File No. 333-29411 CIK #1025213
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 2 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 67
(Exact Name of Trust)
Van Kampen Funds Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
VAN KAMPEN FUNDS INC. CHAPMAN AND CUTLER
Attention: A. Thomas Smith III, General Counsel 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 October 25, 1999 pursuant to paragraph (b) of Rule 485.
BIOTECHNOLOGY TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 67
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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 67 (the "Fund")
is comprised of one unit investment trust, Biotechnology Trust, Series 1 (the
"Trust"). The Trust offers investors the opportunity to purchase Units
representing proportionate interests in a fixed portfolio of common stocks
issued by biotechnology companies. Unless terminated earlier, the Trust will
terminate on July 24, 2001 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 October 26, 1999
BIOTECHNOLOGY TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 67
Summary of Essential Financial Information
As of August 10, 1999
Managing Underwriter and Supervisor: EVEREN Securities, Inc.
Sponsor: Van Kampen Funds Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
Biotechnology
Trust
-----------------
General Information
<S> <C>
Number of Units 1,242,417
Fractional Undivided Interest in Trust per Unit 1/1,242,417
Public Offering Price:
Aggregate Value of Securities in Portfolio (1) $ 15,874,651.07
Aggregate Value of Securities per Unit (including accumulated dividends) $ 12.78
Sales charge 3.5% (3.627% of Aggregate Value of Securities excluding
principal cash) per Unit (3) $ .46
Public Offering Price per Unit (2)(3) $ 13.24
Redemption Price per Unit $ 12.78
Secondary Market Repurchase Price per Unit $ 12.78
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ .46
</TABLE>
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 July 24, 1997
Mandatory Termination Date July 24, 2001
Minimum Termination Value The Trust may be terminated if the net asset value of
such Trust is less than $500,000 unless the net asset value of such Trust
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 Annual Organizational Expenses
per Unit (4) $.01102 per Unit
Trustee's Annual fee $.008 per Unit
Income and Account Record Date TENTH day of December.
Income and Capital Distribution Date TWENTY-FIFTH day of December.
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(1) Equity Securities listed on a national 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.
(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 July 24, the secondary sales charge will decrease by .5
of 1% to a minimum sales charge of 3.5%. See "Public Offering-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 Biotechnology Trust consists of common stocks issued by biotechnology
companies selected by Principal Financial Securities, Inc.
<TABLE>
<CAPTION>
PER UNIT INFORMATION
1998 (1) 1999
------------ ------------
<S> <C> <C>
Net asset value per Unit at beginning of period......................................... $ 10.03 $ 8.22
============ ============
Net asset value per Unit at end of period............................................... $ 8.22 $ 10.85
============ ============
Distributions to Unitholders of investment income including accumulated dividends paid
on Units redeemed (average Units outstanding for entire period)...................... $ 0.00 $ 0.00
============ ============
Distributions to Unitholders from Equity Security redemption proceeds (average Units
outstanding for entire period)....................................................... $ -- $ --
============ ============
Unrealized appreciation (depreciation) of Equity Securities (per Unit outstanding at
end of period)....................................................................... $ (1.10) $ 5.26
============ ============
Distributions of investment income by frequency of payments
Monthly.............................................................................. $ $ 4.43
Units outstanding at end of period...................................................... 1,953,646 1,361,996
</TABLE>
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(1) For the period from July 24, 1997 (date of deposit) through June 30, 1998.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of
Biotechnology Trust, Series 1 (Van Kampen American Capital Equity Opportunity
Trust, Series 67):
We have audited the accompanying statements of condition (including the
analysis of net assets) and the related portfolio of Biotechnology Trust, Series
1 (Van Kampen American Capital Equity Opportunity Trust, Series 67) as of June
30, 1999 and the related statements of operations and changes in net assets for
the period from July 24, 1997 (date of deposit) through June 30, 1998 and the
year ended June 30, 1999. 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 June 30, 1999 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 Biotechnology Trust, Series
1 (Van Kampen American Capital Equity Opportunity Trust, Series 67) as of June
30, 1999 and the results of operations and changes in net assets for the period
from July 24, 1997 (date of deposit) through June 30, 1998 and the year ended
June 30, 1999 in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
August 28, 1999
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 67
Statement of Condition
June 30, 1999
Biotechnology
Trust
---------------
Trust property
<S> <C> <C> <C>
Securities at market value, (cost $9,755,903) (note 1) $ 14,776,186
Organizational Expense 30,682
---------------
$ 14,806,868
===============
Liabilities and interest to Unitholders
Cash overdraft $ 16,703
Redemptions payable 11,007
Interest to Unitholders 14,779,158
---------------
$ 14,806,868
===============
Analyses of Net Assets
Interest of Unitholders (1,361,996 Units of fractional undivided interest outstanding)
Cost to original investors of 2,217,514 Units (note 1) $ 23,061,000
Less initial underwriting commission (note 3) 1,030,656
---------------
22,030,344
Less redemption of 855,518 Units 7,270,696
---------------
14,759,648
Undistributed net investment income
Net investment income (74,693)
Less distributions to Unitholders --
---------------
--
Realized gain (loss) on Security sale (4,507,136)
Unrealized appreciation (depreciation) of Securities (note 2) 5,020,283
Distributions to Unitholders of Security sale proceeds --
Deferred Sales Charge (418,944)
---------------
Net asset value to Unitholders $ 14,779,158
===============
Net asset value per Unit (1,361,996 Units outstanding) $ 10.85
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
BIOTECHNOLOGY TRUST, SERIES 1
Statements of Operations
Period from July 24, 1997 (date of deposit) through June 30, 1998
and the year ended June 30, 1999
1998 1999
------------- -------------
Investment income
<S> <C> <C>
Dividend income.................................................................. $ -- $ --
Expenses
Trustee fees and expenses..................................................... 19,681 20,336
Evaluator fees................................................................ 4,028 5,562
Organizational fees........................................................... 1,021 13,404
Supervisory fees.............................................................. 10,661 --
------------- -------------
Total expenses............................................................. 35,391 39,302
------------- -------------
Net investment income......................................................... (35,391) (39,302)
Realized gain (loss) from Securities sales
Proceeds......................................................................... 2,699,438 5,070,867
Cost............................................................................. 3,827,345 8,450,096
------------- -------------
Realized gain (loss).......................................................... (1,127,907) (3,379,229)
Net change in unrealized appreciation (depreciation) of Securities.................. (2,139,789) 7,160,072
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............... $(3,303,087) $ 3,741,541
------------- -------------
Statements of Changes in Net Assets
Period from July 24, 1997 (date of deposit) through June 30, 1998
and the year ended June 30, 1999
1998 1999
------------- -------------
Increase (decrease) in net assets Operations:
Net investment income............................................................ $ (35,391) $ (39,302)
Realized gain (loss) on Securities sales......................................... (1,127,907) (3,379,229)
Net change in unrealized appreciation (depreciation) of Securities............... (2,139,789) 7,160,072
------------- -------------
Net increase (decrease) in net assets resulting from operations............... (3,303,087) 3,741,541
Distributions to Unitholders from:
Net investment income............................................................ -- --
Security sale or redemption proceeds............................................. -- --
Redemption of Units................................................................. (2,321,014) (4,949,682)
Deferred Sales Charge............................................................... (346,510) (72,434)
------------- -------------
Total increase (decrease)..................................................... (5,970,611) (1,280,575)
Net asset value to Unitholders
Beginning of period.............................................................. 22,030,344 16,059,733
------------- -------------
End of period (including undistributed net investment income of $(35,391)
and $(74,693), respectively).................................................. $16,059,733 $ 14,779,158
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
BIOTECHNOLOGY TRUST, SERIES 1 PORTFOLIO as of June 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Valuation of
Number Market Value Securities at
of Shares Name of Issuer Per Share (Note 1)
- --------------- ------------------------------------------------------------------------------------ ---------------
<S> <C> <C> <C>
4,879 Advanced Tissue Sciences, Incorporated $ 3.25000 $ 15,857
- --------------------------------------------------------------------------------------------------------------------------
13,794 Affymetrix, Incorporated 49.0000 675,906
- --------------------------------------------------------------------------------------------------------------------------
329 Amylin Pharmaceuticals, Incorporated 1.1250 370
- --------------------------------------------------------------------------------------------------------------------------
15,919 ARIAD Pharmaceuticals, Incorporated 1.2500 19,899
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6,640 ArQule, Incorporated 4.8750 32,370
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15,116 AXYS Pharmaceuticals, Incorporated 3.3750 51,016
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11,299 Cadus Pharmaceuticals, Incorporated .7187 8,121
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20,823 Gilead Sciences, Incorporated 52.1250 1,085,399
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12,527 Guilford Pharmaceuticals, Incorporated 12.3750 155,022
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16,118 Human Genome Sciences, Incorporated 39.3750 634,646
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84,158 ICOS Corporation 40.7500 3,429,438
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20,756 IDEC Pharmaceuticals, Corporation 77.0000 1,598,212
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67,322 Immune Response Corporation 5.3750 361,856
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35,767 Ligand Pharmaceuticals 10.9375 391,202
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70,713 Liposome Company, Incorporated 18.9375 1,339,127
- --------------------------------------------------------------------------------------------------------------------------
40,954 Millennium Pharmaceuticals, Incorporated 35.9375 1,471,784
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40,911 Neurocrine Biosciences, Incorporated 5.1875 212,226
- --------------------------------------------------------------------------------------------------------------------------
16,265 Neurogen Corporation 14.5000 235,842
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44,477 Regeneron Pharmaceuticals, Incorporated 7.8125 347,477
- --------------------------------------------------------------------------------------------------------------------------
43,418 Sugen, Incorporated 29.3750 1,275,404
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15,330 Transkaryotic Therapies, Incorporated 32.8750 503,974
- --------------------------------------------------------------------------------------------------------------------------
43,836 Vical, Incorporated 11.8750 520,552
- --------------------------------------------------------------------------------------------------------------------------
67,709 XOMA Corporation 6.0625 410,486
- --------------------------------------------------------------------------------------------------------------------------
709,060 $ 14,776,186
=============== ===============
</TABLE>
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The accompanying notes are an integral part of these statements.
BIOTECHNOLOGY TRUST, SERIES 1
Notes to Financial Statements
June 30, 1998 and 1999
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national 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.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national exchange on the closing sale prices on the
exchange or, if not so listed, at the asked price thereof. 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 as described
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 June 30, 1999 is as follows:
Biotechnology
Trust
----------------
Unrealized Appreciation $ 6,571,981
Unrealized Depreciation (1,551,698)
--------------
$ 5,020,283
==============
NOTE 3 - OTHER
Marketability - Although it is not obligated to do so, the Managing
Underwriter 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 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 adding to 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 4.5% of the public offering price which is equivalent to 4.712% of the
aggregate underlying value of the Securities and the maximum deferred sales
charge of ($.20 per Unit). Effective on each July 24, commencing July 24, 1998,
the secondary sales charge does not include deferred payments but will instead
include only a one-time initial sales charge of 4.0% of the public offering
price and will decrease by .5 of 1% to a minimum sales charge of 3.5%.
Compensation of Evaluator and Supervisor - The Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.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 from July 24, 1997 (date of deposit) to June 30, 1998 and
the year ended June 30, 1999, 263,868 Units and 591,650 Units, respectively,
were presented for redemption.
EVEREN SECURITIES, INC.
Biotechnology Trust, Series 1 Prospectus Part Two
- --------------------------------------------------------------------------------
The Trust. Biotechnology Trust, Series 1 (the "Trust") is a unit investment
trust included in Van Kampen American Capital Equity Opportunity Trust, Series
67. The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a fixed, diversified portfolio primarily consisting
of common stocks issued by biotechnology companies (the "Equity Security" or
"Securities"). See "Trust Portfolio." Unless terminated earlier, the Trust will
terminate on July 24, 2001 and any Equity Securities then held will, within a
reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Equity Securities liquidated at termination will be sold at the then current
market value for such Equity 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 or her Units.
Objectives of the Trust. The objective of the Trust is to provide the
potential for capital appreciation by investing in a portfolio primarily
consisting of common stocks issued by biotechnology companies. See "Objectives
and Securities Selection." Each Unit of the Trust represents an undivided
fractional interest in all the Equity Securities deposited in the Trust. There
is, of course, no guarantee that the objectives of the Trust will be achieved.
Public Offering Price. The Public Offering Price of the Units of the Trust
includes the aggregate underlying value of the Securities in the Trust's
portfolio, the sales charge described herein, and cash, if any, in the Income
and Capital Accounts held or owned by the Trust. See "Public Offering."
Dividend and Capital 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. Additionally, upon
termination of the Trust, the Trustee will distribute 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 Managing Underwriter 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, plus or
minus a pro rata share of 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. 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. At least
60 days prior to the Mandatory Termination Date the Trustee will provide written
notice thereof to all Unitholders and will include with such notice a form to
enable Unitholders to elect a distribution of shares of Equity Securities if
such Unitholder owns at least 2,500 Units of the Trust rather than to receive
payment in cash for such Unitholder's pro rata share of the amounts realized
upon the disposition by the Trustee of Equity Securities. All Unitholders will
receive cash in lieu of any fractional shares. To be effective, the election
form, 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."
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including, among other factors, the possible
deterioration of either the financial condition of the issuers or the general
condition of the stock market, volatile interest rates, economic recession and
risks relating to an investment in biotechnology companies. The Trust is not
actively managed and Equity Securities will not be sold by the Trust to take
advantage of market fluctuations or changes in anticipated rates of
appreciation. 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. See "Risk Factors."
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.
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 67 is comprised
of one unit investment trust, Principal Financial Securities, Inc. Biotechnology
Trust, Series 1 (the "Trust"). 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 Funds Inc., as Sponsor, American Portfolio Evaluation Services, a
division of Van Kampen Investment Advisory Corp., as Evaluator, Van Kampen
Investment Advisory Corp., as Supervisor and The Bank of New York, as Trustee,
or their predecessors.
The Trust may be an appropriate medium for investors who desire to
participate in a diversified portfolio of equity securities issued by
biotechnology companies. Diversification of assets in the Trust will not
eliminate the risk of loss always inherent in the ownership of securities. For a
breakdown of the portfolio, see "Trust Portfolio."
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Equity Securities, including delivery statements relating to contracts for the
purchase of certain such Equity 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 Equity 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 Equity
Securities then held will within a reasonable time thereafter be liquidated or
distributed by the Trustee.
Additional Units of the Trust may be issued at any time by depositing in the
Trust additional Equity Securities, contracts to purchase securities or
irrevocable letters of credit or cash with instructions to purchase additional
Equity Securities in exchange for the corresponding number of additional Units.
As additional Units are issued by the Trust as a result of the deposit of
additional Equity 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 Equity Securities (or cash or a letter
of credit with instructions to purchase additional Equity Securities) into the
Trust. Such additional deposits may be made provided that such additional
deposits will be in amounts which will maintain the proportionate relationship
based on the number of shares of each Equity Security in the Trust's portfolio
as exists immediately preceding such additional deposit. Any deposit by the
Sponsor of additional Securities will duplicate, as nearly as practicable, this
original proportionate relationship and not the actual proportionate
relationship on the subsequent date of deposit, since the actual proportionate
relationship may be different than the original proportionate relationship. Any
such difference may be due to the sale, redemption or liquidation of any of the
Equity Securities deposited in the Trust on the Initial, or any subsequent, Date
of Deposit. The required percentage relationship of the Equity Securities will
be adjusted, to the extent necessary, to reflect the occurrence of a stock
dividend, a stock split or similar event which affects the capital structure of
the issuer of an Equity Security but which does not affect the Trust's
percentage ownership of the common stock equity of such issuer at the time of
such event. If the Sponsor deposits cash or a letter of credit with instructions
to purchase additional Securities, 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 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 Equity 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 Managing Underwriter, or until
the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objective of the Trust is to provide investors with the potential for
capital appreciation and diversification from a portfolio of biotechnology
issues. The portfolio is described under "Trust Portfolio" and "Portfolio"
herein. The Equity Securities were selected by Principal Financial Securities,
Inc., the original Managing Underwriter, as of the Initial Date of Deposit based
on the criteria described herein. Subsequent to that date, EVEREN Securities,
Inc. acquired Principal Financial Securities, Inc. and became the Managing
Underwriter. Over the next few years, the Managing Underwriter anticipates that
shares of well-placed biotechnology firms could offer substantial investment
opportunities. The Managing Underwriter believes that the biotech industry is in
pursuit of the solutions to many of today's medical problems and that the major
drug industry recognizes this and has formed important strategic alliances with
a broad cross-section of biotech firms. In addition, the Managing Underwriter
believes that some biotech issues may be bought out by major drug companies who
are increasingly focusing on biotech solutions for their own product team.
As the population continues to age, health care needs will likely continue to
grow. Biotechnology, with its advances in molecular biology and biochemistry, is
an industry that may fill this need, and can present a variety of significant
investment opportunities for the aggressive growth portion of an investment
portfolio. Many of the issues in the biotech area, while holding the keys to a
promising future of earnings realization on new products, do not have current
earnings or broad product lines. There may be disappointments with individual
companies which will partially offset potential gains of other issuers. A
diversified investment approach is highly appropriate in this area.
The selection process, for potentially locating the best-positioned issues
for investment, was geared toward identifying those companies which were in an
advanced stage of product development. The companies in the selection universe
completed at least Phase II on their important products or have important and
deep-pocketed partners who are committed to the development process (Phase II of
Phases I-IV generally involves comparing the effects of a new drug on subjects
with the effects of a placebo administered in a control group). The Managing
Underwriter also sought to invest in those companies which can make the
transition from research and development to production and marketing. The
Managing Underwriter sought companies that have either cash on hand which can
see them through the next two years without new financing or the access to new
funding through existing partners. Although the companies in the selection
universe tended to be small capitalization issues, an average portfolio market
capitalization floor of $250 million was required to help insure adequate
liquidity.
At the core of the industry-wide revitalization is that a key goal of science
and medicine is to ultimately improve the quality of life. This commitment has
driven research efforts leading to new product development and breakthrough
discoveries. For instance, the industry witnessed rapid growth during the
earlier part of the 1990s when biotechnology companies increased the speed with
which scientific advancements evolved into commercial products. Not only has
such progress made contributions to improve human health, but it may also
provide investors with increased opportunities.
A number of trends may spur the growth of the biotechnology industry and may
present important investment opportunities: issues relating to health care
appear to continue to dominate the national and global public forum;
demographics depict a rapidly aging population which may result in an increase
in demand for medical therapeutics; continual progress in understanding the
basic biological mechanisms involved in diseases creates new avenues for
therapeutic intervention; the biotechnology industry is maturing and outsourcing
and partnering with large pharmaceutical corporations are becoming an important
part of the business; and Food and Drug Administration reform has shortened the
drug approval process which could reduce development expenses and speed up the
realization of product revenues. Of course, biotechnology companies are subject
to government regulation and approval of their products and are often subject to
rapid product obsolescence as new technologies develop, limited product lines
and stock price volatility. An investment in Units should be made with an
understanding of such risks. See "Risk Factors".
General. An investor will be subjected to taxation on any dividend income
received from the Trust and on gains from the sale or liquidation of Securities
(see "Tax Status"). 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 Equity Security issuers to continue to
declare and pay dividends and because the market value of the Equity 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 Equity 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 Equity Securities and the declaration of any dividends
depends upon several factors including the financial condition of the issuers
and general economic conditions.
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, Equity
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 Equity Securities were selected by the Managing
Underwriter prior to the Initial Date of Deposit. The Trust may continue to
purchase or hold Equity Securities originally selected through this process even
though the evaluation of the attractiveness of the Equity Securities may have
changed and, if the evaluation were performed again at that time, the Equity
Securities would not be selected for the Trust.
TRUST PORTFOLIO
The Trust consists of Equity Securities issued by biotechnology companies.
Each of the companies whose Equity Securities are included in the portfolio were
selected by the Managing Underwriter based upon those factors referred to under
"Objectives and Securities Selection" above.
The Trust consists of such of the Equity Securities listed under "Portfolio"
in Part One as may continue to be held from time to time in the Trust and any
additional Equity Securities acquired and held by the Trust pursuant to the
provisions of the Trust Agreement together with 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 Equity Securities. However, should any contract
for the purchase of any of the Equity Securities initially deposited hereunder
fail, the Sponsor will, unless substantially all of the moneys held in the Trust
to cover such purchase are reinvested in substitute Equity Securities in
accordance with the Trust Agreement, refund the cash and sales charge
attributable to such failed contract to all Unitholders on 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 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. Pursuant to the Trust Agreement and with limited exceptions, the
Trustee may sell any securities or other property 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). 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.
Unitholders will be unable to dispose of any of the Equity Securities as such
and will not be able to vote the Equity Securities. As the holder of the Equity
Securities, the Trustee will have the right to vote all of the voting stocks in
the Trust and will vote such stocks in accordance with the instructions of the
Sponsor. In the absence of any such instructions by the Sponsor, the Trustee
will vote such stocks so as to insure that the stocks are voted as closely as
possible in the same manner and the same general proportion as are shares held
by owners other than the Trust.
The Managing Underwriter may acquire the Equity Securities for the Sponsor.
The Managing Underwriter in its general securities business acts as agent or
principal in connection with the purchase and sale of equity securities,
including the Equity Securities in the Trust, and may act as a market maker in
certain of the Equity Securities. The Managing Underwriter may also, from time
to time, issue reports on and make recommendations relating to equity
securities, which may include the Equity Securities. From time to time the
Managing Underwriter may act as investment banker or an employee or affiliate
may be a director of a company whose shares are included among the Equity
Securities; nonpublic information concerning such a company would not be
disclosed to the Managing Underwriter or for the benefit of the Trust under such
circumstances.
RISK FACTORS
The Trust is concentrated in issuers within the biotechnology industry. A
portfolio concentrated in a single industry may present more risk than a
portfolio of more broadly diversified investments. The Trust, and therefore
Unitholders, may be particularly susceptible to a negative impact resulting from
adverse market conditions or other factors affecting issuers in the
biotechnology industry because any negative impact on the biotechnology 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 associated with companies in the biotechnology industry. Because the
Securities are issued by companies involved in a variety of sectors within the
biotechnology industry, each Security may be subject to risks specific to the
company's sector. The companies included in the Trust portfolio may include
companies involved in research on antibodies, anti-infectives, biomaterials,
blood substitutes, diagnostic imaging, drug delivery, drug discovery, drug
design, genomics, immunology, neurosciences, novel manufacturing technologies,
oncology, services including drug development, information technology and drug
distribution and vaccines. Biotechnology companies are subject to governmental
regulation of their products and services, a factor which could have a
significant unfavorable effect on the price and availability of such products or
services.
Furthermore, such companies face the risk of patent protection for drug or
medical products and the risk that rapid technological advances, which are
typical within the industry, will render their products obsolete. The success of
certain issuers depends on the commercial viability of a limited number of
products or services. The research and development costs of bringing a drug,
product or service to market are substantial, and include lengthy governmental
review processes and rigorous clinical testing with no guarantee that the drug,
product or service will ever come to market or will achieve acceptance by the
medical community if brought to market. Such companies may also have persistent
losses during a new product's transition from development to production, and
revenue patterns may be erratic.
Legislative proposals concerning health care have been under consideration by
state and federal legislatures in recent years. These proposals span a wide
range of topics, including costs and price controls (which might include a
freeze on the prices of prescription drugs), national health insurance,
incentives for competition in providing health care services, tax incentives and
penalties related to health care insurance premiums and promotion of pre-paid
health care plans. It is impossible to predict the effect of any of these
proposals, if adopted, on the issuers of the Securities.
The Securities in the Trust are issued by companies with small market
capitalizations. Accordingly, an investment in Units of the Trust should be made
with an understanding of the risks of small capitalization companies. Smaller
companies often have rates of sales, earnings, growth and share price
appreciation that exceed those of larger companies; however, such companies also
generally have limited product lines, markets or financial resources. Investors
should note that stocks of smaller companies often have limited marketability
and typically experience more 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.
The principal trading market for certain of 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 Managing Underwriter or 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.
In the opinion of the Managing Underwriter, certain of the Equity Securities
included in the Trust which may have the highest potential for capital
appreciation also from time to time may experience limited purchase or sale
availability in the market place. In anticipation of this possibility, the
Managing Underwriter intends to make a market in said Equity Securities to
facilitate the creation of subsequent deposits for this Trust which may have an
impact on the price at which Units are valued during the initial offering
period. In addition, upon termination of the Trust, this potential limited daily
trading volume may result in negative market price consequences for the Trust
stemming from the liquidation of a significant amount of these Equity
Securities. The Sponsor will 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.
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entail, 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. The 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 the issuer's board of directors and have a right to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. 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 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, generally
have 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 of liquidation
which are senior to those of common stockholders.
Year 2000 Readiness Disclosure. The following two paragraphs constitute "Year
2000 Readiness Disclosure" within the meaning of the Year 2000 Information and
Readiness Disclosure Act of 1998. If computer systems used by the Sponsor,
Evaluator, Supervisor, Trustee or other service providers to the Trust do not
properly process date-related information after December 31, 1999, the resulting
difficulties could adversely impact the Trust. This is commonly known as the
"Year 2000 Problem". The Sponsor, Evaluator, Supervisor and Trustee are taking
steps to address this problem and to obtain reasonable assurances that other
service providers to the Trust are taking comparable steps. We cannot guarantee
that these steps will be sufficient to avoid any adverse impact on the Trust.
This problem may impact corporations to varying degrees based on factors such as
industry sector and degree of technological sophistication. We cannot predict
what impact, if any, this problem will have on the issuers of the Securities.
In addition, computer failures throughout the financial services industry
beginning January 1, 2000 could have a detrimental affect on the markets for the
Securities. Improperly functioning trading systems may result in settlement
problems and liquidity issues. Moreover, corporate and governmental data
processing errors may adversely affect issuers and overall economic
uncertainties. Remediation costs will affect the earnings of individual issuers.
These costs could be substantial. Issuers may report these costs inconsistently
in U.S. and foreign financial markets. All of these issues could adversely
affect the Securities and the Trust.
TAXSTATUS
General. The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (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 opinions, it is assumed that
each 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 Security when such income is considered to be received by the
Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his or her pro rata portion of each Security when such dividends are
considered to be received by the Trust regardless of whether such dividends are
used to pay a portion of any expenses or deferred sales charge imposed.
Unitholders will be taxed in this manner regardless of whether distributions
from the Trust are actually received by the Unitholder.
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent an
in kind distribution of stock is received by such Unitholder from 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 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 initial tax basis for his pro rata portion of each Security held by the
Trust. Unitholders should consult their own tax advisers with regard to the
calculation of basis. For federal income tax purposes, a Unitholder's pro rata
portion of the dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to a Security held by the Trust is taxable as ordinary
income to the extent of such corporation's current and accumulated "earnings and
profits". A Unitholder's pro rata portion of dividends paid on such Security
which exceed such current and accumulated earnings and profits will first reduce
a Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Security shall generally be treated as
capital gain. In general, the holding period for such capital gain will be
determined by the period of time a Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of 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 gains and losses for federal income tax purposes. Unitholders
should consult their tax advisers regarding the recognition of 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 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). 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. Unitholders should consult with their
tax advisers with respect to the limitations on and possible modifications to
the dividends received deduction.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trust is deferred. The income a Unitholder must take into account
for federal income tax purposes is not reduced by amounts deducted to pay the
deferred sales charge. Unitholders should consult their own tax advisors as to
the income tax consequences of the deferred sales charge.
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 a
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the
Trust or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. The Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Tax Act") provides that for tax-payers 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) realized from property
(with certain exclusions) is subject to a maximum marginal stated tax rate of
20% (10% in the case of certain taxpayers in the lowest tax bracket). 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 for determining the holding period of the Unit. Capital gains realized
from assets held for one year or less are taxed at the same rates as ordinary
income.
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 advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust including his pro rata
portion of all Securities represented by a Unit. The Taxpayer Relief Act of 1997
(the "1997 Tax 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 of Units or
Termination of the Trust. As discussed in "Rights of Unitholders--Redemption of
Units," under certain circumstances a Unitholder tendering Units for redemption
may request an in kind distribution of the Securities in the Trust. A Unitholder
may also under certain circumstances request an in kind distribution of the
Securities in the Trust upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units". The Unitholder requesting an in kind
distribution will be liable for expenses related thereto (the "Distribution
Expenses") and the amount of such in kind distribution will be reduced by the
amount of the Distribution Expenses. See "Rights of Unitholders--Redemption of
Units". As previously discussed, prior to the redemption of Units or the
termination of the Trust, a Unitholder is considered as owning a pro rata
portion of each of the Trust's assets for federal income tax purposes. The
receipt of an in kind distribution will result in a Unitholder receiving an
undivided interest in whole shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an in kind distribution
with respect to each Security owned by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion in the Securities held by
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will generally
recognize gain or loss based upon the difference between the amount of cash
received by the Unitholder and his tax basis in such fractional share of a
Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an in
kind distribution will have to analyze the tax consequences with respect to each
Security owned by 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 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 Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
as described above.
Other Matters. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust will generally be
subject to United States income taxation and withholding in the case of Units
held by non-resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of the Trust a statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security (resulting from redemption or the
sale of any 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 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.
Unitholders should consult their tax advisers regarding potential foreign, state
or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
Compensation of Sponsor, Evaluator and Managing Underwriter. The Sponsor will
not receive any fees in connection with its activities relating to the Trust.
The Evaluator shall receive that evaluation fee set forth under "Summary of
Essential Financial Information" in Part One (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) for regularly evaluating the Trust portfolio. Such fee may exceed
the actual cost of providing such evaluation services for this Trust, but at no
time will the total amount paid to the Evaluator for providing evaluation
services to unit investment trusts of which Van Kampen Funds Inc. acts as
Sponsor in any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year. The Supervisor will receive an annual
supervisory fee which is not to exceed the amount set forth under "Summary of
Essential Financial Information" in Part One (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) for providing portfolio supervisory services for the Trust. Such
fee may exceed the actual cost of providing such supervision services for this
Trust, but at no time will the total amount paid to the Supervisor for providing
portfolio supervision services to unit investment trusts in any calendar year
exceed the aggregate cost to the Supervisor of supplying such services in such
year. The foregoing fees will be payable as described under "General" below.
Both of the foregoing fees may be increased without approval of the Unitholders
by amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published by the
United States Department of Labor or, if such category is no longer published,
in a comparable category. The Sponsor and the Managing Underwriter will receive
sales commissions and may realize other profits (or losses) in connection with
the sale of Units and the deposit of the Equity Securities as described under
"Public Offering--Sponsor and Managing Underwriter Compensation."
Trustee's Fee. For its services the Trustee will receive an annual fee from
the Trust as set forth under "Summary of Essential Financial Information" in
Part One (which amount is based on the number of Units outstanding on January 1
of each year for which such compensation relates except during the initial
offering period in which event the calculation is based on the number of Units
outstanding at the end of the month of such calculation). The Trustee's fees are
payable as described under "General" below. The Trustee benefits to the extent
there are funds for future distributions, payment of expenses and redemptions in
the Capital and Income Accounts since these accounts are non-interest bearing
and the amounts earned by the Trustee are retained by the Trustee. Part of the
Trustee's compensation for its services to the Trust is expected to result from
the use of these funds. Such fees may be increased without approval of the
Unitholders by amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index published by the
United States Department of Labor or, if such category is no longer published,
in a comparable category. For a discussion of the services rendered by the
Trustee pursuant to its obligations under the Trust Agreement, see "Rights of
Unitholders--Reports Provided" and "Trust Administration."
Miscellaneous Expenses. Expenses incurred in establishing the Trust,
including the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and certificates), federal and state
registration fees, the initial fees and expenses of the Trustee, legal and
accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over the life of the Trust.
The following additional charges are or may be incurred by the Trust: (a) normal
expenses (including the cost of mailing reports to Unitholders) incurred in
connection with the operation of the Trust, (b) fees of the Trustee for
extraordinary services, (c) expenses of the Trustee (including legal and
auditing expenses) and of counsel designated by the Sponsor, (d) various
governmental charges, (e) expenses and costs of any action taken by the Trustee
to protect the Trust and the rights and interests of Unitholders, (f)
indemnification of the Trustee for any loss, liability or expenses incurred in
the administration of the Trust without negligence, bad faith or wilful
misconduct on its part, (g) accrual of costs associated with liquidating the
securities and (h) expenditures incurred in contacting Unitholders upon
termination of the Trust. The expenses set forth herein are payable as described
under "General" below.
General. During the initial offering period of the Trust, all of the fees and
expenses will accrue on a daily basis and will be charged to the Trust, in
arrears, at the end of the initial offering period. After the initial offering
period of the Trust, all of the fees and expenses of the Trust will accrue on a
daily basis and will be charged to the Trust, in arrears, on a monthly basis as
of the tenth day of each month. The fees and expenses are payable out of the
Capital Account. When such fees and expenses are paid by or owing to the
Trustee, they are secured by a lien on the Trust's portfolio. It is expected
that the balance in the Capital Account will be insufficient to provide for
amounts payable by the Trust and that Equity Securities will be sold from the
Trust to pay such amounts. These sales will result in capital gains or losses to
Unitholders. See "Tax Status".
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, the sales charge described below, and cash, if any, in the
Income and Capital Accounts held or owned by the Trust. The sales charge
assessed to Unitholders on a per Unit basis is initially 4.5% of the Public
Offering Price (4.712% of the aggregate value of the Securities in the Trust
less the deferred sales charge). Commencing on July 24, 1998, the secondary
market sales charge will instead include only a one-time initial sales charge of
4.0% of the Public Offering Price and will be reduced by .5 of 1% on each
subsequent July 24, to a minimum sales charge of 3.5%.
Any sales charge reduction will primarily be the responsibility of the
selling Managing Underwriter, 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 Principal Financial Securities, Inc. and its affiliates,
dealers and their affiliates, and vendors providing services to the Managing
Underwriter may purchase Units at the Public Offering Price less the applicable
dealer concession.
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 Equity Securities
in the Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Equity Securities an
amount equal to the sales charge and dividing the sum so obtained by the number
of Units outstanding. Such underlying value shall include the proportionate
share of any cash held in the Income and Capital Accounts. This computation
produced a gross underwriting profit equal to the total sales charge. Such price
determination as of the close of business on the day before the Initial Date of
Deposit was made on the basis of an evaluation of the Equity Securities in the
Trust prepared by Interactive Data Corporation, a firm regularly engaged in the
business of evaluating, quoting or appraising comparable securities. Thereafter,
the Evaluator on each business day will appraise or cause to be appraised the
value of the underlying Equity 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 Managing Underwriter 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.
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 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 therefor is other than on the
exchange, the evaluation shall generally be based on the current bid prices on
the over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are unavailable,
the evaluation is generally determined (a) on the basis of current 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.
In offering the Units to the public, neither the Sponsor, the Managing
Underwriter nor any broker-dealers are recommending any of the individual Equity
Securities in the Trust but rather the entire pool of Equity Securities, taken
as a whole, which are represented by the Units.
Unit Distribution. Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary market Public Offering Price in the
manner described above.
The Sponsor intends to qualify the Units for sale in a number of states. Any
discount provided to investors will be borne by the Managing Underwriter as
indicated under "General" above. 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.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 200 Units (100 Units for a
tax-sheltered retirement plan). The Managing Underwriter reserves the right to
reject, in whole or in part, any order for the purchase of Units and to change
the amount of any concession to registered representatives from time to time.
Sponsor and Managing Underwriter Compensation. The Managing Underwriter will
receive a gross sales commission equal to the sales charge on Units. Any
discounts provided to investors will be borne by the Managing Underwriter as
indicated under "General" above.
In addition, the Managing Underwriter will realize a profit or will sustain a
loss, as the case may be, as a result of the difference between the price paid
for the Equity Securities by the Managing Underwriter and the cost of such
Equity 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 Equity Securities in the Trust portfolio. The
Sponsor and the Managing Underwriter may further realize additional profit or
loss as a result of the possible fluctuations in the market value of the Equity
Securities in the Trust after a date of deposit, since all proceeds received
from the sale of Units (excluding dealer concessions and agency commissions
allowed, if any) will be retained by the Sponsor or Managing Underwriter.
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
their 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 the Units on the date of settlement
provided payment has been received. Cash, if any, made available to the Sponsor
or Managing Underwriter prior to the date of settlement for the purchase of
Units may be used in the Sponsor's or Managing Underwriter's business and may be
deemed to be a benefit to the Sponsor or Managing Underwriter, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Managing Underwriter intends to
maintain a secondary market for Units of the Trust for the period indicated. In
so maintaining a market, the Managing Underwriter 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 Managing Underwriter 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 Managing
Underwriter may maintain a secondary 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 Managing Underwriter may either
discontinue all purchases of Units or discontinue purchases of Units at such
prices. In the event that a market is not maintained for the Units and the
Unitholder cannot find another purchaser, a Unitholder desiring to dispose of
his Units will be able to dispose of such Units by tendering them to the Trustee
for redemption at the Redemption Price. It is the current intention of the
Managing Underwriter not to maintain a secondary market after January 24, 2001.
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. The minimum purchase for tax-sheltered retirement
plans is 100 Units.
RIGHTS OF UNITHOLDERS
General. 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 book entry unless a Unitholder makes a
written request to the Managing Underwriter that ownership be evidenced by
certificates. 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
Equity Securities, etc.) are credited to the Capital Account. Proceeds from the
sale of Equity Securities to meet redemptions of Units shall be segregated
within the Capital Account from proceeds from the sale of Equity Securities made
to satisfy the fees, expenses and charges of the Trust.
The Trustee will distribute any income received with respect to any of the
Equity 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 Equity Securities in the Trust, to the extent not used to meet redemptions
of Units, pay the deferred sales charge or pay expenses, will (except as
hereinafter provided) 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 Equity
Securities after a record date and prior to the following distribution date will
be held in the Capital Account of the Trust and not distributed until the next
distribution date applicable to such Capital Account. Funds in the Capital
Account will, however, be distributed on the twenty-fifth day of each month to
holders of record on the tenth day of such month if the amount available for
distribution equals at least $0.01 per Unit. 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, if any, are not received by the Trust at a constant rate throughout
the year, such distributions to Unitholders are expected to fluctuate from
distribution to distribution. Persons who purchase Units will commence receiving
distributions only after such person becomes a record owner. Notification to the
Trustee of the transfer of Units is the responsibility of the purchaser, but in
the normal course of business such notice is provided by the selling
broker-dealer.
At the end of the initial offering period and as of the tenth day of each
month thereafter, the Trustee will deduct from the Capital Account, amounts
necessary to pay the expenses of the Trust (as determined on the basis set forth
under "Trust Operating Expenses"). The Trustee also may withdraw from the Income
and Capital Accounts such amounts, if any, as it deems necessary to establish a
reserve for any governmental charges payable out of the Trust. Amounts so
withdrawn shall not be considered a part of the Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the accounts. In
addition, the Trustee may withdraw from the Income and Capital Accounts such
amounts as may be necessary to cover redemptions of Units.
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. Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each person who at any time during
the calendar year was a registered Unitholder of the Trust 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 Equity
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 Equity Securities held by the Trust 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 or her
Units by tender to the Trustee at its Unit Investment Trust Division, 101
Barclay Street, 20th Floor, New York, New York 10286 of a request for redemption
duly endorsed or accompanied by proper instruments of transfer with signature
guaranteed as described above and by payment of applicable governmental charges,
if any. No redemption fee will be charged. On the third business day following
such tender the Unitholder will be entitled to receive in cash (unless the
redeeming Unitholder elects an "In Kind Distribution" as described below) an
amount for each Unit equal to the Redemption Price per Unit next computed after
receipt by the Trustee of such tender of Units as of the Evaluation Time set
forth under "Summary of Essential Financial Information" in Part One. The "date
of tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received after the applicable Evaluation Time
the date of tender is the next day on which the New York Stock Exchange is open
for trading and such Units will be deemed to have been tendered to the Trustee
on such day for redemption at the redemption price computed on that day.
The Trustee is empowered to sell Equity Securities of the Trust in order to
make funds available for redemption if funds are not otherwise available in the
Capital and Income Accounts to meet redemptions. The Equity 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 in the Trust tendering 2,500 or more Units for redemption may
request from the Trustee in lieu of a cash redemption a distribution in kind
("In Kind Distribution") of an amount and value of Equity Securities per Unit
equal to the Redemption Price per Unit as determined as of the next evaluation
following the tender. An In Kind Distribution on redemption of Units will be
made by the Trustee through the distribution of each of the Equity Securities in
book-entry form to the account of the Unitholder's broker-dealer at Depository
Trust Company. The tendering Unitholder will receive his pro rata number of
whole shares of each of the Equity Securities comprising the Trust portfolio and
cash from the Capital Account equal to the fractional shares to which the
tendering Unitholder is entitled. The Trustee may adjust the number of shares of
any issue of Equity Securities included in a Unitholder's In Kind Distribution
to facilitate the distribution of whole shares, such adjustment to be made on
the basis of the value of the Equity Securities on the date of tender. If funds
in the Capital Account are insufficient to cover the required cash distribution
to the tendering Unitholder, the Trustee may sell Equity Securities according to
the criteria discussed above.
To the extent that Equity 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 the Equity 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 Equity Securities in the portfolio at the time of
redemption. Special federal income tax consequences will result if a Unitholder
requests an In Kind Distribution. See "Tax Status."
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 of the Trust. On the Initial Date of Deposit, the
Public Offering Price per Unit (which includes the sales charge) exceeded the
values at which Units could have been redeemed by the amounts shown under
"Summary of Essential Financial Information" in Part One. 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, (ii) the value of the Equity Securities 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) any remaining deferred sales charge and
accrued expenses of the Trust. The Evaluator may determine the value of the
Equity Securities in the Trust in the following manner: if the Equity Securities
are listed on a national securities exchange, this evaluation is generally based
on the closing sale prices on that exchange (unless it is determined that these
prices are inappropriate as a basis for valuation) or, if there is no closing
sale price on that exchange, at the closing bid prices. If the Equity Securities
of the Trust are not so listed or, if so listed and the principal market
therefore is other than on the exchange, the evaluation shall generally be based
on the current bid price on the over-the-counter market (unless these prices are
inappropriate as a basis for evaluation). If current bid prices are unavailable
or inappropriate as a basis for valuation, the evaluations 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 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
Managing Underwriter Purchases of Units. The Trustee shall notify the
Managing Underwriter of any Units tendered for redemption. If the Managing
Underwriter'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 Managing
Underwriter may be tendered to the Trustee for redemption as any other Units.
The offering price of any Units acquired by the Managing Underwriter 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 Managing Underwriter 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.
While the Trust will not be managed, the Trust Agreement does provide 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 Equity 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 such Trust pursuant to
the direction of the Sponsor (who may rely on the advice of the Supervisor).
Proceeds from the sale of Equity 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 or to meet redemptions. Except
as stated under "Trust Portfolio--General" for failed securities and as provided
in this paragraph, the acquisition by the Trust of any securities other than the
Equity Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above, the
Trustee may also sell Equity Securities designated by the Supervisor, or if no
such designation has been made, 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 individual issues of Equity Securities
in the Trust. To the extent this is not practicable, the composition and
diversity of the Equity Securities in such Trust may be altered. In order to
obtain the best price for 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. The Sponsor or Managing Underwriter may consider
sales of units of unit investment trusts in selecting broker/dealers to execute
the Trust's portfolio transactions.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor and
the Trustee), provided, however, that the Trust Agreement may not be amended to
increase the number of Units (except as provided in the Trust Agreement). The
Trust Agreement may also be amended in any respect by the Trustee and Sponsor,
or any of the provisions thereof may be waived, with the consent of the holders
representing 51% of the Units of the Trust 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 Units of the Trust then outstanding or by the
Trustee when the value of the Equity Securities owned by the Trust, as shown by
any evaluation, is less than that amount set forth under Minimum Termination
Value in the "Summary of Essential Financial Information" in Part One. The Trust
will be liquidated by the Trustee in the event that a sufficient number of Units
not yet sold are tendered for redemption by the Managing Underwriter or the
Sponsor, so that the net worth of the Trust would be reduced to less than 40% of
the value of the Equity Securities at the time they were deposited in the Trust.
If the Trust is liquidated because of the redemption of unsold Units by the
Sponsor and/or the Managing Underwriter, the Sponsor will refund to each
purchaser of Units the entire sales charge paid by such purchaser. The Trust
Agreement will terminate upon the sale or other disposition of the last Equity
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. At least 60 days before the Mandatory Termination Date the Trustee
will provide written notice of any termination to all Unitholders of the Trust
and will include with such notice a form to enable Unitholders owning 2,500 or
more Units to request an In Kind Distribution rather than payment in cash upon
the termination of the Trust. To be effective, this request must be returned to
the Trustee at least five business days prior to the Mandatory Termination Date.
On the Mandatory Termination Date (or on the next business day thereafter if a
holiday) the Trustee will deliver each requesting Unitholder's pro rata number
of whole shares of each of the Equity Securities in the Trust to the account of
the broker-dealer or bank designated by the Unitholder at Depository Trust
Company. The value of the Unitholder's fractional shares of the Equity
Securities will be paid in cash. Unitholders with less than 2,500 Units and
Unitholders 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 of the Trust his pro rata share of the balance of the Income and
Capital Accounts.
The Sponsor will attempt to sell Securities as quickly as possible commencing
on the Mandatory Termination Date without in the judgment of the Sponsor
materially adversely affecting the market price of the Securities. The Sponsor
does not anticipate that the period will be longer than one month, and it could
be as short as one day, depending on the liquidity of the Securities being sold.
The liquidity of any Security depends on the daily trading volume of the
Security and the amount that the Sponsor has available on any particular day.
It is expected (but not required) that the Sponsor will generally follow the
following guidelines in selling the Securities; for highly liquid Securities,
the Securities will generally be sold on the Mandatory Termination Date; for
less liquid Securities, on each of the first two days subsequent to the
Mandatory Termination Date, the amount of any underlying Securities will
generally be sold at a price no less than 1/2 of one point under the closing
sale price of those Securities on the preceding day. Thereafter, the Sponsor
intends to sell without any price restrictions at least a portion of the
remaining underlying Securities, the numerator of which is one and the
denominator of which is the total number of days remaining (including that day)
in the one month period following the Mandatory Termination Date.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and
the Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (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 Equity 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 Equity 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,
Supervisor 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 Funds Inc., a Delaware corporation, is the Sponsor of the
Trust. The Sponsor is an indirect subsidiary of Van Kampen Investments Inc. Van
Kampen Investments 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 rates); real
estate advice, financing and investing; global custody, securities clearance
services and securities lending; and credit card services.
Van Kampen Funds 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, 1998, the total stockholders' equity of Van Kampen
Funds Inc. was $135,236,000 (audited). (This paragraph relates only to the
Sponsor and not to the Trust or to any other Series thereof. The information is
included herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
As of March 31, 1999, the Sponsor and its Van Kampen affiliates managed or
supervised approximately $75 billion of investment products. The Sponsor and its
Van Kampen affiliates managed $64 billion of assets, consisting of $36.6 billion
for 50 open-end mutual funds, $19.5 billion for 39 closed-end funds and $8.2
billion for 106 institutional accounts. The Sponsor has also deposited more than
3,200 unit trusts amounting to approximately $35.4 billion of assets. All of Van
Kampen'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 or evaluation services at cost for approximately $13.4
billion of unit investment trust assets outstanding. Since 1976, the Sponsor has
serviced over two million investor accounts, opened through retail distribution
firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286 (800) 221-7668. The Bank of New York is subject
to supervision and examination by the Superintendent of Banks of the State of
New York and the Board of Governors of the Federal Reserve System, and its
deposits are insured by the Federal Deposit Insurance Corporation to the extent
permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Equity 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 Trust. 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
Equity 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.
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
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Van Kampen American Capital Equity Opportunity Trust, Series 67, 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 25th day of October, 1999.
Van Kampen American Capital Equity Opportunity
Trust, Series 67
(Registrant)
By Van Kampen Funds 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 October 25, 1999 by the
following persons who constitute a majority of the Board of Directors of Van
Kampen Funds Inc.:
SIGNATURE TITLE
Richard F. Powers III Chairman and Chief Executive )
Officer )
John H. Zimmerman III President and Chief Operating )
Officer )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
A. Thomas Smith III Executive Vice President, )
General Counsel and Secretary )
Michael H. Santo Executive Vice President )
Gina M. Costello______________
(Attorney in Fact)*
- --------------------
* An executed copy of each of the related powers of attorney is filed herewith
or was filed with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Van Kampen Focus Portfolios, Series 136
(File No. 333-70897) and the same are hereby incorporated herein by this
reference.
Consent of Independent Certified Public Accountants
We have issued our report dated August 20, 1999 accompanying the financial
statements of Van Kampen American Capital Equity Opportunity Trust, Series 67 as
of June 30, 1999, and for the period then ended, contained in this
Post-Effective Amendment No. 2 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
October 25, 1999
