiaries provide local telephone
service, cellular telephone service, information services and communications
products.
Ameritech Corporation. Ameritech Corporation provides a wide array of local
phone, data and video services in Illinois, Indiana, Michigan, Ohio and
Wisconsin. The company creates new information, entertainment and interactive
services for homes, businesses and governments worldwide. Ameritech owns
interests in telephone companies in New Zealand and Hungary and in business
directories in Germany and other countries.
BellSouth Corporation. BellSouth Corporation is a holding company providing
telecommunications services in nine southeastern states. The company's
nonregulated operations include: directory advertising and publishing, mobile
communications and the sale and service of telecommunications and computer
systems. BellSouth also has interests in international cellular operations.
Central Louisiana Electric. Central Louisiana Electric provides electricity
services in approximately 23 counties in west central and southeastern
Louisiana. The company services small rural communities and generates revenues
from residential, commercial and industrial customers. Central Louisiana's
generation sources include natural gas, lignite and coal.
CINergy Corporation. CINergy Corporation is the holding company of Cincinnati
Gas & Electric and PSI Resources. The company produces, transmits and
distributes electricity to southwestern Ohio, north central, central and
southern Indiana, and Kentucky. CINergy sells electricity to residential,
commercial, industrial and wholesale customers.
DPL, Inc. DPL, Inc. conducts business through its subsidiary, the Dayton Power
and Light Company. The company supplies electricity and natural gas to 16
counties in Ohio. Primary industrial customers include electrical machinery,
automotive and other transportation equipment, non-electrical machinery,
agriculture, paper, rubber and plastic.
Duke Power Company. Duke Power Company generates, transmits, distributes and
sells electric energy in the Piedmont sections of North Carolina and South
Carolina. The company also supplies electricity to other rural electric
cooperatives and private utilities.
Enron Corporation. Enron Corporation is a natural gas company that transports
and markets natural gas throughout the United States via 44,000 miles of
pipelines. The company explores for and produces natural gas throughout the
world and markets internationally natural gas liquids, crude oil and refined
petroleum products. The company also sells and produces cogenerated steam and
electricity.
Indiana Energy, Inc. Indiana Energy, Inc. is a public utility holding company.
The company's main subsidiary, Indiana Gas, distributes natural gas to north
central, central and southern Indiana. Another of Indiana Energy's
subsidiaries operates an interstate natural gas pipeline from northern
Kentucky to southern Indiana.
KN Energy, Inc. KN Energy, Inc. is a natural gas services company. These
services include gas reserves development, gas gathering, processing,
marketing, storage, transportation and retail gas distribution services.
Operations are primarily concentrated in the Rocky Mountain and mid-continent
region.
MCN Corporation. MCN Corporation is a diversified natural gas holding company
with operations and markets throughout North America. The company operates
through Michigan Consolidated Gas Company, a natural gas distributor and
intrastate transmission company. MCN also operates through MCN Investment
Corporation, a subsidiary holding company for its diversified businesses.
National Fuel Gas Company. National Fuel Gas Company is an integrated gas
holding company that explores for, produces, purchases, gathers, transmits,
stores and distributes natural gas. The company also explores for and produces
oil, constructs pipeline and operates a saw mill. National Fuel Gas serves
western New York and northwestern Pennsylvania.
Northern States Power Company. Northern States Power Company, along with its
subsidiaries, generates, transmits and distributes electricity to retail
customers in Minnesota, North Dakota and South Dakota and, through its
Wisconsin Company, in Wisconsin and Michigan. The company also distributes
natural gas to communities within its service area.
ONEOK Inc. ONEOK, Inc. and its subsidiaries purchase, distribute and sell
natural gas. The company also leases pipeline capacity, provides gas storage
and transports gas on an interstate level. In addition, ONEOK explores for and
produces oil and gas, conducts contract drilling and sells natural gas liquids.
Questar Corporation. Questar Corporation is a holding company. Through
affiliates, the company explores, produces, gathers, purchases, transmits,
markets, stores and distributes natural gas. Through its natural gas
exploration activities, the company also produces and sells oil. In addition,
Questar provides data processing, microwave communication services and manages
real estate.
SCANA Corporation. SCANA Corporation is a holding company which through its
subsidiaries is involved in electric and natural gas operations,
telecommunications and other energy-related businesses.
Sonat, Inc. Sonat, Inc. is an integrated oil and natural gas company that
explores for and produces oil and natural gas, transmits natural gas and
markets natural gas and electric power.
Southern Company. Southern Company is the parent company of five electric
service companies which include Alabama Power, Georgia Power, Gulf Power,
Mississippi Power and Savannah Electric. The company's other subsidiaries are
Southern Electric International, Southern Electric Railroad, Southern Nuclear,
Southern Development and Investment Group, Southern Communications Services
and Southern Company Services.
Washington Gas Light Company. Washington Gas Light Company is a distributor of
natural gas in Maryland, Virginia and the District of Columbia. The company,
through subsidiaries, also provides gas service in Virginia and West Virginia,
explores for gas in Maryland and operates an underground gas storage field. In
addition, Washington supplies and installs energy conservation products.
The Williams Companies, Inc. The Williams Companies, Inc. owns and operates
natural gas and petroleum products pipelines. The company is also a natural
gas gatherer and processor, a full-service energy marketing and trading
company, a national business-telecommunications company, and a nationwide
fiber-optic video services provider.
General. The Trust consists of (a) the Securities listed under "
Portfolio" as may continue to be held from time to time in the Trust, (b)
any additional Securities acquired and held by the Trust pursuant to the
provisions of the Trust Agreement and (c) any cash held in the Income and
Capital Accounts. Neither the Sponsor nor the Trustee shall be liable in any
way for any failure in any of the Securities. However, should any contract for
the purchase of any of the Securities initially deposited hereunder fail, the
Sponsor will, unless substantially all of the moneys held in the Trust to
cover such purchase are reinvested in substitute Securities in accordance with
the Trust Agreement, refund the cash and sales charge attributable to such
failed contract to all Unitholders on the next distribution date.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will in most cases be distributed to Unitholders and will not be
reinvested, no assurance can be given that the Trust will retain for any
length of time its present size and composition. Although the portfolio is not
managed, the Sponsor may instruct the Trustee to sell Equity Securities under
certain limited circumstances. See "Trust Administration--Portfolio
Administration." Equity Securities, however, will not be sold by the Trust
to take advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation.
RISK FACTORS
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Utility Issuers. An investment in Units of the Trust should be made with an
understanding of the characteristics of the public utility industry and the
risks which such an investment may entail. General problems of such issuers
include the difficulty in financing large construction programs in an
inflationary period, the limitations on operations and increased costs and
delays attributable to environmental considerations, the difficulty of the
capital market in absorbing utility debt, the difficulty in obtaining fuel at
reasonable prices and the effect of energy conservation. All of such issuers
have been experiencing certain of these problems in varying degrees. In
addition, Federal, state and municipal governmental authorities may from time
to time review existing, and impose additional, regulations governing the
licensing, construction and operation of nuclear power plants, which may
adversely affect the ability of the issuers of certain of the Securities in
the portfolio to make payments of principal and/or interest on such Securities.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged and
the appropriate rate of return on an approved asset base, which must be
approved by the state commissions. Certain utilities have had difficulty from
time to time in persuading regulators, who are subject to political pressures,
to grant rate increases necessary to maintain an adequate return on investment
and voters in many states have the ability to impose limits on rate
adjustments (for example, by initiative or referendum). Any unexpected
limitations could negatively affect the profitability of utilities whose
budgets are planned far in advance. In addition, gas pipeline and distribution
companies have had difficulties in adjusting to short and surplus energy
supplies, enforcing or being required to comply with long-term contracts and
avoiding litigation from their customers, on the one hand, or suppliers, on
the other.
Certain of the issuers of the Securities in the Trust may own or operate
nuclear generating facilities. Governmental authorities may from time to time
review existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. Nuclear generating
projects in the electric utility industry have experienced substantial cost
increases, construction delays and licensing difficulties. These have been
caused by various factors, including inflation, high financing costs, required
design changes and rework, allegedly faulty construction, objections by groups
and governmental officials, limits on the ability to finance, reduced
forecasts of energy requirements and economic conditions. This experience
indicates that the risk of significant cost increases, delays and licensing
difficulties remains present through to completion and achievement of
commercial operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled outages
due to equipment problems or new regulatory requirements sometimes followed by
a significant delay in obtaining regulatory approval to return to service. A
major accident at a nuclear plant anywhere, such as the accident at a plant in
Chernobyl, could cause the imposition of limits or prohibitions on the
operation, construction or licensing of nuclear units in the United States.
Other general problems of the gas, water, telephone and electric utility
industry (including state and local joint action power agencies) include
difficulty in obtaining timely and adequate rate increases, difficulty in
financing large construction programs to provide new or replacement facilities
during an inflationary period, rising costs of rail transportation to
transport fossil fuels, the uncertainty of transmission service costs for both
interstate and intrastate transactions, changes in tax laws which adversely
affect a utility's ability to operate profitably, increased competition in
service costs, recent reductions in estimates of future demand for electricity
and gas in certain areas of the country, restrictions on operations and
increased cost and delays attributable to environmental considerations,
uncertain availability and increased cost of capital, unavailability of fuel
for electric generation at reasonable prices, including the steady rise in
fuel costs and the costs associated with conversion to alternate fuel sources
such as coal, availability and cost of natural gas for resale, technical and
cost factors and other problems associated with construction, licensing,
regulation and operation of nuclear facilities for electric generation,
including among other considerations the problems associated with the use of
radioactive materials and the disposal of radioactive wastes, and the effects
of energy conservation.
In view of the pending investigations and the other uncertainties discussed
above, there can be no assurance that any company's share of the full cost of
units under construction ultimately will be recovered in rates or of the
extent to which a company could earn an adequate return on its investment in
such units. The likelihood of a significantly adverse event occurring in any
of the areas of concern described above varies, as does the potential severity
of any adverse impact. It should be recognized, however, that one or more of
such adverse events could occur and individually or collectively could have a
material adverse impact on the financial condition or the results of
operations of a company's ability to make dividend payments.
A bill is currently pending in Congress which would deregulate and restructure
the electric utility industry in the U.S. The bill would establish a federal
mandate for all electric utilities to provide retail choice to all classes of
customers by late in the year 2000. After retail choice is established, a
state utility commission would be prohibited from regulating rates for retail
electricity services and would not be allowed to bar any supplier from
offering retail service to any customer. In addition to substantially
increasing competition within the industry, certain authorities have estimated
that restructuring of the industry could result in substantial stranded
investment costs relating to lost long-term investments made in reliance on
future maintenance of current customer bases (which could be negatively
impacted by deregulation). Any such stranded costs would be borne by the
stockholders of the related issuers, including the Trust. Although the Sponsor
makes no prediction as to whether this legislation will be adopted, many
authorities believe that deregulation and restructuring within the electric
utility industry is likely to occur in the coming years. Accordingly, it is
likely that the U.S. electricity market will become highly competitive in
future years. Deregulation of the electric utility industry is in the early
stages and no assurance can be made as to the timing or impact of future
deregulation or restructuring. Accordingly, the restructuring and deregulation
of the electricity industry is marked by great uncertainty and could have a
material adverse impact on certain issuers.
In addition, Congress recently enacted the Telecommunications Act of 1996
which, among other things, is designed to open local telephone services to
competition. While final regulations have only recently been adopted, the
Telecommunications Act is expected to have a significant impact on the
telecommunications industry. In particular, companies within the local
exchange and long distance markets will be subject to substantially increased
competition from other long distance carriers, competitive access providers
and cable companies, among others. Telecommunications companies will need to
be able to adapt to an increasingly innovative and competitive marketplace
with many companies offering combined video, internet and telephonic services.
This increased competition and the changing regulatory environment within the
telecommunications industry could have a material adverse impact on certain
issuers of the Securities.
General. An investment in Units 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,
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 Trust have a right to receive dividends only
when and if, and in the amounts, declared by the issuer's board of directors
and have a right to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or provided
for. Certain of the issuers may currently be in arrears with respect to
preferred stock dividend payments. 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 the
portfolio may be expected to fluctuate over the life of the Trust to values
higher or lower than those prevailing on the Initial Date of Deposit or at the
time a Unitholder purchases Units.
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 Trust 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 redemptions, and the value of the
Trust, will be adversely affected if trading markets for the Equity Securities
are limited or absent.
As described under "Trust Operating Expenses," all of the expenses of
the Trust will be paid from the sale of Securities from the 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 and 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 "Federal Taxation."
Unitholders will be unable to dispose of any of the Equity Securities in the
portfolio, 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 the 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 shares held by owners other than the Trust.
FEDERAL TAXATION
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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
the Trust.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The 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 the Trust under the Code; and the income of
the 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 the Trust asset when such income is received by the 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
considered to be received by the 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 the Trust are
actually received by the Unitholder or are automatically reinvested.
3. Each Unitholder will have a taxable event when the Trust disposes of an
Equity 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
as described below). The price a Unitholder pays for his Units is allocated
among his pro rata portion of each Equity Security held by the Trust (in
proportion to the fair market values thereof on the valuation date nearest the
date the Unitholder purchase his Units) in order to determine his initial tax
basis for his pro rata portion of each Equity Security held by the Trust. For
federal income tax purposes, a Unitholder's pro rata portion of dividends as
defined by Section 316 of the Code paid by a corporation with respect to an
Equity Security held by the Trust are taxable as ordinary income to the extent
of such corporation's current and accumulated "earnings and profits" .
A Unitholder's pro rata portion of dividends paid on such Equity Security
which exceeds such current and accumulated earnings and profits will first
reduce a Unitholder's tax basis in such Equity Security, and to the extent
that such dividends exceed a Unitholder's tax basis in such Equity Security
shall 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 Equity Securities held by the Trust will generally
be considered a capital gain 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 (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 Equity
Securities held by the 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
such capital gains and losses for federal income tax purposes.
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 Trust 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 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 the 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 Equity Securities paying such dividends (other
than corporate Unitholders, 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 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.
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 Equity Securities by
the Trust or Disposition of Units. As discussed above, a Unitholder may
recognize taxable gain (or loss) when an Equity Security is disposed of by the
Trust or if the Unitholder disposes of a Unit. 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 "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 Act, the Act includes a
provision that would recharacterize 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 including his pro rata
portion of all Equity Securities represented by a Unit.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of
Unitholders--Redemption of Units" , under certain circumstances a
Unitholder tendering Units for redemption may request an In Kind Distribution.
A Unitholder may also under certain circumstances request an In Kind
Distribution upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units." As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust assets for
federal income tax purposes. The receipt of an In Kind Distribution will
result in a 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 Equity Security held by the Trust will depend on whether
or not a Unitholder receives cash in addition to Equity Securities. An "
Equity 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 Equity Securities in exchange for his or her pro rata
portion in the Equity Securities held by the Trust. However, if a Unitholder
also receives cash in exchange for a fractional share of an Equity 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 an Equity Security held by the Trust.
Because the Trust will own many Equity Securities, a Unitholder who requests
an In Kind Distribution will have to analyze the tax consequences with respect
to each Equity Security owned by the 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 Equity Security owned by the Trust. Unitholders who request an
In Kind Distribution are advised to consult their tax advisers in this regard.
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 of his
Units. The cost of the Units is allocated among the Equity Securities held in
the Trust in accordance with the proportion of the fair market values of such
Equity 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 Equity Security.
A Unitholder's tax basis in his Units and his pro rata portion of an Equity
Security held by the Trust will be reduced to the extent dividends paid with
respect to such Equity Security are received by the Trust which are not
taxable as ordinary income as described above.
General. 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 by the Internal Revenue Service 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 the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
Distributions by the 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.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of the Trust a statement containing information relating to the dividends
received by the Trust on the Equity Securities, the gross proceeds received by
the Trust from the disposition of any Equity Security (resulting from
redemption or the sale of any Equity Security), and the fees and expenses paid
by the Trust. The Trustee will also furnish annual information returns to
Unitholders and to the Internal Revenue Service.
In the opinion of Kroll & Tract, special counsel to the Trust for New York tax
matters, the Trust is not an association taxable as a corporation and the
income of the Trust 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 of the Trust 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.
TRUST OPERATING EXPENSES
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Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trust. 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 Trust. Such fee (which is
based on the number of Units 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 outstanding at the end
of the month of such calculation) may exceed the actual costs of providing
such supervisory services for this Trust, but at no time will the total amount
received for portfolio supervisory services rendered to Series 1 and
subsequent series of Van Kampen Merritt Utility Income Trust (and its
successors) 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, the Evaluator, which is a division of Van
Kampen American Capital Investment Advisory Corp., shall receive the annual
per Unit evaluation fee set forth under "Summary of Essential Financial
Information" (which amount is based on the number of Units 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 outstanding at the end of the month of such calculation) for
regularly evaluating the Trust portfolio. 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
Compensation."
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trust set forth under "Summary of Essential Financial
Information" (which amount is based on the number of Units 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 outstanding at the end of the month of such calculation). 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 the 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 "Trust Administration."
Miscellaneous Expenses. Expenses incurred in establishing the Trust, including
the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and certificates), 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 the Trust and amortized over the life of the Trust.
The following additional charges are or may be incurred by the Trust: (a)
normal expenses (including the cost of mailing reports to Unitholders)
incurred in connection with the operation of the 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 the Trust and the rights and interests of Unitholders,
(f) indemnification of the Trustee for any loss, liability or expenses
incurred in the administration of the Trust without negligence, bad faith or
wilful misconduct on its part and (g) expenditures incurred in contacting
Unitholders upon termination of the Trust. The expenses set forth herein are
payable as described under "General" below.
General. During the initial offering period of the Trust, all of the fees and
expenses will accrue on a daily basis and will be charged to the Trust, in
arrears, at the end of the initial offering period. After the initial offering
period of the Trust, all of the fees and expenses of the Trust will accrue on
a daily basis and will be charged to the Trust, in arrears, on a monthly basis
as of the tenth day of each month. The fees and expenses are payable out of
the Capital Account. When such fees and expenses are paid by or owing to the
Trustee, they are secured by a lien on the Trust's portfolio. It is expected
that the balance in the Capital Account will be insufficient to provide for
amounts payable by the Trust and that Equity Securities will be sold from the
Trust to pay such amounts. These sales will result in capital gains or losses
to Unitholders. See "Federal Taxation" .
PUBLIC OFFERING
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General. Units are offered at the Public Offering Price. The Public Offering
Price is based on the aggregate underlying value of the Securities in the
Trust's portfolio, the initial sales charge described below, and cash, if any,
in the Income and Capital Accounts held or owned by the Trust. The initial
sales charge is equal to the difference between the maximum total sales charge
for the Trust of 4.5% of the Public Offering Price and the maximum deferred
sales charge for the Trust ($0.20 per Unit). The monthly deferred sales charge
($0.0333 per Unit) will begin accruing on a daily basis on March 4, 1997 and
will continue to accrue through September 3, 1997. The monthly deferred sales
charge will be charged to the Trust, in arrears, commencing April 4, 1997 and
will be charged on the 4th day of each month thereafter through September 4,
1997. If any deferred sales charge payment date is not a business day, the
payment will be charged to the Trust on the next business day. Unitholders
will be assessed only that portion of the deferred sales charge accrued from
the time they became Unitholders of record. Units purchased subsequent to the
initial deferred sales charge payment will be subject to only that portion of
the deferred sales charge payments not yet collected. This deferred sales
charge will be paid from funds in the Capital Account, if sufficient, or from
the periodic sale of Securities. The total maximum sales charge assessed to
Unitholders on a per Unit basis will be 4.5% of the Public Offering Price
(4.712% of the aggregate value of the Securities in the Trust less the
deferred sales charge). The sales charge for secondary market transactions is
described under "Offering Price" below. The initial sales charge
applicable to quantity purchases is, during the initial offering period,
reduced on a graduated basis to any person acquiring 5,000 or more Units as
follows:
<TABLE>
<CAPTION>
Aggregate Number Dollar Amount of Sales
of Units Purchased Charge Reduction Per Unit
- ------------------------ ----------------------------
<S> <C>
5,000-9,999 $0.03
10,000-24,999 $0.05
25,000-49,999 $0.10
50,000-99,999 $0.15
100,000 or more $0.20
</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 qualifies for a sales charge reduction or reductions, to
determine the applicable sales charge reduction or reductions it is necessary
to accumulate all purchases made on the Initial Purchase Date and all
purchases made in accordance with (b) above. Units purchased in the name of
the spouse of a purchaser or in the name of a child of such purchaser under 21
years of age will be deemed for the purposes of calculating the applicable
sales charge to be additional purchases by the purchaser. The reduced sales
charges will also be applicable to a trustee or other fiduciary purchasing
securities for one or more trust estate or fiduciary accounts.
During the initial offering period of the Trust, unitholders of any Van Kampen
American Capital-sponsored unit investment trust may utilize their redemption
or termination proceeds to purchase Units of this Trust subject only to the
deferred sales charge described herein.
Employees of Van Kampen American Capital Distributors, Inc. and its affiliates
may purchase Units of the 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 the Trust at the current Public
Offering Price less the dealer's concession during the initial offering period
and for secondary market transactions.
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.
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
Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to the difference between the maximum total sales charge of 4.5% of the
Public Offering Price and the maximum deferred sales charge ($0.20 per Unit)
and dividing the sum so obtained by the number of Units outstanding. The
Public Offering Price shall also include the proportionate share of any cash
held in the Capital Account. This computation produced a gross underwriting
profit equal to 4.5% of the Public Offering Price. Such price determination as
of the close of business on the day before the Initial Date of Deposit was
made on the basis of an evaluation of the Securities in the Trust prepared by
Interactive Data Corporation, a firm regularly engaged in the business of
evaluating, quoting or appraising comparable securities. After the close of
business on the day before the Initial Date of Deposit, the Evaluator will
appraise or cause to be appraised daily the value of the underlying Securities
as of the Evaluation Time on days the New York Stock Exchange is open 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 when the New York Stock Exchange is closed, will be held until the next
determination of 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 for the Trust of 4.5% of the
Public Offering Price and the maximum deferred sales charge for the Trust
($0.20 per Unit) and will be assessed a deferred sales charge of $0.0333 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 March 3, 2001. Commencing on September 4,
1997, the secondary market sales charge will not include deferred payments but
will instead include only a one-time initial sales charge of 4.0% of the
Public Offering Price and will be reduced by .5 of 1% on each subsequent
September 4, to a minimum sales charge of 3.0%.
The value of the Equity Securities during the initial offering period is
determined on each business day by the Evaluator in the following manner: if
the Equity Securities are listed on a national securities exchange this
evaluation is generally based on the closing sale prices on that exchange
(unless it is determined that these prices are inappropriate as a basis for
valuation) or, if there is no closing sale price on that exchange, at the
closing ask prices. If the Equity Securities are not so listed or, if so
listed and the principal market therefor 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 offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities in the Trust
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.
Broker-dealers or others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period
of 3.20% per Unit. Volume concessions or agency commissions of an additional
.30% of the Public Offering Price will be given to any broker/dealer or bank,
who purchases from the Sponsor at least $100,000 on the Initial Date of
Deposit or $250,000 on any day thereafter. Any quantity discount provided to
investors will be borne by the selling dealer or agent as indicated under "
General" above. However, for transactions involving unitholders of any Van
Kampen American Capital-sponsored unit investment trust who purchase Units
during the initial offering period with redemption or termination proceeds
from such trust, the concession or agency commission will be 1% per Unit. For
all secondary market transactions, the concession or agency commission will
amount to 70% of the sales charge applicable to the transaction.
Certain commercial banks are making Units of the Trust 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.
Sponsor Compensation. The Sponsor will receive a gross sales commission equal
to 4.5% of the Public Offering Price of the Units (equivalent to 4.712% of the
aggregate value of Securities less the deferred sales charge), less any
reduced sales charge for quantity purchases (as described under "
General" above). Any quantity discount provided to investors will be borne
by the selling broker, dealer or agent as indicated under "General"
above.
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 the Trust on the
Initial Date of Deposit as well as on subsequent deposits. See "Notes to
Portfolio." 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 Trust portfolio. 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 Trust after a date of deposit, since all proceeds
received from purchasers of Units (excluding dealer concessions and agency
commissions allowed, if any) will be retained by the Sponsor. Broker-dealers
or others (each "a distributor" ) who distribute 1,000,000 - 1,999,999
Units during the initial offering period will receive additional compensation
from the Sponsor, after the close of the initial offering period, of $0.01 for
each Unit it distributes; or each distributor who distributes 2,000,000 -
2,999,999 Units will receive additional compensation of $0.015 for each Unit
it distributes; or each distributor who distributes 3,000,000 or more Units
will receive additional compensation of $0.02 for each Unit it distributes.
Broker-dealers of the Trust, 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 Trust. Such payments are made by
the Sponsor out of its own assets, and not out of the assets of the Trust.
These programs will not change the price Unitholders pay for their Units or
the amount that the Trust will receive from the Units sold.
A person will become the owner of Units on the date of settlement provided
payment has been received. 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 intends to maintain
a secondary market for Units of the Trust 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 intends to
maintain a market for the Units offered hereby 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 Trust. 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. It is the current intention of the Sponsor
to maintain a market for Units through March 3, 2001 only. 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 may be able to
dispose of such Units only 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 Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for 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 Trust may be limited by the plans' provisions and
does not itself establish such plans.
RIGHTS OF UNITHOLDERS
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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 Trust 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 the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account of the Trust. Proceeds
from the sale of Securities to meet redemptions of Units shall be segregated
within the Capital Account from proceeds from the sale of Securities made to
satisfy the fees, expenses and charges of the Trust.
The Trustee will distribute any income received with respect to any of the
Securities in the Trust on or about the Income Distribution Dates to
Unitholders of record on the preceding Income Record Dates. See "Summary
of Essential Financial Information." Proceeds received on the sale of any
Securities in the Trust, to the extent not used to meet redemptions of Units,
pay the deferred sales charge or pay fees and expenses, will be distributed
annually on the Capital Account Distribution Date to Unitholders of record on
the preceding Capital Account Record Date. 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 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. Because
dividends are not received by the Trust at a constant rate throughout the
year, such distributions to Unitholders are expected to fluctuate from
distribution to distribution. 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 and as of the tenth day of each
month thereafter, the Trustee will deduct from the Capital Account amounts
necessary to pay the expenses of the Trust (as determined on the basis set
forth under "Trust 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
the Trust. Amounts so withdrawn shall not be considered a part of the 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 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 may elect to have each distribution of
income, capital gains and/or capital 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 Trust. 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
income, capital gains and/or capital 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 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 outstanding. For as long as the Sponsor deems it to be
in the best interest of the Unitholders, the accounts of the Trust shall be
audited, not less frequently than annually, by independent certified public
accountants, and the report of such accountants shall be furnished by the
Trustee to Unitholders upon request. 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 a statement (i)
as to the Income Account: income received, deductions for applicable taxes and
for fees and expenses of the 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 the 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 and the number of Units outstanding on the last
business day of such calendar year; (iv) the Redemption Price per Unit 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, 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 the 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 (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 an amount for each Unit equal to the Redemption Price per Unit next
computed after receipt by the Trustee of such tender of Units. The "date
of tender" is deemed to be the date on which Units are received by the
Trustee, except that as regards Units received after the Evaluation Time the
date of tender is the next day on which the New York Stock Exchange is open
for trading 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 Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts 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.
Unitholders tendering 1,000 Units or more for redemption may request from the
Trustee in lieu of a cash redemption a distribution in kind ("In Kind
Distributions" ) 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 the portfolio and cash from the
Capital Account equal to the fractional shares to which the tendering
Unitholder is entitled. In implementing these redemption procedures, the
Trustee shall make any adjustments necessary to reflect differences between
the Redemption Price of the Securities distributed in kind as of 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. For the tax consequences related to
an In Kind Distribution see "Federal Taxation."
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be, and the diversity of the 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.
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 the Trust, plus or minus cash, if any, in the Income
and Capital Accounts. 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." While the Trustee has the power to
determine the Redemption Price per Unit when Units are tendered for
redemption, such authority has been delegated to the Evaluator which
determines the price per Unit on a daily basis. The Redemption Price per Unit
is the pro rata share of each Unit in the Trust determined on the basis of (i)
the cash on hand in the Trust, (ii) the value of the Securities in the Trust
and (iii) dividends receivable on the Equity Securities trading ex-dividend as
of the date of computation, less (a) amounts representing taxes or other
governmental charges payable out of the Trust and (b) the accrued sales
charges or expenses of the Trust. The Evaluator may determine the value of the
Equity Securities in the Trust in the following manner: if the Equity
Securities are listed on a national securities exchange this evaluation is
generally based on the closing sale prices on that exchange (unless it is
determined that these prices are inappropriate as a basis for valuation) or,
if there is no closing sale price on that exchange, at the closing bid prices.
If the Equity Securities 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 on the bid side of the market or (c) by any combination
of the above.
As stated above, the Trustee may sell Securities to cover redemptions. When
Securities are sold, the size and diversity of the Trust will be reduced. Such
sales may be required at a time when Securities would not otherwise be sold
and might result in lower prices than might otherwise be realized.
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 the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
- --------------------------------------------------------------------------
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any tender
of Units 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 portfolio of the Trust is 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 Trust, 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 the Trust. Pursuant to the Trust Agreement, the
Sponsor is not authorized to direct the reinvestment of the proceeds of the
sale of Securities in replacement securities except in the event the sale is
the direct result of serious adverse credit factors affecting the issuer of
the Security which, in the opinion of the Sponsor, would make the retention of
such Security detrimental to the 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 the
Trust, they may be accepted for deposit in the Trust and either sold by the
Trustee or held in the Trust pursuant to the direction of the Sponsor (who may
rely on the advice of the Supervisor). Therefore, except as stated under "
Trust Portfolio" for failed securities and as provided in this paragraph,
the acquisition by the Trust of any securities other than the Securities is
prohibited. Proceeds from the sale of Securities (or any securities or other
property received by the Trust in exchange for Equity Securities), unless held
for reinvestment as herein provided, are credited to the Capital Account for
distribution to Unitholders, to meet redemptions or to pay charges and
expenses of the Trust.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Securities designated by the Supervisor, or if not
so directed, in its own discretion, for the purpose of redeeming Units of the
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. To the extent this is not practicable,
the composition and diversity of the Equity Securities may be altered. In
order to obtain the best price for the 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 of 51% of the Units then outstanding, provided that no
such amendment or waiver will reduce the interest in the 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.
The Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Trust Units then outstanding or by the Trustee when the value
of the Trust, as shown by any evaluation, is less than that amount set forth
under Minimum Termination Value in "Summary of Essential Financial
Information." The Trust will be liquidated by the Trustee in the event
that a sufficient number of Units not yet sold are tendered for redemption by
the Sponsor so that the net worth of the Trust would be reduced to less than
40% of the value of the Securities at the time they were deposited in the
Trust. If the Trust is liquidated because of the redemption of unsold Units
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 Trust. 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. Written notice of any termination specifying the time or
times at which Unitholders may surrender their certificates for cancellation,
if any are then issued and outstanding, shall be given by the Trustee to each
Unitholder so holding a certificate at his address appearing on the
registration books of the Trust maintained by the Trustee. At least 30 days
before the Mandatory Termination Date the Trustee will provide written notice
thereof to all Unitholders and 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 the 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 Equity Securities in the portfolio 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 Equity Securities will be paid in
cash. Unitholders with less than 1,000 Units and those not requesting an In
Kind Distribution will receive a cash distribution from the sale of the
remaining Equity Securities within a reasonable time following the Mandatory
Termination Date. Regardless of the distribution involved, the Trustee will
deduct from the funds of the 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 Equity Securities in the 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 his pro rata share
of the balance of the Income and Capital Accounts.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement, in substantially the same form as the annual
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 (negligence in the case of
the Trustee) 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 the
Trust which the Trustee may be required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. Van Kampen American Capital
Distributors, Inc. is primarily owned by Clayton, Dubilier & Rice, Inc., a New
York-based private investment firm. Van Kampen American Capital Distributors,
Inc. management owns a significant minority equity position. On June 21, 1996
VK/AC Holding, Inc., the indirect corporate parent of the Sponsor, entered
into an Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM
Holdings II, Inc. and MSAM Acquisition Inc., pursuant to which MSAM
Acquisition Inc. will be merged with and into VK/AC Holding, Inc. and VK/AC
Holding, Inc. will be the surviving corporation. MSAM Acquisition Inc. is a
wholly owned subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly
owned subsidiary of Morgan Stanley Group Inc. Subject to a number of
conditions being met, it is currently anticipated that a closing will occur in
November of 1996. Thereafter, VK/AC Holding, Inc. and its affiliated entities,
including the Sponsor, shall be part of the Morgan Stanley Group Inc. Van
Kampen American Capital Distributors, Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds with roots in money
management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (708) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of June 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 Trust or to any other Series thereof. 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 June 30, 1996, the Sponsor and its affiliates managed or supervised
approximately $57.7 billion of investment products, of which over $23.0
billion is invested in municipal securities. The Sponsor and its affiliates
managed $46.0 billion of assets, consisting of $22.5 billion for 64 open-end
mutual funds (of which 48 are distributed by Van Kampen American Capital
Distributors, Inc.), $12.3 billion for 38 closed-end funds and $5.6 billion
for 106 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 Trust 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 portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
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 the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
- --------------------------------------------------------------------------
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Kroll & Tract has acted as counsel for the Trustee.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio 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 Utility Income Trust, Series 8:
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen American Capital Utility Income Trust, Series 8 as of
September 4, 1996. The statement of condition and portfolio 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 an irrevocable letter 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
Utility Income Trust, Series 8 as of September 4, 1996, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
September 4, 1996
<TABLE>
VAN KAMPEN AMERICAN CAPITAL UTILITY INCOME TRUST, SERIES 8
STATEMENT OF CONDITION
As of September 4, 1996
<CAPTION>
Investment in Securities:
<S> <C>
Contracts to purchase securities <F1>.......... $ 146,624
Organizational costs <F2>...................... 34,692
-----------
............................................... $ 181,316
===========
Liabilities and Interest of Unitholders:
Liabilities--..................................
Accrued organizational costs <F2>.............. $ 34,692
Deferred sales charge liability <F3>........... 3,000
Interest of Unitholders-- .....................
Cost to investors <F4>......................... 150,450
Less: Gross underwriting commission <F4><F5>... 6,826
-----------
Net interest to Unitholders <F4>............... 143,624
-----------
Total.......................................... $ 181,316
===========
- ----------
<FN>
<F1>The aggregate value of the Securities listed under "Portfolio" and
their cost to the 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 an irrevocable letter of credit of $146,624 which has been
deposited with the Trustee.
<F2>The Trust will bear all or a portion of its organizational costs, which will
be deferred and amortized over the life of the Trust. Organizational costs
have been estimated based on a projected trust size of $10,000,000. To the
extent the Trust is larger or smaller, the estimate will vary.
<F3>Represents the amount of mandatory distributions from the Trust on the bases
set forth under "Public Offering" .
<F4>The aggregate public offering price and the aggregate sales charge of 4.5% are
computed on the bases set forth under "Public Offering--Offering Price"
and "Public Offering--Sponsor Compensation" and assume all single
transactions involve less than 5,000 Units. For single transactions involving
5,000 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 UTILITY INCOME TRUST, SERIES 8
PORTFOLIO as of the Initial Date of Deposit: September 4, 1996
<CAPTION>
Estimated
Standard & Poor's Annual
Earnings and Dividends Cost of
Number of Dividend Market Value per Securities
Shares Name of Issuer<F1> Ranking<F2> per Share<F3> Share<F3> to Trust<F3>
- ------------ -------------------------------- -------------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
261 Alltel Corporation A $ 28.125 $ 1.04 $ 7,340.63
143 Ameritech Corporation A- 51.125 2.12 7,310.88
203 BellSouth Corporation B+ 36.250 1.44 7,358.75
280 Central Louisiana Electric A- 26.000 1.54 7,280.00
245 CINergy Corporation B 29.750 1.72 7,288.75
313 DPL, Inc. A- 23.750 1.30 7,433.75
158 Duke Power Company A- 46.500 2.12 7,347.00
179 Enron Corporation B+ 40.625 0.85 7,271.88
283 Indiana Energy, Inc. B+ 25.500 1.14 7,216.50
212 KN Energy, Inc. B+ 35.000 1.04 7,420.00
273 MCN Corporation N/R 27.125 0.93 7,405.13
196 National Fuel Gas Company B+ 37.625 1.68 7,374.50
163 Northern States Power Company A- 44.750 2.76 7,294.25
267 ONEOK, Inc. B+ 27.500 1.20 7,342.50
200 Questar Corporation A 36.500 1.18 7,300.00
272 SCANA Corporation A- 26.750 1.47 7,276.00
164 Sonat, Inc. B 44.375 1.08 7,277.50
329 Southern Company A- 22.375 1.26 7,361.38
334 Washington Gas Light Company A 22.000 1.14 7,348.00
145 The Williams Companies, Inc. B+ 50.875 1.36 7,376.88
4,620 ................................ $ 146,624.28
=========== ==============
</TABLE>
NOTES TO PORTFOLIO
- --------------------------------------------------------------------------
(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, Securities may
have been delivered to the Sponsor pursuant to certain of these contracts; 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
September 3, 1996 and are expected to settle on September 6, 1996 (see "
The Trust" ).
(2) All rankings are by Standard & Poor's, a division of the McGraw-Hill
Companies, Inc. For a brief description of the ranking symbols and their
related meanings, see "Description of Earnings and Dividend Rankings" .
(3) The market value of each of the Securities is based on the closing sale
price of each listed Security on the applicable exchange, or if not so listed,
on the ask price on the day prior to the Initial Date of Deposit. Estimated
annual dividends are based on annualizing the most recently declared
dividends. The aggregate value of the Securities on the day prior to the
Initial Date of Deposit based on the closing sale price of each listed
Security, and on the bid price if not so listed, (which is the basis on which
the Redemption Price per Unit will be determined) was $146,624. The ask price
of the applicable Securities (the basis on which the Public Offering Price per
Unit will be determined during the initial offering period) is greater than
the bid price of such Securities. Other information regarding the Securities
in the Trust, as of the Initial Date of Deposit, is as follows:
<TABLE>
<CAPTION>
Estimated
Profit Annual
(Loss) to
Cost to Sponsor Sponsor Dividends
<S> <C> <C>
$146,624 -- $6,316
</TABLE>
DESCRIPTION OF EARNINGS AND DIVIDEND RANKINGS
- --------------------------------------------------------------------------
The investment process involves assessment of various factors--such as product
and industry position, corporate resources and financial policy--with results
that make some common stocks more highly esteemed than others. In this
assessment, Standard & Poor's believes that earnings and dividend performance
is the end result of the interplay of these factors and that, over the long
run, the record of this performance has a considerable bearing on relative
quality. The rankings, however, do not pretend to reflect all of the factors,
tangible or intangible, that bear on stock quality.
Relative quality of bonds or other debt, that is, degrees of protection for
principal and interest, called creditworthiness, cannot be applied to common
stocks, and therefore rankings are not to be confused with bond quality
ratings which are arrived at by a necessarily different approach.
Growth and stability of earnings and dividends are deemed key elements in
establishing Standard & Poor's earnings and dividend rankings for common
stocks, which are designed to capsulize the nature of this record in a single
symbol. It should be noted, however, that the process also takes into
consideration certain adjustments and modifications deemed desirable in
establishing such rankings.
The point of departure in arriving at these rankings is a computerized scoring
system based on per-share earnings and dividend records of the most recent ten
years--a period deemed long enough to measure significant time segments of
secular growth, to capture indications of basic change in trends as they
develop, and to encompass the full peak-to-peak range of the business cycle.
Basic scores are computed for earnings and dividends, then adjusted as
indicated by a set of predetermined modifiers for growth, stability within
long-term trends, and cyclicality. Adjusted scores for earnings and dividends
are then combined to yield a final score.
Further, the ranking system makes allowance for the fact that, in general,
corporate size imparts certain recognized advantages from an investment
standpoint. Conversely, minimum size limits (in terms of corporate sales
volume) are set for the various rankings, but the system provides for making
exceptions where the score reflects an outstanding earnings-dividend record.
The final score for each stock is measured against a scoring matrix determined
by analysis of the scores of a large and representative sample of stocks. The
range of scores in the array of this sample has been aligned with the
following ladder of rankings:
As published by Standard & Poor's.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
A+ - Highest B+ - Average C - Lowest
A - High B - Below Average D - In Reorganization
A- - Above Average B- - Lower
</TABLE>
N/R signifies no ranking because of insufficient data or because the stock is
not amenable to the ranking process.
The positions as determined above may be modified in some instances by special
considerations, such as natural disasters, massive strikes, and nonrecurring
accounting adjustments.
A ranking is not a forecast of future market price performance, but is
basically an appraisal of past performance of earnings and dividends, and
relative current standing. These rankings must not be used as market
recommendations; a high-score stock may at times be so overpriced as to
justify its sale, while a low-score stock may be attractively priced for
purchase. Rankings based upon earnings and dividend records are no substitute
for complete analysis. They cannot take into account potential effects of
management changes, internal company policies not yet fully reflected in the
earnings and dividend record, public relations standing, recent competitive
shifts, and a host of other factors that may be relevant to investment status
and decision.
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
Trust or the Sponsor. 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.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Title Page
<S> <C>
Summary of Essential Financial Information 3
Fee Table 5
The Trust 6
Objectives and Securities Selection 6
Trust Portfolio 8
Risk Factors 10
Federal Taxation 13
Trust Operating Expenses 16
Public Offering 17
Rights of Unitholders 21
Trust Administration 25
Other Matters 29
Report of Independent Certified Public Accountants 29
Statement of Condition 30
Portfolio 31
Notes to Portfolio 32
Description of Earnings and Dividend Rankings 32
This Prospectus contains information concerning the Trust 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.
PROSPECTUS
September 4, 1996
Van Kampen American Capital
Utility Income Trust, Series 8
A Wealth of Knowledge A Knowledge of Wealth
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
This Amendment of Registration Statement comprises the following
papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of Counsel as to the Federal Income tax status of securities
being registered.
3.3 Opinion and consent of counsel as to New York tax status of
securities being registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Acountants.
EX-27Financial Data Schedule.
Signatures
The Registrant, Van Kampen American Capital Utility Income Trust,
Series 8, hereby identifies Van Kampen Merritt Utility Income Trust,
Series 1, Van Kampen Merritt Equity Opportunity Trust, Series 4, Van
Kampen American Capital Equity Opportunity Trust, Series 13 and Van
Kampen American Capital Equity Opportunity Trust, Series 14 for purposes
of the representations required by Rule 487 and represents the following:
(1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not
differ materially in type or quality from those deposited in such
previous series; (2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide essential
financial information for, the series with respect to the securities of
which this Registration Statement is being filed, this Registration
Statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such
previous series as to which the effective date was determined by the
Commission or the staff; and (3) that it has complied with Rule 460 under
the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Utility Income Trust, Series 8
has duly caused this Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City
of Chicago and State of Illinois on the 4th day of September, 1996.
Van Kampen American Capital Utility
Income Trust, Series 8
By Van Kampen American Capital
Distributors, Inc.
By Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on September 4, 1996.
Signature Title
Don G. Powell Chairman and Chief Executive )
Officer )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Ronald A. Nyberg Director )
William R. Molinari Director )
Sandra A. Waterworth
(Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was
filed with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 203 (File No. 33-65744)
and with the Registration Statement on Form S-6 of Insured Municipals
Income Trust, 170th Insured Multi-Series (File No. 33-55891) and the same
are hereby incorporated herein by this reference.
</TABLE>
Exhibit 1.1
Van Kampen American Capital Utility Income Trust
Series 8
Trust Agreement
Dated: September 4, 1996
This Trust Agreement between Van Kampen American Capital
Distributors, Inc., as Depositor, American Portfolio Evaluation Services,
a division of Van Kampen American Capital Investment Advisory Corp., as
Evaluator, Van Kampen American Capital Investment Advisory Corp., as
Supervisory Servicer, and The Bank of New York, as Trustee, sets forth
certain provisions in full and incorporates other provisions by reference
to the document entitled "Van Kampen Merritt Utility Income Trust, Series
1, and Subsequent Series, Standard Terms and Conditions of Trust,
Effective March 17, 1988" (herein called the "Standard Terms and
Conditions of Trust") and such provisions as are set forth in full and
such provisions as are incorporated by reference constitute a single
instrument. All references herein to Articles and Sections are to
Articles and Sections of the Standard Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee
agree as follows:
Part I
Standard Terms And Conditions Of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
(1) The Securities defined in Section 1.01(8), listed in
Schedule A hereto, have been deposited in trust under this Trust
Agreement.
(2) The fractional undivided interest in and ownership of the
Trust Fund represented by each Unit is the amount set forth under
"Summary of Essential Financial Information - Fractional Undivided
Interest in the Trust per Unit" in the Prospectus. Such fractional
undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03,(b) increased or
decreased in connection with an adjustment to the number of Units
pursuant to Section 2.03, or (c) decreased by the number of Units
redeemed pursuant to Section 5.02.
(3) The First Record Date and the amount of the first
distribution of funds from the Income Account shall be the record
date for the Income Account and the amount set forth under
"Distributions" on the cover page of the Prospectus.
(4) Section 1.01(4) shall be amended to read as follows:
"(4) "Depositor" shall mean Van Kampen American Capital
Distributors, Inc. and its successors in interest, or any
successor depositor appointed as hereinafter provided."
(5) Section 1.01(5) shall be amended to read as follows:
"(5) "Evaluator" shall mean American Portfolio
Evaluation Services, a division of Van Kampen American
Capital Investment Advisory Corp. and its successors in
interest, or any successor evaluator appointed as
hereinafter provided."
(6) Section 1.01(9) shall be amended to read as follows:
"(9) "Supervisory Servicer" shall mean Van Kampen
American Capital Investment Advisory Corp. and its
successors in interest, or any successor portfolio
supervisor appointed as hereinafter provided."
(7) The first, second and third sentences of Section 2.01(b)
are hereby replaced with the following: "From time to time
following the initial date of deposit for a Trust Fund, the
Depositor is hereby authorized, in its discretion, to assign, convey
to and deposit with the Trustee additional Securities for such Trust
Fund, duly endorsed in blank or accompanied by all necessary
instruments of assignment and transfer in proper form, to be held,
managed and applied by the Trustee as herein provided. Such deposit
of additional Securities shall be made, in each case, pursuant to an
executed Supplemental Indenture satisfactory to legal counsel to the
Depositor. The Depositor shall ensure that each deposit of
additional Securities pursuant to this Section shall be equal to the
percentage relationship among the number of shares of each Security
that exists immediately preceding the related deposit of Securities
for such Trust Fund."
(8) Section 2.03 shall be amended by adding the following
sentence immediately after the first sentence of such Section: "The
number of Units may be increased through a split of the Units or
decreased through a reverse split thereof, as directed by the
Depositor, on any day on which the Depositor is the only Unitholder,
which revised number of Units shall be recorded by the Trustee on
its books."
(9) Section 3.01 of the Standard Terms and Conditions of Trust
shall be replaced in its entirety with the following:
"Section 3.01. Initial Costs. The following
organization and regular and recurring expenses of the
Trust shall be borne by the Trustee: (a) to the extent
not borne by the Depositor, expenses incurred in
establishing a Trust, including the cost of the initial
preparation and typesetting of the registration statement,
prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to the Trust,
Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation of
the portfolio and audit of the Trust, the initial fees and
expenses of the Trustee, and legal and other out-of-pocket
expenses related thereto, but not including the expenses
incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and
any other selling expenses, (b) the amount specified in
Section 3.05 and Article VIII, (c) to the extent permitted
by Section 6.02, auditing fees and, to the extent not
borne by the Depositor, expenses incurred in connection
with maintaining the Trust's registration statement
current with Federal and State authorities, (d) any
Certificates issued after the Initial Date of Deposit ;
and (e) expenses of any distribution agent. The Trustee
shall be reimbursed for those organizational expenses
referred to in clause (a) as provided in the Prospectus.
(10) Section 6.01(i) of the Standard Terms and Conditions of
Trust shall be amended by adding the following to the beginning of
such Section:
"Except as provided in Sections 3.01 and 3.05,"
(11) Section 8.04 is hereby amended by deleting the first word
of such Section and replacing it with the following:
"Except as provided in Sections 3.01 and 3.05, the"
(12) The first five paragraphs of Section 3.05 are hereby
replaced with the following:
"Section 3.05. Distributions;. The first distribution of
funds from the Income Account shall be in the amount
specified in Part II of the Trust Agreement and shall be
made approximately fifteen days after the "First Record
Date," as defined in Part II of the Trust Agreement, to
all Unitholders of record as of the First Record Date.
For all subsequent distributions, the "Record Date" is
hereby fixed to be the tenth day of each month of each
year unless such other dates are set forth in the Trust
Agreement relating to such Series of the Trust Fund.
As of the tenth day of each month of each year commencing
the First Record Date, the Trustee shall:
(a) deduct from the Capital Account and pay to itself
individually the amounts that it is at the time entitled
to receive pursuant to Section 6.04;
(b) deduct from the Capital Account and pay to the
Evaluator the amount that it is at the time entitled to
receive pursuant to Section 4.03;
(c) deduct from the Capital Account and pay to legal
counsel, as hereinafter provided for, an amount equal to
unpaid fees and expenses, if any, of such legal counsel
pursuant to Section 3.08; and
(d) deduct from the Capital Account and pay to the
Supervisory Servicer the amount that it is at the time
entitled to receive pursuant to Section 3.12.
On or shortly after the twenty-fifth day of each month
(the "Distribution Date") occurring subsequent to the
First Record Date, the Trustee shall distribute by mail to
or upon the order of each Unitholder of record as of the
close of business on the tenth day of the same month (the
"Record Date") at the post office address appearing on the
registration books of the Trustee such Unitholder's pro
rata share of the balance of the Income Account calculated
as of the Record Date on the basis of one-twelfth of the
estimated annual income to the Trust Fund for the ensuing
twelve months, after deduction of the estimated costs and
expenses to be incurred during the twelve month period for
which such income has been estimated, except in connection
with the December distribution such distribution will be
based on the actual balance in the Income Account.
In the event the amount on deposit in the Income Account
is not sufficient for the payment of the amount intended
to be distributed to Unitholders on the basis of the
aforesaid computation, the Trustee is authorized to
advance its own funds and cause to be deposited in and
credited to the Income Account such amounts as may be
required to permit payment of the monthly distribution to
be made as aforesaid and shall be entitled to be
reimbursed, without interest, out of dividend distribution
received by the Trust Fund subsequent to the date of such
advance. Any such advance shall be reflected in the
Income Account until repaid.
Distributions of amounts represented by the cash balance
in the Capital Account shall be computed as of the
December Record Date of each year occurring subsequent to
the date of the First General Record Date. On the twenty-
fifth day of each December, or within a reasonable period
of time thereafter, the Trustee shall distribute by mail
to each Unitholder of record at the close of business on
the date of computation (the Record Date) at his post
office address such holder's pro rata share of the cash
balance of the Capital Account as thus computed. The
Trustee shall not be required to make a distribution from
the Capital Account unless the cash balance on deposit
therein available for distribution shall be sufficient to
distribute at least $0.01 per Unit."
(13) Section 3.12 is hereby replaced in its entirety by the
following:
"Section 3.12. Compensation of Supervisory Servicer;. As
compensation for providing supervisory portfolio services
under this Indenture, the Supervisory Servicer shall
receive against a statement or statements therefor
submitted to the Trustee monthly or annually an aggregate
annual fee in an amount which shall not exceed that amount
set forth under "Summary of Essential Financial
Information" in the Prospectus. Such fee shall be
computed based on the number of Units outstanding as of
the January 1 of such year (except during the initial
offering period in which event the calculation shall be
based on the number of Units outstanding at the end of the
month of such calculation), but in no event shall such
compensation when combined with all compensation received
from other series of the Trust for providing such
supervisory services in any calendar year exceed the
aggregate cost to the Supervisory Servicer for providing
such services. Such compensation may, from time to time,
be adjusted provided that the total adjustment upward does
not, at the time of such adjustment, exceed the percentage
of the total increase, after the date hereof, in consumer
prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All
Services Less Rent of Shelter" or similar index, if such
index should no longer be published. The consent or
concurrence of any Unitholder hereunder shall not be
required for any such adjustment or increase. Such
compensation shall be charged by the Trustee, upon receipt
of invoice therefor from the Supervisory Servicer, against
the Income and Capital Accounts on or before the
Distribution Date. If the cash balance in the Income and
Capital Accounts shall be insufficient to provide for
amounts payable pursuant to this Section 3.12, the Trustee
shall have the power to sell (i) Securities from the
current list of Securities designated to be sold pursuant
to Section 5.02 hereof, or (ii) if no such Securities have
been so designated, such Securities as the Trustee may see
fit to sell in its own discretion, and to apply the
proceeds of any such sale in payment of the amounts
payable pursuant to this Section 3.12. Any moneys payable
to the Supervisory Servicer pursuant to this Section 3.12
shall be secured by a prior lien on the Trust Fund except
that no such lien shall be prior to any lien in favor of
the Trustee under the provisions of Section 6.04."
(14) Article III of the Standard Terms and Conditions of Trust
is hereby amended by inserting the following paragraph which shall
be entitled Section 3.13.:
"Section 3.13. Deferred Sales Charge. If the prospectus
related to the Trust specifies a deferred sale charge, the
Trustee shall, on the dates specified in and as permitted
by such Prospectus, withdraw from the Capital Account, an
amount per Unit specified in such Prospectus and credit
such amount to a special non-Trust account maintained at
the Trustee out of which the deferred sales charge will be
distributed to the Depositor. If the balance in the
Capital Account is insufficient to make any such
withdrawal, the Trustee shall, as directed by the
Depositor, either advance funds in an amount equal to the
proposed withdrawal and be entitled to reimbursement of
such advance upon the deposit of additional monies in the
Capital Account, sell Securities and credit the proceeds
thereof to such special Depositor's account or credit (if
permitted by law) Securities in kind to such special
Depositor's Account. If a Unitholder redeems Units prior
to full payment of the deferred sales charge, the Trustee
shall, if so provided in the related Prospectus, on the
Redemption Date, withhold from the Redemption Price
payable to such Unitholder an amount equal to the unpaid
portion of the deferred sales charge and distribute such
amount to such special Depositor's Account. The Depositor
may at any time instruct the Trustee in writing to
distribute to the Depositor cash or Securities previously
credited to the special Depositor's Account."
(15) Section 4.01 is hereby replaced in its entirety by the
following:
"Section 4.01. Evaluation of Securities. (a) The
Evaluator shall determine separately and promptly furnish
to the Trustee and the Depositor upon request the value of
each issue of Securities as of the close of trading on the
New York Stock Exchange on days such Exchange is open for
trading on the days on which an evaluation of the Trust
Fund is required by Section 5.01 and, in addition, as of
the close of trading on the New York Stock Exchange on
days such Exchange is open for trading if a secondary
market for the Units is maintained, such additional
evaluation being made on any day desired by the Trustee or
deemed necessary by the Depositor. During the initial
offering period, such evaluations shall be made in the
following manner: If the Securities are listed on a
national securities exchange, the evaluation will
generally be based on the closing sale price on the
exchange (unless the Evaluator deems the price
inappropriate as a basis for evaluation) of, if there is
no closing sale price on the exchange, at the closing
offer prices. If the Securities are not so listed or, if
so listed and the principal market for the Securities is
other than on the exchange, the evaluation will generally
be made by the Evaluator in good faith based on the
current offer prices on the over-the-counter market
(unless the Evaluator deems these prices inappropriate as
a basis for evaluation) or, if offer prices are not
available, (1) on the basis of the current offer prices
for comparable securities, (2) by the Evaluator's
appraising the value of the Securities in good faith at
the offer side of the market or (3) by any combination
thereof. For each evaluation, the Evaluator shall also
determine and furnish to the Trustee and the Depositor the
aggregate of (a) the value of all Securities on the basis
of such evaluation and (b) on the basis of the information
furnished to the Evaluator by the Trustee pursuant to
Section 3.03, the amount of cash then held in the Capital
Account which was received by the Trustee after the Record
Date preceding such determination less any amounts held in
the Capital Account for distribution to Unitholders on a
subsequent Distribution Date when a Record Date occurs
four business days or less after such determination. For
the purposes of the foregoing, the Evaluator may obtain
current prices for the Securities from investment dealers
or brokers (including the Depositor) that customarily deal
in similar securities.
(b) For purposes of the evaluations required in
determining Unit Value and Redemption Price, evaluation of
the Securities shall be made in the manner described above
on the basis of the last available bid prices of the
Securities except in those cases in which the Securities
are listed on a national securities exchange and the
closing sale prices are utilized."
(16) Notwithstanding anything to the contrary contained
therein, Section 4.03 of the Standard Terms and Conditions of Trust
is hereby stricken and replaced by the following:
Section 4.03. Compensation of Evaluator: As compensation
for its services hereunder, the Evaluator shall receive
against a statement therefor submitted to the Trustee,
that fee stated in the "Summary of Essential Financial
Information" in the Prospectus. The Evaluator's
compensation for any year shall be computed on the basis
of the largest number of Units outstanding during the
calendar year for which such compensation relates (except
during the initial offering period in which event the
calculation shall be based on the number of Units
outstanding at the end of the month of such calculation).
Such compensation may, from time to time, be adjusted
provided that the total adjustment upward does not, at the
time of such adjustment, exceed the percentage of the
total increase, after the date hereof, in consumer prices
for services as measured by the United States Department
of Labor Consumer Price Index entitled "All Services Less
Rent of Shelter" or similar index, if such index shall no
longer be published. The consent or concurrence of any
Unitholder hereunder shall not be required for any such
adjustment or increase. Such compensation shall be
charged by the Trustee, upon receipt of invoice therefor
from the Evaluator, against the Income and Capital
Accounts on or before the Distribution Date. If the cash
balances in the income and Capital Accounts shall be
insufficient to provide for amounts payable pursuant to
this Section 4.03, the Trustee shall have the power to
sell (i) Securities designated to be sold pursuant to
Section 5.02 hereof, or (ii) if no such Securities have
been so designated, such Securities as the Trustee may see
fit to sell in its own discretion, and to apply the
proceeds of any such sale in payment of the amounts
payable pursuant to this Section 4.03. Any moneys payable
to the Evaluator pursuant to this Section 4.03 shall be
secured by a prior lien on the Trust Fund except that no
such lien shall be prior to any lien in favor of the
Trustee under the provisions of Section 6.04.
(17) The face of the form of the Certificates will be
substantially as follows:
No.__________ Certificate of Ownership ___________ Units
--Evidencing--
An Undivided Interest
--In--
This is to certify that ___________ is the owner and registered
holder of this Certificate evidencing the ownership of ____________ units
of fractional undivided interest in the above-named Trust created
pursuant to the Indenture, a copy of which is available at the office of
the Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the Holder of
this Certificate by virtue of the acceptance hereof assents and is bound,
a summary of which Indenture is contained in the Prospectus relating to
the Trust. This Certificate is transferable and interchangeable by the
registered owner in person or by his duly authorized attorney at the
Trustee's office upon surrender of this Certificate properly endorsed or
accompanied by a written instrument of transfer and any other documents
that the Trustee may require for transfer, in form satisfactory to the
Trustee and payment of the fees and expenses provided in the Indenture.
Witness the facsimile signature of a duly authorized officer of the
Sponsor and the manual signature of an authorized signatory of the
Trustee.
Dated:
Van Kampen American Capital The Bank of New York
Distributors, Inc. Trustee
Depositor
By _________________________ By ___________________________________
Chairman Authorized Signatory
(18) The sixth paragraph in Section 5.02 of the Standard Terms
and Conditions of Trust is hereby stricken and replaced by the
following:
Notwithstanding anything to the contrary in this
Section 5.02, any Unitholder may, if such Unitholder
tenders at least that number of Units specified in the
Prospectus for redemption, request at the time of tender
to receive from the Trustee in lieu of cash such
Unitholder's pro rata share of each Security then held by
the Trust Fund. Such tendering Unitholder will receive
his pro rata number of whole shares of each of the
Securities comprising the portfolio of the Trust Fund and
cash from the Capital Account equal to the value of the
fractional shares to which such tendering Unitholder is
entitled. Such pro rata share of each Security and the
related cash equal to the value of the fractional shares
to which such tendering Unitholder is entitled is referred
to herein as an "In Kind Distribution". An In Kind
Distribution 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. 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.
(19) The first sentence of Section 6.04 is hereby replaced with
the following: "For services performed under this Indenture the
Trustee shall be paid that annual fee specified under "Summary of
Essential Financial Information" in the Prospectus, payable in
monthly installments. The Trustee's compensation for any year shall
be computed on the basis of the largest number of Units outstanding
as of the January 1 of such year (except during the initial offering
period in which event the calculation shall be based on the number
of Units outstanding at the end of the month of such calculation).
(20) Section 8.02 is hereby revised to require an affirmative
vote of Unitholders representing 66 2/3% of the then outstanding
Units to terminate the Trust rather than the 51% indicated therein.
(21) The second paragraph in Section 8.02 of the Standard Terms
and Conditions of Trust is hereby stricken and replaced by the
following:
Written notice shall be given by the Trustee in
connection with any termination to each Unitholder at his
address appearing on the registration books of the Trustee
and in connection with a Mandatory Termination Date such
notice shall be given no later than 30 days before the
Mandatory Termination Date. Included with such notice
shall be a form to enable Unitholders owning that number of
Units specified in the Prospectus to request an In Kind
Distribution rather than payment in cash upon termination.
Such request must be returned to the Trustee at least five
business days prior to the Mandatory Termination Date.
Within a reasonable period of time after such termination
the Trustee shall fully liquidate (except as otherwise
provided in subdivision (e) below) the Securities then
held, if any, and shall:
(a) deduct from the Capital Account and pay to
itself individually an amount equal to the sum of (1) its
accrued compensation for its ordinary recurring services,
(2) any compensation due it for its extraordinary services
and (3) any costs, expenses, advances or indemnities as
provided herein;
(b) deduct from the Capital Account and pay accrued
and unpaid fees of the Evaluator, Supervisory Servicer and
legal counsel, if any;
(c) deduct from the Income Account or the Capital
Account any amounts which may be required to be deposited
in the Reserve Account to provide for payment of any
applicable taxes or other governmental charges and any
other amounts which may be required to meet expenses
incurred under this Indenture;
(d) distribute to each Unitholder such holder's pro
rata share of the balance of the Income Account;
(e) either distribute in cash to each Unitholder
such holder's pro rata share of the balance of the Capital
Account, or, in the alternative, distribute to each
Unitholder who then owns at least that number of Units
specified in the Prospectus, and who has requested an In
Kind Distribution under the conditions set forth above,
such holder's In Kind Distribution as set forth in Section
5.02; and
(f) together with such distribution to each
Unitholder as provided for in (d) and (e), furnish to each
such Unitholder a final distribution statement as of the
date of the computation of the amount distributable to
Unitholders, setting forth the data and information in
substantially the form and manner provided for in Section
3.06 hereof.
(22) The following new second paragraph is hereby added to
Section 3.10:
In the event that an offer by the issuer of any of
the Securities or any other party shall be made to issue
new securities, or to exchange securities, for Trust
Securities, the Trustee shall reject such offer. However,
should any exchange or substitution be effected
notwithstanding such rejection or without an initial
offer, any securities, cash and/or property received in
exchange shall be deposited hereunder and shall be
promptly sold, if securities or property, by the Trustee
unless the Depositor advises the Trustee to keep such
securities or property. The cash received in such
exchange and cash proceeds of any such sales shall be
distributed to Unitholders on the next Distribution Date
in the manner set forth in Section 3.05 regarding
distributions from the Capital Account. The Trustee shall
not be liable or responsible in any way for depreciation
or loss incurred by reason of any such sale.
In Witness Whereof, Van Kampen American Capital Distributors, Inc.
has caused this Trust Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be
hereto affixed and attested by its Secretary or one of its Vice
Presidents or Assistant Secretaries, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., and Van Kampen American Capital Investment Advisory Corp., have
each caused this Trust Indenture and Agreement to be executed by their
respective President or one of their respective Vice Presidents and the
corporate seal of Van Kampen American Capital Investment Advisory Corp.
to be hereto affixed and attested to by the Secretary, Assistant
Secretary or one of the Assistant Vice Presidents of Van Kampen American
Capital Investment Advisory Corp. and The Bank of New York through its
Wall Street Trust division, has caused this Trust Agreement to be
executed by one of its Vice Presidents and its corporate seal to be
hereto affixed and attested to by one of its Assistant Treasurers all as
of the day, month and year first above written.
Van Kampen American Capital
Distributors, Inc.
By Sandra A. Waterworth
(Seal) Vice President
Attest:
By Gina M. Scumaci
Assistant Secretary
American Portfolio Evaluation
Services, a division of Van Kampen
American Capital Investment
Advisory Corp.
By Dennis J. McDonnell
(Seal) President
Attest
By Scott E. Martin
Assistant Secretary
Van Kampen American Capital
Investment Advisory Corp.
By Dennis J. McDonnell
(Seal) President
Attest
By Scott E. Martin
Assistant Secretary
The Bank of New York
By Jeffrey Bieselin
(Seal) President
Attest
By Norbert Loney
Assistant Treasurer
Schedule A to Trust Agreement
Securities Initially Deposited
in
Van Kampen American Capital Utility Income Trust, Series 8
(Note: Incorporated herein and made a part hereof is the
"Portfolio" as set forth in the Prospectus.)
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
September 4, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re:Van Kampen American Capital Utility Income Trust, Series 8
Gentlemen:
We have served as counsel for Van Kampen American Capital
Distributors, Inc. as Sponsor and Depositor of Van Kampen American
Capital Utility Income Trust, Series 8 (hereinafter referred to as the
"Trust"), in connection with the preparation, execution and delivery of a
Trust Agreement dated September 4, 1996, among Van Kampen American
Capital Distributors, Inc., as Depositor, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., as Evaluator, Van Kampen American Capital Investment Advisory
Corp., as Supervisory Servicer, and The Bank of New York, as Trustee,
pursuant to which the Depositor has delivered to and deposited the
Securities listed in the Schedule to the Trust Agreement with the Trustee
and pursuant to which the Trustee has provided to or on the order of the
Depositor documentation evidencing ownership of Units of fractional
undivided interest in and ownership of the Trust (hereinafter referred to
as the "Units"), created under said Trust Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Trust have been duly authorized; and
2. The certificates evidencing the Units in the Trust,
when duly executed and delivered by the Depositor and the
Trustee in accordance with the aforementioned Trust Agreement,
will constitute valid and binding obligations of such Trust and
the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-10303) relating to the Units
referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
MJK/cjw
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
September 4, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re:Van Kampen American Capital Utility Income Trust, Series 8
Gentlemen:
We have acted as counsel for Van Kampen American Capital
Distributors, Inc., Depositor of Van Kampen American Capital Utility
Income Trust, Series 8 (the "Fund"), in connection with the issuance of
Units of fractional undivided interest in the Fund, under a Trust
Agreement dated September 4, 1996 (the "Indenture") among Van Kampen
American Capital Distributors, Inc., as Depositor, Van Kampen American
Capital Investment Advisory Corp., as Evaluator, Van Kampen American
Capital Investment Advisory Corp., as Supervisory Servicer, and The Bank
of New York, as Trustee.
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we
have deemed pertinent.
The assets of the Fund will consist of a portfolio of equity
securities (the "Equity Securities") as set forth in the Prospectus.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing United States Federal income tax law:
(i) The Fund is not an association taxable as a
corporation but will be governed by the provisions of
subchapter J (relating to Trusts) of chapter 1, Internal
Revenue Code of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata
share of each asset of the Fund in the proportion that the
number of Units held by him bears to the total number of Units
outstanding. Under subpart E, subchapter J of chapter 1 of the
Code, income of the Fund will be treated as income of each
Unitholder in the proportion described, and an item of Fund
income will have the same character in the hands of a
Unitholder as it would have in the hands of the Trustee. Each
Unitholder will be considered to have received his pro rata
share of income derived from each Fund asset when such income
is considered to be received by the Fund. A Unitholder's pro
rata portion of distributions of cash or property by a
corporation with respect to an Equity Security ("dividends" as
defined by Section 316 of the Code ) are taxable as ordinary
income to the extent of such corporation's current and
accumulated "earnings and profits." A Unitholder's pro rata
portion of dividends which exceed such current and accumulated
earnings and profits will first reduce the Unitholder's tax
basis in such Equity Security, and to the extent that such
dividends exceed a Unitholder's tax basis in such Equity
Security, shall be treated as gain from the sale or exchange of
property.
(iii) The price a Unitholder pays for his Units, generally
including sales charges, is allocated among his pro rata
portion of each Equity Security held by the Fund (in the
proportion to the fair market values thereof on the valuation
date closest to the date the Unitholder purchases his Units),
in order to determine his tax basis for his pro rata portion of
each Equity Security held by the Fund.
(iv) Gain or loss will be recognized to a Unitholder
(subject to various nonrecognition provisions under the Code)
upon redemption or sale of his Units, except to the extent an
in kind distribution of stock is received by such Unitholder
from the Fund as discussed below. Such gain or loss is
measured by comparing the proceeds of such redemption or sale
with the adjusted basis of his Units. Before adjustment, such
basis would normally be cost if the Unitholder had acquired his
Units by purchase. Such basis will be reduced, but not below
zero, by the Unitholder's pro rata portion of dividends with
respect to each Equity Security which are not taxable as
ordinary income.
(v) If the Trustee disposes of a Fund asset (whether by
sale, exchange, liquidation, redemption or otherwise) gain or
loss will be recognized to the Unitholder (subject to various
nonrecognition provisions under the Code) and the amount
thereof will be measured by comparing the Unitholder's aliquot
share of the total proceeds from the transaction with his basis
for his fractional interest in the asset disposed of. Such
basis is ascertained by apportioning the tax basis for his
Units (as of the date on which his Units were acquired) among
each of the Fund assets (as of the date on which his Units were
acquired) ratably according to their values as of the valuation
date nearest the date on which he purchased such Units. A
Unitholder's basis in his Units and of his fractional interest
in each Trust asset must be reduced, but not below zero, by the
Unitholder's pro rata portion of dividends with respect to the
Equity Security which is not taxable as ordinary income.
(vi) Under the Indenture, under certain circumstances, a
Unitholder tendering Units for redemption may request an in
kind distribution of Equity Securities upon the redemption of
Units or upon the termination of the Fund. As previously
discussed, prior to the redemption of Units or the termination
of the Fund, a Unitholder is considered as owning a pro rata
portion of each of the Fund's assets. The receipt of an in
kind distribution will result in a United States Unitholder
receiving an undivided interest in whole shares of stock and
possibly cash. The potential federal income tax consequences
which may occur under an in kind distribution with respect to
each Equity Security owned by the Fund will depend upon whether
or not a Unitholder receives cash in addition to Equity
Securities. An "Equity 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 Equity Securities in exchange for his or her pro
rata portion in the Equity Securities held by the Fund.
However, if a Unitholder also receives cash in exchange for a
fractional share of an Equity Security held by the Fund, 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 an
Equity Security held by the Fund. The total amount of taxable
gains (or losses) recognized upon such redemption will
generally equal the sum of the gain (or loss) recognized under
the rules described above by the redeeming Unitholder with
respect to each Equity Security owned by the Fund.
Dividends received by the Fund which are attributable to a
corporation owning Units in the Fund and which are taxable as ordinary
income may be eligible for the 70% dividends received deduction pursuant
to Section 243(a) of the Code, subject to the limitations imposed by
Sections 246 and 246A of the Code. It should be noted that various
legislative proposals that would affect the dividends received deduction
have been introduced.
Section 67 of the Code provides that certain itemized deductions,
such as investment expenses, tax return preparation fees and employee
business expenses will be deductible by individuals only to the extent
they exceed 2% of such individual's adjusted gross income. Temporary
regulations have been issued which require Unitholders to treat certain
expenses of the Fund as miscellaneous itemized deductions subject to this
limitation.
A Unitholder will recognize taxable gain (or loss) when all or part
of the pro rata interest in an Equity Security is either sold by the Fund
or redeemed or when a Unitholder disposes of his Units in a taxable
transaction, in each case for an amount greater (or less) than his tax
basis therefor, subject to various non-recognition provisions of the
Code.
Any gain recognized on a sale or exchange will, under current law,
generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set
forth herein, and, except as expressly set forth above, we express no
opinion with respect to any other taxes, including foreign, state or
local taxes or collateral tax consequences with respect to the purchase,
ownership and disposition of Units.
Very truly yours
Chapman and Cutler
MJK/cjw
Exhibit 3.3
Kroll & Tract
520 Madison Avenue
New York, New York 10022
September 4, 1996
Van Kampen American Capital Utility
Income Trust, Series 8
c/o The Bank of New York,
As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen American Capital
Utility Income Trust, Series 8 (the "Fund") for the purposes of
determining the applicability of certain New York taxes under the
circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the
"Indenture"), dated as of today (the "Date of Deposit") among Van Kampen
American Capital Distributors, Inc. (the "Depositor"), American Portfolio
Evaluation Services, a division of a subsidiary of Depositor, as
Evaluator and as Supervisory Servicer (the "Supervisory Servicer"), and
The Bank of New York as Trustee (the "Trustee"). As described in the
prospectus relating to the Fund dated today to be filed as an amendment
to a registration statement heretofore filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Prospectus") (File Number 333-10303), the objectives of the Fund are to
provide the potential for capital appreciation from a portfolio of equity
securities involved in either the enabling technology or commnications
services areas of the Internet. It is noted that no opinion is expressed
herein with regard to the Federal tax aspects of the securities, units of
the Trust (the "Units"), or any interest, gains or losses in respect
thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to each Trust the securities and/or contracts and cash for
the purchase thereof together with an irrevocable letter of credit in the
amount required for the purchase price of the securities comprising the
corpus of the Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities
to be deposited in the Trust, and, upon the receipt thereof, will deliver
to the Depositor a registered certificate for the number of Units
representing the entire capital of the Trust as more fully set forth in
the Prospectus. The Units, which are represented by certificates
("Certificates"), will be offered to the public upon the effectiveness of
the Registration Statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash
dividends received by the Fund and with the proceeds from the disposition
of securities held in the Fund and the proceeds of the treasury
obligation on maturity and the distribution of such cash dividends and
proceeds to the Unitholders. The Trustee will also maintain records of
the registered holders of Certificates representing an interest in the
Fund and administer the redemption of Units by such Certificateholders
and may perform certain administrative functions with respect to an
automatic investment option.
Generally, equity securities held in the Trust may be removed
therefrom by the Trustee at the direction of the Depositor upon the
occurrence of certain specified events which adversely affect the sound
investment character of the Fund, such as default by the issuer in
payment of declared dividends or of interest or principal on one or more
of its debt obligations..
Article 9-A of the New York Tax Law imposes a franchise tax on
business corporations, and, for purposes of that Article, Section 208(l)
defines the term "corporation" to include, among other things, "any
business conducted by a trustee or trustees wherein interest or ownership
is evidenced by certificate or other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in
which interest or ownership is evidenced by
certificate or other written instrument. includes,
but is not limited to, an association commonly
referred to as a "business trust" or "Massachusetts
trust". In determining whether a trustee or trustees
are conducting a business, the form of the agreement
is of significance but is not controlling. The
actual activities of the trustee or trustees, not
their purposes and powers, will be regarded as
decisive factors in determining whether a trust is
subject to tax under Article 9-A. The mere
investment of funds and the collection of income
therefrom, with incidental replacement of securities
and reinvestment of funds, does not constitute the
conduct of a business in the case of a business
conducted by the trustee or trustees. 20 NYCRR 1-
2.3(b)(2) (July 11, 1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that
where a trustee merely invests funds and collects and distributes the
income therefrom, the trust is not engaged in business and is not subject
to the franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171
(3rd Dept. 1948), order resettled, 274 A.D. 1073, 85 N.Y.S.2d 705 (1949).
An opinion of the Attorney General of the State of New York, 47 N.Y.
Atty. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee
of an unincorporated investment trust was without authority to reinvest
amounts received upon the sales of securities and could dispose of
securities making up the trust only upon the happening of certain
specified events or the existence of certain specified conditions, the
trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to sell
obligations contained in the corpus of the Fund and reinvest the proceeds
therefrom. Further, the power to sell such obligations is limited to
circumstances in which the creditworthiness or soundness of the issuer of
such equity security is in question or in which cash is needed to pay
redeeming Unit holders or to pay expenses, or where the Fund is
liquidated pursuant to the termination of the Indenture. In substance,
the Trustee will merely collect and distribute income and will not
reinvest any income or proceeds, and the Trustee has no power to vary the
investment of any Unit holder in a Trust.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust
will be deemed to be the owner of the trust under certain circumstances,
and therefore taxable on his proportionate interest in the income
thereof. Where this Federal tax rule applies, the income attributed to
the grantor will also be income to him for New York income tax purposes.
See TSB-M-78(9)(c), New York Department of Taxation and Finance June 23,
1978.
By letter, dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be
considered as owning a share of each asset of a Trust in the proportion
that the number of Units held by such holder bears to the total number of
Units outstanding and the income of a Trust will be treated as the income
of each Unit holder in said proportion pursuant to Subpart E of Part 1,
subchapter J of Chapter 1 of the Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we
specifically rely, we are of the opinion that under existing laws,
rulings and court decisions interpreting the laws of the State and City
of New York.
1. Each Trust will not constitute an association taxable as a
corporation under New York law and, accordingly, will not be subject to
tax on its income under the New York State franchise tax or the New York
City general corporation tax.
2. The income of the Trust will be treated as the income of the
Unit holders under the income tax laws of the State and City of New York,
and
3. Unit holders who are not residents of the State of New York are
not subject to the income tax laws thereof with respect to any interest
or gain derived from the Fund or any gain from the sale or other
disposition of the Units, except to the extent that such interest or gain
is from property employed in a business trade profession or occupation
carried on in the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name
and the reference to our firm in the Registration Statement and in the
Prospectus.
Very truly yours,
Kroll & Tract
MNS:ac
Exhibit 4.1
Interactive Data
14 West Street
New York, NY 10005
September 3, 1996
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital Utility Income Trust, Series 8
(A Unit Investment Trust) Registered Under the Securities
Act of 1933, File No. 333-10303
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Services, Inc.,
as the Evaluator, and to the use of the Obligations prepared by us which
are referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Independent Certified Public Accountants' Consent
We have issued our report dated September 4, 1996 on the statement
of condition and related securities portfolio of Van Kampen American
Capital Utility Income Trust, Series 8 as of September 4, 1996 contained
in the Registration Statement on Form S-6 and Prospectus. We consent to
the use of our report in the Registration Statement and Prospectus and to
the use of our name as it appears under the caption "Other Matters-
Independent Certified Public Accountants.'"
Grant Thornton LLP
Chicago, Illinois
September 4, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on September 4, 1996 it
is unaudited
</LEGEND>
<SERIES>
<NUMBER> 8
<NAME> VUIT
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> SEP-04-1996
<INVESTMENTS-AT-COST> 146624
<INVESTMENTS-AT-VALUE> 146624
<RECEIVABLES> 34692
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 181316
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37692
<TOTAL-LIABILITIES> 37692
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 143624
<SHARES-COMMON-STOCK> 15000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 143624
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
