File No. 333-34097
CIK #1025217
Securities and Exchange Commission
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: Van Kampen American Capital Equity
Opportunity Trust, Series 71
B. Name of Depositor: Van Kampen American Capital Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen American Capital
Attention: Mark J. Kneedy Distributors, Inc.
111 West Monroe Street Attention: Don G. Powell, Chairman
Chicago, Illinois 60603 One Parkview Plaza
Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: An indefinite
number of Units of proportionate interest pursuant to Rule 24f-2
under the Investment Company Act of 1940
F. Proposed maximum offering price to the public of the securities
being registered: Indefinite
G. Amount of registration fee: Not Applicable
H. Approximate date of proposed sale to the public:
As Soon As Practicable After the Effective Date of the
Registration Statement
/X/ Check box if it is proposed that this filing will become effective
at 2:00 p.m. on September 3, 1997 pursuant to Rule 487.
Van Kampen American Capital Equity Opportunity Trust
Series 71
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) *
underwriter
5. Organization of trust ) The Trust
6. Execution and termination of ) The Trust
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and
Securities of the Trust
10. General information regarding ) The Trust
trust's securities and ) Federal Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trust
) Trust Portfolio
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Portfolio
)
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or ) Trust Operating Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received ) Public Offering
by depositor, principal ) *
underwriter, trustee or any ) Trust Portfolio
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trust
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special Trusts ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolio
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities ) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's ) Cover Page
securities ) Trust Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Trust Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Trust Administration
securities )
(d) Trustamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Federal Taxation
VII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions ) Report of Independent Certified
1(c) to Form S-6) ) Public Accountants
) Statement of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
September 3, 1997
VAN KAMPEN AMERICAN CAPITAL
Aggressive Growth Series
Internet Trust 7
The Fund. Van Kampen American Capital Equity Opportunity Trust, Series 71 (the
"Fund") is comprised of one underlying unit investment trust
designated as Aggressive Growth Series, Internet Trust 7 (the "Trust").
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a fixed, diversified portfolio of actively traded
equity securities issued primarily by companies engaged in either the enabling
technology or communications services areas of the Internet, certain of which
are common stocks of foreign issuers in American Depositary Receipt
("ADRs") form ("Equity Securities" or "Securities"). See
"Trust Portfolio". Unless terminated earlier, the Trust will terminate
on the Mandatory Termination Date and any Securities then held will, within a
reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Securities liquidated at termination will be sold at the then current market
value for such Securities; therefore, the amount distributable in cash to a
Unitholder upon termination may be more or less than the amount such
Unitholder paid for his Units. Upon liquidation, Unitholders may choose to
reinvest their proceeds into the next Aggressive Growth Series, if available,
at a reduced sales charge, to receive a cash distribution or to receive a pro
rata distribution of the Securities then included in the Trust (if they own
the requisite number of Units).
An investment in Units will be automatically redeemed on the first Special
Redemption Date (approximately fourteen months from the Initial Date of
Deposit) unless the Unitholder elects in writing to hold Units through Trust
termination.
Attention Foreign Investors. If you are not a United States citizen or
resident, distributions from the Trust will generally be subject to U.S.
federal withholding taxes; however, under certain circumstances treaties
between the United States and other countries may reduce or eliminate such
withholding tax. See "Federal Taxation." Such investors should consult
their tax advisers regarding the imposition of U.S. withholding on
distributions.
Objective of the Trust. The objective of the Trust is to provide the potential
for capital appreciation from a portfolio of equity securities of companies
primarily involved in either the enabling technology or communications
services areas of the Internet. See "Objectives and Securities
Selection". There is, of course, no guarantee that the objective of the
Trust will be achieved.
Public Offering Price. The Public Offering Price of the Units of the Trust
during the initial offering period and for secondary market transactions after
the initial offering period includes the aggregate underlying value of the
Securities in the Trust's portfolio, an initial sales charge, and cash, if
any, in the Income and Capital Accounts held or owned by the Trust. The
initial sales charge is computed as described under "Public
Offering--General". Unitholders will also be subject to a deferred sales
charge as described under "Public Offering--General". During the
initial offering period, the sales charge is reduced on a graduated scale for
sales involving at least 2,500 Units of the Trust. If Units were available for
purchase at the close of business on the day before the Initial Date of
Deposit, the Public Offering Price per Unit would have been that amount set
forth under "Summary of Essential Financial Information". Except as
provided in "Public Offering--Unit Distribution", the minimum purchase
is 100 Units. See "Public Offering".
Additional Deposits. The Sponsor may, from time to time after the Initial Date
of Deposit, deposit additional Securities in the Trust as provided under "
The Trust".
Dividend and Capital Distributions. Distributions of dividends and capital, if
any, received by the Trust will be paid in cash on the Distribution Dates to
Unitholders of record on the record date as set forth in the "Summary of
Essential Financial Information". Gross dividends received by the Trust
will be distributed to Unitholders. Expenses of the Trust will be paid with
proceeds from the sale of Securities. For the consequences of such sales, see
"Federal Taxation". Additionally, upon surrender of Units for
redemption or 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".
Units of the Trust are not insured by the FDIC, are not deposits or other
obligations of, or guaranteed by, any depository institution or any government
agency and are subject to investment risk, including possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Secondary Market For Units. Although not obligated to do so, the Sponsor
currently intends to maintain a market for Units through March 3, 1998 and
offer to repurchase such Units at prices which are based on the aggregate
underlying value of Equity Securities (generally determined by the closing
sale or bid prices of the Securities) plus or minus cash, if any, in the
Capital and Income Accounts of the Trust. If a secondary market is not
maintained, a Unitholder may redeem Units at prices based upon the aggregate
underlying value of the Equity Securities 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". Units sold or tendered for
redemption prior to such time as the entire deferred sales charge on such
Units has been collected will be assessed the amount of the remaining deferred
sales charge at the time of sale or redemption. A Unitholder tendering 1,000
or more Units for redemption may request a distribution of shares of
Securities (reduced by customary transfer and registration charges) in lieu of
payment in cash. See "Rights of Unitholders--Redemption of Units".
Termination. An investment in Units of the Trust will terminate approximately
fourteen months from the Initial Date of Deposit unless a Unitholder elects in
writing to remain invested in the Trust through the Mandatory Termination
Date. Approximately fourteen months after the Initial Date of Deposit,
Unitholders will be given the option to (i) have their Units redeemed and
reinvest the proceeds into a subsequent Series of the Trust, (ii) receive an
in-kind distribution of Securities (if applicable) or (iii) continue to hold
the Units through the termination of the Trust approximately two years
following the Initial Date of Deposit. If a Unitholder makes no election at
the first Special Redemption Date, the Unitholder's Units will be redeemed on
such date and the Unitholder will receive cash representing their pro rata
portion of the Trust's assets. At least 30 days prior to the Mandatory
Termination Date the Trustee will provide written notice thereof to all
Unitholders and will include with such notice a form to enable Unitholders to
elect a distribution of shares of the Securities (reduced by customary
transfer and registration charges) if such Unitholder owns at least 1,000
Units, rather than to receive payment in cash for such Unitholder's pro rata
share of the amounts realized upon the disposition of such Securities.
Unitholders will receive cash in lieu of any fractional shares. To be
effective, the election form, and any other documentation required by the
Trustee, must be returned to the Trustee at least five business days prior to
the Mandatory Termination Date. Unitholders may elect to become Rollover
Unitholders as described in "Special Redemption and Rollover in New
Trust" below. Rollover Unitholders will not receive the final liquidation
distribution but will receive units of a new Aggressive Growth Series, if one
is being offered. Unitholders not electing the Rollover Option or a
distribution of shares of Securities will receive a cash distribution from the
sale of the remaining Securities within a reasonable time after the Trust is
terminated. See "Trust Administration--Amendment or Termination".
Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase Units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales
charge to the extent stated in the related prospectus (which may be deferred
in certain cases).
In the event that a distribution is made to Unitholders prior to the Trust's
termination, Unitholders will have such distributions reinvested into
additional Units of the Trust subject only to the remaining deferred sales
charge payments as set forth herein, if Units are available at the time of
reinvestment, or distributed in cash. See "Rights of
Unitholders--Reinvestment Option".
Special Redemption and Rollover in New Trust. The Sponsor currently
anticipates that a new series of the Fund will be created quarterly.
Unitholders will have the option, subject to any necessary regulatory
approval, of specifying by either Rollover Notification Date stated in
"Summary of Essential Financial Information" to have all of their Units
redeemed and the distributed Securities sold by the Trustee, in its capacity
as Distribution Agent, on the related Special Redemption Date. (Unitholders so
electing are referred to herein as "Rollover Unitholders".) The
Distribution Agent will appoint the Sponsor as its agent to determine the
manner, timing and execution of sales of underlying Securities. The proceeds
of the redemption will then be invested in units of a new Aggressive Growth
Series (the "New Trust"), if one is offered, at a reduced sales
charge. The Sponsor may, however, stop offering units of the New Trust at any
time in its sole discretion without regard to whether all the proceeds to be
invested have been invested. Cash which has not been invested on behalf of the
Rollover Unitholders in the New Trust will be distributed shortly after the
related Special Redemption Date. However, the Sponsor anticipates that
sufficient Units will be available, although moneys in this Trust may not be
fully invested on the next business day. The New Trust will contain a
portfolio of common stocks of aggressive growth companies with an investment
objective of obtaining capital appreciation. Rollover Unitholders will receive
the amount of dividends in the Income Account of the Trust which will be
included in the reinvestment in units of the New Trust.
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including the possible deterioration of the
financial condition of the issuers, the general condition of the stock market
and increased stock price volatility of aggressive growth companies
(especially within high-technology industries). An investment should also be
made with an understanding of the special risks related to companies in the
high-technology industries associated with the Internet. For certain risk
considerations related to the Trust, see "Risk Factors".
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, Series 71
Summary of Essential Financial Information
At the close of business on the day before the Initial Date of Deposit: September 2, 1997
Sponsor: Van Kampen American Capital Distributors, Inc.
Supervisor: Van Kampen American Capital Investment Advisory Corp.
(An affiliate of the Sponsor)
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
<S> <C>
GENERAL INFORMATION
Number of Units <F1>........................................................... 15,000
Fractional Undivided Interest in the Trust per Unit <F1>....................... 1/15,000
Public Offering Price:
Aggregate Value of Securities in Portfolio <F2>...............................$ 150,040
Aggregate Value of Securities per Unit........................................$ 10.00
Sales Charge <F3>.............................................................$ .29
Less Deferred Sales Charge per Unit...........................................$ .19
Public Offering Price per Unit <F3><F4>.......................................$ 10.10
Redemption Price per Unit <F5>.................................................$ 9.74
Initial Secondary Market Repurchase Price per Unit <F5>........................$ 9.81
Excess of Public Offering Price per Unit over Redemption Price per Unit <F5>...$ .36
Estimated Annual Organizational Expenses per Unit <F6>.........................$ .05062
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee .................Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee....................Maximum of $.0025 per Unit
Rollover Notification Dates .........................October 3, 1998 and August 3, 1999
Special Redemption Dates.............................November 3, 1998 and September 3, 1999
Mandatory Termination Date ..........................September 3, 1999
The Trust may be terminated if the net asset value of the Trust is less than
$500,000 unless the net asset value of the Trust's deposits have exceeded
$15,000,000, then the Trust Agreement may be terminated if the net asset
Minimum Termination Value............................value of the Trust is less than $3,000,000.
Trustee's Annual Fee ................................$.008 per Unit
Income and Capital Account Record Dates <F7>.........November 3, 1998 and September 3, 1999
Income and Capital Account Distribution Dates <F7>...November 13, 1998 and September 13, 1999
Evaluation Time......................................4:00 P.M. New York time
- ----------
<FN>
<F1>As of the close of business on any day on which the Sponsor is the sole
Unitholder of the Trust, the number of Units may be adjusted so that the
Public Offering Price per Unit will equal approximately $10. Therefore, to the
extent of any such adjustment the fractional undivided interest per Unit will
increase or decrease from the amount indicated above.
<F2>Each Security listed on a national securities exchange is valued at the
closing sale price or if the Security is not so listed, at the asked price
thereof.
<F3>The Sales Charge consists of an initial sales charge and a deferred sales
charge. The initial sales charge is applicable to all Units and represents an
amount equal to the difference between the first year sales charge (2.90% of
the Public Offering Price) and the amount of the deferred sales charge imposed
prior to the first Special Redemption Date ($0.19 per Unit). Unitholders will
also be subject to a deferred sales charge during the first year of the Trust
equal to $0.19 per Unit. Unitholders who elect to hold Units after the first
Special Redemption Date will be charged an additional $0.16 per Unit deferred
sales charge after such date. This additional deferred sales charge will not
be imposed on Unitholders who do not elect to hold Units after such date.
Subsequent to the Initial Date of Deposit, the amount of the initial sales
charge will vary with changes in the aggregate value of the Securities in the
Trust. Units purchased subsequent to the initial deferred sales charge payment
will be subject only to that portion of the deferred sales charge payments not
yet collected. These deferred sales charge payments will be paid from funds in
the Capital Account, if sufficient, or from the periodic sale of Securities.
See the "Fee Table" below and "Public Offering--General".
<F4>On the Initial Date of Deposit there will be no cash in the Income or Capital
Accounts. Anyone ordering Units after such date will have included in the
Public Offering Price a pro rata share of any cash in such Accounts.
<F5>The Redemption Price per Unit and the Initial Secondary Market Repurchase
Price per Unit are reduced by the unpaid portion of the deferred sales charge
imposed prior to the first Special Redemption Date.
<F6>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 one year and paid
from funds in the Capital Account, if sufficient, or from the sale of
Securities. See "Trust Operating Expenses" and "Statement of
Condition". Historically, the sponsors of unit investment trusts have paid
all of the costs of establishing such trusts. Estimated Annual Organizational
Expenses per Unit have been estimated based on a projected trust size of
$7,000,000. To the extent the Trust is larger or smaller, the actual
organizational expenses paid by the Trust (and therefore by Unitholders) will
vary from the estimated amount set forth above.
<F7>No distribution will be made unless the amount available for distribution in
the Income and Capital Accounts equals at least $0.01 per Unit.
</TABLE>
FEE TABLE
This Fee Table is intended to assist investors in understanding the costs
and expenses that an investor in the Trust will bear directly or indirectly.
See "Public Offering--General" and "Trust Operating Expenses". Although the
Trust has a fixed term, and is a unit investment trust rather than a mutual
fund, this information is presented to permit a comparison of fees. The fee
table below assumes that the principal amount of and distributions on an
investment are redeemed at the first Special Redemption Date. The example
below assumes that the principal amount of and distributions on an
investment are rolled over each year into a new Aggressive Growth Series
subject only to the anticipated reduced sales charge applicable to Rollover
Unitholders. See "Right of Unitholders--Special Redemption and Rollover in
New Trust." Investors should note that while this example is based on the
public offering price and the estimated fees for the current Aggressive
Growth Series, the actual public offering price and fees for any new
Aggressive Growth Series created in the future periods indicated could
vary from those of the current Aggressive Growth Series.
<TABLE>
<CAPTION>
Amount Per
Unitholder Transaction Expenses (as of the Initial Date of Deposit) (as a percentage of offering price) 100 Units
---------------
<S> <C> <C>
Initial Sales Charge Imposed on Purchase<F1>............................................................ 1.00% $ 10.00
Deferred Sales Charge<F2> <F3>.......................................................................... 1.90% 19.00
Sales Charge<F3>........................................................................................ 2.90% $ 29.00
========= ===============
Maximum Sales Charge Imposed on Reinvested Dividends<F3> <F4>........................................... 1.90% $ 19.00
========= ===============
Estimated Annual Trust Operating Expenses (as of the Initial Date of Deposit) (as a percentage of
aggregate value)
Trustee's Fee .......................................................................................... 0.080% $ 0.80
Portfolio Supervision and Evaluation Fees .............................................................. 0.050% 0.50
Organizational Costs.................................................................................... 0.506% 5.06
Other Operating Expenses ............................................................................... 0.035% 0.35
--------- ---------------
Total .................................................................................................. 0.671% $ 6.71
========= ===============
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for
Period of:
----------------------------------
3 10
1 Year Years 5 Years Years
----------- ------ ------- -------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming a 5% annual
return and redemption at the end of each time period $ 36 $89 N/A N/A
</TABLE>
The example assumes reinvestment of all dividends and distributions at the end
of each year and utilizes a 5% annual rate of return as mandated by Securities
and Exchange Commission regulations applicable to mutual funds. For purposes
of the examples, the deferred sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the dividend;
the cumulative expenses would be higher if sales charges on reinvested
dividends were reflected in the year of reinvestment. The examples should not
be considered representations of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the examples.
- ----------
(1) The Initial Sales Charge is actually the difference between the Sales
Charge (2.90% of the Public Offering Price) and the Deferred Sales Charge
($0.19 per Unit) and would exceed 1.00% if the Public Offering Price
exceeds $10 per Unit.
(2) The actual deferred sales charge imposed during the Trust's first year
is $0.019 per Unit per month, irrespective of purchase or redemption price,
deducted during the first year of the Trust. If a holder sells or redeems
Units before all of these deductions have been made, the balance of the
deferred sales charge payments remaining will be deducted from the sales or
redemption proceeds. If Unit price exceeds $10 per Unit, the deferred portion
of the sales charge will be less than 1.90%; if Unit price is less than $10
per Unit, the deferred portion of the sales charge will exceed 1.90%. Units
purchased subsequent to the initial deferred sales charge payment will be
subject to only that portion of the deferred sales charge payments not yet
collected. Unitholders who do not elect to hold Units subsequent to the first
Special Redemption Date will be subject only to this deferred sales charge of
$0.19 per Unit imposed during the first year of the Trust.
(3) In addition to the Deferred Sales Charge set forth above, Unitholders who
elect to hold Units subsequent to the first Special Redemption Date will be
subject to a deferred sales charge of $0.16 per Unit which will be imposed
after such date as described under "Public Offering--General". This
would increase the total maximum sales charge for such Unitholders to 4.50% of
the Public Offering Price imposed over a two year period.
(4) Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment. See "Rights of
Unitholders--Reinvestment Option".
THE TRUST
- --------------------------------------------------------------------------
Van Kampen American Capital Equity Opportunity Trust, Series 71 is comprised
of one unit investment trust: Aggressive Growth Series, Internet Trust 7. The
Trust was created under the laws of the State of New York pursuant to a Trust
Indenture and Trust Agreement (the "Trust Agreement"), dated the date
of this Prospectus (the "Initial Date of Deposit"), among Van Kampen
American Capital Distributors, Inc., as Sponsor, Van Kampen American Capital
Investment Advisory Corp., as Supervisor, The Bank of New York, as Trustee,
and American Portfolio Evaluation Services, a division of Van Kampen American
Capital Investment Advisory Corp., as Evaluator.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities
issued primarily by companies engaged in either the enabling technology or
communications services areas of the Internet including common stocks of
foreign issuers in ADR form. Diversification of assets in the Trust will not
eliminate the risk of loss always inherent in the ownership of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolio" herein, including delivery
statements relating to contracts for the purchase of certain such Securities
and an irrevocable letter of credit issued by a financial institution in the
amount required for such purchases. Thereafter, the Trustee, in exchange for
such Securities (and contracts) so deposited, delivered to the Sponsor
documentation evidencing the ownership of that number of Units indicated in
"Summary of Essential Financial Information". Unless terminated
earlier, the Trust will terminate on the Mandatory Termination Date set forth
under "Summary of Essential Financial Information" and any Securities
then held will, within a reasonable time thereafter, be liquidated or
distributed by the Trustee. Any Securities liquidated at termination will be
sold at the then current market value for such Securities; therefore, the
amount distributable in cash to a Unitholder upon termination may be more or
less than the amount such Unitholder paid for his Units. Upon either Rollover
Notification Date, Unitholders may choose to reinvest their proceeds into a
subsequent Aggressive Growth Series, if available, at a reduced sales charge,
to receive a pro rata distribution of the Securities then included in the
Trust (if they own the requisite minimum number of Units) or to receive a cash
distribution. At the first Rollover Notification Date Unitholders may also
elect to continue their investment in Units through the Mandatory Termination
Date (approximately two years following the Initial Date of Deposit).
Unitholders who make no election at the first Rollover Notification Date will
have their Units redeemed on the first Special Redemption Date and will
receive a cash distribution of the proceeds.
Additional Units of the Trust may be issued at any time by depositing in the
Trust (i) additional Securities, (ii) contracts to purchase securities
together with cash or irrevocable letters of credit or (iii) cash (or a letter
of credit) with instructions to purchase additional Securities. As additional
Units are issued by the Trust as a result of the deposit of additional
Securities, the aggregate value of the Securities in the Trust will be
increased and the fractional undivided interest in the Trust represented by
each Unit will be decreased. The Sponsor may continue to make additional
deposits of Securities or cash with instructions to purchase Securities into
the Trust following the Initial Date of Deposit, provided that such additional
deposits will be in amounts which will maintain, as nearly as practicable, the
same percentage relationship among the number of shares of each Equity
Security in the Trust's portfolio that existed immediately prior to any such
subsequent deposit. Any deposit of additional Equity Securities will
duplicate, as nearly as is practicable, this actual proportionate relationship
and not the original proportionate relationship on the Initial Date of
Deposit, since the actual proportionate relationship may be different than the
original proportionate relationship. Any such difference may be due to the
sale, redemption or liquidation of any of the Equity Securities deposited in
the Trust on the Initial, or any subsequent, Date of Deposit. If the Sponsor
deposits cash, however, existing and new investors may experience a dilution
of their investments and a reduction in their anticipated income because of
fluctuations in the prices of the Securities between the time of the cash
deposit and the purchase of the Securities and because the Trust will pay the
associated brokerage fees.
Each Unit initially offered represents an undivided interest in the Trust. To
the extent that any Units are redeemed by the Trustee or additional Units are
issued as a result of additional Securities being deposited by the Sponsor,
the fractional undivided interest in the Trust represented by each unredeemed
Unit will increase or decrease accordingly, although the actual interest in
the Trust represented by such fraction will remain unchanged. Units will
remain outstanding until redeemed upon tender to the Trustee by Unitholders,
which may include the Sponsor, or until the termination of the Trust
Agreement.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------
The objective of the Trust is to provide the potential for capital
appreciation from a portfolio of equity securities primarily involved in
either the enabling technology or communications services areas of the
Internet including common stocks of foreign issuers in ADR form. In selecting
the Securities, the Sponsor considered companies engaged in one or more of the
following Internet-related industry areas: manufacturers or providers of
enabling technology, access equipment, communications equipment, service
providers, access and value added services, and commerce and value added
services, software and network services. There is, of course, no assurance
that the Trust (which includes expenses and sales charges) will achieve its
objective.
According to Morgan Stanley research, it is estimated that there were
approximately 167 million users of personal computers world-wide at the end of
1996. Future estimates show this trend growing to 225 million by the year
2000. The projections for Internet penetration into homes and businesses are
significant. According to recent estimates, only about 8% of U.S. households
are on-line. Estimates by Louis Harris & Associates taken on November 16,
1996, show that there are approximately a total of 35 million adults
world-wide now using the Internet, up from 27 million earlier in 1996. An
Advertising Age/Market Facts telephone survey taken from September 6-11, 1996,
of 1,000 randomly selected U.S. residents age 18 and over, found that 27
percent had been on-line in the previous six months. Morgan Stanley's
estimates for the industry project growth in all areas (in millions):
<TABLE>
<CAPTION>
Users of 1995 1996 1997 1998 1999 2000
- ---------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PCs 144 167 184 203 217 225
E-mail 35 60 80 130 180 200
Net/Web 9 23 46 81 122 152
Online/hybrid 8 13 18 23 27 30
</TABLE>
Currently, there are approximately 611,860 Web sites (Internet Info, September
27, 1996) with significant growth anticipated in the near future. In recent
months, the percentage of non-U.S. registrations has grown dramatically. The
following table shows a breakdown by type of Web site:
<TABLE>
<CAPTION>
As of As of
Type 7/5/96 9/27/96 Increase
- ----------------------------------------------- ------------ -----------------------
<S> <C> <C> <C> <C>
Commercial Business (.com) 397,690 548,638 150,948 37.9%
Organizations (.org) 27,358 36,808 9,450 34.5%
Network Providers (.net) 16,027 23,539 7,512 46.8%
Educational Institutions (.edu) 2,643 2,875 232 8.7%
Total 443,718 611,860 168,142 37.8%
============= ============ ============= =========
</TABLE>
The global market for Internet products and services is estimated to grow to
$23 billion. The table below (Hambrecht & Quist, December 1995) shows a
forecast by market segment (in millions):
<TABLE>
<CAPTION>
Forecast by Market Segment 1995 2000
- -------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Network Services (ISPs) $ 300$ 5,000
Hardware (routers, modems, computer hardware) 500 2,500
Software (server, applications) 300 4,000
Enabling Services (electronic commerce, directory services,
web tracking) 20 1,000
Expertise (system integrators, business consultants) 50 700
Content and Activity (online entertainment, information,
shopping) 500 10,000
Total Market $ 1,670$ 23,200
========== ==========
</TABLE>
However, many authorities also expect significant consolidation among
Internet-related companies as this market develops. Because of this and
because Internet-related companies are often subject to erratic market
movements, as indicated under "Risk Factors," an investment in the
Trust should be considered to be appropriate for more aggressive investors.
For example, investors who would be comfortable owning the individual
securities in the Trust's portfolio might find the Trust to be an appropriate
investment. While these risks cannot be eliminated, the Trust portfolio is
diversified with companies involved in the creation of a variety of products,
equipment and/or services related to the Internet to help manage certain of
these investment risks.
Investors should note that the figures described above are not indications of
past or future performance of any investment, including the Securities and the
Trust. There can be no assurance that the estimates described above will be
achieved or, if achieved, that they will be sustained. In particular, many of
the figures above include longer-term estimates that, if achieved, may not be
achieved during the life of the Trust or any subsequent series of the Trust.
In addition, growth in the use of or market for computer or Internet-related
products and services, or growth in the number of Web sites, is not indicative
of possible growth in the value of any investment, including the Securities
and the Trust.
The Internet. The Internet is a massive network of networks, which connects
over 600,000 corporate, university, and government networks located in over 90
countries around the world. It was originally developed by the United States
Department of Defense in 1969 as a way to coordinate research at major
universities and government agencies with a network reliable enough to
withstand nuclear war. In 1992, the government opened the Internet to full
commercial use and financial backing by the U.S. government was withdrawn.
Since then, the Internet has been operated and expanded by the
interconnections of the more than 300 access providers, and growth has been
tremendous.
The World Wide Web is a technology for retrieving and processing data on the
Internet. The Internet has no physical presence. As described above, the
Internet is a network of computers which share a format for routing data. A
Web page is a publicly available computer file stored on a computer attached
to the Internet. These are called "web sites" and are what appears on
a computer screen when an on-line service retrieves information. Services that
index and store information exist which are called "spiders" and "
search engines." These services permit users to search the World Wide Web
for sites, channels and information.
Currently, the Internet allows users to complete a variety of transactions,
access information from commercial, government and educational organizations,
and participate in thousands of "chat groups" from which users can
share and gather information.
The Aggressive Growth Series. The Aggressive Growth Series is a series of
shorter-term equity unit investment trusts geared toward the more aggressive
investor. Each Aggressive Growth Series trust invests in a portfolio of stocks
seeking high growth from the market's newest trends. The buy-and-hold
philosophy of a unit investment trust combined with an investment in the
aggressive end of the stock market leads to a shorter time horizon for the
investor. It is the intention of the Sponsor to create new trusts which will
be available for investment upon termination of each Aggressive Growth Series.
It is anticipated that each new Aggressive Growth Series trust will contain a
portfolio of common stocks of aggressive growth companies with an investment
objective of capital appreciation. See "Rights of Unitholders--Special
Redemption and Rollover in New Trust." This rollover investment strategy
allows the investor to reallocate his or her investment into a new trust
holding those companies that provide a greater potential, in the opinion of
the Sponsor, to achieve price appreciation over the following year.
The shorter terms of the Aggressive Growth Series trusts are aimed at taking
advantage of a marketplace that is changing rapidly. The shorter terms provide
investments that better take into consideration new companies going public,
consolidations of existing companies, development of new technologies and
other dynamic events which affect aggressive growth companies. It is the
intention of the Sponsor to offer a new Aggressive Growth Series at the
termination of the Trust which offers an investment which best responds to the
marketplace at that time. Accordingly, by continuing to roll over investments
into new Aggressive Growth Series trusts, over time an investor may benefit
from a long-term investment strategy that seeks to respond to current market
trends each year by investing in a different portfolio of aggressive growth
stocks.
Asset allocation is one of the most important parts of successful investing.
Asset allocation means spreading money among a number of investment classes
such as stocks, bonds and cash. Structuring a portfolio among different
classes may help spread risk, limit volatility and/or diversify opportunities
for return. Historically, stocks have outperformed bonds and cash by a
significant margin. An investment of $1 in common stocks (as represented by
the Standard & Poor's 500 Index) on January 1, 1926 would have been worth
approximately $1,371.76 by December 31, 1996. Over the same time period, $1
invested in long-term U.S. Government bonds would have been worth
approximately $33.66, $1 invested in short-term Treasury bills would have been
worth approximately $13.54 and $1 growing at the rate of inflation would have
been worth approximately $8.88. While past performance is no indication of
future results, stocks may be an important part of an investment portfolio.
Because some stocks outperform others, the Aggressive Growth Series focuses on
stocks from a specific economic sector or market trend that Van Kampen
American Capital analysts believe has solid growth prospects. The historical
performance of the categories above is shown for illustrative purposes only;
it is not meant to forecast, imply or guarantee future performance of any
particular investment vehicle. It is important to note that stocks are
accompanied by higher volatility than bonds or investments dedicated to
capital preservation. Long-term government bonds are considered long-term
investments, and are subject to price fluctuations and the value of such bonds
declines as interest rates rise. The Trust is a short-term investment,
includes sales charges and expenses, and the value of the Securities may
fluctuate in a different manner than that of bonds.
In addition, equity investments may provide the potential to keep pace with or
outpace inflation. Inflation, the rise in prices of goods and services, can
eat away at an investor's savings. In fact, one dollar in 1975 is worth less
than 34 cents in spending power today. Many experts agree that retired
investors can no longer depend solely on conservative investments to maintain
their standard of living throughout their retirement years. According to the
National Center for Health Statistics, more than one-half of the people who
turned 65 in 1996 will live to be at least 80 years old. With life
expectancies growing longer and reforms to Social Security possible, an
investor's money set aside for retirement may have to stretch farther than
originally planned. By dedicating a modest portion of an investment portfolio
toward more aggressive investments, an investor may benefit from the potential
returns aggressive growth stocks may provide.
General. Investors will be subject to taxation on the dividend income, if any,
received by the Trust and on gains from the sale or liquidation of Securities.
Investors should be aware that there is not any guarantee that the objective
of the Trust will be achieved because it is subject to the continuing ability
of the respective issuers to declare and pay dividends and because the market
value of the Securities can be affected by a variety of factors. Common stocks
may be especially susceptible to general stock market movements and to
volatile increases and decreases of value as market confidence in and
perceptions of the issuers change. Investors should be aware that there can be
no assurance that the value of the underlying Securities will increase or that
the issuers of the Securities, which are primarily aggressive growth
companies, will pay dividends on outstanding common shares. Any distribution
of income will generally depend upon the declaration of dividends by the
issuers of the Securities and the declaration of any dividends depends upon
several factors including the financial condition of the issuers and general
economic conditions. See "Risk Factors".
The investment strategy utilized by the Trust is designed to be implemented on
an annual basis. Investors who hold Units through Trust termination may have
investment results that differ significantly from a Unit investment that is
reinvested into a new trust each year. Investors should note that a change in
the federal taxation of capital gains was recently enacted that reduces the
maximum stated marginal tax rate for certain capital gains for investments
held for more than 18 months to 20% (10% in the case of certain taxpayers in
the lowest federal tax bracket). Unitholders who elect to continue their
investment through Trust termination may qualify for such treatment.
Unitholders who make no election at the first Special Redemption Date and
Unitholders who elect to reinvest into a new series of the Trust at the first
Special Redemption Date will not qualify for such treatment but would be
subject to a maximum stated marginal federal capital gains tax rate of 28%.
See "Federal Taxation".
Investors should be aware that the Trust is not a "managed" fund and
as a result the adverse financial condition of a company will not result in
its elimination from the portfolio except under extraordinary circumstances
(see "Trust Administration--Portfolio Administration"). In addition,
Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the Securities were selected for inclusion in the
Trust as of the Initial Date of Deposit. Subsequent to the Initial Date of
Deposit, the Securities may no longer meet the criteria necessary for
inclusion on the Initial Date of Deposit. Should a Security fail to meet such
criteria following the Initial Date of Deposit, such Security will not as a
result thereof be removed from the portfolio. In addition, since the Sponsor
may deposit additional Equity Securities which were originally selected
through this process, the Sponsor may continue to sell Units of the Trust even
though the Equity Securities would no longer be chosen for deposit into the
Trust if the selection process were to be made again at a later time. Because
certain of the Equity Securities from time to time may be sold under certain
circumstances described herein, and because the proceeds from such events will
in most cases be distributed to Unitholders and will not be reinvested, no
assurance can be given that the Trust will retain for any length of time its
present size and composition. Although the portfolio is not managed, the
Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. See "Trust Administration--Portfolio
Administration."
TRUST PORTFOLIO
- --------------------------------------------------------------------------
The Trust consists of a diversified portfolio of 30 different issues of
Securities which may be engaged in one or more of the following
Internet-related industry areas: manufacturers or providers of enabling
technology, access equipment, communications equipment, service providers,
access and value added services, and commerce and value added services,
software and network services. All of the issuers of the Securities have
significant business interests in the Internet or Internet-related products or
services. All of the Securities are listed on a national securities exchange,
the NASDAQ National Market System or are traded in the over-the-counter
market. The following is a general description of each of the companies that
are included in the Trust.
Advanced Fibre Communications. Advanced Fibre Communications manufactures
telecommunications systems for the "local loop" between telephone
service users and public telephone networks worldwide. The company created a
single platform that supports all networks, transports and services.
Amazon.com, Inc. Amazon.com, Inc. retails books online. The company offers
customers a selection of 2.5 million book titles. Amazon.com also sells a
small number of CDs, videotapes and audiotapes online.
America Online, Inc. America Online, Inc. provides a variety of online
services to consumers in the United States. The company's services include
electronic mail, conferencing, computing support, software, electronic
magazines and newspapers and online classes. America Online markets its
services to consumers through magazine advertising, direct mail and by
establishing alliances with media companies.
At Home Corporation. At Home Corporation provides Internet services over the
cable television infrastructure to consumers and businesses. The company's
service allows residential subscribers to connect their personal computers via
cable modems to a new high-speed network. This service allows subscribers to
receive "@ Home Experience," which includes Internet service over
hybrid coaxial cables at peak speed.
CBT Group PLC. CBT Group PLC provides interactive software designed to meet
the information technology education and training needs of businesses. The
company develops, publishes and markets approximately 379 software titles
focused on client/server technologies and delivered on network and stand-alone
personal computers.
Check Point Software Technologies Ltd. Check Point Software Technologies Ltd.
develops, markets and supports network security software products that enable
connectivity with security and manageability. The company's "
FireWall-1" product provides scaleable application support, an open and
extensible architecture and integration of authentication, encryption and
remote access.
CIENA Corporation. CIENA Corporation designs, manufactures and sells dense
wavelength division multiplexing systems for long distance fiberoptic
telecommunications networks. The company's product, the "Multiwave
1600," alleviates capacity constraints in high traffic fiberoptic routes
without requiring installation of new fiber.
Cisco Systems, Inc. Cisco Systems, Inc. develops, manufactures and markets
software products which enable customers to build secure and reliable
information networks that support productivity-enhancing applications. The
company's clients include utilities, corporations, universities, governments,
service providers and small to medium businesses worldwide.
CKS Group, Inc. CKS Group, Inc. provides integrated marketing communication
services that help their client companies market their products, services and
messages. The company provides strategic corporate and product positioning,
corporate identity and product branding, new media, packaging, collateral
systems, advertising, direct mail, consumer production, trade promotions and
media placement services.
CNET, Inc. CNET, Inc. provides original Internet content and television
programming related to computers, the Internet and digital technologies. The
company, through its web sites and television programs, provides informational
programs on computers and computer based media such as the Internet and World
Wide Web.
Compaq Computer Corporation. Compaq Computer Corporation designs, develops,
manufactures and markets personal computers for professional users and
consumers. The company's products include portable, desktop, laptop and
notebook personal computers and servers that are compatible with IBM and all
standardized applications software.
Dell Computer Corporation. Dell Computer Corporation designs, develops,
manufactures, markets, services and supports a variety of computer systems,
including desktops, notebooks and network servers. The company also customizes
products and services to end-user requirements. Dell also offers a variety of
peripherals and software.
E*TRADE Group, Inc. E*TRADE Group, Inc. provides online discount brokerage
services. The company offers automated order placement, portfolio tracking and
related market information, news and other information services over the
Internet, online services providers CompuServe and America Online, direct
modem access, touch-tone telephone and interactive television.
Harbinger Corporation. Harbinger corporation develops, markets and supports
software products. The company also provides computer communications network
and consulting services that allow companies to operate in electronic
commerce, which includes electronic data interchange (EDI), e-mail, electronic
funds transfer, bulletin boards, electronic catalog services and other
activities.
Lucent Technologies, Inc. Lucent Technologies, Inc. designs, builds and
delivers a wide range of public and private networks, communications systems
and software, consumer and business telephone systems and microelectronics
components. The research and development arm of the company is Bell
Laboratories. Lucent Technologies provides its services worldwide.
Lycos, Inc. Lycos, Inc. develops and provides online guides to the Internet's
World Wide Web that serve as a new medium for information access. The
company's products and services enable users of the Internet to quickly,
easily and accurately identify, select and access the resources and
information of interest to them.
McAfee Associates, Inc. McAfee Associates, Inc. offers a fully integrated
network security and management suite for enterprise-wide NetWare, Windows NT
and UNIX networks. The company's suite, which contains a broad range of
functionality, is composed of four networks: McAfee's Service Desk, Saner LAN
Workstation, Gateway Security Suite and Desktop Security Suite.
Memco Software Ltd. Memco Software Ltd. develops, markets, licenses and
supports security software. The company's software is designed to protect and
manage access to critical information assets and system resources in an open
client/server environment.
Microsoft Corporation. Microsoft Corporation develops, manufactures, licenses
and supports computer software products. The company offers "Microsoft
MS-DOS," "Microsoft Access," "Microsoft FoxPro," "
Microsoft SQL Server" and "Microsoft Excel" networking, database
and spreadsheet programs, books and other computer products.
Netscape Communications Corporation. Netscape Communications Corporation
provides open software for linking people and information over intranets and
the Internet. The company offers a wide array of enterprise server and client
software, development tools and commercial applications that create a single
communications platform. Netscape's product "Navigator" allows users
to browse the Internet.
ONSALE, Inc. ONSALE, Inc. is an electronic retailer pioneering a new sales
format, the interactive 24-hour auction. The company's product is designed to
serve as an entertaining marketing channel. ONSALE specializes in selling
refurbished and close-out computers, peripherals and consumer electronics over
the Internet's World Wide Web.
Oracle Corporation. Oracle Corporation supplies software for information
management. The company offers its database, tools and application products,
along with related consulting, education and support services in more than 140
countries around the world.
Security Dynamics Technologies, Inc. Security Dynamics Technologies, Inc.
designs, develops, markets and supports a family of security products used to
protect and manage access to computer-based information resources. The
company's products supply solutions for corporate enterprise-wide networks,
intranets, and the Internet along with electronic commerce.
Siebel Systems, Inc. Siebel Systems, Inc. is an industry provider of
enterprise-class sales and marketing information software systems. The company
designs, develops, markets and supports "Siebel Sales Enterprise," an
Internet-enabled, object oriented client/server application software product
family. Siebel's products are designed to meet the sales and marketing
information system requirements of organizations.
Sun Microsystems, Inc. Sun Microsystems, Inc. provides hardware, software and
services for establishing enterprise-wide intranets and expanding the power of
the Internet. The company's products are sold in more than 150 countries.
Symantec Corporation. Symantec Corporation develops, markets and supports a
complete line of applications and system software products designed to enhance
individual and workgroup productivity. The company's global operations span
North America, Europe and several markets throughout Asia Pacific and Latin
America.
TMP Worldwide, Inc. TMP Worldwide, Inc. is a marketing services,
communications and technology company that provides individually tailored
advertising services and other ancillary services and products. The company
offers advertising programs to Fortune 100 and Fortune 500 companies.
Trusted Information Systems, Inc. Trusted Information Systems, Inc. provides
comprehensive security solutions for protection of computer networks,
including global Internet-based systems, internal networks and individual
workstations and laptops. The company develops, markets, licenses and supports
the "Guantlet" family of firewall products and other network security
products, as well as "RecoverKey" technology.
WorldCom, Inc. WorldCom, Inc. is a global business telecommunications company.
The company provides facilities-based and fully integrated local, long
distance, international and Internet services. WorldCom's subsidiary, UUNet
Technologies, Inc., is a provider of Internet services. The company has
operations in more then 50 countries.
Yahoo! Inc. Yahoo! Inc. is an Internet media company that offers a network of
globally-branded properties, specialty programming and aggregated content
distributed primarily on the Web serving business professionals and consumers.
The company continues to develop a family of community services along with
targeted Internet guides for geographic, shared-interest and demographic
audiences.
General. The Trust consists of (a) the Equity Securities (including contracts
for the purchase thereof) listed under the "Portfolio" as may continue
to be held from time to time in the Trust, (b) any additional Equity
Securities acquired and held by the Trust pursuant to the provisions of the
Trust Agreement and (c) any cash held in the Income and Capital Accounts.
Neither the Sponsor nor the Trustee shall be liable in any way for any failure
in any of the 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 or before the next
scheduled distribution date.
RISK FACTORS
- --------------------------------------------------------------------------
General. An investment in Units should be made with an understanding of the
risks which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities or the general
condition of the common stock market may worsen and the value of the Equity
Securities and therefore the value of the Units may decline. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of
the issuers change. These perceptions are based on unpredictable factors
including expectations regarding government, economic, monetary and fiscal
policies, inflation and interest rates, economic expansion or contraction, and
global or regional political, economic or banking crises. Shareholders of
common stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or holders of
debt obligations or preferred stocks of, such issuers. Shareholders of common
stocks of the type held by the Trust have a right to receive dividends only
when and if, and in the amounts, declared by each issuer's board of directors
and have a right to participate in amounts available for distribution by such
issuer only after all other claims on such issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or
the rights of holders of common stock with respect to assets of the issuer
upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities in a portfolio may be expected to
fluctuate over the life of the Trust to values higher or lower than those
prevailing on the Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison
with the rights of creditors of, or holders of debt obligations or preferred
stocks issued by, the issuer. Cumulative preferred stock dividends must be
paid before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stockholders are also generally entitled to rights
on liquidation which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity Securities
will be maintained or of the liquidity of the Equity Securities in any markets
made. In addition, the Trust may be restricted under the Investment Company
Act of 1940 from selling Equity Securities to the Sponsor. The price at which
the Equity Securities may be sold to meet redemptions, and the value of the
Trust, will be adversely affected if trading markets for the Equity Securities
are limited or absent.
An investment in Units will terminate approximately fourteen months from the
Initial Date of Deposit unless a Unitholder elects in writing to remain
invested in the Trust through the Mandatory Termination Date. If a Unitholder
makes no election at the first Special Redemption Date, the Unitholder's Units
will be redeemed on such date and the Unitholder will receive cash
representing their pro rata portion of the Trust's assets. Unitholders who
sell or redeem their Units prior to holding such Units for more than 18 months
will not benefit from the reduced federal long-term capital gains tax rate of
20%. For example, Unitholders who elect to become Rollover Unitholders on or
prior to the first Special Redemption Date will not benefit from this reduced
tax rate. Of course, there can be no assurance that Unitholders will realize
capital gains upon the disposition of Units or Securities. Unitholders who
elect to hold Units after the first Special Redemption Date should note that
this redemption process could cause the value of the Trust to fall below the
Minimum Termination Value stated under "Summary of Essential Financial
Information" and could result in a termination of the Trust before the
Mandatory Termination Date. This could cause a Unitholder who elects to hold
Units after the first Special Redemption Date to receive a distribution of
Unit proceeds prior to holding such Units for more than 18 months
notwithstanding such election.
The Trust Agreement authorizes the Sponsor to increase the size of the Trust
and the number of Units thereof by the deposit of additional Securities, or
cash (or a letter of credit) with instructions to purchase additional
Securities, in the Trust and issuance of a corresponding number of additional
Units. If the Sponsor deposits cash, existing and new investors may experience
a dilution of their investments and 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.
As described under "Trust Operating Expenses," all of the expenses of
the Trust will be paid from the sale of Securities from the Trust. It is
expected that such sales will be made at the end of the initial offering
period and each month thereafter through termination of the Trust. Such sales
will result in capital gains and losses and may be made at times and prices
which adversely affect the Trust. For a discussion of the tax consequences of
such sales, see "Federal Taxation."
Unitholders will be unable to dispose of any of the Equity Securities, 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.
Internet-Related Technology Companies. The Trust is concentrated in issuers
within the technology industry. A portfolio concentrated in a single industry
may present more risk than a portfolio broadly diversified over several
industries. The Trust, and therefore Unitholders, may be particularly
susceptible to a negative impact resulting from adverse market conditions or
other factors affecting technology issuers because any negative impact on the
technology industry will not be diversified among issuers within other
unrelated industries. Accordingly, an investment in Units of the Trust should
be made with an understanding of the characteristics of the technology
industry and the risks which such an investment may entail.
Technology companies generally include companies involved in the development,
design, manufacture and sale of computers, computer related equipment,
computer networks, communications systems, telecommunications products,
electronic products, and other related products, systems and services. The
market for technology products and services, especially those specifically
related to the Internet, is characterized by rapidly changing technology,
rapid product obsolescence, cyclical market patterns, evolving industry
standards and frequent new product introductions. The success of the issuers
of the Securities depends in substantial part on the timely and successful
introduction of new products. An unexpected change in one or more of the
technologies affecting an issuer's products or in the market for products
based on a particular technology could have a material adverse affect on an
issuer's operating results. Furthermore, there can be no assurance that the
issuers of the Securities will be able to respond timely to compete in the
rapidly developing marketplace or that the Internet will continue to be
accepted as a means of communication and commerce.
The market for Internet-related products and services has only recently begun
to develop, is rapidly evolving and is characterized by an increasing number
of market entrants who have introduced or developed products and services for
communication and commerce over the Internet. The industry is young and has
few proven products and services. Moreover, critical issues concerning the
commercial use of the Internet (including security, cost, ease of use and
access, and quality of service) remain unresolved and may impact the growth of
Internet use. Additionally, many Internet-related companies have only recently
commenced operations or offered equity securities to the public. In
particular, it is important for investors to note that the initial public
offerings of a substantial number of the issues included in the Trust occurred
only within the last two years. Such companies are in the early stage of
development and have a limited operating history on which to analyze future
operating results. Such securities are generally regarded as speculative
investments. It is important to note that following its initial public
offering a security is likely to experience substantial stock price volatility
and speculative trading. Accordingly, there can be no assurance that upon
redemption of Units or termination of the Trust a Unitholder will receive an
amount greater than or equal to the Unitholder's initial investment.
There can be no assurance that commerce and communication over the Internet
will become widespread or that any related products or services will become
widely adopted for these purposes. If the market fails to develop, develops
more slowly than expected, becomes saturated with competitors or certain
products or services do not achieve market acceptance, the financial condition
of the issuers of the Securities could be materially adversely affected. In
addition, due to the increasing use of the Internet, it is possible that
various laws and regulations may be adopted addressing issues such as privacy,
pricing, characteristics, and quality of Internet products and services. For
example, recent proposals would prohibit distribution of obscene, lascivious
or indecent communications on the Internet. The adoption of any such laws
could have a material adverse impact on the Securities in the Trust.
Based on trading history, factors such as announcements of new products or
development of new technologies and general conditions of the industry have
caused and are likely to cause the market price of technology common stocks to
fluctuate substantially. In addition, technology company stocks have
experienced extreme price and volume fluctuations that often have been
unrelated to the operating performance of such companies. This market
volatility may adversely affect the market price of the Securities and
therefore the ability of a Unitholder to redeem Units, or roll over Units into
a new trust, at a price equal to or greater than the original price paid for
such Units.
Some key components of certain products of technology issuers are currently
available only from single sources. There can be no assurance that in the
future suppliers will be able to meet the demand for components in a timely
and cost effective manner. Accordingly, an issuer's operating results and
customer relationships could be adversely affected by either an increase in
price for, or an interruption or reduction in supply of, any key components.
Additionally, many technology issuers are characterized by a highly
concentrated customer base consisting of a limited number of large customers
who may require product vendors to comply with rigorous and constantly
developing industry standards. Any failure to comply with such standards may
result in a significant loss or reduction of sales. Because many products and
technologies of Internet-related companies are incorporated into other related
products, such companies are often highly dependent on the performance of
other computer, electronics and communications companies (many of which are
included in the Trust's portfolio). There can be no assurance that these
customers will place additional orders, or that an issuer of Securities will
obtain orders of similar magnitude as past orders from other customers.
Similarly, the success of many Internet-related companies is tied to a
relatively small concentration of products or technologies with intense
competition between companies. Accordingly, a decline in demand of such
products, technologies or from such customers could have a material adverse
impact on issuers of the Securities.
Certain issuers of the Securities derive a significant amount of business in
foreign markets. Many countries, especially emerging market countries, have
regulatory requirements that differ from U.S. requirements and are
characterized by less developed and more volatile economies. International
sales and operations are subject to certain risks, including unexpected
changes in regulatory environments, exchange rates, tariffs and other
barriers, political and economic instability and potentially adverse tax
consequences. All of these factors could have a material adverse impact on the
financial condition of certain issuers.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their proprietary
rights in their products and technologies. There can be no assurance that the
steps taken by the issuers of the Securities to protect their proprietary
rights will be adequate to prevent misappropriation of their technology or
that competitors will not independently develop technologies that are
substantially equivalent or superior to such issuers' technology.
FEDERAL TAXATION
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General. The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as capital
assets (generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986 (the "Code"). Unitholders
should consult their tax advisers in determining the federal, state, local and
any other tax consequences of the purchase, ownership and disposition of Units
in the Trust. For purposes of the following discussion and opinion, 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 the Trust asset 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 pro rata portion of each Equity Security when such dividends are
considered to be received by the Trust regardless of whether such dividends
are used to pay a portion of the deferred sales charge. Unitholders will be
taxed in this manner regardless of whether distributions from the Trust are
actually received by the Unitholder or are automatically reinvested (see "
Rights of Unitholders--Reinvestment Option").
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 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
nearest to the date the Unitholder purchases his Units) in order to determine
his tax basis for his pro rata portion of each Security held by the Trust. It
should be noted that certain legislative proposals have been made which could
affect the calculation of basis for Unitholders holding securities that are
substantially identical to the Securities. Unitholders should consult their
own tax advisors with regard to calculation of basis. For Federal income tax
purposes, a Unitholder's pro rata portion of dividends as defined by Section
316 of the Code paid by a corporation with respect to 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 exceeds 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.
In particular, a Rollover Unitholder should be aware that a Rollover
Unitholder's loss, if any, incurred in connection with the exchange of Units
for units in the next new Aggressive Growth Series (the "New Trust")
will generally be disallowed with respect to the disposition of any Securities
pursuant to such exchange to the extent that such Unitholder is considered the
owner of substantially identical securities under the wash sale provisions of
the Code taking into account such Unitholder's deemed ownership of the
securities underlying the Units in the New Trust in the manner described
above, if such substantially identical securities were acquired within a
period beginning 30 days before and ending 30 days after such disposition.
However, any gains incurred in connection with such an exchange by a Rollover
Unitholder would be recognized. Unitholders should consult their tax advisers
regarding the recognition of gains and losses for Federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes sales
charges, and such charges are not deductible. A portion of the sales charge
for the Trust is deferred. It is possible that for federal income tax purposes
a portion of the deferred sales charge may be treated as interest which would
be deductible by a Unitholder subject to limitations on the deduction of
investment interest. In such a case, the non-interest portion of the deferred
sales charge would be added to the Unitholder's tax basis in his Units. The
deferred sales charge could cause the Unitholder's Units to be considered to
be debt-financed under Section 246A of the Code which would result in a small
reduction of the dividends-received deduction. In any case, the income (or
proceeds from redemption) a Unitholder must take into account for Federal
income tax purposes is not reduced by amounts deducted to pay the deferred
sales charge. Unitholders should consult their own tax advisers as to the
income tax consequences of the deferred sales charge.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by 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 shareholders, such as "S" corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and
the personal holding corporation tax). However, a corporation owning Units
should be aware that Sections 246 and 246A of the Code impose additional
limitations on the eligibility of dividends for the 70% dividends received
deduction. These limitations include a requirement that stock (and therefore
Units) must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been recently issued which address
special rules that must be considered in determining whether the 46 day
holding period requirement is met. Moreover, the allowable percentage of the
deduction will be reduced from 70% if a corporate Unitholder owns certain
stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. It should be noted that various
legislative proposals that would affect the dividends received deduction have
been introduced. Unitholders should consult with their tax advisers with
respect to the limitations on and possible modifications to the dividends
received deduction.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by
an individual only to the extent they exceed 2% of such individual's adjusted
gross income. Unitholders may be required to treat some or all of the expenses
of the Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by 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 (although losses incurred by Rollover
Unitholders may be subject to disallowance, as discussed above). For taxpayers
other than corporations, net capital gains (which is defined as net long-term
capital gain over net short-term capital loss for the taxable year) are
subject to a maximum marginal stated tax rate of either 28% or 20%, depending
upon the holding period of the capital assets. In particular, net capital
gain, excluding net gain from property held more than one year but not more
than 18 months and gain on certain other assets, is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Net capital gain that is not taxed at the maximum
marginal stated tax rate of 20% (or 10%) as described in the preceding
sentence, is generally subject to a maximum marginal stated tax rate of 28%.
The date on which a Unit is acquired (i.e., the "trade date") is
excluded for purposes of determining the holding period of the Unit. It should
be noted that legislative proposals are introduced from time to time that
affect tax rates and could affect relative differences at which ordinary
income and capital gains are taxed.
If a Unitholder disposes of a Unit he or she is deemed thereby to have
disposed of his entire pro rata interest in all assets of the Trust involved
including his pro rata portion of all Securities represented by a Unit. 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 advisors with regard to any such constructive sale 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.
A Unitholder may also under certain circumstances request an In Kind
Distribution upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units". 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.
As discussed in "Rights of Unitholders--Special Redemption and Rollover in
New Trust," a Unitholder may elect to become a Rollover Unitholder. To the
extent a Rollover Unitholder exchanges his Units for Units of the New Trust in
a taxable transaction, such Unitholder will recognize gains, if any, but
generally will not be entitled to a deduction for any losses recognized upon
the disposition of any Securities pursuant to such exchange to the extent that
such Unitholder is considered the owner of substantially identical securities
under the wash sale provisions of the Code taking into account such
Unitholder's deemed ownership of the securities underlying the Units in the
New Trust in the manner described above, if such substantially identical
securities were acquired within a period beginning 30 days before and ending
30 days after such disposition under the wash sale provisions contained in
Section 1091 of the Code. In the event a loss is disallowed under the wash
sale provisions, special rules contained in Section 1091(d) of the Code apply
to determine the Unitholder's tax basis in the securities acquired. Rollover
Unitholders are advised to consult their tax advisers.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax basis
in his Units will generally equal the price paid by such Unitholder for his
Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of
each Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary
income as described above.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified by the Internal Revenue Service that payments
to the Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
Distributions by the Trust (other than those that are not treated as United
States source income, if any) will generally be subject to United States
income taxation and withholding in the case of Units held by non-resident
alien individuals, foreign corporations or other non-United States persons.
Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a trade
or business within the United States that is earned by non-U.S. Unitholders
and derived from dividends of foreign corporations will not be subject to U.S.
withholding tax provided that less than 25 percent of the gross income of the
foreign corporation for a three-year period ending with the close of its
taxable year preceding payment was not effectively connected to the conduct of
a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the
United States and a foreign country. Non-U.S. Unitholders should consult their
own tax advisers regarding the imposition of U.S. withholding on distributions
from the Trust.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their own tax
advisers regarding the potential tax consequences relating to the payment of
any such withholding taxes by the Trust. Any dividends withheld as a result
thereof will nevertheless be treated as income to the Unitholders. Because,
under the grantor trust rules, an investor is deemed to have paid directly his
share of foreign taxes that have been paid or accrued, if any, an investor may
be entitled to a foreign tax credit or deduction for United States purposes
with respect to such taxes. The 1997 Tax Act imposes a required holding period
for such credits. Investors should consult their tax advisers with respect to
foreign withholding taxes and foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder 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 to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the
Trust will be treated as the income of the Unitholders under the existing
income tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
("U.S. Unitholders") with regard to federal and certain aspects of New
York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers
in this regard. As used herein, the term "U.S. Unitholder" means an
owner of a Unit of the Trust that (a) is (i) for United States Federal income
tax purposes a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unitholder in
paragraph (a) but whose income from a Unit is effectively connected with such
Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable.
TRUST OPERATING EXPENSES
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Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trust. However, Van Kampen
American Capital Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive an annual supervisory fee which is not to exceed the
amount set forth under "Summary of Essential Financial Information",
for providing portfolio supervisory services for the Trust. Such fee (which is
based on the number of Units outstanding on January 1 of each year except
during the initial offering period in which event the calculation is based on
the number of Units outstanding at the end of the month of such calculation)
may exceed the actual costs of providing such supervisory services for this
Trust, but at no time will the total amount received for portfolio supervisory
services rendered to all Series of the Fund and to any other unit investment
trusts sponsored by the Sponsor for which the Supervisor provides portfolio
supervisory services in any calendar year exceed the aggregate cost to the
Supervisor of supplying such services in such year. In addition, American
Portfolio Evaluation Services, which is a division of Van Kampen American
Capital Investment Advisory Corp., shall receive for regularly providing
evaluation services to the Trust the annual per Unit evaluation fee set forth
under "Summary of Essential Financial Information" (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. The
fees set forth herein are payable as described under "General" below.
Both of the foregoing fees may be increased without approval of the
Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. The Sponsor will receive
sales commissions and may realize other profits (or losses) in connection with
the sale of Units and the deposit of the Securities as described under "
Public Offering--Sponsor and Other Compensation".
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trust set forth under "Summary of Essential Financial
Information" (which is based on the number of Units outstanding at the end
of the month of such calculation until the end of the initial offering period
at which time such calculation is based on the number of Units outstanding on
such date). The fees set forth herein are payable as described under "
General" below. The Trustee benefits to the extent there are funds for
future distributions, payment of expenses and redemptions in the Capital and
Income Accounts since these Accounts are non-interest bearing to Unitholders
and the amounts earned by the Trustee are retained by the Trustee. Part of the
Trustee's compensation for its services to the Trust is expected to result
from the use of these funds. Such fees may be increased without approval of
the Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. For a discussion of the
services rendered by the Trustee pursuant to its obligations under the Trust
Agreement, see "Rights of Unitholders--Reports Provided" and "
Trust Administration".
Miscellaneous Expenses. Expenses incurred in establishing the Trust, including
the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and closing documents), federal and
state registration fees, the initial fees and expenses of the Trustee, legal
and accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over one year. 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 securities and (h) expenditures
incurred in contacting Unitholders upon termination of the Trust. The fees 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 of the Trust 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, 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 on or before the tenth day of each month. The fees and expenses are
payable out of the Capital Account of the Trust. When such fees and expenses
are paid by or owing to the Trustee, they are secured by a lien on the Trust's
portfolio. If the balance in the Capital Account is insufficient to provide
for amounts payable by the Trust, the Trustee has the power to sell Equity
Securities to pay such amounts. 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 may result in capital gains or losses to Unitholders. See "Federal
Taxation".
PUBLIC OFFERING
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General. Units are offered at the Public Offering Price. During the initial
offering period and for secondary market transactions after the initial
offering period the Public Offering Price is based on the aggregate underlying
value of the Securities in the Trust's portfolio, the initial sales charge
described below, and cash, if any, in the Income and Capital Accounts held or
owned by the Trust. The initial sales charge is equal to the difference
between the total first year sales charge for the Trust (2.9% of the Public
Offering Price) and the deferred sales charge imposed prior to the first
Special Redemption Date ($0.19 per Unit). The monthly deferred sales charge
($0.019 per Unit) will begin accruing on a daily basis on November 3, 1997 and
will continue to accrue through September 2, 1998. The monthly deferred sales
charge will be charged to the Trust, in arrears, commencing December 3, 1997
and will be charged on the 3rd day of each month thereafter through September
3, 1998. In addition, Unitholders who elect to hold Units after the first
Special Redemption Date will be subject to an additional deferred sales charge
of $0.16 per Unit which will begin accruing on a daily basis commencing
December 3, 1998 and will continue to accrue through August 2, 1999; this
monthly deferred sales charge will be charged to the Trust, in arrears,
commencing January 3, 1999 and will be charged on the 3rd day of each month
thereafter through August 3, 1999. If any deferred sales charge payment date
is not a business day, the payment will be charged to the Trust on the next
business day. Unitholders will be assessed only that portion of the deferred
sales charge accrued from the time they became Unitholders of record. Units
purchased subsequent to the initial deferred sales charge payment will be
subject to only that portion of the deferred sales charge payments not yet
collected. The deferred sales charges will be paid from funds in the Capital
Account, if sufficient, or from the periodic sale of Securities. The sales
charge assessed to Unitholders during the Trust's first year on a per Unit
basis will be 2.9% of the Public Offering Price (2.987% of the aggregate value
of the Securities in the Trust less the deferred sales charge). The total
sales charge assessed to each Unitholder who elects to hold Units through
termination of the Trust will be 4.50% of the Public Offering Price (4.712% of
the aggregate value of the Securities less the deferred sales charge). The
sales charge applicable to quantity purchases is reduced on a graduated basis
to any person acquiring 2,500 or more Units as follows:
<TABLE>
<CAPTION>
Aggregate Number of Units Percentage of Sales Charge Reduction Per
Purchased* Unit
- --------------------------------- --------------------------------------------
<S> <C>
2,500-4,999 0.15%
5,000-9,999 0.30
10,000-24,999 0.65
25,000 or more 0.90
*The breakpoint sales charges are also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied
on whichever basis is more favorable to the investor. The breakpoints will be
adjusted to take into consideration purchase orders stated in dollars which
cannot be completely fulfilled due to the Trust's requirement that only whole
Units be issued.
</TABLE>
The sales charge reduction will primarily be the responsibility of the selling
broker, dealer or agent. This reduced sales charge structure will apply on all
purchases by the same person from any one dealer of units of Van Kampen
American Capital-sponsored unit investment trusts which are being offered in
the initial offering period (a) on any one day (the "Initial Purchase
Date") or (b) on any day subsequent to the Initial Purchase Date if (1)
the units purchased are of a unit investment trust purchased on the Initial
Purchase Date, and (2) the person purchasing the units purchased a sufficient
amount of units on the Initial Purchase Date to qualify for a reduced sales
charge on such date. In the event units of more than one trust are purchased
on the Initial Purchase Date, the aggregate dollar amount of such purchases
will be used to determine whether purchasers are eligible for a reduced sales
charge. Such aggregate dollar amount will be divided by the public offering
price per unit (on the day preceding the date of purchase) of each respective
trust purchased to determine the total number of units which such amount could
have purchased of each individual trust. Purchasers must then consult the
applicable trust's prospectus to determine whether the total number of units
which could have been purchased of a specific trust would have qualified for a
reduced sales charge and, if so qualified, the amount of such reduction.
Assuming a purchased qualified for a sales charge reduction or reductions, to
determine the applicable sales charge reduction or reductions it is necessary
to accumulate all purchases made on the Initial Purchase Date and all
purchases made in accordance with (b) above. Units purchased in the name of
the spouse of a purchaser or in the name of a child of such purchaser ("
immediate family members") will be deemed for the purposes of calculating
the applicable sales charge to be additional purchases by the purchaser. The
reduced sales charges will also be applicable to a trustee or other fiduciary
purchasing securities for one or more trust estate or fiduciary accounts.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Public Offering--Unit
Distribution") by (1) investors who purchase Units through registered
investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management service, or provide such
services in connection with the establishment of an investment account for
which a comprehensive "wrap fee" charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who for at least 90 days, has been an
officer, director or bona fide employee of any firm offering Units for sale to
investors or their immediate family members (as described above) and (4)
officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive sales charge reductions for
quantity purchases.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law,
fathers-in-law, sons-in-law and daughters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons) of Van Kampen American Capital
Distributors, Inc. and its affiliates, dealers and their affiliates, and
vendors providing services to the Sponsor may purchase Units at the Public
Offering Price less the applicable dealer concession.
During the initial offering period of the Trust, unitholders of unaffiliated
unit investment trusts having an investment objective similar to the
investment objective of the Trust may utilize proceeds received upon
termination or upon redemption immediately preceding termination of such
unaffiliated trust to purchase Units of the Trust at the Public Offering Price
per Unit less 1%.
During the initial offering period, unitholders of any Van Kampen American
Capital-sponsored unit investment trust may utilize their redemption or
termination proceeds to purchase Units of this Trust at the Public Offering
Price per Unit less 1%.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
accordance with fluctuations in the prices of the underlying Securities in the
Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to the difference between the total first year sales charge of 2.9% of
the Public Offering Price and the deferred sales charge imposed prior to the
first Special Redemption Date ($0.19 per Unit) and dividing the sum so
obtained by the number of Units outstanding. The Public Offering Price per
Unit shall include the proportionate share of any cash held in the Income and
Capital Accounts. Such price determination as of the close of the relevant
stock market on the day before the Initial Day of Deposit was made on the
basis of an evaluation of the Securities prepared by Interactive Data
Corporation, a firm regularly engaged in the business of evaluating, quoting
or appraising comparable securities. Thereafter, the Evaluator on each
business day will appraise or cause to be appraised the value of the
underlying Securities as of the Evaluation Time and will adjust the Public
Offering Price of the Units commensurate with such valuation. Such Public
Offering Price will be effective for all orders received prior to the
Evaluation Time on each such day. Orders received by the Trustee or Sponsor
for purchases, sales or redemptions after that time, or on a day which is not
a business day for the Trust, will be held until the next determination of
price. Unitholders who purchase Units subsequent to the Initial Date of
Deposit will pay an initial sales charge equal to the difference between the
total first year sales charge and the deferred sales charge imposed prior to
the first Special Redemption Date ($0.19 per Unit) and will be assessed a
deferred sales charge of $0.019 per Unit on each of the remaining deferred
sales charge payment dates as set forth in "Public Offering--General".
In addition, Unitholders who elect to hold Units after the first Special
Redemption Date will be assessed an additional deferred sales charge of $0.02
per Unit on each of the deferred sales charge payment dates during the Trust's
second year as set forth in "Public Offering--General". The Sponsor
currently does not intend to maintain a secondary market after March 3, 1998.
The aggregate underlying value of the Equity Securities during the initial
offering period is determined on each business day by the Evaluator in the
following manner: if the Equity Securities are listed on a national securities
exchange, this evaluation is generally based on the closing sale prices on
that exchange (unless it is determined that these prices are inappropriate as
a basis for valuation) or, if there is no closing sale price on that exchange,
at the closing ask prices. If the Equity Securities are not so listed or, if
so listed and the principal market therefore is other than on the exchange,
the evaluation shall generally be based on the current ask price on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the value of
the Equity Securities on the ask side of the market or (c) by any combination
of the above.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather
the entire pool of Securities, taken as a whole, which are represented by the
Units.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by the Sponsor, broker-dealers and others at the
Public Offering Price. Upon the completion of the initial offering period,
Units repurchased in the secondary market, if any, may be offered by this
Prospectus at the secondary market Public Offering Price in the manner
described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Brokers, dealers and others will be allowed a concession or agency commission
in connection with the distribution of Units during the initial offering
period as set forth in the following table. A portion of such concessions or
agency commissions represents amounts paid by the Sponsor to such brokers,
dealers and others out of its own assets as additional compensation.
<TABLE>
<CAPTION>
Aggregate Number of Units Initial Offering Period Concession or
Purchased* Agency Commission per Unit
- --------------------------------- --------------------------------------------
<S> <C>
1 - 2,499 ....................... 2.00%
2,500 - 4,999.................... 1.85
5,000 - 9,999.................... 1.70
10,000 - 24,999.................. 1.45
25,000 or more................... 1.35
*The breakpoint concessions, agency commissions or additional payments are
also applied on a dollar basis utilizing a breakpoint equivalent in the above
table of $10 per Unit and will be applied on whichever basis is more
favorable to the investor. The breakpoints will be adjusted to take into
consideration purchase orders stated in dollars which cannot be completely
fulfilled due to the Trust's requirement that only whole Units be issued.
</TABLE>
In addition to the amounts set forth above, any firm that distributes a total
of 500,000-999,999 Units of the Trust during the initial offering period will
be paid additional compensation by the Sponsor of $0.005 per Unit distributed;
or any firm that distributes a total of 1,000,000 or more Units of the Trust
during the initial offering period will be paid additional compensation by the
Sponsor of $0.01 per Unit distributed. Such additional compensation will be
paid at the end of the initial offering period of the Trust.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For transactions involving
Rollover Unitholders, the total concession or agency commission will amount to
1.15% per Unit (or such lesser amount resulting from quantity sales
discounts). For all secondary transactions, the total concession or agency
commission will amount to 2.0% per Unit. In addition to the amounts set forth
above, for transactions involving Unitholders who elect to hold Units after
the first Special Redemption Date the total concession or agency commission
will include an additional 1% per Unit which will be paid to the broker,
dealer or agent subsequent to the first Special Redemption Date.
Notwithstanding anything to the contrary herein, the total of any concessions,
agency commissions and any additional compensation allowed or paid to any
broker, dealer or other distributor of Units with respect to any individual
transaction, shall in no case exceed the total sales charge applicable to such
transaction.
Certain commercial banks are making Units available to their customers on an
agency basis. A portion of the sales charge (equal to the agency commission
referred to above) is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units;
however, the Glass-Steagall Act does permit certain agency transactions and
the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units except as stated
herein. In connection with fully disclosed transactions with the Sponsor, the
minimum purchase requirement will be that number of Units set forth in the
contract between the Sponsor and the related broker or agent. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase
of Units and to change the amount of the concession or agency commission to
dealers and others from time to time.
Sponsor and Other Compensation. The Sponsor will receive a gross sales
commission equal to 2.9% of the Public Offering Price of the Units (4.50% of
the Public Offering Price with respect to sales to Unitholders who elect to
hold Units after the first Special Redemption Date), less any reduced sales
charge for purchases as described under "General" above. Any such
discount provided to investors will be borne by the selling dealer or agent.
In addition, the Sponsor will realize a profit or will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Securities by the Sponsor and the cost of such Securities to the Trust on the
Initial Date of Deposit as well as on subsequent deposits. See "Notes to
Portfolio". The Sponsor has not participated as sole underwriter or as
manager or as a member of the underwriting syndicates or as an agent in a
private placement for any of the Securities in the Trust portfolio. The
Sponsor may further realize additional profit or loss during the initial
offering period as a result of the possible fluctuations in the market value
of the Securities after a date of deposit, since all proceeds received from
purchasers of Units.
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 by the
Sponsor, an amount not exceeding the total applicable sales charges on the
sales generated by such persons at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant
to objective criteria established by the Sponsor paid 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 assets of the Trust. These programs will
not change the price Unitholders pay for their Units or the amount that the
Trust will receive from the Units sold.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior
to the date of settlement for the purchase of Units may be used in the
Sponsor's business and may be deemed to be a benefit to the Sponsor, subject
to the limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor currently intends
to maintain a secondary market for Units for the period indicated. In so
maintaining a market, the Sponsor will also realize profits or sustain losses
in the amount of any difference between the price at which Units are purchased
and the price at which Units are resold (which price includes the applicable
sales charge). In addition, the Sponsor will also realize profits or sustain
losses resulting from a redemption of such repurchased Units at a price above
or below the purchase price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Sponsor currently
intends to maintain a market for the Units offered hereby through March 3,
1998 and offer continuously to purchase Units at prices, subject to change at
any time, based upon the aggregate underlying value of the Equity Securities
(computed as indicated under "Offering Price" above and "Rights of
Unitholders--Redemption of Units"). If the supply of Units exceeds demand
or if some other business reason warrants it, the Sponsor may either
discontinue all purchases of Units or discontinue purchases of Units at such
prices. In the event that a market is not maintained for the Units and the
Unitholder cannot find another purchaser, a Unitholder desiring to dispose of
his Units will be able to dispose of such Units by tendering them to the
Trustee for redemption at the Redemption Price. See "Rights of
Unitholders--Redemption of Units". A Unitholder who wishes to dispose of
his Units should inquire of his broker as to current market prices in order to
determine whether there is in existence any price in excess of the Redemption
Price and, if so, the amount thereof. Units sold prior to such time as the
entire deferred sales charge on such Units has been collected will be assessed
the amount of the remaining deferred sales charge at the time of sale
(however, Units sold on or prior to the first Special Redemption Date will not
be assessed the unpaid $0.16 per Unit deferred sales charge remaining after
such date).
Tax-Sheltered Retirement Plans. Units are available for purchase in connection
with certain types of tax-sheltered retirement plans, including Individual
Retirement Accounts for the individuals, Simplified Employee Pension Plans for
employees, qualified plans for self-employed individuals, and qualified
corporate pension and profit sharing plans for employees. The purchase of
Units may be limited by the plans' provisions and does not itself establish
such plans.
RIGHTS OF UNITHOLDERS
- --------------------------------------------------------------------------
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units will be evidenced by certificates unless a Unitholder or
the Unitholder's registered broker-dealer makes a written request to the
Trustee that ownership be in book entry form. Units are transferable by making
a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred
with the signature guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP") or such other signature guarantee
program in addition to, or in substitution for, STAMP as may be accepted by
the Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Income and Capital. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds from the sales
of Securities to meet redemptions of Units shall be segregated within the
Capital Account from proceeds from the sale of Securities made to satisfy the
fees, expenses and charges of the Trust.
The Trustee will distribute any net income received with respect to any of the
Securities on or about the Income Account Distribution Date to Unitholders of
record on the preceding Record Date. See "Summary of Essential Financial
Information". Proceeds received on the sale of any Securities, to the
extent not used to meet redemptions of Units, pay the deferred sales charge or
pay expenses, will be distributed on the Capital Account Distribution Date to
Unitholders of record on the preceding Capital Account Record Date. Proceeds
received from the disposition of any of the Securities after a record date and
prior to the following distribution date will be held in the Capital Account
and not distributed until the next distribution date applicable to such
Capital Account. The Trustee is not required to pay interest on funds held in
the Capital or Income Accounts (but may itself earn interest thereon and
therefore benefits from the use of such funds) nor to make a distribution from
the Income or Capital Accounts unless the amount available for distribution
therein shall equal at least $0.01 per Unit.
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account. Because
dividends are not received by the Trust at a constant rate throughout the
year, such distributions to Unitholders are expected to fluctuate from
distribution to distribution. Persons who purchase Units will commence
receiving distributions only after such person becomes a record owner.
Notification to the Trustee of the transfer of Units is the responsibility of
the purchaser, but in the normal course of business such notice is provided by
the selling broker-dealer.
At the end of the initial offering period and as of the tenth day of each
month thereafter, the Trustee will deduct from the Capital Account amounts
necessary to pay the expenses of the Trust (as determined on the basis set
forth under "Trust Operating Expenses"). The Trustee also may withdraw
from the Income and Capital Accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of
the Trust. Amounts so withdrawn shall not be considered a part of the Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw
from the Income and Capital Accounts such amounts as may be necessary to cover
redemptions of Units.
It is anticipated that the deferred sales charge will be collected from the
Capital Account. To the extent that amounts in the Capital Account are
insufficient to satisfy the then current deferred sales charge obligation,
Equity Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made to an
account maintained by the Trustee for purposes of satisfying Unitholders'
deferred sales charge obligations.
Reinvestment Option. In the event that any distribution is made to Unitholders
prior to termination of the Trust, Unitholders will initially have each such
distribution of dividend income, capital gains and/or principal on their Units
automatically reinvested in additional Units of the Trust under the "
Automatic Reinvestment Option" (to the extent Units may be lawfully
offered for sale in the state in which the Unitholder resides). Brokers and
dealers who distribute Units to Unitholders pursuant to the Automatic
Reinvestment Option may do so through two options. Brokers and dealers can use
the Dividend Reinvestment Service through the Depository Trust Company or
purchase the Automatic Reinvestment Option CUSIP. If a broker or dealer
decides to continue to utilize the Dividend Reinvestment Service through the
Depository Trust Company, the broker or dealer must have access to a PTS
terminal equipped with the Elective Dividend System function (EDS) prior to
the Record Date set forth under "Summary of Essential Financial
Information". The second option available is to purchase the appropriate
CUSIP for automatic reinvestment. Unitholders receiving Units pursuant to
participation in the Automatic Reinvestment Option will be subject to the
remaining deferred sales charge payments due on Units (assuming for these
purposes such Units had been outstanding during the primary offering period).
Unitholders may also elect to receive distributions of dividend income,
capital gains and/or principal on their Units in cash. To receive cash, a
Unitholder may either contact his or her broker or agent or file with the
Trustee a written notice of election at least five days prior to the Record
Date for which the first distribution is to apply. A Unitholder's election to
receive cash will apply to all Units owned by such Unitholder and such
election will remain in effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market") or,
until such time as additional Units cease to be issued by the Trust (see
"The Trust"), distributions may be reinvested in such additional Units. If
Units are unavailable in the secondary market, distributions which would
otherwise have been reinvested shall be paid in cash to the Unitholder on the
applicable Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made at the net asset value for Units as of the Evaluation Time on the related
Income or Capital Distribution Dates. Under the reinvestment plan, the Trust
will pay the Unitholder's distributions to the Trustee which in turn will
purchase for such Unitholder full and fractional Units and will send such
Unitholder a statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of income, capital gains
and/or capital on their Units automatically reinvested in shares of any Van
Kampen American Capital or Morgan Stanley mutual funds (except for B shares)
which are registered in the Unitholder's state of residence. Such mutual funds
are hereinafter collectively referred to as the "Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trust. The prospectus relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen American
Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois
60181. Texas residents who desire to reinvest may request that a broker-dealer
registered in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
income, capital gains and/or capital on the participant's Units will, on the
applicable distribution date, automatically be applied, as directed by such
person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange on such
date. Unitholders with an existing Guaranteed Reinvestment Option (GRO)
Program account (whereby a sales charge is imposed on distribution
reinvestments) may transfer their existing account into a new GRO account
which allows purchases of Reinvestment Fund shares at net asset value as
described above. Confirmations of all reinvestments by a Unitholder into a
Reinvestment Fund will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
The Sponsor, each Reinvestment Fund, and its investment adviser shall have the
right to suspend or terminate the reinvestment plan at any time.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. 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 Securities and the net proceeds received
therefrom, deductions for payment of applicable taxes, fees and expenses of
the Trust held for distribution to Unitholders of record as of a date prior to
the determination and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Securities held 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 Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286 and, in the case of Units
evidenced by a certificate, by tendering such certificate to the Trustee, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as described above (or by providing satisfactory indemnity, as in
connection with lost, stolen or destroyed certificates) and by payment of
applicable governmental charges, if any. No redemption fee will be charged. On
the third business day following such tender, the Unitholder will be entitled
to receive in cash (unless the redeeming Unitholder 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. The "date of tender" is deemed to be the date on
which Units are received by the Trustee, except that with respect to Units
received after the applicable Evaluation Time the date of tender is the next
business day as defined under "Public Offering--Offering Price" and
such Units will be deemed to have been tendered to the Trustee on such day for
redemption at the redemption price computed on that day. Units redeemed prior
to such time as the entire deferred sales charge has been collected will be
assessed the amount of the remaining deferred sales charge at the time of
redemption (however, Units redeemed on or prior to the first Special
Redemption Date will not be assessed the unpaid $0.16 per Unit deferred sales
charge remaining after such date).
An investment in Units will be redeemed on the first Special Redemption Date
unless a Unitholder elects in writing to remain invested in the Trust through
the Mandatory Termination Date. On the first Rollover Notification Date the
Trustee will provide written notice and a form of election to Unitholders
giving Unitholders the option to (i) have their Units redeemed and reinvest
the proceeds into a subsequent Series of the Trust (i.e., become Rollover
Unitholders), (ii) receive an In Kind Distribution of Securities (if the
Unitholder owns at least 1,000 Units) or (iii) continue to hold the Units
through the Mandatory Termination Date. Unitholders who do not affirmatively
elect in writing on the first Rollover Notification Date to become Rollover
Unitholders, to receive an in-kind distribution or to continue to hold Units
through the Mandatory Termination Date will have their Units redeemed on the
first Special Redemption Date and will receive a cash distribution equal to
the Redemption Price per Unit on such date. To be effective, any such election
must be received by the Trustee no later than five business days prior to the
first Special Redemption Date.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by
the Trustee from those designated on a current list provided by the Supervisor
for this purpose. Units so redeemed shall be cancelled. Units tendered for
redemption prior to such time as the entire deferred sales charge on such
Units has been collected will be assessed the amount of the remaining deferred
sales charge at the time of redemption.
Unitholders tendering 1,000 or more Units for redemption may request from the
Trustee, in lieu of a cash redemption, an in kind distribution ("In Kind
Distribution") of an amount and value of Securities per Unit equal to the
Redemption Price per Unit as determined as of the evaluation next following
the tender. An In Kind Distribution on redemption of Units will be made by the
Trustee through the distribution of each of the Securities in book-entry form
to the account of the Unitholder's bank or broker-dealer at Depository Trust
Company. The tendering Unitholder will receive his pro rata number of whole
shares of each of the Securities comprising 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 Securities included in a Unitholder's In Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made on the
basis of the value of Securities on the date of tender. If funds in the
Capital Account are insufficient to cover the required cash distribution to
the tendering Unitholder, the Trustee may sell Securities according to the
criteria discussed above.
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result
in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the portfolio at the time of
redemption. Special federal income tax consequences will result if a
Unitholder requests an In Kind Distribution. See "Federal Taxation".
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the aggregate underlying value of
the Equity Securities, plus or minus cash, if any, in the Income and Capital
Accounts. On the Initial Date of Deposit, the Public Offering Price per Unit
(which includes the initial sales charge) exceeded the values at which Units
could have been redeemed by the amounts shown under "Summary of Essential
Financial Information". The Redemption Price per Unit is the pro rata
share of each Unit in the Trust determined on the basis of (i) the cash on
hand in the Trust, (ii) the value of the 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, (b) the accrued expenses of the Trust and (c) any
unpaid deferred sales charge payments (however, Unitholders who redeem their
Units on or prior to the first Special Redemption Date will not be assessed
the unpaid $0.16 per Unit deferred sales charge remaining after such date).
The Evaluator may determine the value of the Equity Securities in the
following manner: if the Equity Securities are listed on a national securities
exchange, this evaluation is generally based on the closing sale prices on
that exchange (unless it is determined that these prices are inappropriate as
a basis for valuation) or, if there is no closing sale price on that exchange,
at the closing bid prices. If the Equity Securities are not so listed or, if
so listed and the principal market therefore is other than on the exchange,
the evaluation shall generally be based on the current bid price on the
over-the-counter market (unless these prices are inappropriate as a basis for
evaluation). If current bid prices are unavailable, the evaluation is
generally determined (a) on the basis of current bid prices for comparable
securities, (b) by appraising the value of the Equity Securities on the bid
side of the market or (c) by any combination of the above.
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 is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
Special Redemption and Rollover in New Trust. It is expected that a special
redemption will be made of all Units held by any Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee in writing that he
desires to rollover his Units by either Rollover Notification Date specified
in the "Summary of Essential Financial Information".
All Units of Rollover Unitholders will be redeemed on the related Special
Redemption Date and the underlying Securities will be distributed to the
Distribution Agent on behalf of the Rollover Unitholders. On the related
Special Redemption Date (as set forth in "Summary of Essential Financial
Information"), the Distribution Agent will be required to sell all of the
underlying Securities on behalf of Rollover Unitholders. The sales proceeds
will be net of brokerage fees, governmental charges or any expenses involved
in the sales.
The Distribution Agent will attempt to sell the Securities as quickly as is
practicable on the appropriate Special Redemption Date. The Sponsor does not
anticipate that the period will be longer than one day given that the
Securities are usually liquid. However, certain of the factors discussed under
"Risk Factors" could affect the ability of the Sponsor to sell the
Securities and thereby affect the length of the sale period somewhat. The
liquidity of any Security depends on the daily trading volume of the Security
and the amount that the Sponsor has available for sale on any particular day.
The Rollover Unitholders' proceeds will be invested in the then current
Aggressive Growth Series (the "New Trust"), if then being offered,
which will contain a portfolio of common stocks of aggressive growth companies
and will have an investment objective of obtaining capital appreciation. The
proceeds of redemption will be used to buy New Trust units in the portfolio as
the proceeds become available.
The Sponsor intends to create a New Trust shortly prior to each Special
Redemption Date, dependent upon the availability and reasonably favorable
prices of the securities included in the New Trust portfolio, and it is
intended that Rollover Unitholders will be given first priority to purchase
the New Trust units. There can be no assurance, however, as to the exact
timing of the creation of the New Trust units or the aggregate number of New
Trust units which the Sponsor will create. The Sponsor may, in its sole
discretion, stop creating new units in a trust portfolio at any time it
chooses, regardless of whether all proceeds of the Special Redemption have
been invested on behalf of Rollover Unitholders. Cash which has not been
invested on behalf of the Rollover Unitholders in New Trust units will be
distributed shortly after the Special Redemption Date.
Any Rollover Unitholder may thus be redeemed out of the Trust and become a
holder of an entirely different unit investment trust in the New Trust with a
different portfolio of Securities. The Rollover Unitholders' Units will be
redeemed and the distributed Securities shall be sold on the Special
Redemption Date. In accordance with the Rollover Unitholders' offer to
purchase the New Trust units, the proceeds of the sales (and any other cash
distributed upon redemption) will be invested in the New Trust at the public
offering price, including a reduced sales charge.
This process of redemption and rollover into a new trust is intended to allow
for the fact that the portfolio selected by the Sponsor is chosen on the basis
of growth potential only for the near term, at which point a new portfolio is
chosen. It is contemplated that a similar process of redemption and rollover
in new unit investment trusts will be available for each subsequent series of
the Trust.
There can be no assurance that the redemption and rollover in the Aggressive
Growth Series will avoid any negative market price consequences stemming from
the trading of large volumes of securities and of the underlying Securities in
the Aggressive Growth Series. The above procedures may be insufficient or
unsuccessful in avoiding such price consequences. In fact, market price trends
may make it advantageous to sell or buy more quickly or more slowly than
permitted by these procedures. Investors should note that, because aggressive
growth stocks generally experience stock price volatility to a greater extent
than other securities and because the Trust is not a "managed" fund,
there can be no assurance that these procedures will result in advantageous
sales or purchases of securities or that any future rollover will occur at an
advantageous time. See "Trust Administration--Portfolio Administration"
and "Risk Factors".
It should also be noted that Rollover Unitholders may realize taxable capital
gains on a Special Redemption and Rollover but, in certain circumstances, will
not be entitled to a deduction for certain capital losses and, due to the
procedures for investing in the subsequent Aggressive Growth Series, no cash
would be distributed at that time to pay any taxes. Included in the cash for a
Special Redemption and Rollover will be any amount of cash attributable to the
last distribution of dividend income; accordingly, Rollover Unitholders also
will not have such cash distributed to pay any taxes. See "Federal
Taxation". Unitholders who do not inform the Distribution Agent that they
wish to have their Units so redeemed and liquidated will not realize capital
gains or losses due to either Special Redemption and Rollover.
The Sponsor may for any reason, in its sole discretion, decide not to sponsor
subsequent Aggressive Growth Series, without penalty or incurring liability to
any Unitholder. If the Sponsor so decides, the Sponsor shall notify the
Unitholders before the Special Redemption Date would have commenced. The
Sponsor may modify the terms of any subsequent Aggressive Growth Series. The
Sponsor may also modify the terms of a Special Redemption and Rollover upon
notice to the Unitholders prior to the related Rollover Notification Date
specified in the related "Summary of Essential Financial Information".
TRUST ADMINISTRATION
- --------------------------------------------------------------------------
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any Units
tendered for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefore to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The portfolio of the Trust is not "managed"
by the Sponsor, Supervisor or the Trustee; their activities described herein
are governed solely by the provisions of the Trust Agreement. Traditional
methods of investment management for a managed fund typically involve frequent
changes in a portfolio of securities on the basis of economic, financial and
market analyses. The Trust, however, will not be managed. The Trust Agreement,
however, provides that the Sponsor may (but need not) direct the Trustee to
dispose of an Equity Security in certain events such as the issuer having
defaulted on the payment on any of its outstanding obligations or the price of
an Equity Security has declined to such an extent or other such credit factors
exist so that in the opinion of the Sponsor the retention of such Securities
would be detrimental to the Trust. Pursuant to the Trust Agreement and with
limited exceptions, the Trustee may sell any securities or other properties
acquired in exchange for Equity Securities such as those acquired in
connection with a merger or other transaction. If offered such new or
exchanged securities or property, the Trustee shall reject the offer. However,
in the event such securities or property are nonetheless acquired by the
Trust, they may be accepted for deposit in the Trust and either sold by the
Trustee or held in the Trust pursuant to the direction of the Sponsor (who may
rely on the advice of the Supervisor). Proceeds from the sale of Securities
(or any securities or other property received by the Trust in exchange for
Equity Securities) are credited to the Capital Account for distribution to
Unitholders or to pay certain costs or expenses of the Trust. Except as stated
under "Trust Portfolio" for failed securities and as provided in this
paragraph, the acquisition by the Trust of any securities other than the
Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Securities designated by the Supervisor, or if no
such designation has been made, in its own discretion, for the purpose of
redeeming Units of the Trust tendered for redemption and the payment of
expenses.
To the extent practicable, the Supervisor may (but is not obligated to)
designate Securities to be sold by the Trustee in order to maintain the
proportionate relationship among the number of shares of individual issues of
Equity Securities in the Trust. To the extent this is not practicable, the
composition and diversity of the Equity Securities in the 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 may consider sales of
units of unit investment trusts which it sponsors 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 then outstanding,
provided that no such amendment or waiver will reduce the interest in such
Trust of any Unitholder without the consent of such Unitholder or reduce the
percentage of Units required to consent to any such amendment or waiver
without the consent of all Unitholders. The Trustee shall advise the
Unitholders of any amendment promptly after execution thereof.
An investment in Units will terminate on the first Special Redemption Date
unless a Unitholder elects in writing to remain invested in the Trust through
the Mandatory Termination Date. On the first Rollover Notification Date the
Trustee will provide written notice and a form of election to Unitholders
giving Unitholders the option to (i) have their Units redeemed and reinvest
the proceeds into a subsequent Series of the Trust (i.e., become Rollover
Unitholders), (ii) receive an In Kind Distribution of the Securities (if the
Unitholder owns at least 1,000 Units) or (iii) continue to hold the Units
through the Mandatory Termination Date. Unitholders who do not affirmatively
elect on the first Rollover Notification Date to become Rollover Unitholders,
to receive an in-kind distribution or to continue to hold Units through the
Mandatory Termination Date will have their Units redeemed on the first Special
Redemption Date and will receive a cash distribution equal to the Redemption
Price per Unit on such date. To be effective, any such election must be
received by the Trustee no later than five business days prior to the first
Special Redemption Date. Unitholders who elect to remain invested in the Trust
through the Mandatory Termination Date will not receive new Units and will not
receive an interest in a new investment. Such Unitholders will continue to
hold the same Units and remain invested in the same Trust until the Mandatory
Termination Date or until such time as the Unitholder redeems the Units.
The Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units 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 "Summary of
Essential Financial Information." The Trust will be liquidated by the
Trustee in the event that a sufficient number of Units not yet sold are
tendered for redemption by the Sponsor so that the net worth of the Trust
would be reduced to less than 40% of the value of the Securities at the time
they were deposited in the Trust. If the Trust is liquidated because of the
redemption of unsold Units by the Sponsor, the Sponsor will refund to each
purchaser of Units the entire sales charge paid by such purchaser. The Trust
Agreement will terminate upon the sale or other disposition of the last
Security held thereunder, but in no event will it continue beyond the
Mandatory Termination Date stated under "Summary of Essential Financial
Information".
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the 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 30 days before the Mandatory Termination Date the
Trustee will provide written notice of any termination to all Unitholders and
will include with such notice a form to enable Unitholders owning 1,000 or
more Units to request an In Kind Distribution rather than payment in cash upon
the termination of the Trust. To be effective, this request must be returned
to the Trustee at least five business days prior to the Mandatory Termination
Date. On the Mandatory Termination Date (or on the next business day
thereafter if a holiday) the Trustee will deliver each requesting Unitholder's
pro rata number of whole shares of each of the 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 Securities will be paid in cash. Unitholders with less than 1,000 Units,
Unitholders with 1,000 or more Units not requesting an In Kind Distribution
and Unitholders who do not elect the Rollover Option will receive a cash
distribution from the sale of the remaining Securities within a reasonable
time following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the Trust any accrued
costs, expenses, advances or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee, costs of liquidation and any
amounts required as a reserve to provide for payment of any applicable taxes
or other governmental charges. Any sale of Securities upon termination may
result in a lower amount than might otherwise be realized if such sale were
not required at such time. The Trustee will then distribute to each Unitholder
his pro rata share of the balance of the Income and Capital Accounts.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent Aggressive Growth Series pursuant to the Rollover Option
(see "Rights of Unitholders--Special Redemption and Rollover in New
Trust"). There is, however, no assurance that units of any new Aggressive
Growth Series will be offered for sale at that time, or if offered, that there
will be sufficient units available for sale to meet the requests of any or all
Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason of
the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and shall not be liable for any action taken by it in good faith
under the Trust Agreement. The Trustee shall not be liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or
upon the interest thereon or upon it as Trustee under the Trust Agreement or
upon or in respect of the Trust which the Trustee may be required to pay under
any present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Trust Agreement
contains other customary provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly owned
subsidiary of MSAM Holdings II, Inc., which in turn is a wholly owned
subsidiary of Morgan Stanley Group Inc.
On May 31, 1997, Morgan Stanley Group Inc. merged with and into Dean Witter,
Discover & Co. to create Morgan Stanley, Dean Witter, Discover & Co. ("
MSDWD"), a global financial services firm with a market capitalization of
more than $21 billion. MSDWD, 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. As of June 2, 1997, MSDWD, together with its affiliated
investment advisory companies, had approximately $270 billion of assets under
management and fiduciary advice.
Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of November 30, 1996 the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the 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, 1997, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $58.45 billion of investment
products, of which over $11.85 billion is invested in municipal securities.
The Sponsor and its Van Kampen American Capital affiliates managed $47 billion
of assets, consisting of $29.23 billion for 59 open-end mutual funds (of which
46 are distributed by Van Kampen American Capital Distributors, Inc.) $13.4
billion for 37 closed-end funds and $4.97 billion for 106 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen American Capital's open-end funds,
closed-ended funds and unit investment trusts are professionally distributed
by leading financial firms nationwide. Based on cumulative assets deposited,
the Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R)trust. The Sponsor also provides
surveillance and evaluation services at cost for approximately $13 billion of
unit investment trust assets outstanding. Since 1976, the Sponsor has serviced
over two million investor accounts, opened through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (i) appoint
a successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of
Governors of the Federal Reserve System, and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units 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 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. Winston & Strawn has acted as counsel for the Trustee.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton LLP, independent certified
public accountants, as set forth in their report in this Prospectus, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Equity Opportunity Trust,
Series 71 (Aggressive Growth Series, Internet Trust 7):
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen American Capital Equity Opportunity Trust, Series 71
(Aggressive Growth Series, Internet Trust 7) as of September 3, 1997. The
statement of condition and portfolio are the responsibility of the Sponsor.
Our responsibility is to express an opinion on such financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of irrevocable letters of credit deposited to
purchase securities by correspondence with the Trustee. An audit also includes
assessing the accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen American Capital
Equity Opportunity Trust, Series 71 (Aggressive Growth Series, Internet Trust
7) as of September 3, 1997, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Chicago, Illinois
September 3, 1997
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
Series 71
STATEMENT OF CONDITION
As of September 3, 1997
<CAPTION>
INVESTMENT IN SECURITIES
<S> <C>
Contracts to purchase Securities <F1>...........$ 150,040
Organizational costs <F2>....................... 35,434
-----------
Total..........................................$ 185,474
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--...................................
Accrued organizational costs <F2>..............$ 35,434
Deferred sales charge liability <F3>........... 2,850
Interest of Unitholders-- ......................
Cost to investors <F4>......................... 151,500
Less: Gross underwriting commission <F4><F5>... 4,310
-----------
Net interest to Unitholders <F4>............... 147,190
-----------
Total..........................................$ 185,474
===========
==========
<FN>
<F1>The aggregate value of the Securities listed under "Portfolio" herein
and their cost to the Trust are the same. The value of the Securities is
determined by Interactive Data Corporation on the bases set forth under "
Public Offering--Offering Price". The contracts to purchase Securities are
collateralized by a letter of credit of $150,040 which has been deposited with
the Trustee.
<F2>The Trust will bear all or a portion of its organizational costs, which will
be deferred and amortized over one year. Organizational costs have been
estimated based on a projected Trust size of $7,000,000. To the extent the
Trust is larger or smaller, the estimate will vary. Securities will be sold to
pay organizational costs.
<F3>Represents the amount of mandatory distributions from the Trust on the bases
set forth under "Public Offering."
<F4>The aggregate public offering price and the aggregate first year sales charge
are computed on the bases set forth under "Public Offering--General"
and "Public Offering--Sponsor and Other Compensation" and assume all
single transactions involve less than 2,500 Units. For single transactions
involving 2,500 or more Units, the sales charge is reduced (see "Public
Offering--General") resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
<F5>Assumes only the first year sales charge.
</TABLE>
<TABLE>
AGGRESSIVE GROWTH SERIES
INTERNET TRUST 7
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 71)
as of the Initial Date of Deposit: September 3, 1997
<CAPTION>
Estimated
Annual Cost of
Number of Market Value Dividends per Securities
Shares Name of Issuer <F1> per Share <F2> Share <F2> to Trust <F2>
- -------------- ----------------------------------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
78 Advanced Fibre Communications $ 64.500 $ 0.00 $ 5,031.00
175 Amazon.com, Inc. 28.250 0.00 4,943.75
75 America Online, Inc. 68.313 0.00 5,123.44
257 At Home Corporation 18.625 0.00 4,786.63
+ 78 CBT Group PLC 64.000 0.00 4,992.00
181 Check Point Software Technologies Ltd. 27.875 0.00 5,045.38
99 CIENA Corporation 49.875 0.00 4,937.63
65 Cisco Systems, Inc. 77.250 0.00 5,021.25
149 CKS Group, Inc. 33.375 0.00 4,972.88
147 CNET, Inc. 34.750 0.00 5,108.25
73 Compaq Computer Corporation 68.688 0.00 5,014.19
59 Dell Computer Corporation 84.188 0.00 4,967.06
147 E*TRADE Group, Inc. 35.188 0.00 5,172.56
143 Harbinger Corporation 35.000 0.00 5,005.00
62 Lucent Technologies, Inc. 80.375 0.30 4,983.25
151 Lycos, Inc. 33.250 0.00 5,020.75
86 McAfee Associates, Inc. 56.875 0.00 4,891.25
255 Memco Software Ltd. 20.000 0.00 5,100.00
37 Microsoft Corporation 137.250 0.00 5,078.25
120 Netscape Communications Corporation 41.500 0.00 4,980.00
489 ONSALE, Inc. 10.375 0.00 5,073.38
127 Oracle Corporation 38.875 0.00 4,937.13
125 Security Dynamics Technologies, Inc. 37.750 0.00 4,718.75
137 Siebel Systems, Inc. 36.250 0.00 4,966.25
100 Sun Microsystems, Inc. 51.125 0.00 5,112.50
203 Symantec Corporation 24.750 0.00 5,024.25
236 TMP Worldwide, Inc. 21.500 0.00 5,074.00
546 Trusted Information Systems, Inc. 9.125 0.00 4,982.25
162 WorldCom, Inc. 31.063 0.00 5,032.13
124 Yahoo! Inc. 39.875 0.00 4,944.50
4,686 $ 150,039.66
============= ==============
</TABLE>
NOTES TO PORTFOLIO
(1) All of the Securities are represented by "regular way" contracts for
the performance of which an irrevocable letter of credit has been deposited
with the Trustee. At the Initial Date of Deposit, the Sponsor has assigned to
the Trustee all of its right, title and interest in and to such Securities.
Contracts to acquire Securities were entered into on September 2, 1997 and are
expected to settle on September 5, 1997. (see "The Trust").
(2) The market value of each of the Equity Securities is based on the closing
sale price of each listed Security on the applicable exchange, or on the asked
price if not so listed, on the day prior to the Initial Date of Deposit.
Estimated annual dividends are based on the most recently declared dividends.
The aggregate value of the Securities on the day prior to the Initial Date of
Deposit based on the closing sale price of each listed Security, and on the
bid price if not so listed, (which is the basis on which the Redemption Price
per Unit will be determined) was $148,876. The ask price of the applicable
Securities (the basis on which the Public Offering Price per Unit will be
determined during the initial offering period) is greater than the bid price
of such Securities. Other information regarding the Securities in the Trust,
as of the Initial Date of Deposit is as follows:
<TABLE>
<CAPTION>
Aggregate
Profit (Loss) To Estimated
Cost To Sponsor Sponsor Annual Dividends
- ------------------- --------------------- --------------------
<S> <C> <C>
$ 149,923 $ 117 $ 19
</TABLE>
A Security marked "+" indicates an American Depositary Receipt.
An affiliate of the Sponsor may have participated as issuer, sole underwriter,
managing underwriter or member of an underwriting syndicate in a public
offering of one or more of the stocks in the Trust. An affiliate of the
Sponsor may serve as a specialist in the stocks in the Trust on one or more
stock exchanges and may have a long or short position in any of these stocks
or in options on any of these stocks, and may be on the opposite side of
public orders executed on the floor of an exchange where such stocks are
listed. An officer, director or employee of the Sponsor or an affiliate may be
an officer or director of one or more of the issuers of the stocks in the
Trust. An affiliate of the Sponsor may trade for its own account as an odd-lot
dealer, market maker, block positioner and/or arbitrageur in any stocks or
options relating thereto. The Sponsor, its affiliates, directors, elected
officers and employee benefit programs may have either a long or short
position in any stock or option of the issuers.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the Fund
or the Sponsor. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Title Page
<S> <C>
Summary of Essential Financial Information........... 4
The Trust............................................ 7
Objectives and Securities Selection.................. 8
Trust Portfolio...................................... 11
Risk Factors......................................... 14
Federal Taxation..................................... 17
Trust Operating Expenses............................. 21
Public Offering...................................... 22
Rights of Unitholders................................ 26
Trust Administration................................. 31
Other Matters........................................ 36
Report of Independent Certified Public Accountants... 36
Statement of Condition .............................. 37
Portfolio............................................ 38
Notes to Portfolio................................... 39
</TABLE>
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Fund has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
When Units of the Trust are no longer available, or for investors who will
reinvest into subsequent series of the Trust, this Prospectus may be used as a
preliminary prospectus for a future series; in which case investors should
note the following:
Information contained herein is subject to completion or amendment. A
registration statement relating to securities of a future series has been
filed with the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. The Prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such State.
PROSPECTUS
September 3, 1997
Van Kampen
American Capital
Equity Opportunity
Trust, Series 71
Aggressive Growth
Series
Internet Trust 7
A Wealth of Knowledge A Knowledge of Wealth
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
This Amendment of Registration Statement comprises the following
papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of Counsel as to the Federal Income tax status of
securities being registered.
3.3 Opinion and consent of counsel as to New York tax status of
securites being registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Acountants.
EX-27 Financial Data Schedule.
Signatures
The Registrant, Van Kampen American Capital Equity Opportunity
Trust, Series 71, hereby identifies Van Kampen Merritt Equity Opportunity
Trust, Series 1, Series 2, Series 4 and Series 7 and Van Kampen American
Capital Equity Opportunity Trust, Series 13, Series 14 and Series 57 for
purposes of the representations required by Rule 487 and represents the
following: (1) that the portfolio securities deposited in the series as
to the securities of which this Registration Statement is being filed do
not differ materially in type or quality from those deposited in such
previous series; (2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide essential
financial information for, the series with respect to the securities of
which this Registration Statement is being filed, this Registration
Statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such
previous series as to which the effective date was determined by the
Commission or the staff; and (3) that it has complied with Rule 460 under
the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
71 has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Chicago and State of Illinois on the 3rd day of September,
1997.
Van Kampen American Capital Equity
Opportunity Trust, Series 71
By Van Kampen American Capital
Distributors, Inc.
By Gina M. Costello
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on
September 3, 1997 by the following persons who constitute a majority of
the Board of Directors of Van Kampen American Capital Distributors, Inc.
Signature Title
Don G. Powell Chairman and Chief Executive )
Officer )
William R. Molinari President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
Gina M. Costello (Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was
filed with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Van Kampen American Capital Equity
Opportunity Trust, Series 64 (File No. 333-33087) and the same are hereby
incorporated herein by this reference.
Exhibit 1.1
Van Kampen American Capital Equity Opportunity Trust
Series 71
Trust Agreement
Dated: September 3, 1997
This Trust Agreement among Van Kampen American Capital Distributors,
Inc., as Depositor, American Portfolio Evaluation Services, a division of
Van Kampen American Capital Investment Advisory Corp., as Evaluator, Van
Kampen American Capital Investment Advisory Corp., as Supervisory
Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Van Kampen Merritt Equity Opportunity Trust, Series 1
and Subsequent Series, Standard Terms and Conditions of Trust, Effective
November 21, 1991" (herein called the "Standard Terms and Conditions of
Trust") and such provisions as are set forth in full and such provisions
as are incorporated by reference constitute a single instrument. All
references herein to Articles and Sections are to Articles and Sections
of the Standard Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee
agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(22), listed in the
Schedule hereto, have been deposited in trust under this Trust
Agreement.
2. The fractional undivided interest in and ownership of the
Trust represented by each Unit is the amount set forth under
"Summary of Essential Financial Information - Fractional Undivided
Interest in the Trust per Unit" in the Prospectus. Such fractional
undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03, (b) increased or
decreased in connection with an adjustment to the number of Units
pursuant to Section 2.03, or (c) decreased by the number of Units
redeemed pursuant to Section 5.02.
3. Section 1.01(1) shall be amended to read as follows:
"(1) "Depositor" shall mean Van Kampen American Capital
Distributors, Inc. and its successors in interest, or any
successor depositor appointed as hereinafter provided."
4. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean American Portfolio
Evaluation Services, a division of Van Kampen American
Capital Investment Advisory Corp. and its successors in
interest, or any successor evaluator appointed as
hereinafter provided."
5. Section 1.01(4) shall be amended to read as follows:
"(4) "Supervisory Servicer" shall mean Van Kampen
American Capital Investment Advisory Corp. and its
successors in interest, or any successor portfolio
supervisor appointed as hereinafter provided."
6. Section 1.01(19) shall be amended to read as follows:
"(19) "Percentage Ratio" shall mean, for each Trust which
will issue additional Units pursuant to Section 2.03
hereof, (a) the percentage relationship among the Equity
Securities based on the number of shares of each Equity
Security per Unit existing immediately prior to such
additional deposit with respect to the Select Equity Trust
and (b) the percentage relationship existing on the
Initial Date of Deposit among the maturity value per Unit
of the Zero Coupon Obligations, each Equity Security per
Unit as a percent of all shares of Equity Securities and
the sum of the maturity value per Unit of the Zero Coupon
Obligations and all Equity Securities attributable to each
Unit with respect to the Select Equity and Treasury Trust.
The Percentage Ratio shall be adjusted to the extent
necessary, and may be rounded, to reflect the occurrence
of a stock dividend, a stock split or a similar event
which affects the capital structure of the issuer of an
Equity Security.
7. Section 1.01(34) shall be amended to read as follows:
"(34) The term "Rollover Unitholder" shall be defined as
set forth in Section 5.05, herein."
8. Section 1.01(35) shall be amended to read as follows:
"(35) The "Rollover Notification Date" shall be defined
as set forth in the Prospectus under "Summary of Essential
Information."
9. Section 1.01(36) shall be amended to read as follows:
"(36) The term "Rollover Distribution" shall be defined
as set forth in Section 5.05, herein."
10. Section 1.01(37) shall be amended to read as follows:
"(37) The term "Distribution Agent" shall refer to the
Trustee acting in its capacity as distribution agent
pursuant to Section 5.05 herein."
11. Section 1.01(38) shall be amended to read as follows:
"(38) The term "Special Redemption and Liquidation
Period" shall be redefined as "Special Redemption Date"
and shall be as set forth in the Prospectus under "Summary
of Essential Information - Special Redemption Date."
12. The Initial Date of Deposit for the Trust is September 3,
1997.
13. Notwithstanding anything to the contrary appearing in the
Standard Terms and Conditions of Trust, "Van Kampen American Capital
Equity Opportunity Trust" will replace "Select Equity Trust."
14. The second sentence in the second paragraph of Section
3.11 shall be revised as follows: "However, should any issuance,
exchange or substitution be effected notwithstanding such rejection
or without an initial offer, any securities, cash and/or property
received shall be deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee unless the Depositor advises
the Trustee to keep such securities, cash or properties."
15. Article III of the Standard Terms and Conditions of Trust
is hereby amended by inserting the following paragraph which shall
be entitled Section 3.17.:
"Section 3.17. Deferred Sales Charge. If the prospectus
related to the Trust specifies a deferred sale charge, the
Trustee shall, on the dates specified in and as permitted
by such Prospectus, withdraw from the Capital Account, an
amount per Unit specified in such Prospectus and credit
such amount to a special non-Trust account maintained at
the Trustee out of which the deferred sales charge will be
distributed to the Depositor. If the balance in the
Capital Account is insufficient to make any such
withdrawal, the Trustee shall, as directed by the
Depositor, either advance funds in an amount equal to the
proposed withdrawal and be entitled to reimbursement of
such advance upon the deposit of additional monies in the
Capital Account, sell Securities and credit the proceeds
thereof to such special Depositor's account or credit (if
permitted by law) Securities in kind to such special
Depositor's Account. If a Unitholder redeems Units prior
to full payment of the deferred sales charge, the Trustee
shall, if so provided in the related Prospectus, on the
Redemption Date, withhold from the Redemption Price
payable to such Unitholder an amount equal to the unpaid
portion of the deferred sales charge and distribute such
amount to such special Depositor's Account. The Depositor
may at any time instruct the Trustee in writing to
distribute to the Depositor cash or Securities previously
credited to the special Depositor's Account."
16. The following Section 5.05 shall be added:
"Section 5.05. Rollover of Units. (a) If the Depositor shall
offer a subsequent series of the Trust (the "New Series"), the
Trustee shall, on each Rollover Notification Date and at the
Depositor's sole cost and expense, send a notice and a form of
election (which may be included in the notice sent to Unitholders
specified in Section 8.02) whereby Unitholders, whose redemption
distribution would be in an amount sufficient to purchase at least
one Unit of the New Series, may elect to have their Units(s)
redeemed in kind in the manner provided in Section 5.02, the
Securities included in the redemption distribution sold, and the
cash proceeds applied by the Distribution Agent to purchase Units of
the New Series, all as hereinafter provided. The Trustee shall
honor properly completed election forms returned to the Trustee,
accompanied by any Certificate evidencing Units tendered for
redemption or a properly completed redemption request with respect
to uncertificated Units, by its close of business five business days
prior to the related Special Redemption Date.
All Units so tendered by a Unitholder (a "Rollover Unitholder")
shall be redeemed and cancelled on the related Special Redemption
Date. Subject to payment by such Rollover Unitholder of any tax or
other governmental charges which may be imposed thereon, such
redemption is to be made in kind pursuant to Section 5.02 by
distribution of cash and/or Securities to the Distribution Agent on
such Special Redemption Date of the net asset value (determined on
the basis of the Trust Fund Evaluation as of such Special Redemption
Date in accordance with Section 4.01) multiplied by the number of
Units being redeemed (herein called the "Rollover Distribution").
Any Securities that are made part of the Rollover Distribution shall
be valued for purposes of the redemption distribution as of such
Special Redemption Date.
All Securities included in a Unitholder's Rollover Distribution
shall be sold by the Distribution Agent on the related Special
Redemption Date specified in the Prospectus pursuant to the
Depositor's direction, and the Distribution Agent may employ the
Depositor as broker in connection with such sales. For such
brokerage services, the Depositor shall be entitled to compensation
at its customary rates, provided however, that its compensation
shall not exceed the amount authorized by applicable Securities laws
and regulations. The Depositor shall direct that sales be made in
accordance with the guidelines set forth in the Prospectus under the
heading "Special Redemption and Rollover in New Trust." Should the
Depositor fail to provide direction, the Distribution Agent shall
sell the Securities in the manner provided in the prospectus for
"less liquid Equity Securities." The Distribution Agent shall have
no responsibility for any loss or depreciation incurred by reason of
any sale made pursuant to this Section.
Upon each trade date for sales of Securities included in the
Rollover Unitholder's Rollover Distribution, the Distribution Agent
shall, as agent for such Rollover Unitholder, enter into a contract
with the Depositor to purchase from the Depositor Units of the New
Series (if any), at the Depositor's public offering price for such
Units on such day, and at such reduced sales charge as shall be
described in the prospectus for the Trusts. Such contract shall
provide for purchase of the maximum number of Units of the New
Series whose purchase price is equal to or less than the cash
proceeds held by the Distribution Agent for the Unitholder on such
day (including therein the proceeds anticipated to be received in
respect of Securities traded on such day net of all brokerage fees,
governmental charges and any other expenses incurred in connection
with such sale), to the extent Units are available for purchase from
the Depositor. In the event a sale of Securities included in the
Rollover Unitholder's redemption distribution shall not be
consummated in accordance with its terms, the Distribution Agent
shall apply the cash proceeds held for such Unitholder as of the
settlement date for the purchase of Units of the New Series to
purchase the maximum number of units which such cash balance will
permit, and the Depositor agrees that the settlement date for Units
whose purchase was not consummated as a result of insufficient funds
will be extended until cash proceeds from the Rollover Distribution
are available in a sufficient amount to settle such purchase. If
the Unitholder's Rollover Distribution will produce insufficient
cash proceeds to purchase all of the Units of the New Series
contracted for, the Depositor agrees that the contract shall be
rescinded with respect to the Units as to which there was a cash
shortfall without any liability to the Rollover Unitholder or the
Distribution Agent. Any cash balance remaining after such purchase
shall be distributed within a reasonable time to the Rollover
Unitholder by check mailed to the address of such Unitholder on the
registration books of the Trustee. Units of the New Series will be
uncertificated unless and until the Rollover Unitholder requests a
certificate. Any cash held by the Distribution Agent shall be held
in a non-interest bearing account which will be of benefit to the
Distribution Agent in accordance with normal banking procedures.
Neither the Trustee nor the Distribution Agent shall have any
responsibility or liability for loss or depreciation resulting from
any reinvestment made in accordance with this paragraph, or for any
failure to make such reinvestment in the event the Depositor does
not make Units available for purchase.
(b) Notwithstanding the foregoing, the Depositor may, in its
discretion at any time, decide not to offer a New Series in the
future, and if so, this Section 5.05 concerning the Rollover of
Units shall be inoperative.
(c) The Distribution Agent shall receive no fees for
performing its duties hereunder. The Distribution Agent shall,
however, be entitled to receive reimbursement from the Trust for any
and all expenses and disbursements to the same extent as the Trustee
is permitted reimbursement hereunder."
(d) Notwithstanding the foregoing, in lieu of selling
Securities through the Depositor on the open market the Distribution
Agent may sell Securities from a terminating Trust into the
corresponding New Series if those Securities continue to meet the
New Series' strategy. The price for those Securities will be the
closing sale price on the sale date on the exchange where the
Securities are principally traded, as certified by the Sponsor.
17. Notwithstanding anything to the contrary in the Standard
Terms and Conditions of Trust, the requisite number of Units needed
to be tendered to exercise an In Kind Distribution as set forth in
Sections 5.02 and 8.02 shall be that number set forth in the
Prospectus.
18. Section 8.02 is hereby revised to require an affirmative
vote of Unitholders representing 66 2/3% of the then outstanding
Units to terminate the Trust rather than the 51% indicated therein.
19. Section 3.01 of the Standard Terms and Conditions of Trust
shall be replaced in its entirety with the following:
"Section 3.01. Initial Costs. The following
organization and regular and recurring expenses of the
Trust shall be borne by the Trustee: (a) to the extent
not borne by the Depositor, expenses incurred in
establishing a Trust, including the cost of the initial
preparation and typesetting of the registration statement,
prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to the Trust,
Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation of
the portfolio and audit of the Trust, the initial fees and
expenses of the Trustee, and legal and other out-of-pocket
expenses related thereto, but not including the expenses
incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and
any other selling expenses, (b) the amount specified in
Section 3.05 and Article VIII, (c) to the extent permitted
by Section 6.02, auditing fees and, to the extent not
borne by the Depositor, expenses incurred in connection
with maintaining the Trust's registration statement
current with Federal and State authorities, (d) any
Certificates issued after the Initial Date of Deposit ;
and (e) expenses of any distribution agent. The Trustee
shall be reimbursed for those organizational expenses
referred to in clause (a) as provided in the Prospectus.
20. Section 6.01(i) of the Standard Terms and Conditions of
Trust shall be amended by adding the following to the beginning of
such Section:
"Except as provided in Sections 3.01 and 3.05,"
21. Section 8.04 is hereby amended by deleting the first word
of such Section and replacing it with the following:
"Except as provided in Sections 3.01 and 3.05, the"
22. Section 2.03(a) shall be amended by adding the following
sentence immediately after the first sentence of such Section: "The
number of Units may be increased through a split of the Units or
decreased through a reverse split thereof, as directed by the
Depositor, on any day on which the Depositor is the only Unitholder,
which revised number of Units shall be recorded by the Trustee on
its books."
23. Sections 4.01(b) and (c) are hereby replaced with the
following:
"(b) During the initial offering period such Evaluation
shall be made in the following manner: if the Securities are
listed on a national securities exchange, such Evaluation shall
generally be based on the last available sale price on or
immediately prior to the Evaluation Time on the exchange which
is the principal market therefor, which shall be deemed to be
the New York Stock Exchange if the Securities are listed
thereon (unless the Evaluator deems such price inappropriate as
a basis for evaluation) or, if there is no such available sale
price on such exchange. If the Securities are not so listed
or, if so listed, the principal market therefor is other than
on such exchange or there is no such available sale price on
such exchange, such Evaluation shall generally be based on the
following methods or any combination thereof whichever the
Evaluator deems appropriate: (i) in the case of Equity
Securities, on the basis of the current ask price (unless the
Evaluator deems such price inappropriate as a basis for
evaluation), (ii) on the basis of current offering prices for
the Zero Coupon Obligations as obtained from investment dealers
or brokers who customarily deal in securities comparable to
those held by the Fund, (iii) if offering or ask prices are not
available for the Zero Coupon Obligations or the Equity
Securities, on the basis of offering or ask price for
comparable securities, (iv) by determining the valuation of the
Zero Coupon Obligations or the Equity Securities on the
offering or ask side of the market by appraisal or (v) by any
combination of the above. For each Evaluation, the Evaluator
shall also confirm and furnish to the Trustee and the
Depositor, on the basis of the information furnished to the
Evaluator by the Trustee as to the value of all Trust assets
other than Securities, the calculation of the Trust Fund
Evaluation to be computed pursuant to Section 5.01.
(c) For purposes of the Trust Fund Evaluations required
by Section 5.01 in determining Redemption Value and Unit Value,
Evaluation of the Securities shall be made in the manner
described in 4.01(b), on the basis of current bid prices for
the Zero Coupon Obligations and, except in those cases in which
the Equity Securities are listed on a national securities
exchange and the last available sale prices are utilized, on
the basis of the last available bid prices of the Equity
Securities."
24. Section 3.05(a) is hereby replaced with the following:
"(a) On or immediately after the tenth the day of each
month, the Trustee shall satisfy itself as to the adequacy of
the Reserve Account, making any further credits thereto as may
appear appropriate in accordance with Section 3.04 and shall
then with respect to each Trust:
(i) deduct from the Capital Account and pay to
itself individually the amounts that it is at the time
entitled to receive pursuant to Section 6.04;
(ii) deduct from the Capital Account and pay to, or
reserve for, the Evaluator the amount that it is at the
time entitled to receive pursuant to Section 4.03;
(iii) deduct from the Capital Account and pay to
counsel, as hereinafter provided for, an amount equal to
unpaid fees and expenses, if any, of such counsel pursuant
to Section 3.08, as certified to by the Depositor; and
(iv) deduct from the Capital Account and pay to, or
reserve for, the Supervisory Servicer the amount that it
is entitled to receive pursuant to Section 3.13."
25. Section 2.01(b) is hereby replaced with the following:
(b) From time to time following the Initial Date of
Deposit, the Depositor is hereby authorized, in its discretion,
to assign, convey to and deposit with the Trustee (i)
additional Securities, duly endorsed in blank or accompanied by
all necessary instruments of assignment and transfer in proper
form (or Contract Obligations relating to such Securities),
and/or (ii) cash (or a Letter of Credit in lieu of cash) with
instructions to purchase additional Securities, in an amount
equal to the portion of the Unit Value of the Units created by
such deposit attributable to the Securities to be purchased
pursuant to such instructions. Such deposit of additional
Securities or cash with instructions to purchase additional
Securities shall be made, in each case, pursuant to a
Supplemental Indenture accompanied by a legal opinion issued by
legal counsel satisfactory to the Depositor. Instructions to
purchase additional Securities shall be in writing, and shall
specify the name of the Security, CUSIP number, if any,
aggregate amount, price or price range and date to be
purchased. When requested by the Trustee, the Depositor shall
act as broker to execute purchases in accordance with such
instructions; the Depositor shall be entitled to compensation
therefor in accordance with applicable law and regulations.
The Trustee shall have no liability for any loss or
depreciation resulting from any purchase made pursuant to the
Depositor's instructions or made by the Depositor as broker,
except by reason of its own negligence, lack of good faith or
willful misconduct.
In connection with any deposit pursuant to this Section 2.01(b)
in the Select Equity and Treasury Trust, the Depositor shall be
obligated to determine that the maturity value of the Zero
Coupon Obligations included in the deposit, divided by the
number of Units created by reason of the deposit, shall equal
at least $10.00.
The Depositor, in each case, shall ensure that each deposit of
additional Securities pursuant to this Section shall be, as
nearly as is practicable, in the identical ratio as the
Percentage Ratio for such Securities as is specified in the
Trust Agreement for each Trust. The Depositor shall deliver
the additional Securities which were not delivered concurrently
with the deposit of additional Securities and which were
represented by Contract Obligations within 10 calendar days
after such deposit of additional Securities (the "Additional
Securities Delivery Period"). If a contract to buy such
Securities between the Depositor and seller is terminated by
the seller thereof for any reason beyond the control of the
Depositor or if for any other reason the Securities are not
delivered to the Trust by the end of the Additional Securities
Delivery Period for such deposit, the Trustee shall immediately
draw on the Letter of Credit, if any, in its entirety, apply
the moneys in accordance with Section 2.01(d), and the
Depositor shall forthwith take the remedial action specified in
Section 3.12. If the Depositor does not take the action
specified in Section 3.12 within 10 calendar days of the end of
the Additional Securities Delivery Period, the Trustee shall
forthwith take the action specified in Section 3.12.
26. Notwithstanding anything to the contrary in the Standard
Terms and Conditions of Trust, all Units held by a Unitholder will
be deemed to have been properly tendered to the Trustee for
redemption on the first Special Redemption Date set forth in the
Prospectus unless the Trustee receives a written election to the
contrary from such Unitholder at least five business days prior to
such date.
27. Notwithstanding anything to the contrary in the Standard
Terms and Conditions of Trust, no distribution of funds from the
Income Account or the Capital Account shall be made to Unitholders
on any Income Distribution Date or on any Capital Account
Distribution Date unless the amount per Unit in the related Account
is at least equal to $0.01 per Unit computed as of the close of
business on the Income Distribution Record Date or the Capital
Account Record Date immediately preceding such Income Distribution
Date or such Capital Account Distribution Date.
In Witness Whereof, Van Kampen American Capital Distributors, Inc.
has caused this Trust Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be
hereto affixed and attested by its Secretary or one of its Vice
Presidents or Assistant Secretaries, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., and Van Kampen American Capital Investment Advisory Corp., have
each caused this Trust Indenture and Agreement to be executed by their
respective President or one of their respective Vice Presidents and the
corporate seal of each to be hereto affixed and attested to by the
Secretary, Assistant Secretary or one of their respective Vice Presidents
or Assistant Vice Presidents and The Bank of New York, has caused this
Trust Agreement to be executed by one of its Vice Presidents and its
corporate seal to be hereto affixed and attested to by one of its
Assistant Treasurers all as of the day, month and year first above
written.
Van Kampen American Capital
Distributors, Inc.
By James J. Boyne
Vice President
Attest:
By Cathy Napoli
Assistant Secretary
American Portfolio Evaluation
Services, a division of Van Kampen
American Capital Investment
Advisory Corp.
By Dennis J. McDonnell
President
Attest:
By James J. Boyne
Assistant Secretary
Van Kampen American Capital
Investment Advisory Corp.
By Dennis J. McDonnell
President
Attest:
By James J. Boyne
Assistant Secretary
The Bank of New York
By Ted Rudich
Vice President
Attest:
By Jeffrey Cohen
Assistant Treasurer
Schedule A to Trust Agreement
Securities Initially Deposited
in
Van Kampen American Capital Equity Opportunity Trust, Series 71
(Note: Incorporated herein and made a part hereof is the "Portfolio" as
set forth in the Prospectus.)
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
September 3, 1997
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Van Kampen American Capital Equity Opportunity Trust, Series 71
Gentlemen:
We have served as counsel for Van Kampen American Capital
Distributors, Inc. as Sponsor and Depositor of Van Kampen American
Capital Equity Opportunity Trust, Series 71 (hereinafter referred to as
the "Trust"), in connection with the preparation, execution and delivery
of a Trust Agreement dated September 3, 1997, among Van Kampen American
Capital Distributors, Inc., as Depositor, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., as Evaluator, Van Kampen American Capital Investment Advisory
Corp., as Supervisory Servicer, and The Bank of New York, as Trustee,
pursuant to which the Depositor has delivered to and deposited the
Securities listed in the Schedule to the Trust Agreement with the Trustee
and pursuant to which the Trustee has provided to or on the order of the
Depositor documentation evidencing ownership of Units of fractional
undivided interest in and ownership of the Trust (hereinafter referred to
as the "Units"), created under said Trust Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Trust have been duly authorized; and
2. The certificates evidencing the Units in the Trust,
when duly executed and delivered by the Depositor and the
Trustee in accordance with the aforementioned Trust Agreement,
will constitute valid and binding obligations of such Trust and
the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-34097) relating to the Units
referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Respectfully submitted,
Chapman and Cutler
MJK/slm
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
September 3, 1997
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Van Kampen American Capital Equity Opportunity Trust, Series 71
Gentlemen:
We have acted as counsel for Van Kampen American Capital
Distributors, Inc., Depositor of Van Kampen American Capital Equity
Opportunity Trust, Series 71 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a
Trust Agreement dated September 3, 1997 (the "Indenture") among Van
Kampen American Capital Distributors, Inc., as Depositor, Van Kampen
American Capital Investment Advisory Corp., as Evaluator, Van Kampen
American Capital Investment Advisory Corp., as Supervisory Servicer, and
The Bank of New York, as Trustee. The Fund is comprised of one unit
investment trust, Aggressive Growth Series, Internet Trust 7.
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we
have deemed pertinent.
The assets of each Trust will consist of a portfolio of equity
securities (the "Equity Securities") as set forth in the Prospectus.
For the purposes of the following discussion and opinion, it is assumed
that each Security is equity for federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing United States Federal income tax law:
(i) Each Trust is not an association taxable as a
corporation but will be governed by the provisions of
subchapter J (relating to trusts) of chapter 1, Internal
Revenue Code of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata
share of each asset of the particular Trust in the proportion
that the number of Units held by him bears to the total number
of Units outstanding. Under subpart E, subchapter J of chapter
1 of the Code, income of a Trust will be treated as income of
each Unitholder in the proportion described, and an item of
Trust income will have the same character in the hands of a
Unitholder as it would have in the hands of the Trustee. Each
Unitholder will be considered to have received his pro rata
share of income derived from each Trust asset when such income
is considered to be received by a Trust. A Unitholder's pro
rata portion of distributions of cash or property by a
corporation with respect to an Equity Security ("dividends" as
defined by Section 316 of the Code ) are taxable as ordinary
income to the extent of such corporation's current and
accumulated "earnings and profits." A Unitholder's pro rata
portion of dividends which exceed such current and accumulated
earnings and profits will first reduce the Unitholder's tax
basis in such Equity Security, and to the extent that such
dividends exceed a Unitholder's tax basis in such Equity
Security, shall be treated as gain from the sale or exchange of
property.
(iii) The price a Unitholder pays for his Units, generally
including sales charges, is allocated among his pro rata
portion of each Equity Security held by a Trust (in the
proportion to the fair market values thereof on the valuation
date closest to the date the Unitholder purchases his Units),
in order to determine his tax basis for his pro rata portion of
each Equity Security held by a Trust.
(iv) Gain or loss will be recognized to a Unitholder
(subject to various nonrecognition provisions under the Code)
upon redemption or sale of his Units, except to the extent an
in kind distribution of stock is received by such Unitholder
from a Trust as discussed below. Such gain or loss is measured
by comparing the proceeds of such redemption or sale with the
adjusted basis of his Units. Before adjustment, such basis
would normally be cost if the Unitholder had acquired his Units
by purchase. Such basis will be reduced, but not below zero,
by the Unitholder's pro rata portion of dividends with respect
to each Equity Security which are not taxable as ordinary
income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unitholder
(subject to various nonrecognition provisions under the Code)
and the amount thereof will be measured by comparing the
Unitholder's aliquot share of the total proceeds from the
transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning
the tax basis for his Units (as of the date on which his Units
were acquired) among each of the Trust assets of such Trust (as
of the date on which his Units were acquired) ratably according
to their values as of the valuation date nearest the date on
which he purchased such Units. A Unitholder's basis in his
Units and of his fractional interest in each Trust asset must
be reduced, but not below zero, by the Unitholder's pro rata
portion of dividends with respect to each Equity Security which
are not taxable as ordinary income.
(vi) Under the Indenture, under certain circumstances, a
Unitholder tendering Units for redemption may request an in
kind distribution of Equity Securities upon the redemption of
Units or upon the termination of the Trust. As previously
discussed, prior to the redemption of Units or the termination
of a Trust, a Unitholder is considered as owning a pro rata
portion of each of the particular Trust's assets. The receipt
of an in kind distribution will result in a Unitholder
receiving an undivided interest in whole shares of stock and
possibly cash. The potential federal income tax consequences
which may occur under an in kind distribution with respect to
each Equity Security owned by the Trust will depend upon
whether or not a United States Unitholder receives cash in
addition to Equity Securities. An "Equity Security" for this
purpose is a particular class of stock issued by a particular
corporation. A Unitholder will not recognize gain or loss if a
Unitholder only receives Equity Securities in exchange for his
or her pro rata portion in the Equity Securities held by the
Trust. However, if a Unitholder also receives cash in exchange
for a fractional share of an Equity Security held by the Trust,
such Unitholder will generally recognize gain or loss based
upon the difference between the amount of cash received by the
Unitholder and his tax basis in such fractional share of an
Equity Security held by the Trust. The total amount of taxable
gains (or losses) recognized upon such redemption will
generally equal the sum of the gain (or loss) recognized under
the rules described above by the redeeming Unitholder with
respect to each Equity Security owned by a Trust.
A domestic corporation owning Units in a Trust may be eligible for
the 70% dividends received deduction pursuant to Section 243(a) of the
Code with respect to such Unitholder's pro rata portion of dividends
received by a Trust (to the extent such dividends are taxable as ordinary
income and are attributable to domestic corporations), subject to the
limitations imposed by Sections 246 and 246A of the Code. It should be
noted that various legislative proposals that would affect the dividends
received deduction have been introduced.
Section 67 of the Code provides that certain itemized deductions,
such as investment expenses, tax return preparation fees and employee
business expenses will be deductible by individuals only to the extent
they exceed 2% of such individual's adjusted gross income. Unitholders
may be required to treat some or all of the expenses of a Trust as
miscellaneous itemized deductions subject to this limitation.
A Unitholder will recognize taxable gain (or loss) when all or part
of the pro rata interest in an Equity Security is either sold by the
Trust or redeemed or when a Unitholder disposes of his Units in a taxable
transaction, in each case for an amount greater (or less) than his tax
basis therefor, subject to various non-recognition provisions of the
Code.
It should be noted that payments to a Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes and Unitholders should consult their tax
advisers regarding the potential tax consequences relating to the payment
of any such withholding taxes by the Trust. Any dividends withheld as a
result thereof will nevertheless be treated as income to the Unitholders.
Because under the grantor trust rules, an investor is deemed to have paid
directly his share of foreign taxes that have been paid or accrued, if
any, an investor may be entitled to a foreign tax credit or deduction for
United States tax purposes with respect to such taxes.
Any gain recognized on a sale or exchange will, under current law,
generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set
forth herein, and, except as expressly set forth above, we express no
opinion with respect to any other taxes, including foreign, state or
local taxes or collateral tax consequences with respect to the purchase,
ownership and disposition of Units.
Very truly yours,
Chapman and Cutler
MJK/slm
Exhibit 3.3
Winston & Strawn
200 Park Avenue
New York, New York 10166-4193
September 3, 1997
Van Kampen American Capital Equity
Opportunity Trust, Series 71
Aggressive Growth Series,
Internet Trust 7
c/o The Bank of New York,
As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen American Capital
Equity Opportunity Trust, Series 71 (the "Fund") consisting of Aggressive
Growth Series, Internet Trust 7 (the "Trust") for purposes of determining
the applicability of certain New York taxes under the circumstances
hereinafter described.
The Fund is created pursuant to a Trust Agreement (the
"Indenture"), dated as of today (the "Date of Deposit") among Van Kampen
American Capital Distributors, Inc. (the "Depositor"), American Portfolio
Evaluation Services, a division of an affiliate of the Depositor, as
Evaluator and Supervisory Servicer, and The Bank of New York, as Trustee
(the "Trustee"). As described in the prospectus relating to the Fund
dated today to be filed as an amendment to a registration statement
heretofore filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (respectively the "Prospectus" and the
"Registration Statement") (File number 333-34097), the objectives of the
Fund are to provide the potential for capital appreciation from a
portfolio of equity securities involved in either the Internet industry
or providing services to companies in that industry. It is noted that no
opinion is expressed herein with regard to the Federal tax aspects of
securities, the Trust, units of the Trust (the "Units"), or any income,
gains or losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to the Trust the securities and/or contracts and cash for
the purchase thereof together with an irrevocable letter of credit in the
amount required for the purchase price of the securities comprising the
corpus of the Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities
to be deposited in the Trust, and, upon the receipt thereof, will deliver
to the Depositor a registered certificate for the number of Units
representing the entire capital of the Trust as more fully set forth in
the Prospectus. The Units, which are represented by certificates
("Certificates"), will be offered to the public upon the effectiveness of
the Registration Statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash
dividends received by the Fund and with the proceeds from the disposition
of securities held in the Fund and the distribution of such cash
dividends and proceeds to the Unit holders. The Trustee will also
maintain records of the registered holders of Certificates representing
an interest in the Fund and administer the redemption of Units by such
Certificate holders and may perform certain administrative functions with
respect to an automatic reinvestment option.
Generally, equity securities held in the Trust may be removed
therefrom by the Trustee at the direction of the Depositor upon the
occurrence of certain specified events which adversely affect the sound
investment character of the Fund, such as default by the issuer in
payment of declared dividends or of interest or principal on one or more
of its debt obligations.
Prior to the termination of the Fund, the Trustee is empowered to
sell equity securities designated by the Supervisor only for the purpose
of redeeming Units tendered to it and of paying expenses for which funds
are not available. The Trustee does not have the power to vary the
investment of any Unit holder in the Fund, and under no circumstances may
the proceeds of sale of any equity securities held by the Fund be used to
purchase new equity securities to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on
business corporations, and, for purposes of that Article, Section 208(l)
defines the term "corporation" to include, among other things, "any
business conducted by a trustee or trustees wherein interest or ownership
is evidenced by certificate or other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in
which interest or ownership is evidenced by
certificate or other written instrument includes, but
is not limited to, an association commonly referred
to as a "business trust" or "Massachusetts trust".
In determining whether a trustee or trustees are
conducting a business, the form of the agreement is
of significance but is not controlling. The actual
activities of the trustee or trustees, not their
purposes and powers, will be regarded as decisive
factors in determining whether a trust is subject to
tax under Article 9-A. The mere investment of funds
and the collection of income therefrom, with
incidental replacement of securities and reinvestment
of funds, does not constitute the conduct of a
business in the case of a business conducted by a
trustee or trustees. 20 NYCRR 1-2.5(b)(2) (July 11,
1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that
where a trustee merely invests funds and collects and distributes the
income therefrom, the trust is not engaged in business and is not subject
to the franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171
(3rd Dept. 1948), order resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd
Dept. 1949).
In an Opinion of the Attorney General of the State of New York,
47 N.Y. Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the
trustee of an unincorporated investment trust was without authority to
reinvest amounts received upon the sales of securities and could dispose
of securities making up the trust only upon the happening of certain
specified events or the existence of certain specified conditions, the
trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to, and we
assume will not, sell securities contained in the corpus of the Fund and
reinvest the proceeds therefrom. Further, the power to sell such
securities is limited to circumstances in which the credit-worthiness or
soundness of the issuer of such equity security is in question or in
which cash is needed to pay redeeming Unit holders or to pay expenses, or
where the Fund is liquidated subsequent to the termination of the
Indenture. In substance, the Trustee will merely collect and distribute
income and will not reinvest any income or proceeds, and the Trustee has
no power to vary the investment of any Unit holder in the Fund.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust
will be deemed to be the owner of the trust under certain circumstances,
and therefore taxable on his proportionate interest in the income
thereof. Where this Federal tax rule applies, the income attributed to
the grantor will also be income to him for New York income tax purposes.
See TSB-M-78(9)(c), New York Department of Taxation and Finance, June 23,
1978.
By letter dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be
considered as owning a share of each asset of the Trust in the proportion
that the number of Units held by such holder bears to the total number of
Units outstanding and the income of a Trust will be treated as the income
of each Unit holder in said proportion pursuant to Subpart E of Part I,
Subchapter J of Chapter 1 of the Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we
specifically rely, we are of the opinion that under existing laws,
rulings, and court decisions interpreting the laws of the State and City
of New York:
1. The Trust will not constitute an association taxable as a
corporation under New York law, and, accordingly, will not be
subject to tax on its income under the New York State franchise tax
or the New York City general corporation tax;
2. The income of the Trust will be treated as the income of
the Unit holders under the income tax laws of the State and City of
New York; and
3. Unit holders who are not residents of the State of New
York are not subject to the income tax laws thereof with respect to
any interest or gain derived from the Fund or any gain from the sale
or other disposition of the Units, except to the extent that such
interest or gain is from property employed in a business, trade,
profession or occupation carried on in the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name
and the reference to our firm in the Registration Statement and in the
Prospectus.
Very truly yours,
Winston & Strawn
MNS:lma
Exhibit 4.1
Interactive Data
14 West Street
New York, NY 10005
September 2, 1997
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital Aggressive Growth Series, Internet
Trust 7,
(A Unit Investment Trust) Registered Under the Securities
Act of 1933, File No. 333-34097
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Corporation, as
the Evaluator, and to the use of the obligations prepared by us which are
referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Independent Certified Public Accountants' Consent
We have issued our report dated September 3, 1997 on the statement
of condition and related securities portfolio of Van Kampen American
Capital Equity Opportunity Trust, Series 71 as of September 3, 1997
contained in the Registration Statement on Form S-6 and Prospectus. We
consent to the use of our report in the Registration Statement and
Prospectus and to the use of our name as it appears under the caption
"Other Matters-Independent Certified Public Accountants."
Grant Thornton LLP
Chicago, Illinois
September 3, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on September 3, 1997 it
is unaudited
</LEGEND>
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<NUMBER> 7
<NAME> INET
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<PERIOD-START> SEP-03-1997
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