File No. 333-21105 CIK #1025197
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549-1004
POST-EFFECTIVE
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
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 51
(Exact Name of Trust)
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC. CHAPMAN AND CUTLER
Attention: Don G. Powell Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective on May
22, 1998 pursuant to paragraph (b) of Rule 485.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 51
GLOBAL PRECIOUS METALS TRUST, SERIES 1
- --------------------------------------------------------------------------------
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
Please retain both parts of this Prospectus for future reference.
- --------------------------------------------------------------------------------
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 51 (the "Fund")
is comprised of one unit investment trust, Global Precious Metals Trust, Series
1 (the "Trust"). The Trust offers investors the opportunity to purchase Units
representing proportionate interests in a fixed portfolio of equity securities
issued by companies engaged in the exploration, mining, refining and production
of gold and other precious metals including common stocks of foreign issuers,
certain of which are in American Depository Receipt ("ADRs") form ("Equity
Securities" or "Securities"). Unless terminated earlier, the Trust will
terminate on February 25, 2000 and 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.
PUBLIC OFFERING PRICE
The Public Offering Price per Unit is equal to the aggregate underlying value
of the Equity Securities plus or minus cash, if any, in the Capital and Income
Accounts plus the applicable sales charge as described herein, divided by the
number of Units outstanding. See "Summary of Essential Financial Information".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MAY 22, 1998
<TABLE>
VAN KAMPEN AMERICAN CAPITAL
GLOBAL PRECIOUS METALS TRUST, SERIES 1
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 51
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AS OF MARCH 17, 1998
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>
GLOBAL
PRECIOUS METALS
TRUST
-----------------
<S> <C>
GENERAL INFORMATION
Number of Units 262,748.025
Fractional Undivided Interest in Trust per Unit 1/262,748.025
Public Offering Price:
Aggregate Value of Securities in Portfolio (1) $ 1,183,288
Aggregate Value of Securities per Unit (including accumulated dividends) $ 4.57
Sales Charge 3.5% (3.627% of Aggregate Value of Securities excluding principal cash) per Unit(3)$ .15
Public Offering Price per Unit (2)(3) $ 4.72
Redemption Price per Unit $ 4.57
Secondary Market Repurchase Price per Unit $ 4.57
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ .15
Supervisor's Annual Supervisory Fee Maximum of $.0025 per Unit
Evaluator's Annual Fee Maximum of $.0025 per Unit
Evaluation Time Close of the New York Stock Exchange
Initial Date of Deposit February 25, 1997
Mandatory Termination Date February 25, 2000
Minimum Termination Value 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 such Trust is less than
$3,000,000.
Estimated Net Annual Dividends per Unit $.05057 Trustee's Annual Fee $.008 per
Unit Estimated Annual Organizational
Expenses (4) $.1479 per Unit Income
Distribution Record Date TENTH day of June and December.
Income Distribution Date TWENTY-FIFTH day of June and December.
Capital Account Record Date TENTH day of December.
Capital Account Distribution Date TWENTH-FIFTH day of December.
</TABLE>
- ----------
(1)Equity Securities listed on a national or foreign securities exchange are
valued at the closing sale price, or if no such price exists, or if the
Equity Securities are not listed, at the closing bid price thereof. The
aggregate value of Securities of foreign issuers represents the U.S. Dollar
value of Securities of foreign issuers represents the U.S. dollar value on
the basis of the bid side value of the related currency exchange rates at the
Evaluation Time.
(2)Anyone ordering Units will have added to the Public Offering Price a pro
rata share of any cash in the Income and Capital Accounts.
(3)Effective on each February 26, the secondary sales charge will decrease by
.5 of 1% to a minimum sales charge of 3.0%. See "Public-Offering Price" in
Part Two.
(4)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 Trust portfolio and the initial fees and expenses of the Trustee but not
including the expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses) as is common
for mutual funds. Total organizational expenses will be amortized over the
life of the Trust. See "Expenses of the Trust" in Part Two and "Statement of
Condition." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
PORTFOLIO
The Global Precious Metals Trust consists of different issues of Equity
Securities which are primarily issued by foreign and domestic companies that are
engaged in the exploration, mining, refining and production of gold and other
precious metals, including common stocks of foreign issuers. All of of the
Equity Securities are listed on a national or foreign securities exchange, the
NASDAQ National Market System or are traded in the over-the-counter market as of
the Date of Deposit.
<TABLE>
PER UNIT INFORMATION
<CAPTION>
1998 (1)
-------------
<S> <C>
Net asset value per Unit at beginning of period $ 9.97
=============
Net asset value per Unit at end of period $ 5.01
=============
Distributions to Unitholders of investment income including accumulated dividends paid on
Units redeemed (average Units outstanding for entire period) $ .05
=============
Distributions to Unitholders from Security sales proceeds (average Units outstanding for
entire period) $ --
=============
Unrealized appreciation (depreciation) of Equity Securities (per Unit outstanding at end of
period) $ (3.36)
=============
Units outstanding at end of period 272,049
</TABLE>
- ----------
(1)For the period from February 25, 1997 (date of deposit) through January
31, 1998.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
AND THE UNITHOLDERS OF VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 51 (GLOBAL PRECIOUS METALS TRUST, SERIES 1):
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of Van Kampen American Capital
Equity Opportunity Trust, Series 51 (Global Precious Metals Trust, Series 1) as
of January 31, 1998 and the related statements of operations and changes in net
assets for the period from February 25, 1997 (date of deposit) through January
31, 1998. These statements are the responsibility of the Trustee and the
Sponsor. Our responsibility is to express an opinion on such 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 securities owned at January 31, 1998 by correspondence with the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee and 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 the Van Kampen American Capital
Equity Opportunity Trust, Series 51 (Global Precious Metals Trust, Series 1) as
of January 31, 1998 and the results of operations and changes in net assets for
the period from February 25, 1997 (date of deposit) through January 31, 1998, in
conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
April 3, 1998
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 51
STATEMENTS OF CONDITION
JANUARY 31, 1998
<CAPTION>
GLOBAL
PRECIOUS METALS
TRUST
---------------
<S> <C>
Trust property
Cash $ --
Securities at market value, (cost $ 2,251,972) (note 1) 1,338,055
Accumulated dividends 949
Receivable for securities sold 9,689
Organizational Costs 32,762
---------------
$ 1,381,455
===============
Liabilities and interest to Unitholders
Cash overdraft $ 9,897
Accrued Organizational Costs 9,336
Interest to Unitholders 1,362,222
---------------
$ 1,381,455
===============
ANALYSES OF NET ASSETS
Interest of Unitholders (272,049 Units of fractional undivided interest outstanding)
Cost to original investors of 313,885 Units (note 1) $ 2,914,202
Less initial underwriting commission (note 3) 117,599
---------------
2,796,603
Less redemption of 41,836 Units 237,885
Less deferred sales charge 45,897
---------------
2,512,821
Undistributed net investment income
Net investment income (4,289)
Less distributions to Unitholders 14,476
---------------
(18,765)
Realized gain (loss) on Security sale (217,917)
Unrealized appreciation (depreciation) of Securities (note 2) (913,917)
Distributions to Unitholders of Security sale proceeds --
---------------
Net asset value to Unitholders $ 1,362,222
===============
Net asset value per Unit (272,049 Units outstanding) $ 5.01
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
GLOBAL PRECIOUS METALS TRUST, SERIES 1
STATEMENTS OF OPERATIONS
PERIOD FROM FEBRUARY 25, 1997 (DATE OF DEPOSIT) THROUGH JANUARY 31, 1998
<CAPTION>
1998
---------------
<S> <C>
Investment income
Dividend income $ 13,619
Expenses
Trustee fees and expenses 2,347
Evaluator fees 573
Organizational fees 14,415
Supervisory fees 573
---------------
Total expenses 17,908
---------------
Net investment income (4,289)
Realized gain (loss) from Securities sale
Proceeds 329,714
Cost 547,631
---------------
Realized gain (loss) (217,917)
Net change in unrealized appreciation (depreciation) of Securities (913,917)
---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (1,136,123)
===============
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM FEBRUARY 25, 1997 (DATE OF DEPOSIT) THROUGH JANUARY 31, 1998
1998
---------------
Increase (decrease) in net assets Operations:
Net investment income $ (4,289)
Realized gain (loss) on Securities sales (217,917)
Net change in unrealized appreciation (depreciation) of Securities (913,917)
---------------
Net increase (decrease) in net assets resulting from operations
(1,136,123) Distributions to Unitholders from:
Net investment income (14,476)
Securities sale proceeds --
Redemption of Units (237,885)
Deferred sales charge (45,897)
---------------
Total increase (decrease) 1,434,381
Net asset value to Unitholders
Beginning of period 2,796,603
Additional Securities purchased from proceeds of Unit Sales --
---------------
End of period (including (over) undistributed net investment income of $(18,765)) $ 1,362,222
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
GLOBAL PRECIOUS METALS TRUST, SERIES 1 PORTFOLIO AS OF JANUARY 31, 1998
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
VALUATION OF
SECURITIES AT
NUMBER MARKET VALUE JANUARY 31,
OF SHARES NAME OF ISSUER PER SHARE 1998 (NOTE 1)
- --------------- ------------------------------------------------------------------- --------------- --------------
<S> <C> <C> <C>
4,099 Arizona Star Resource Corporation $ 1.6829 $ 6,898
- ----------------------------------------------------------------------------------------------------------------------
3,195 Ashanti Goldfields Company, Ltd. 9.7500 31,151
- ----------------------------------------------------------------------------------------------------------------------
4,445 Barrick Gold Corporation 19.3750 86,122
- ----------------------------------------------------------------------------------------------------------------------
6,566 Battle Mountain Gold Company 5.6250 36,934
- ----------------------------------------------------------------------------------------------------------------------
17,354 Birim Goldfields, Incorporated 0.4121 7,152
- ----------------------------------------------------------------------------------------------------------------------
7,684 Cambior, Incorporated 6.5000 49,946
- ----------------------------------------------------------------------------------------------------------------------
11,120 Driefontein Consolidated, Ltd. 6.6250 73,670
- ----------------------------------------------------------------------------------------------------------------------
7,666 Euro Nevada Mining Corporation 16.0736 123,220
- ----------------------------------------------------------------------------------------------------------------------
20,611 Franc-Or Resources Corporation 0.4258 8,778
- ----------------------------------------------------------------------------------------------------------------------
5,055 Freeport-McMoRan Copper & Gold. Incorporated 14.6875 74,245
- ----------------------------------------------------------------------------------------------------------------------
14,656 Glamis Gold, Incorporated 4.3125 63,204
- ----------------------------------------------------------------------------------------------------------------------
2,455 Gold Reserve Corporation 2.4375 5,984
- ----------------------------------------------------------------------------------------------------------------------
24,177 Golden Knight Resources, Ltd. 1.6485 39,858
- ----------------------------------------------------------------------------------------------------------------------
10,167 Greenstone Resources, Ltd. 6.1250 62,273
- ----------------------------------------------------------------------------------------------------------------------
109,483 Kidston Gold Mines, Ltd. 0.3560 38,980
- ----------------------------------------------------------------------------------------------------------------------
41,447 La Teko Resources, Ltd. 0.9687 40,152
- ----------------------------------------------------------------------------------------------------------------------
30,232 Newcrest Mining, Corporation 1.2666 38,295
- ----------------------------------------------------------------------------------------------------------------------
5,627 Newmont Mining Corporation 28.5000 160,369
- ----------------------------------------------------------------------------------------------------------------------
5,037 Pangea Goldfields, Incorporated 1.3051 6,574
- ----------------------------------------------------------------------------------------------------------------------
20,347 Prime Resource Group, Incorporated 7.7620 157,935
- ----------------------------------------------------------------------------------------------------------------------
11,187 Rio Narcea Gold Mines, Ltd. 2.5759 28,817
- ----------------------------------------------------------------------------------------------------------------------
14,656 Romarco Minerals, Incorporated 2.0607 30,202
- ----------------------------------------------------------------------------------------------------------------------
34,129 St. Barbara Mines, Ltd. 0.1129 3,856
- ----------------------------------------------------------------------------------------------------------------------
49,587 TVI Pacific, Incorporated 0.0583 2,895
- ----------------------------------------------------------------------------------------------------------------------
19,063 TVX Gold, Incorporated 3.0625 58,380
- ----------------------------------------------------------------------------------------------------------------------
15,596 Vaal Reefs Exploration & Mining Company Ltd. 4.7187 73,594
- ----------------------------------------------------------------------------------------------------------------------
28,685 Vengold, Incorporated 0.9960 28,571
------------- ---------------
524,326 $ 1,338,055
============= ===============
</TABLE>
The accompanying notes are an integral part of these statements.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 51
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national or foreign securities
exchange are valued at the last closing sales price or, if no such price exists,
or if the Equity Securities are not listed at the closing bid price thereof. The
aggregate value of Securities of foreign issuers represents the U.S.
dollar value on the basis of the bid side value of the related currency exchange
rates at the Evaluation Time.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national or foreign securities exchange or the
relevant stock exchanges on the closing sale prices on the exchange. The cost
was determined on the day of the various Dates of Deposit.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in the Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value determined
in Note 1 and (3) accumulated dividends thereon, less accrued expenses of the
Trust, if any.
Federal Income Taxes - Each Unitholder is considered to be the owner of a pro
rata portion of the trust and accordingly, no provision has been made for
Federal Income Taxes.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
Organizational Costs - The trust will bear all or a portion of its
organizational costs, which will be deferred and amoritized over the life of the
trust.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at January 31, 1998 is as follows:
GLOBAL
PRECIOUS METALS
TRUST
-----------------
Unrealized Appreciation $ 2,040
Unrealized Depreciation (915,957)
-----------------
$ (913,917)
=================
NOTE 3 - OTHER
Marketability - Although it is not obligated to do so, the Sponsor intends to
maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the aggregate value of the
Securities in the portfolio of the Trust valued as described in Note 1, plus
accumulated dividends to the date of settlement. If the supply of Units exceeds
demand, or for other business reasons, the Sponsor may discontinue purchases of
Units at such prices. In the event that a market is not maintained for the
Units, a Unitholder desiring to dispose of his Units may be able to do so only
by tendering such Units to the Trustee for redemption at the redemption price.
Cost to Investors - The cost to original investors was based on the
underlying value of the Securities per Unit on the date of an investor's
purchase, plus an amount equal to the difference between the maximum sales
charge of 4.0% of the public offering price which is equivalent to 4.167% of the
aggregate underlying value of the Securities and the maximum deferred sales
charge of ($0.20 per Unit). These investors paid a deferred sales charge of
$0.20 per Unit. Effective on each February 26, commencing February 26, 1998, the
secondary sales charge does not include deferred payments but will instead
include only a one-time initial sales charge of 3.5% of the public offering
price and will decrease by .5 of 1% to a minimum sales charge of 3.0%.
Compensation of Evaluator and Supervisor - The Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.0025 per Unit, not to
exceed the aggregate cost of the Supervisor for providing such services to all
applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases under
the category "All Services Less Rent or Shelter" in the Consumer Price Index.
NOTE 4 - REDEMPTION OF UNITS
During the period ended January 31, 1998, 41,836 Units were presented for
redemption.
VAN KAMPEN AMERICAN CAPITAL
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 51
GLOBAL PRECIOUS METALS TRUST, SERIES 1 PROSPECTUS PART TWO
- --------------------------------------------------------------------------------
THE FUND. Van Kampen American Capital Equity Opportunity Trust, Series 51
(the "Fund") is comprised of one unit investment trust, Global Precious Metals
Trust, Series 1 (the "Trust"). The Trust offers investors the opportunity to
purchase Units representing proportionate interests in a fixed portfolio of
equity securities issued by companies engaged in the exploration, mining,
refining and production of gold and other precious metals including common
stocks of foreign issuers, certain of which are in American Depositary Receipt
("ADRs") form ("Equity Securities" or "Securities"). See "Trust Portfolio". The
foreign common stocks which are traded on a foreign securities exchange and not
held in ADR form are referred to herein as the "Foreign Securities." Unless
terminated earlier, the Trust will terminate on February 25, 2000 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, that portion of distributions treated as United States source income
will generally be subject to U.S. federal withholding taxes; however, under
certain circumstances treaties between the United States and other countries may
reduce or eliminate such withholding tax. That portion of distributions not
treated as United States source income will generally not be subject to U.S.
federal withholding tax. See "Federal Taxation." Such investors should consult
their tax advisers regarding the imposition of U.S. withholding on distributions
OBJECTIVE OF THE TRUST. The objective of the Trust is to provide the
potential for capital appreciation by investing in a portfolio of equity
securities of foreign and domestic companies engaged in the exploration, mining,
refining and production of gold and other precious metals. 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, a sales charge, and cash, if any, in the Income and Capital Accounts
held or owned by the Trust. The Public Offering Price per Unit is based on the
aggregate value of the Foreign Securities computed on the basis of the bid side
value of the related currency exchange rate in U.S. dollars for secondary market
transactions. The minimum purchase is 100 Units except for certain transactions
described under "Public Offering--Unit Distribution". See "Public Offering.
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 possible loss of
principal.
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
BOTH PARTS OF THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE. THIS
PROSPECTUS IS DATED AS OF THE DATE OF THE PROSPECTUS PART I ACCOMPANYING THIS
PROSPECTUS PART II.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
DIVIDEND AND CAPITAL GAINS DISTRIBUTIONS. Distributions of dividends and
capital, if any, received by the Trust will be paid in cash on the applicable
Distribution Date to Unitholders of record on the record date as set forth in
the "Summary of Essential Financial Information" in Part One. Gross dividends
received by the Trust will be distributed to Unitholders. Expenses of the Trust
will be paid with proceeds from the sale of Securities. For the consequences of
such sales, see "Federal Taxation". Additionally, upon termination of the Trust,
the Trustee will distribute, upon surrender of Units for redemption, to each
Unitholder his pro rata share of the Trust's assets, less expenses, in the
manner set forth under "Rights of Unitholders--Distributions of Income and
Capital.
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 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 (other than the Foreign
Securities and reduced by customary transfer and registration charges) in lieu
of payment in cash. A Unitholder who elects a distribution of shares of
Securities will not receive shares of the Foreign Securities but will instead
receive cash representing his pro rata portion of the Foreign Securities. See
"Rights of Unitholders--Redemption of Units."
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 (other than the Foreign 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 such Equity Securities. All Unitholders will receive cash in lieu of
their pro rata share of the Foreign Securities and 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 additional Units of the Trust, if Units are available at the
time of reinvestment, or 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 the
financial condition of the issuers, the general condition of the stock market,
volatile interest rates, volatile stock prices, currency fluctuations, the lack
of adequate financial information concerning an issuer, exchange control
restrictions impacting foreign issuers and risks related to an investment in
companies engaged in the exploration, mining, refining and production of gold
and other precious metals. See "Risk Factors."
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 51 is comprised
of one unit investment trust, Global Precious Metals Trust, Series 1. The Trust
was 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 offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities
issued by foreign and domestic companies engaged in the exploration, mining,
refining and production of gold and other precious metals, including common
stocks of foreign issuers (certain of which are in ADR form). Diversification of
assets in the Trust will not eliminate the risk of loss always inherent in the
ownership of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities, 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 Units of the Trust.
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 (i) additional Securities, (ii) contracts to purchase securities together
with cash or irrevocable letters of credit or (iii) cash (including a letter of
credit) with instructions to purchase additional Securities. As additional Units
are issued by 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 or cash with instructions to purchase Securities into the Trust,
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 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. If
the Sponsor deposits cash, however, existing and new investors may experience a
dilution of their investments and a reduction in their anticipated income
because of fluctuations in the prices of the Securities between the time of the
cash deposit and the purchase of the Securities and because the Trust will pay
the associated brokerage and acquisition fees.
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 objective of the Trust is to provide the potential for capital
appreciation. The portfolio is described under "Trust Portfolio" and in
"Portfolio" in Part One. The Trust's portfolio was selected by experienced
professionals at Morgan Stanley & Co. Incorporated ("Morgan Stanley"). Van
Kampen American Capital is a member of the Morgan Stanley Group of affiliated
companies. All statements regarding selection of the Securities and the Trust
objective are made as of the Initial Date of Deposit. In selecting the
Securities, Morgan Stanley focused on companies from around the world with
historically superior production and reserve growth. Morgan Stanley analysts
believe that these stocks could outperform their industry peers even during
neutral or negative price movements of gold and other precious metals. In a
positive environment for precious metals, Morgan Stanley analysts believe that
these stocks may offer significant growth potential. Morgan Stanley also
considered relative value and dividend yields of the stocks in selecting the
Securities. The Securities were chosen from the following three categories:
Multinational Producers. Comprising approximately 20% of the portfolio on
the Initial Date of Deposit, Morgan Stanley believes that these large
companies offer significant growth prospects while offering lower risk
potential than smaller companies. Historically, these companies have
weathered relatively poor price environments, have demonstrated solid
earnings and tend to have proven management teams.
Mid-Sized Companies. Making up nearly 60% of the portfolio on the Initial
Date of Deposit, Morgan Stanley believes that each mid-sized company offers
a unique growth opportunity. These companies include companies that may be
takeover candidates, are considered undervalued, may offer significant
growth opportunities and are in turnaround situations. Morgan Stanley
analysts believe this category provides the best risk-adjusted growth
opportunities in the precious metals industry.
Exploration Companies. These small capitalization companies make up
approximately 20% of the portfolio on the Initial Date of Deposit.
Exploration companies seek substantial ore deposits, and significant
findings have often led to acquisition by larger companies. Not every
exploration company is successful, but the portfolio includes several
companies that have demonstrated promising exploration efforts and could
provide above average growth during the Trust's three-year life.
PRECIOUS METALS COMPANIES. Precious metals companies may offer an ideal way
to diversify an investment portfolio by providing the potential for a hedge
against inflation, growth and diversification within the precious metals
industry. Inflation has consistently eroded the U.S. dollar's buying power. The
Sponsor believes that an investment in precious metals companies may help
protect against inflation and provide a defensive investment and good downside
protection. Over time, the purchasing power of precious metals has been
preserved and may represent one of the best ways to protect against inflation.
Exploration success can potentially lead to strong growth for precious metals
companies and even during relatively flat economic periods for the industry,
companies that discover large ore bodies may experience significant growth. Of
course, there can be no guarantee that exploration efforts, which are
speculative and expensive, by any company will be successful. Beyond exploration
success, if demand for precious metals increases faster than supply, precious
metals companies may be in a position to benefit. According to Morgan Stanley
analysts, some current industry statistics indicate an improving
supply-and-demand environment. For example, after growing approximately 50%
between 1985 and 1992, world gold production has leveled off and drops in world
supply in 1994 and 1995 were the first in 15 years. Rising production in
relatively new geographic areas such as South America, West Africa and Indonesia
is now slowly increasing world production again but many projects are still in
the exploration phase.
South Africa, the world's largest producer of gold, has seen significant
decreases in production in recent years with production dropping 5% in 1994, 10%
in 1995 and an expectation that final calculations will show a decrease in
production for 1996. In addition, strong economic growth and liberalization of
policies in India and China may create a stronger demand for gold. With 38% of
the world population, these countries have experienced dramatic increases in
jewelry demand which accounts for approximately 85 percent of physical demand
for gold. Relatively flat gold production has not kept pace with demand for gold
used for jewelry and other products. In 1995, there was a shortfall of
approximately 436 metric tons (more than 14 million Troy ounces). Of course,
there can be no guarantee that stronger demand for precious metals will be
realized or continue for any length of time because future economic growth and
liberalization of policies depends on social and political developments in
foreign countries, including those countries mentioned above, which cannot be
predicted.
Precious metals companies are subject to certain risks, including volatile
stock prices which may or may not be related to the price of gold. The Trust is
concentrated in issuers within the precious metals industry. A portfolio
concentrated in a single industry may present more risk than a portfolio of more
broadly diversified investments. There can be no guarantee that exploration
efforts, which are speculative and expensive, conducted by any company included
in the portfolio will be successful and a lack of success in any exploration
effort may have a material adverse impact on an issuer and the value of a
Security. See "Risk Factors" for a more detailed discussion of the risks of an
investment in stocks of precious metals companies and foreign issuers.
GENERAL. An investor will be subject to taxation on any 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
The Trust consists of different issues of Equity Securities which are issued
by foreign and domestic companies that are engaged in the exploration, mining,
refining and production of gold and other precious metals, including common
stocks of foreign issuers (certain of which are in American Depositary Receipt
form). All of the Equity Securities are listed on a national or foreign
securities exchange, the NASDAQ National Market System or are traded in the
over-the-counter market.
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
GENERAL. An investment in Units of the Trust should be made with an
understanding of the risks which an investment in domestic and foreign common
stocks entails, including the risk that the financial condition of the issuers
of the Equity Securities or the general condition of the common stock market may
worsen and the value of the Equity Securities and therefore the value of the
Units may decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value as market
confidence in and perceptions of the issuers change. These perceptions are based
on unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
Shareholders of common stocks have rights to receive payments from the issuers
of those common stocks that are generally subordinate to those of creditors of,
or holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by the Trust have a right to
receive dividends only when and if, and in the amounts, declared by each
issuer's board of directors and have a right to participate in amounts available
for distribution by such issuer only after all other claims on such issuer have
been paid or provided for. Common stocks do not represent an obligation of the
issuer and, therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims for
payment of principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities in a portfolio may be expected to
fluctuate over the life of the Trust to values higher or lower than those
prevailing on the Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Cumulative preferred stock dividends must be paid before
common stock dividends and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on liquidation
which are senior to those of common stockholders.
A significant portion of the Securities in the Trust are securities of small
capitalization companies. Accordingly, an investment in Units of the Trust
should be made with an understanding of the risks of small capitalization
companies. Smaller companies may have rates of sales, growth and share price
appreciation that exceed those of larger companies; however, such companies also
generally have limited product lines, markets and financial resources. Investors
should note that stocks of smaller companies generally have limited
marketability and typically experience significantly greater market price
volatility than stocks of larger companies. Accordingly, no assurance can be
made that upon redemption or termination of the Trust the value of the
Securities (and therefore the net asset value of Units) will be greater than or
equal to the value at the time a Unitholder purchased Units.
Certain of the Equity Securities included in the Trust from time to time may
experience limited purchase or sale availability in the market place. This
potential limited trading volume may result in negative market price
consequences for the Trust stemming from the acquisition or liquidation of a
significant amount of these Equity Securities. The Sponsor may attempt to
mitigate these consequences with a longer liquidation period for these Equity
Securities at the Trust's termination than might be required for the other
Equity Securities included in the Trust. However, these procedures may be
insufficient or unsuccessful in avoiding such negative price consequences.
Whether or not the Equity Securities are listed on a national or foreign
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.
The Trust Agreement authorizes the Sponsor to increase the size of the Trust
and the number of Units thereof by the deposit of additional Securities, or cash
(including a letter of credit) with instructions to purchase additional
Securities, in the Trust and the issuance of a corresponding number of
additional Units. If the Sponsor deposits cash, existing and new investors may
experience a dilution of their investments and a reduction in their anticipated
income because of fluctuations in the prices of the Securities between the time
of the cash deposit and the purchase of the Securities and because the Trust
will pay the associated brokerage and acquisition fees. To minimize this effect,
the Trust will attempt to purchase the Securities as close to the Evaluation
Time or as close to the evaluation prices as possible.
Unitholders will be unable to dispose of any of the Equity Securities in the
Trust, as such, and will not be able to vote the Equity Securities. As the
holder of the Equity Securities, the Trustee will have the right to vote all of
the voting stocks in the Trust and will vote such stocks in accordance with the
instructions of the Sponsor (who may rely on the Supervisor). In the absence of
any such instructions, the Trustee will vote such Securities so as to insure
that the Securities 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.
Like other investment companies, financial and business organizations and
individuals around the world, the Trust could be adversely affected if the
computer systems used by the Sponsor, Evaluator, Supervisor or Trustee or other
service providers to the Trust do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Sponsor, Evaluator, Supervisor
and Trustee are taking steps that they believe are reasonably designed to
address the Year 2000 Problem with respect to computer systems that they use and
to obtain reasonable assurances that comparable steps are being taken by the
Trust's other service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Trust.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of Equity Securities contained in the Trust, to varying degrees based
upon various factors, including, but not limited to, their industry sector and
degree of technological sophistication. The Sponsor is unable to predict what
impact, if any, the Year 2000 Problem will have on issuers of the Equity
Securities contained in the Trust.
PRECIOUS METALS INDUSTRY. The Trust is concentrated in issuers within the
precious metals industry. A portfolio concentrated in a single industry may
present more risk than a portfolio broadly diversified over several industries.
The Trust, and therefore Unitholders, may be particularly susceptible to a
negative impact resulting from adverse market conditions or other factors
affecting issuers engaged in the exploration, mining and production of gold and
other precious metals because any negative impact on the precious metals
industry will not be diversified among issuers within other unrelated
industries. Accordingly, an investment in Units should be made with an
understanding of the risks inherent in the precious metals industry.
The Trust includes securities which are issued by companies engaged in the
exploration for and development of gold and other precious metals properties and
mining and processing of gold ore and such other precious metals. Stocks of
precious metals companies often experience significant stock price volatility,
which may or may not be directly related to the price of precious metals.
Accordingly, there can be no guarantee that the value of Units upon redemption
or Trust termination will be equal to or greater than the price a Unitholder
paid for the Units. Mining operations and exploration activities are subject to
extensive federal, state and local laws and regulations governing exploration,
development, production, exports, taxes, labor standards, occupational health,
waste disposal, protection and remediation of the environment, reclamation, mine
safety, toxic substances and other matters. Compliance with such laws and
regulations may significantly increase the costs of planning, designing,
drilling, developing, constructing, operating and closing the mines and other
facilities of certain companies. It is possible that the costs and delays
associated with compliance with such laws and regulations could become such that
certain companies would not proceed with the development or operation of a mine
and could have a significant adverse effect on certain of the issuers of Equity
Securities. Mining and exploration companies must also seek governmental permits
for expansion and advance exploration activities. Obtaining the necessary
government permits is a complex and time-consuming process involving numerous
federal, state and local agencies. The failure to obtain certain permits could
have a material adverse effect on an issuer's business, operations and
prospects. Furthermore, the laws and regulations of foreign countries may differ
significantly from U.S. laws governing mining operations in the United States.
Exploration activities are speculative and expensive undertakings and there can
be no assurance that current or future explorations efforts will be successful.
Exploration efforts which experience delays, increased costs, a failure to
discover ore or a failure to discover ore in the quantities anticipated could
have a material adverse impact on the price (including volatility) of the Equity
Securities and of Units.
In addition, the profitability of precious metals companies is significantly
affected by changes in the market prices of precious metals. Prices of precious
metals can fluctuate widely and are affected by numerous industry factors, such
as demand for precious metals, forward selling by producers, central bank sales
and purchases of gold, and production and cost levels in major metals-producing
regions. Gold, in particular, has been subject to substantial price fluctuations
over short periods of time and may be affected by unpredictable international
monetary and other governmental policies, such as currency devaluations or
revalutions; economic and social conditions within a country; trade imbalances;
or trade or currency restrictions between countries. Since much of the world's
known gold reserves are located in South Africa, political and social conditions
there may influence the price of gold and the share values of precious metals
mining companies located elsewhere. Investors should understand the special
considerations and risks related to such an investment emphasis, and,
accordingly, the potential effect on the value of the Trust.
Although many companies have hedging programs in place to reduce the risk
associated with precious metals price volatility, there is no assurance that an
issuer's hedging strategies will be successful. Furthermore, exploration for all
minerals, as well as gold and other precious metals, is highly speculative in
nature, involves many risks and frequently is unsuccessful. There can be no
assurance that any company's exploration efforts will result in the discovery of
mineralization or that any mineralization discovered will result in an increase
of any company's reserves. In the event that new reserves are not developed, an
issuer may not be able to sustain its current level of production which could
adversely affect such Equity Securities in the Trust's portfolio.
FOREIGN EQUITY RISKS. Since certain of the Equity Securities consist of
securities of foreign issuers, an investment in the Trust involves certain
investment risks that are different in some respects from an investment in a
trust which invests entirely in the securities of domestic issuers. These
investment risks include future political or governmental restrictions which
might adversely affect the payment or receipt of payment of dividends on the
relevant Equity Securities, the possibility that the financial condition of the
issuers of the Equity Securities may become impaired or that the general
condition of the relevant stock market may worsen (both of which would
contribute directly to a decrease in the value of the Equity Securities and thus
in the value of the Units), the limited liquidity and relatively small market
capitalization of the relevant securities market, expropriation or confiscatory
taxation, economic uncertainties and foreign currency devaluations and
fluctuations. In addition, for foreign issuers that are not subject to the
reporting requirements of the Securities Exchange Act of 1934, there may be less
publicly available information than is available from a domestic issuer. Also,
foreign issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic issuers. The securities of many foreign issuers are less
liquid and their prices more volatile than securities of comparable domestic
issuers. In addition, fixed brokerage commissions and other transaction costs on
foreign securities exchanges are generally higher than in the United States and
there is generally less government supervision and regulation of exchanges,
brokers and issuers in foreign countries than there is in the United States.
However, due to the nature of the issuers of the Equity Securities, the Sponsor
believes that adequate information will be available to allow the Supervisor to
provide portfolio surveillance for the Trust.
Equity securities issued by non-U.S. issuers generally pay dividends in
foreign currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the United States dollar value of these securities will
vary with fluctuations in the U.S. dollar foreign exchange rates for the various
Equity Securities. See "Exchange Rate" below. Investors should also realize
that, although certain Equity Securities are ADRs, all foreign issuers which
operate internationally are subject to currency risks.
The securities of certain foreign issuers in the Trust are in ADR form. See
"Portfolio". ADRs evidence American Depositary Receipts which represent common
stock deposited with a custodian in a depositary. American Depositary Shares,
and receipts therefor (ADRs), are issued by an American bank or trust company to
evidence ownership of underlying securities issued by a foreign corporation.
These instruments may not necessarily be denominated in the same currency as the
securities into which they may be converted. For purposes of the discussion
herein, the term ADR generally includes American Depositary Shares. ADRs may be
sponsored or unsponsored. In an unsponsored facility, the depositary initiates
and arranges the facility at the request of market makers and acts as agent for
the ADR holder, while the company itself is not involved in the transaction. In
a sponsored facility, the issuing company initiates the facility and agrees to
pay certain administrative and shareholder-related expenses. Sponsored
facilities use a single depositary and entail a contractual relationship between
the issuer, the shareholder and the depositary; unsponsored facilities involve
several depositaries with no contractual relationship to the company. The
depositary bank that issues an ADR generally charges a fee, based on the price
of the ADR, upon issuance and cancellation of the ADR. This fee would be in
addition to the brokerage commissions paid upon the acquisition or surrender of
the security. In addition, the depositary bank incurs expenses in connection
with the conversion of dividends or other cash distributions paid in local
currency into U.S. dollars and such expenses are deducted from the amount of the
dividend or distribution paid to holders, resulting in a lower payout per
underlying shares represented by the ADR than would be the case if the
underlying share were held directly. The Trustee for this Trust acts as a
depositary for ADRs, certain of which may be included in the Trust's portfolio.
Certain tax considerations, including tax rate differentials and withholding
requirements, arising from applications of the tax laws of one nation to
nationals of another and from certain practices in the ADR market may also exist
with respect to certain ADRs. In varying degrees, any or all of these factors
may affect the value of the ADR compared with the value of the underlying shares
in the local market. In addition, the rights of holders of ADRs may be different
than those of holders of the underlying shares, and the market for ADRs may be
less liquid than that for the underlying shares. ADRs are registered securities
pursuant to the Securities Act of 1933 and may be subject to the reporting
requirements of the Securities Exchange Act of 1934.
On the basis of the best information available to the Sponsor at the present
time, none of the Equity Securities are subject to exchange control restrictions
under existing law which would materially interfere with payment to the Trust of
dividends due on, or proceeds from the sale of, the Equity Securities. However,
there can be no assurance that exchange control regulations might not be adopted
in the future which might adversely affect payment to the Trust. In addition,
the adoption of exchange control regulations and other legal restrictions could
have an adverse impact on the marketability of international securities in the
Trust and on the ability of the Trust to satisfy its obligation to redeem Units
tendered to the Trustee for redemption.
Investors should be aware that it may not be possible to buy all Equity
Securities at the same time because of the unavailability of any Equity
Security, and restrictions applicable to the Trust relating to the purchase of
an Equity Security by reason of the federal securities laws or otherwise.
Foreign securities generally have not been registered under the Securities
Act of 1933 and may not be exempt from the registration requirements of such
Act. Sales of non-exempt Equity Securities by the Trust in the United States
securities markets are subject to severe restrictions and may not be
practicable. Accordingly, sales of these Equity Securities by the Trust will
generally be effected only in foreign securities markets. Although the Sponsor
does not believe that the Trust will encounter obstacles in disposing of the
Equity Securities, investors should realize that the Equity Securities may be
traded in foreign countries where the securities markets are not as developed or
efficient and may not be as liquid as those in the United States. The value of
the Equity Securities will be adversely affected if trading markets for the
Equity Securities are limited or absent.
EXCHANGE RATE. The Trust is concentrated in Equity Securities that are
principally traded in foreign currencies and as such involves investment risks
that are substantially different from an investment in a fund which invests in
securities that are principally traded in United States dollars. The United
States dollar value of the portfolio (and hence of the Units) and of the
distributions from the portfolio will vary with fluctuations in the United
States dollar foreign exchange rates for the related foreign currencies. Most
foreign currencies have fluctuated widely in value against the United States
dollar for many reasons, including supply and demand of the respective currency,
the rate of inflation in the respective economies compared to the United States,
the impact of interest rate differentials between different currencies on the
movement of foreign currency rates, the balance of imports and exports of goods
and services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty, which established a system of fixed
exchange rates and the convertibility of the United States dollar into gold
through foreign central banks. Starting in 1971, growing volatility in the
foreign exchange markets caused the United States to abandon gold convertibility
and to effect a small devaluation of the United States dollar. In 1973, the
system of fixed exchange rates between a number of the most important industrial
countries of the world, among them the United States and most western European
countries, was completely abandoned. Subsequently, major industrialized
countries have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating international
market. Many smaller or developing countries have continued to "peg" their
currencies to the United States dollar although there has been some interest in
recent years in "pegging" currencies to "baskets" of other currencies or to a
Special Drawing Right administered by the International Monetary Fund.
Currencies are generally traded by leading international commercial banks and
institutional investors (including corporate treasurers, money managers, pension
funds and insurance companies). From time to time, central banks in a number of
countries also are major buyers and sellers of foreign currencies, mostly for
the purpose of preventing or reducing substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of actual and
proposed government policies on the value of currencies, interest rate
differentials between the currencies and the balance of imports and exports of
goods and services and transfers of income and capital from one country to
another. These economic factors are influenced primarily by a particular
country's monetary and fiscal policies (although the perceived political
situation in a particular country may have an influence as well--particularly
with respect to transfers of capital). Investor psychology may also be an
important determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative strength or
weakness of a particular currency may sometimes exercise considerable
speculative influence on currency exchange rates by purchasing or selling large
amounts of the same currency or currencies. However, over the long term, the
currency of a country with a low rate of inflation and a favorable balance of
trade should increase in value relative to the currency of a country with a high
rate of inflation and deficits in the balance of trade.
The Evaluator will estimate the current exchange rate for the appropriate
foreign currencies based on activity in the related currency exchange market.
However, since this market may be volatile and is constantly changing, depending
on the activity at any particular time of the large international commercial
banks, various central banks, large multi-national corporations, speculators and
other buyers and sellers of foreign currencies, and since actual foreign
currency transactions may not be instantly reported, the exchange rates
estimated by the Evaluator may not be indicative of the amount in United States
dollars the Trust would receive had the Trustee sold any particular currency in
the market. The foreign exchange transactions of the Trust will be concluded by
the Trustee with foreign exchange dealers acting as principals on a spot (i.e.,
cash) buying basis. Although foreign exchange dealers trade on a net basis, they
do realize a profit based upon the difference between the price at which they
are willing to buy a particular currency (bid price) and the price at which they
are willing to sell the currency (offer price).
FEDERAL TAXATION
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.
For purposes of the following discussion and opinion, it is assumed that each
Equity Security is equity for federal income tax purposes.
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 each Trust asset when such income is considered to be received by
the Trust.
2. 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 available and received by such
Unitholder from the Trust, as described below). The price a Unitholder pays for
his Units, generally including sales charges, is allocated among his pro rata
portion of each Equity Security held by the Trust (in proportion to the fair
market values thereof on the valuation date closest to the date the Unitholder
purchases his Units) in order to determine his tax basis for his pro rata
portion of each Equity Security held by the Trust. Unitholders should consult
their own tax advisors with regard to calculation of basis.
A Unitholder will be considered to have received all of the dividends paid on
his pro rata portion of each Equity Security when such dividends are received by
the Trust. Unitholders will be taxed in this manner regardless of whether
distributions from the Trust are actually received by the Unitholder or are
automatically reinvested. For federal income tax purposes, a Unitholder's pro
rata portion of the dividends, as defined by Section 316 of the Code, paid 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 exceed 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, the holding period for
such capital gain will be determined by the period of time a Unitholder has held
his Units.
3. 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). A Unitholderportion 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). Unitholders should consult their tax advisers regarding
the recognition of such capital gains and losses for federal income tax
purposes.
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 issued which address special rules that must be considered in determining
whether the 46 day holding period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. It should be noted that various
legislative proposals that would affect the dividends received deduction have
been introduced. Unitholders should consult with their tax advisers with respect
to the limitations on and possible modifications to the dividends received
deduction.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
LIMITATIONS ON DEDUCTIBILITY OF TRUST EXPENSES BY UNITHOLDERS. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income. Unitholders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
RECOGNITION OF TAXABLE GAIN OR LOSS UPON DISPOSITION OF SECURITIES BY A TRUST
OR DISPOSITION OF UNITS. As discussed above, a Unitholder may recognize taxable
gain (or loss) when an Equity Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. The Taxpayer Relief Act of 1997 (the "1997 Act")
provides that for taxpayers other than corporations, net capital gain (which is
defined as net long-term capital gain over net short-term capital loss for the
taxable year) is subject to a maximum marginal stated tax rate of either 28% or
20%, depending upon the holding periods of the capital assets. Capital gain or
loss is long-term if the holding period for the asset is more than one year, and
is short-term if the holding period for the asset is one year or less. The date
on which a Unit is acquired (i.e., the "trade date") is excluded for purposes of
determining the holding period of the Unit. Generally, capital gains realized
from assets held for more than one year but not more than 18 months are taxed at
a maximum marginal stated tax rate of 28% and capital gains realized from assets
(with certain exclusions) held for more than 18 months are taxed at a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Further, capital gains realized from assets held for one
year or less are taxed at the same rates as ordinary income. Legislation is
currently pending that provides the appropriate methodology that should be
applied in netting the realized capital gains and losses. Such legislation is
proposed to be effective retroactively for tax years ending after May 6, 1997.
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.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisors regarding the potential effect of this provision on their
investment in Units.
If the Unitholder disposes of a Unit, he or she is deemed thereby to have
disposed of his or her entire pro rata interest in all assets of the Trust
including his or her pro rata portion of all the Equity Securities represented
by the Unit. The 1997 Act includes provisions that treat certain transactions
designed to reduce or eliminate risk of loss and opportunities for gain (e.g.,
short sales, offsetting notional principal contracts, futures or forward
contracts, or similar transactions) as constructive sales for purposes of
recognition of gain (but not loss) and for purposes of determining the holding
period. Unitholders should consult their own tax advisers with regard to any
such constructive sales rules.
SPECIAL TAX CONSEQUENCES OF IN-KIND DISTRIBUTIONS UPON REDEMPTION OR
TERMINATION OF THE TRUST. Under certain circumstances, a Unitholder tendering
Units for redemption may be able to request an In-Kind Distribution. In-Kind
Distributions are not available, however, of foreign securities held by the
Trust. A Unitholder may also under certain circumstances be able to 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
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 for
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 closest to 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 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 person. Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporation for a three-year period ending with the close
of its taxable year preceding payment was not effectively connected to the
conduct of a trade or business within the United States. In addition, such
earnings may be exempt from U.S. withholding pursuant to a specific treaty
between the United States and a foreign country. Non-U.S. Unitholders should
consult their own tax advisers regarding the imposition of U.S. withholding on
distributions from the Trust.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trust. Any dividends withheld as a result thereof will
nevertheless be treated as income to the Unitholders. Because, under the grantor
trust rules, an investor is deemed to have paid directly his share of foreign
taxes that have been paid or accrued, if any, an investor may be entitled to a
foreign tax credit or deduction for United States tax purposes with respect to
such taxes. The 1997 Act imposes a required holding period for such credits.
Investors should consult their tax advisers with respect to foreign withholding
taxes and foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of such 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.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of 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
in 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.
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.
TRUST OPERATING EXPENSES
COMPENSATION OF SPONSOR AND EVALUATOR. The Sponsor will not receive any fees
in connction 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 all Series of the Fund
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 Service less 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 FEES. 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 to
Unitholders 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 willful
misconduct on its part, (g) foreign custodial and transaction fees, (h) accrual
of costs associated with liquidating the foreign securities and (i) expenditures
incurred in contacting Unitholders upon termination of the Trust. The expenses
set forth herein are payable as described under "General" below.
GENERAL. 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
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, a sales charge and cash, if any, in the Income and Capital
Accounts held or owned by the Trust. The sales charge for secondary market
transactions is described under "Summary of Essential Financial Information" in
Part One. The underlying value of the Securities includes that aggregate value
of the Foreign Securities computed on the basis of the bid side value of the
related currency exchange rate expressed in U.S. dollars at the Evaluation Time.
Any sales charge reduction will primarily be the responsibility of the
selling broker, dealer or agent.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law and daughters-in-law, and trustees, custodians or fiduciaries for
the benefit of such persons) of Van Kampen American Capital Distributors, In.
and its affiliates, dealers and their affiliates and vendors providing services
to the Sponsor will be able to purchase Units at the Public Offering Price, less
the applicable dealer concession.
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 a spouse or children under 21 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 Part One in
accordance with fluctuations in the prices of the underlying Securities in the
Trust. The Public Offering Price per Unit is based on the aggregate value of the
Foreign Securities computed on the basis of the bid side value of the related
currency exchange rate expressed in U.S. dollars.
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 total sales charge 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. After the close of
business on the day before the Initial Date of Deposit, the Evaluator will
appraise or cause to be appraised daily (except as stated below) 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. No evaluation shall be made on any date
on which Securities representing greater than 33% of the aggregate value of the
Trust are not traded on the principal trading exchange for such Securities due
to a customary business holiday on such exchange. Accordingly, purchases or
redemptions of Units on such a day will be based on the next determination of
price of the Securities (and the price of such Units would be the next computed
price). The Sponsor currently does not intend to maintain a secondary market
after August 25, 1999. Commencing on February 26, 1998, the secondary market
sales charge will be 3.5% of the Public Offering Price and will be reduced by .5
of 1% on each subsequent February 25, to a minimum sales charge of 3.0%.
The value of the Equity Securities is determined on each business day by the
Evaluator in the following manner: if the Equity Securities are listed on a
national or foreign securities exchange this evaluation is generally based on
the closing sale prices on that exchange (unless it is determined that these
prices are inappropriate as a basis for valuation) or, if there is no closing
sale price on that exchange, at the closing bid prices. If the Equity Securities
are not listed on a national or foreign securities exchange or, if so listed and
the principal market therefor is other than on the exchange, the evaluation
shall generally be based on the current bid price on the over-the-counter market
(unless it is determined that 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. The aggregate underlying value of the
Securities includes the aggregate value of the Foreign Securities computed on
the basis of the bid side value of the related currency exchange rate expressed
in U.S. dollars as of the Evaluation Time.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities in the Trust
but rather the entire pool of Securities, taken as a whole, which are
represented by the Units.
UNIT DISTRIBUTION. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. 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. Any discount
provided to investors will be borne by the selling dealer or agent as indicated
under "General" 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 equal 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 the total sales applicable to the transaction. 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 realized a profit or 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. 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 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 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 (computed as
indicated under "Offering Price" above and "Rights of Unitholders--Redemption of
Units"). 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 August 25, 1999 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.
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
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. Amounts to be credited to
such Accounts are first converted into U.S. dollars at the applicable exchange
rate.
The Trustee will distribute any income received with respect to any of the
Securities in 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" in Part One. 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.
Each month 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.
REINVESTMENT OPTION. Unitholders of the Trust may elect to have each
distribution of income, capital gains and/or capital on their Units
automatically reinvested in additional Units of the Trust (to the extent Units
may be lawfully offered for sale in the state in which the Unitholder resides).
To participate in the reinvestment plan, a Unitholder may either contact his or
her broker or agent or file with the Trustee a written notice of election at
least ten days prior to the Record Date for which the first distribution is to
apply. A Unitholder's election to participate in the reinvestment plan will
apply to all Units of the Trust owned by such Unitholder and such election will
remain in effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market") or, until such
time as additional Units cease to be issued by the Trust (see "The Trust"),
distributions may be reinvested in such additional Units. If Units are
unavailable in the secondary market, distributions which would otherwise have
been reinvested shall be paid in cash to the Unitholder on the applicable
Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made based on the net asset value for Units of the Trust as of the Evaluation
Time on the related Distribution Dates. Under the reinvestment plan, the Trust
will pay the Unitholder's distributions to the Trustee which in turn will
purchase for such Unitholder full and fractional Units of the Trust and will
send such Unitholder a statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of income, capital gains
and/or capital on their Units automatically reinvested in shares of certain Van
Kampen American Capital or Morgan Stanley mutual funds 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, 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 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 of the next
computation of the net asset value per Unit after Units are received by the
Trustee for redemption. No such computation shall be made on any date on which
Securities representing greater than 33% of the aggregate value of the Trust are
not traded on the principal trading exchange for such Securities due to a
customary business holiday on such exchange. Accordingly, purchases or
redemptions of Units on such a day will be based on the next determination of
price of the Securities (and the price of such Units would be the next computed
price). Foreign securities exchanges are open for trading on certain days which
are U.S. holidays on which the Trust will not transact business. The Foreign
Securities will continue to trade on those days and thus the value of the Units
may be significantly affected on days when a Unitholder cannot sell or redeem
Units.
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 a distribution in kind ("In Kind Distribution") of an amount and value
of Securities per Unit (other than the Foreign Securities) 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 applicable 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 applicable Securities and cash from the
Capital Account equal to the pro rata portion of the Foreign Securities and any
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. 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 or foreign securities
exchange this evaluation is generally based on the closing sale prices on that
exchange (unless it is determined that these prices are inappropriate as a basis
for valuation) or, if there is no closing sale price on that exchange, at the
closing bid prices. If the Equity Securities 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. For purposes of the Redemption Price per Unit and
secondary market transactions, the aggregate value of the Securities includes
the value of the Foreign Securities computed on the basis of the bid side value
of the related currency exchange rate expressed in U.S. dollars as of the
Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the Securities
in 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 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) 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" in Part One. 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" in Part One.
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 of Securities
(other than the Foreign Securities) 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
applicable 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 pro rata portion of the Foreign Securities and any 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. The Sponsor is an indirect subsidiary
of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly owned subsidiary of MSAM
Holdings II, Inc., which in turn is a wholly owned subsidiary of Morgan Stanley
Dean Witter & Co. ("MSDW").
MSDW, together with various of its directly and indirectly owned
subsidiaries, is engaged in a wide range of financial services through three
primary businesses: securities, asset management and credit services. These
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; asset
management; trading of futures, options, foreign exchange commodities and swaps
(involving foreign exchange, commodities, indices and interest rating and
investing; global custody, securities clearance services and securities lending;
and credit card services.
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, (630) 684-6000 and 2800 Post Oak
Boulevard, Houston, Texas 77056, (713) 993-0500. As of November 30, 1996, the
total stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not to
the Trusts 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 September 30, 1997, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $65.3 billion of investment
products, of which over $10.85 billion is invested in municipal securities. The
Sponsor and its Van Kampen American Capital affiliates managed $54 billion of
assets, consisting of $34.3 billion for 55 open-end mutual funds (of which 45
are distributed by Van Kampen American Capital Distributors, Inc.) $14.2 billion
for 37 closed-end funds and $5.5 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-ended funds and unit
investment trusts are professionally distributed by leading financial firms
nationwide. Based on cumulative assets deposited, the Sponsor believes that it
is the largest sponsor of insured municipal unit investment trusts, primarily
through the success of its Insured Municipals Income Trust(R) or the IM-IT(R)
trust. The Sponsor also provides surveillance and evaluation services at cost
for approximately $13 billion of unit investment trust assets outstanding. Since
1976, the Sponsor has serviced over two million investor accounts, opened
through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust 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.
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.
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, the Sponsor or dealers. This Prospectus does not
constitute an offer to sell, or a solicitation of any offer to buy, securities
in any state to any persons to whom it is not lawful to make such offer in such
state.
Table of Contents Page
- ------------------------------------- ----
The Trust............................ 2
Objectives and Securities Selection.. 3
Trust Portfolio...................... 4
Risk Factors......................... 4
Taxation............................. 7
Trust Operating Expenses............. 9
Public Offering...................... 9
Rights of Unitholders................ 11
Trust Administration................. 13
Other Matters........................ 15
This Prospectus contains infomration concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration statements
and exhibits relating thereto, which the Fund has filed with the Securities and
Exchange Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
Prospectus Part Two
Van Kampen American Capital Equity Opportunity Trust, Series 51
Global Precious Metals Trust, Series 1
Note: This Prospectus may be used only when accompanied by Part One.
Both parts of this Prospectus should be retained for future reference.
Dated as of the date of the Prospectus Part One accompanying this Prospectus
Part Two.
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
CONTENTS OF POST-EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement comprises
the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
51, certifies that it meets all of the requirements for effectiveness of
this Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Chicago and State of Illinois on the 22nd day
of May, 1998.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 51
(Registrant)
By VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
(Depositor)
By: Gina Costello
Assistant Secretary
(SEAL)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on May 22,
1998 by the following persons who constitute a majority of the Board of
Directors of Van Kampen American Capital Distributors, Inc.:
SIGNATURE TITLE
Don G. Powell Chairman and Chief )
Executive Officer )
John H. Zimmerman President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Gina Costello_______
(Atttorney 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 Van Kampen American Capital Equity Opportunity Trust,
Series 64 (File No. 333-33087) and Van Kampen American Capital Equity
Opportunity Trust, Series 87 (File No. 333-44581) and the same are hereby
incorporated herein by this reference.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated April 3, 1998 accompanying the
financial statements of Van Kampen American Capital Equity Opportunity
Trust, Series 51 as of January 31, 1998, and for the period then ended,
contained in this Post-Effective Amendment No. 1 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant THORNTON LLP
Chicago, Illinois
May 22, 1998
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