File No. 33-28069
CIK #848615
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 2
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Van Kampen American Capital Equity Opportunity Trust, Series 73
(Exact Name of Trust)
Van Kampen Funds Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
Van Kampen Funds Inc. Chapman and Cutler
Attention: Don G. Powell Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective
on December 24, 1998 pursuant to paragraph (b) of Rule 485.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 73
BABY BOOMER OPPORTUNITY TRUST, SERIES 3
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PROSPECTUS PART ONE
NOTE: Part I of this Prospectus may not be distributed unless accompanied by
Part II.
Please retain both parts of this Prospectus for future reference.
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THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 73 (the "Fund") is
comprised of one unit investment trust, Baby Boomer Opportunity Trust, Series 3
(the "Trust"). The Trust offers investors the opportunity to purchase Units
representing proportionate interests in a fixed, diversified portfolio of
actively traded equity securities primarily issued by companies from a variety
of industries expected to benefit from demographic trends associated with those
born between 1946 and 1964, commonly referred to as the "Baby Boomers." Unless
terminated earlier, the Trust will terminate on March 16, 2003 ("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.
PUBLIC OFFERING PRICE
The Public Offering Price per Unit is equal to the aggregate underlying value of
the Equity Securities plus or minus cash, if any, in the Capital and Income
Accounts plus the applicable sales charge as described herein, divided by the
number of Units outstanding. See "Summary of Essential Financial Information" in
this Part One.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is December 24, 1998
Van Kampen
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 73
Baby Boomer Opportunity Trust, Series 3
Summary of Essential Financial Information
As of October 2, 1998
Sponsor: Van Kampen Funds Inc.
Supervisor: Van Kampen 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>
Baby
Boomer
Opportunity
Trust
---------------
<S> <C>
General Information
Number of Units 2,897,700.892
Fractional Undivided Interest in Trust per Unit 1/2,897,700.892
Public Offering Price:
Aggregate Value of Securities in Portfolio (1) $ 22,967,168
Aggregate Value of Securities per Unit (including accumulated dividends) $ 7.93
Sales charge 4.0% (4.167% of Aggregate Value of Securities excluding principal cash per Unit) (3)
$ .32
Public Offering Price per Unit (2)(3) $ 8.25
Redemption Price per Unit $ 7.93
Secondary Market Repurchase Price per Unit $ 7.93
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ .32
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee Maximum of $.0025 per Unit
Evaluator's Annual Fee Maximum of $.0025 per Unit
Evaluation Time Close of the New York Stock Exchange
Initial Date of Deposit September 16, 1997
Mandatory Termination Date March 16, 2003
Minimum Termination Value The Trust may be terminated if the net asset value of such Trust is less than $500,000
unless the net asset value of such Trust deposits has exceeded $15,000,000, then the
Trust Agreement may be terminated if the net asset value of such Trust is less than
$3,000,000.
Estimated Net Annual Dividends per Unit $.07235
Trustee's Annual fee $.008 per Unit
Estimated Annual Organizational Expenses (4) $.004 per Unit
Income Distribution Record Date TENTH day of March, June, September and December
Income Distribution Date TWENTY-FIFTH day of March, June, September and December
Capital Account Record Date TENTH day of December
Capital Account Distribution Date TWENTY-FIFTH day of December
</TABLE>
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(1)Equity Securities listed on a national securities exchange are valued at the
closing sale price, or if no such price exists, or if the Equity Securities
are not listed, at the closing bid price thereof.
(2)Anyone ordering Units will have added to the Public Offering Price a pro
rata share of any cash in the Income and Capital Accounts.
(3)On each September 16, commencing September 16, 1998 the secondary sales
charge will be reduced by .5 of 1% to a minimum sales charge of 3.0%. See
"Public Offering-Offering Price" in Part Two.
(4)The Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration
statement, the trust indenture and other closing documents, registering Units
with the Securities and Exchange Commission and states, the initial audit of
the Trust portfolio and the initial fees and expenses of the Trustee but not
including the expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses) as is common
for mutual funds. Total organizational expenses will be amortized over the
life of the Trust. See "Expenses of the Trust" in Part Two and "Statement of
Condition." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
PORTFOLIO
The Baby Boomer Opportunity Trust consists of 28 different issues of Equity
Securities which are primarily actively traded, equity securities issued by
companies from a variety of industries expected to benefit from demographic
trends associated with those born between 1946 and 1964, commonly referred to as
"Baby Boomers". All of the Equity Securities are listed on a national or foreign
securities exchange, or are traded in the over-the-counter market as of the
Initial Date of Deposit.
<TABLE>
<CAPTION>
PER UNIT INFORMATION
1998 (1)
-------------
<S> <C>
Net asset value per Unit at beginning of period $ 9.52
=============
Net asset value per Unit at end of period $ 8.24
=============
Distributions to Unitholders of investment income including accrued dividends paid on
Units redeemed (average Units outstanding for entire period) $ 0.05
=============
Distributions to Unitholders from Security sale proceeds (average Units outstanding for
entire period) $ 0.18
=============
Unrealized appreciation (depreciation) of Securities (per Unit outstanding at end
of period) $ (1.17)
=============
Distributions of investment income by frequency of payments
Quarterly $ 0.04
Units outstanding at end of period 2,955,019
</TABLE>
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(1) For the period from September 16, 1997 (date of deposit) through August 31,
1998.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds, Inc. and the Unitholders of
Baby Boomer Opportunity Trust, Series 3 (Van
Kampen American Capital Equity Opportunity Trust, Series 73):
We have audited the accompanying statement of condition (including the
analyses of net assets) and the related portfolio of Baby Boomer Opportunity
Trust, Series 3 (Van Kampen American Capital Equity Opportunity Trust, Series
73) as of August 31, 1998 and the related statements of operations and changes
in net assets for the period from September 16, 1997 (date of deposit) through
August 31, 1998. These statements are the responsibility of the Trustee and the
Sponsor. Our responsibility is to express an opinion on such statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at August 31, 1998 by correspondence with the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee and the Sponsor, as well as evaluating
the overall financial statement presentation. We believe our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Baby Boomer Opportunity
Trust, Series 3 (Van Kampen American Capital Equity Opportunity Trust, Series
73) as of August 31, 1998 and the results of operations and changes in net
assets for the period from September 16, 1997 (date of deposit) through August
31, 1998, in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
October 23, 1998
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST
SERIES 73
Statement of Condition
August 31, 1998
<CAPTION>
Baby Boomer
Opportunity
Trust
---------------
<S> <C>
Trust property
Cash $ --
Securities at market value, (cost $27,871,098) (note 1) 24,409,071
Accrued Dividends 8,712
Receivable for securities sold 281,702
Organizational costs 46,724
---------------
$ 24,746,209
===============
Liabilities and interest to Unitholders
Cash overdraft $ 279,574
Redemptions payable 112,081
Interest to Unitholders 24,354,554
---------------
24,746,209
===============
Analyses of Net Assets
Interest of Unitholders (2,955,019 Units of fractional undivided interest outstanding)
Cost to original investors of 3,631,405 Units (note 1) $ 37,363,269
Less initial underwriting commission (note 3) 1,688,655
---------------
35,674,614
Less redemption of 676,386 Units 7,222,108
---------------
28,452,506
Undistributed net investment income
Net investment income 145,785
Less distributions to Unitholders 147,501
---------------
(1,716)
Realized gain (loss) on Security (90,451)
Unrealized appreciation (depreciation) of Securities (note 2) (3,462,027)
Distributions to Unitholders of Security sale proceeds (543,758)
---------------
Net asset value to Unitholders $ 24,354,554
===============
Net asset value per Unit (2,955,019 Units outstanding) $ 8.24
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
BABY BOOMER OPPORTUNITY TRUST, SERIES 3
Statement of Operations
Period from September 16, 1997 (date of deposit) through August 31, 1998
<CAPTION>
1998
-----------
<S> <C>
Investment income
Dividend Income..................................................................................... $ 193,520
Expenses
Trustee fees and expenses........................................................................ 22,449
Evaluator fees................................................................................... 6,812
Supervisor fees.................................................................................. 6,794
Organizational costs............................................................................. 11,680
-----------
Total expenses................................................................................ 47,735
-----------
Net investment income............................................................................ 145,785
Realized gain (loss) from Security sale or redemption
Proceeds............................................................................................ 7,713,065
Cost................................................................................................ 7,803,516
-----------
Realized gain (loss)............................................................................. (90,451)
Net change in unrealized appreciation (depreciation) of Securities..................................... (3,462,027)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS............................................................................... $(3,406,693)
===========
Statement of Changes in Net Assets
Period from September 16, 1997 (date of deposit)
through August 31, 1998
1998
-----------
Increase (decrease) in net assets Operations:
Net investment income............................................................................... $ 145,785
Realized gain (loss) on Security sale or redemption................................................. (90,451)
Net change in unrealized appreciation (depreciation) of Securities.................................. (3,462,027)
-----------
Net increase (decrease) in net assets resulting from operations.................................. (3,406,693)
Distributions to Unitholders from:
Net investment income............................................................................... (147,501)
Security sale or redemption proceeds................................................................ (543,758)
Redemption of Units.................................................................................... (7,222,108)
-----------
Total increase (decrease)........................................................................ (11,320,060)
Net asset value to Unitholders
Beginning of period................................................................................. 35,674,614
-----------
End of period (including undistributed net investment income of $(1,716))........................... $24,354,554
===========
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
BABY BOOMER OPPORTUNITY TRUST PORTFOLIO as of August 31, 1998
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Valuation of
Number Market Value Securities
of Shares Name of Issuer Per Share (Note 1)
- --------------- ------------------------------------------------------------------------------------ --------------
<S> <C> <C> <C>
29,504 Callaway Golf Company $ 9.9375 $ 293,196
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21,575 Cisco Systems, Incorporated 81.8750 1,766,453
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31,003 Compaq Computer Corporation 27.9375 866,146
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22,513 Conseco Inc. 27.6250 621,922
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55,205 Del Webb Corporation 19.6875 1,086,848
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24,965 Equitable Companies, Incorporated 57.1875 1,427,686
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27,610 First Data Corporation 20.6875 571,182
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24,977 Franklin Resources, Incorporated 32.2500 805,508
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98,100 Golden Books Family Entertainment, Incorporated 1.3437 131,822
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38,579 Harley-Davidson, Incorporated 30.8125 1,188,715
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31,572 Hilton Hotels Corporation 20.7500 655,119
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10,791 Intel Corporation 71.1875 768,184
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42,168 K2, Incorporated 18.4375 777,473
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30,715 Marriott International, Incorporated 28.0625 861,940
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33,094 Mentor Corporation 14.3750 475,726
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10,989 Merck & Company, Incorporated 115.9375 1,274,037
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17,408 NationsBank Corporation 57.0000 992,256
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26,105 Oracle Corporation 19.9375 520,468
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34,232 Petco Animal Supplies, Incorporated 6.9375 237,485
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47,671 Royal Caribbean Cruises Ltd. 24.2500 1,156,022
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31,202 Service Corporation International 33.8750 1,056,968
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3,857 Sodexho Marriott Services Incorporated 24.8750 95,943
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29,504 SunAmerica, Incorporated 61.9375 1,827,404
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28,935 Sunrise Assisted Living, Incorporated 26.1250 755,927
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21,758 Tiffany & Company 37.1875 809,126
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35,224 T. Rowe Price Associates 30.3750 1,069,929
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39,763 Walt Disney Company 27.4375 1,090,997
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29,687 Whole Foods Market, Incorporated 41.2500 1,224,589
------------- -------------
878,706 $ 24,409,071
============= ==============
</TABLE>
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The accompanying notes are an integral part of these statements.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 73
Notes to Financial Statements
August 31, 1998
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national securities exchange are
valued at the closing sales price or, if no such price exists, or if the Equity
Securities are not listed at the closing bid price thereof.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national securities exchange on the closing sale
prices on the exchange or, if not so listed, on the ask price thereof. The cost
was determined on the day of the various Dates of Deposit.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in the Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value described in
Note 1 and (3) accumulated dividends thereon, less accrued expenses of the
Trust, if any.
Federal Income Taxes - Each Unitholder is considered to be the owner of a pro
rata portion of the Trust and, accordingly, no provision has been made for
Federal Income Taxes.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
Organizational Costs - The trust will bear all or a portion of its
organizational costs, which will be deferred and amoritized over the life of the
trust.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at August 31, 1998 is as follows:
Baby Boomer
Opportunity
Trust
---------------
Unrealized Appreciation $ 2,792,674
Unrealized Depreciation (6,254,701)
---------------
$ (3,462,027)
===============
NOTE 3- OTHER
Marketability - Although it is not obligated to do so, the Sponsor intends to
maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the value of the Securities in
the portfolio of the Trust valued as described in Note 1, plus accumulated
dividends to the date of settlement. If the supply of Units exceeds demand, or
for other business reasons, the Sponsor may discontinue purchases of Units at
such prices. In the event that a market is not maintained for the Units, a
Unitholder desiring to dispose of his Units may be able to do so only by
tendering such Units to the Trustee for redemption price.
Cost to Investors - The cost to original investors was based on adding to the
underlying value of the Securities per Unit on the date of an investor's
purchase, plus an amount equal to the difference between the maximum sales
charge of 4.5% of the Public Offering Price which is equivalent to 4.712% of the
aggregate underlying value of the Securities and the maximum deferred sales
charge of ($0.20 per Unit). These investors paid a deferred sales charge of
$0.20 per Unit. Effective on each September 16th commencing September 16, 1998,
the secondary market sales charge does not include deferred payments but will
instead include only a one-time initial sales charge of 4.0% of the Public
Offering Price and will decrease by .5 of 1% to a minimum sales charge of 3.0%.
Compensation of Evaluator and Supervisor - The Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.0025 per Unit, not to
exceed the aggregate cost of the Supervisor for providing such services to all
applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases under
the category "All Services Less Rent of Shelter" in the Consumer Price Index.
NOTE 4 - REDEMPTION OF UNITS
During the period ended August 31, 1998, 676,386 Units were presented for
redemption.
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
Baby Boomer Opportunity Trust Prospectus Part Two
- --------------------------------------------------------------------------------
The Fund. Van Kampen American Capital Equity Opportunity Trust (the " Fund" )
is comprised of separate and distinct unit investment trusts, including series
of the Baby Boomer Opportunity Trust (the "Trust"). The Trust offers investors
the opportunity to purchase Units representing proportionate interests in a
fixed portfolio of equity securities issued by companies from a variety of
industries expected to benefit from demographic trends associated with those
born between 1946 and 1964, commonly referred to as the "Baby Boomers" ("Equity
Securities" or " Securities" ). See "Trust Portfolio" . Unless terminated
earlier, the Trust will terminate on the Mandatory Termination Date set forth
under "Summary of Essential Financial Information" in Part One and any
Securities then held will, within a reasonable time thereafter, be liquidated or
distributed by the Trustee. Any Securities liquidated at termination will be
sold at the then current market value for such Securities; therefore, the amount
distributable in cash to a Unitholder upon termination may be more or less than
the amount such Unitholder paid for his Units.
Attention Foreign Investors. If you are not a United States citizen or
resident, distributions from the Trust will generally be subject to U.S. Federal
withholding taxes; however, under certain circumstances treaties between the
United States and other countries may reduce or eliminate such withholding tax.
See "Federal Taxation." Such investors should consult their tax advisers
regarding the imposition of U.S. withholding on distributions.
Objective of the Trust..The objective of the Trust is to provide the
potential for capital appreciation and income, consistent with the preservation
of invested capital, by investing in a portfolio of equity securities of
companies from a variety of industries expected to benefit from demographic
trends associated with those born between 1946 and 1964. 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
includes the aggregate underlying value of the Securities in the Trust's
portfolio, the applicable sales charge described herein, and cash, if any, in
the Income and Capital Accounts held or owned by the Trust. For sales charges in
the secondary market, see "Public Offering." The minimum purchase is 100 Units
except for certain transactions described under "Public
Units of the Trust are not deposits or obligations of, or guaranteed or
endorsed by, any bank and are not federally insured or otherwise protected by
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency and involve investment risk, including the possible loss of
principal.
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
Both parts of this Prospectus should be retained for future reference. This
Prospectus is dated as of the date of the Prospectus Part I accompanying this
Prospectus Part II.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Dividend and Capital Distributions. Distributions of dividends and capital,
if any, received by the Trust will be paid in cash on the applicable
Distribution Date to Unitholders of record on the record date as set forth in
the " Summary of Essential Financial Information" in Part One. Gross dividends
received by the Trust will be distributed to Unitholders. Expenses of the Trust
will be paid with proceeds from the sale of Securities. For the consequences of
such sales, see "Federal Taxation" . Additionally, upon termination of the
Trust, the Trustee will distribute, upon surrender of Units for redemption, to
each Unitholder his pro rata share of the Trust's assets, less expenses, in the
manner set forth under "Rights of Unitholders--Distributions of Income and
Capital."
Secondary Market for Units. Although not obligated to do so, the Sponsor
intends to maintain a market for Units of the Trust and offer to repurchase such
Units at prices which are based on the aggregate underlying value of Equity
Securities in the Trust (generally determined by the closing sale or bid prices
of the Securities) plus or minus cash, if any, in the Capital and Income
Accounts of the Trust. If a secondary market is not maintained, a Unitholder may
redeem Units through redemption at prices based upon the aggregate underlying
value of the Equity Securities in the Trust plus or minus a pro rata share of
cash, if any, in the Capital and Income Accounts of the Trust. A Unitholder
tendering 1,000 or more Units for redemption may request a distribution of
shares of Securities (reduced by customary transfer and registration charges) in
lieu of payment in cash. See "Rights of Unitholders--Redemption of Units."
Termination. Commencing on the Mandatory Termination Date, Equity Securities
will begin to be sold in connection with the termination of the Trust. The
Sponsor will determine the manner, timing and execution of the sale of the
Equity Securities. Written notice of any termination of the Trust specifying the
time or times at which Unitholders may surrender their certificates for
cancellation shall be given by the Trustee to each Unitholder at his address
appearing on the registration books of the Trust maintained by the Trustee. At
least 30 days prior to the Mandatory Termination Date the Trustee will provide
written notice thereof to all Unitholders and will include with such notice a
form to enable Unitholders to elect a distribution of shares of Equity
Securities if such Unitholder owns at least 1,000 Units of the Trust, rather
than to receive payment in cash for such Unitholder's pro rata share of the
amounts realized upon the disposition by the Trustee of Equity Securities. All
Unitholders will receive cash in lieu of any fractional shares. To be effective,
the election form, together with surrendered certificates if issued, and other
documentation required by the Trustee, must be returned to the Trustee at least
five business days prior to the Mandatory Termination Date. Unitholders not
electing a distribution of shares of Equity Securities will receive a cash
distribution from the sale of the remaining Securities within a reasonable time
after the Trust is terminated. See "Trust Administration--Amendment or
Termination."
Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales charge
to the extent stated in the related prospectus (which may be deferred in certain
cases). Unitholders also have the opportunity to have their distributions
reinvested into additional Units of the Trust, if Units are available at the
time of reinvestment, or into an open-end management investment company as
described herein. See "Rights of Unitholders--Reinvestment Option."
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including the possible deterioration of the
financial condition of the issuers, the general condition of the stock market
and volatile interest rates. See "Risk Factors" and "Trust Portfolio."
THE TRUST
Van Kampen American Capital Equity Opportunity Trust is comprised of separate
and distinct unit investment trusts, including series of the Baby Boomer
Opportunity Trust. The Trust was created under the laws of the State of New York
pursuant to a Trust Indenture and Agreement (the "Trust Agreement"), dated the
Initial Date of Deposit, among Van Kampen American Capital Distributors, Inc.,
as Sponsor, American Portfolio Evaluation Services, a division of Van Kampen
American Capital Investment Advisory Corp., as Evaluator, Van Kampen American
Capital Investment Advisory Corp., as Supervisor, and The Bank of New York, as
Trustee.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities
issued by companies from a variety of industries expected to benefit from
demographic trends associated with those born between 1946 and 1964, commonly
referred to as "Baby Boomers." Diversification of assets in the Trust will not
eliminate the risk of loss always inherent in the ownership of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities, including delivery statements relating to contracts for the purchase
of certain such Securities and an irrevocable letter of credit issued by a
financial institution in the amount required for such purchases. Thereafter, the
Trustee, in exchange for such Securities (and contracts) so deposited, delivered
to the Sponsor documentation evidencing the ownership of Units of the Trust.
Unless otherwise terminated as provided in the Trust Agreement, the Trust will
terminate on the Mandatory Termination Date and Securities then held will within
a reasonable time thereafter be liquidated or distributed by the Trustee.
Each Unit of the Trust initially offered represents an undivided interest in
the Trust. To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest in the Trust represented by each unredeemed Unit
will increase, 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 and income, consistent with the preservation of invested capital.
The portfolio is described under "Trust Portfolio" and "Portfolio" . In
selecting the Securities, the Sponsor considered the extent to which the issuers
provide goods and/or services which will benefit from the demographic trends
associated with the generation known as the Baby Boomers, which is generally
acknowledged as those born between 1946 and 1964. In particular, the Sponsor
considered the following factors, among others, in selecting the Securities: (a)
the issuer had to represent a pure play in the targeted investment area (for
example, a company involved in leisure-related products or services had to be
involved entirely in such products or services); (b) earnings per share
estimates had to generally be experiencing upward revisions by analysts; (c) the
issuer had to have a ratio of price/earnings to long-term earnings growth rate
lower than that of the Standard & Poor's 500 Index (i.e., lower than a ratio of
3.1); and (d) the issuer's mean long-term earnings growth rate estimate had to
exceed 12% (compared to 6% for the Standard & Poor's 500 Index). Of course,
there can be no assurance that the issuers of the Securities selected through
this process will continue to satisfy such criteria subsequent to the Initial
Date of Deposit.
The Baby Boomer Generation. The baby boomer generation, the 76 million
Americans born between 1946 and 1964, began turning 50 years old in 1996.
Demographics show that aging baby boomers could have a significant impact on
individual lifestyles, the economy and specific industries. Approximately every
seven seconds of every day for ten years a baby boomer will turn 50 and over
fifteen years the number of people between 50 and 64 is expected to nearly
double. As baby boomers, who represent more than one-third of all Americans,
grow older, they are expected to adjust to different personal and financial
circumstances. For example, many reports have noted that the diaper industry
prospered when the first baby boomers were born, the shoe industry grew as baby
boomers grew, and financial publications experienced growth as baby boomers
began to focus on their careers. The Trust has targeted the companies which the
Sponsor believes are in a position to potentially benefit from these shifting
American demographics. As baby boomers make plans for retirement, more leisure
time and future healthcare needs, the Sponsor believes that companies within the
entertainment, financial, healthcare, leisure, real estate and technology
sectors offer the potential to benefit the most.
Equity Securities. Stocks have been acknowledged as one of the best ways to
increase the value of assets and stay ahead of inflation over time. A single
dollar invested in common stocks (as represented by the Standard & Poor's 500
Index) in 1926 would have been worth $1,371.98 by December 31, 1996. Inflation
(Consumer Price Index) would have increased the cost of a dollar's worth of
goods to only $8.88 over the same period. A single dollar invested in long-term
U.S. government bonds and short-term U.S. Treasury Bills would have grown to
$33.66 and $13.54, respectively, over this period. Of course, these figures
represent past performance of these categories and there is no guarantee of
future results, either of these categories or of the Trust. Unitholders will be
subject to charges, expenses and taxes which are not reflected in these figures.
General. An investor will be subject to taxation on the dividend income
received from the Trust and on gains from the sale or liquidation of Securities
(see "Federal Taxation" ). Investors should be aware that there is not any
guarantee that the objectives of the Trust will be achieved because they are
subject to the continuing ability of the respective Security issuers to continue
to declare and pay dividends and because the market value of the Securities can
be affected by a variety of factors. Common stocks may be especially susceptible
to general stock market movements and to volatile increases and decreases of
value as market confidence in and perceptions of the issuers change. Investors
should be aware that there can be no assurance that the value of the underlying
Securities will increase or that the issuers of the Equity Securities will pay
dividends on outstanding common shares. Any distributions of income will
generally depend upon the declaration of dividends by the issuers of the
Securities and the declaration of any dividends depends upon several factors
including the financial condition of the issuers and general economic
conditions.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust as of the Initial Date of
Deposit. Subsequent to the Initial Date of Deposit, the Securities may no longer
meet such criteria. Should an Equity Security no longer meet such criteria, such
Equity Security will not, simply as a result of such fact, be removed from the
portfolio of the Trust.
Investors should be aware that the Trust is not a "managed" fund and as a
result the adverse financial condition of a company will not result in its
elimination from the portfolio except under extraordinary circumstances (see
"Trust Administration--Portfolio Administration" ). In addition, Securities will
not be sold by the Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in particular that the
Securities were selected by the Sponsor as of the Initial Date of Deposit. The
Trust may continue to purchase or hold Securities originally selected through
this process even though the evaluation of the attractiveness of the Securities
may have changed and, if the evaluation were performed again at that time, the
Securities would not be selected for the Trust.
TRUST PORTFOLIO
The Trust consists of Equity Securities which are primarily issued by
companies from a variety of industries expected to benefit from demographic
trends associated with those born between 1946 and 1964, commonly referred to as
the "Baby Boomers" . All of the Equity Securities are listed on a national
securities exchange, the NASDAQ National Market System or are traded in the
over-the-counter market.
General. The Trust consists of (a) the Securities listed under " Portfolio"
in Part One as may continue to be held from time to time in the Trust, (b) any
additional Securities acquired and held by the Trust pursuant to the provisions
of the Trust Agreement and (c) any cash held in the Income and Capital Accounts.
Neither the Sponsor nor the Trustee shall be liable in any way for any failure
in any of the Securities. However, should any contract for the purchase of any
of the Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the Trust to cover such purchase are
reinvested in substitute Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract to all
Unitholders on the next distribution date.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will in most cases be distributed to Unitholders and will not be
reinvested, no assurance can be given that the Trust will retain for any length
of time its present size and composition. Although the portfolio is not managed,
the Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. See "Trust Administration--Portfolio Administration."
Equity Securities, however, will not be sold by the Trust to take advantage of
market fluctuations or changes in anticipated rates of appreciation or
depreciation.
RISK FACTORS
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails, including the risk that the
financial condition of the issuers of the Equity Securities or the general
condition of the common stock market may worsen and the value of the Equity
Securities and therefore the value of the Units may decline. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of the
issuers change. These perceptions are based on unpredictable factors including
expectations regarding government economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, global or
regional political, economic or banking crises. Shareholders of common stocks
have rights to receive payments from the issuers of those common stocks that are
generally subordinate to those of creditors of, or holders of debt obligations
or preferred stocks of, such issuers. Shareholders of common stocks of the type
held by the Trust have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and have a right to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. Certain of the
issuers may currently be in arrears with respect to preferred stock dividend
payments. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of principal,
interest and dividends which could adversely affect the ability and inclination
of the issuer to declare or pay dividends on its common stock or the rights of
holders of common stock with respect to assets of the issuer upon liquidation or
bankruptcy. The value of common stocks is subject to market fluctuations for as
long as the common stocks remain outstanding, and thus the value of the Equity
Securities in the portfolio may be expected to fluctuate over the life of the
Trust to values higher or lower than those prevailing on the Initial Date of
Deposit or at the time a Unitholder purchases Units.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Cumulative preferred stock dividends must be paid before
common stock dividends and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on liquidation
which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made for
any of the Equity Securities, that any market for the Equity Securities will be
maintained or of the liquidity of the Equity Securities in any markets made. In
addition, the Trust may be restricted under the Investment Company Act of 1940
from selling Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions, and the value of the Trust, will be
adversely affected if trading markets for the Equity Securities are limited or
absent.
As described under "Trust Operating Expenses," all of the expenses of the
Trust will be paid from the sale of Securities from the Trust. It is expected
that such sales will be made at the end of the initial offering period and each
month thereafter through termination of the Trust. Such sales will result in
capital gains and losses and may be made at times and prices which adversely
affect the Trust. For a discussion of the tax consequences of such sales, see
"Federal Taxation."
Unitholders will be unable to dispose of any of the Equity Securities in the
portfolio, as such, and will not be able to vote the Equity Securities. As the
holder of the Equity Securities, the Trustee will have the right to vote all of
the voting stocks in the Trust and will vote such stocks in accordance with the
instructions of the Sponsor. In the absence of any such instructions by the
Sponsor, the Trustee will vote such stocks so as to insure that the stocks are
voted as closely as possible in the same manner and the same general proportion
as are shares held by owners other than the Trust.
FEDERAL TAXATION
The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986 (the "Code" ). Unitholders should consult
their tax advisers in determining the federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in the Trust.
For purposes of the following discussion and opinion, it is assumed that each
Equity Security is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from the Trust asset when such income is received by the Trust.
2. Each Unitholder will be considered to have received all of the dividends
paid on his pro rata portion of each Equity Security when such dividends are
considered to be received by the Trust regardless of whether such dividends are
used to pay a portion of the deferred sales charge. Unitholders will be taxed in
this manner regardless of whether distributions from the Trust are actually
received by the Unitholder or are automatically reinvested.
3. Each Unitholder will have a taxable event when the Trust disposes of an
Equity Security (whether by sale, exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unitholder (except to
the extent an in kind distribution of stock is received by such Unitholder as
described below). The price a Unitholder pays for his Units is allocated among
his pro rata portion of each Equity Security held by the Trust (in proportion to
the fair market values thereof on the valuation date nearest the date the
Unitholder purchase his Units) in order to determine his initial tax basis for
his pro rata portion of each Equity Security held by the Trust. 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 advisers
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 an Equity Security held by the Trust
are taxable as ordinary income to the extent of such corporation's current and
accumulated "earnings and profits" . A Unitholder's pro rata portion of
dividends paid on such Equity Security which exceeds such current and
accumulated earnings and profits will first reduce a Unitholder's tax basis in
such Equity Security, and to the extent that such dividends exceed a
Unitholder's tax basis in such Equity Security shall generally be treated as
capital gain. In general, 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 Equity Securities held by the Trust will generally
be considered a capital gain except in the case of a dealer or a financial
institution. A Unitholder's portion of loss, if any, upon the sale or redemption
of Units or the disposition of Equity Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unitholders should consult their tax advisers regarding
the recognition of such capital gains and losses for federal income tax purpose.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Equity Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics' and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. It should be noted that various
legislative proposals that would affect the dividends received deduction have
been introduced. Unitholders should consult with their tax advisers with respect
to the limitations on and possible modifications to the dividends received
deduction.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income. Unitholders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Equity Securities by
the Trust or Disposition of Units. As discussed above, a Unitholder may
recognize taxable gain (or loss) when an Equity Security is disposed of by the
Trust or if the Unitholder disposes of a Unit. For taxpayers other than
corporations, net capital gains (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.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered" conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit, he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust including his pro rata
portion of all Equity 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, off-setting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their own
tax advisers with regard to any such constructive sales rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of Unitholders--Redemption of
Units" , under certain circumstances a Unitholder tendering Units for redemption
may request an In Kind Distribution. A Unitholder may also under certain
circumstances request an In Kind Distribution upon the termination of the Trust.
See "Rights of Unitholders--Redemption of Units." As previously discussed, prior
to the redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust assets for federal
income tax purposes. The receipt of an In Kind Distribution will result in a
Unitholder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution
with respect to each Equity Security held by the Trust will depend on whether or
not a Unitholder receives cash in addition to Equity Securities. An " Equity
Security" for this purpose is a particular class of stock issued by a particular
corporation. A Unitholder will not recognize gain or loss if a Unitholder only
receives Equity Securities in exchange for his or her pro rata portion in the
Equity Securities held by the Trust. However, if a Unitholder also receives cash
in exchange for a fractional share of an Equity Security held by the Trust, such
Unitholder will generally recognize gain or loss based upon the difference
between the amount of cash received by the Unitholder and his tax basis in such
fractional share of an Equity Security held by the Trust.
Because the Trust will own many Equity Securities, a Unitholder who requests
an In Kind Distribution will have to analyze the tax consequences with respect
to each Equity Security owned by the Trust. The amount of taxable gain (or loss)
recognized upon such exchange will generally equal the sum of the gain (or loss)
recognized under the rules described above by such Unitholder with respect to
each Equity Security owned by the Trust. Unitholders who request an In Kind
Distribution are advised to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder of his
Units. The cost of the Units is allocated among the Equity Securities held in
the Trust in accordance with the proportion of the fair market values of such
Equity Securities on the valuation date nearest the date the Units are purchased
in order to determine such Unitholder's tax basis for his pro rata portion of
each Equity Security.
A Unitholder's tax basis in his Units and his pro rata portion of an Equity
Security held by the Trust will be reduced to the extent dividends paid with
respect to such Equity Security are received by the Trust which are not taxable
as ordinary income as described above.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified by the Internal Revenue Service that payments to the
Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
Distributions by the Trust (other than those that are not treated as United
States source income, if any) will generally be subject to United States income
taxation and withholding in the case of Units held by non-resident alien
individuals, foreign corporations or other non-United States persons. Such
persons should consult their tax advisers.
Unitholders will be notified annually of the amounts of dividends includible
in the Unitholder's gross income and amounts of Trust expenses which may be
claimed as itemized deductions.
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 foreign,
state or local taxation 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
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trust. However, Van Kampen
American Capital Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive an annual supervisory fee which is not to exceed the
amount set forth under "Summary of Essential Financial Information," for
providing portfolio supervisory services for the Trust. Such fee (which is based
on the number of Units outstanding on January 1 of each year for which such
compensation relates) may exceed the actual costs of providing such supervisory
services for this Trust, but at no time will the total amount received for
portfolio supervisory services rendered to all Series of the Fund and to any
other unit investment trusts sponsored by the Sponsor for which the Supervisor
provides portfolio supervisory services in any calendar year exceed the
aggregate cost to the Supervisor of supplying such services in such year. In
addition, the Evaluator, which is a division of Van Kampen American Capital
Investment Advisory Corp., shall receive the annual per Unit evaluation fee set
forth under "Summary of Essential Financial Information" (which amount is based
on the number of Units outstanding on January 1 of each year for which such
compensation relates) for regularly evaluating the Trust portfolio. The
foregoing fees are payable as described under "General" below. Both of the
foregoing fees may be increased without approval of the Unitholders by amounts
not exceeding proportionate increases under the category "All Services Less Rent
of Shelter" in the Consumer Price Index published by the United States
Department of Labor or, if such category is no longer published, in a comparable
category. The Sponsor will receive sales commissions and may realize other
profits (or losses) in connection with the sale of Units and the deposit of the
Securities as described under "Public Offering--Sponsor Compensation."
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trust set forth under "Summary of Essential Financial Information"
(which amount is based on the number of Units outstanding on January 1 of each
year for which such compensation relates). The Trustee's fees are payable as
described under "General" below. The Trustee benefits to the extent there are
funds for future distributions, payment of expenses and redemptions in the
Capital and Income Accounts since these Accounts are non-interest bearing to
Unitholders and the amounts earned by the Trustee are retained by the Trustee.
Part of the Trustee's compensation for its services to the Trust is expected to
result from the use of these funds. Such fees may be increased without approval
of the Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor or, if such category is no
longer published, in a comparable category. For a discussion of the services
rendered by the Trustee pursuant to its obligations under the Trust Agreement,
see "Rights of Unitholders--Reports Provided" and "Trust Administration."
Miscellaneous Expenses. Expenses incurred in establishing the Trust,
including the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and certificates), federal and state
registration fees, the initial fees and expenses of the Trustee, legal and
accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over a five year period. The
following additional charges are or may be incurred by the Trust: (a) normal
expenses (including the cost of mailing reports to Unitholders) incurred in
connection with the operation of the Trust, (b) fees of the Trustee for
extraordinary services, (c) expenses of the Trustee (including legal and
auditing expenses) and of counsel designated by the Sponsor, (d) various
governmental charges, (e) expenses and costs of any action taken by the Trustee
to protect the Trust and the rights and interests of Unitholders, (f)
indemnification of the Trustee for any loss, liability or expenses incurred in
the administration of the Trust without negligence, bad faith or willful
misconduct on its part, (g) accrual of costs associated with liquidating
securities and (h) expenditures incurred in contacting Unitholders upon
termination of the Trust. The expenses set forth herein are payable as described
under "General" below.
General. The fees and expenses of the Trust will accrue on a daily basis and
will be charged to the Trust, in arrears, on a monthly basis as of the tenth day
of each month. The fees and expenses are payable out of the Capital Account.
When such fees and expenses are paid by or owing to the Trustee, they are
secured by a lien on the Trust's portfolio. It is expected that the balance in
the Capital Account will be insufficient to provide for amounts payable by the
Trust and that Equity Securities will be sold from the Trust to pay such
amounts. These sales will result in capital gains or losses to Unitholders. See
"Federal Taxation" .
PUBLIC OFFERING
General. Units are offered at the Public Offering Price. The Public Offering
Price is based on the aggregate underlying value of the Securities in the
Trust's portfolio, the sales charge described below, and cash, if any, in the
Income and Capital Accounts held or owned by the Trust. The sales charge for
secondary market transactions is described under "Summary of Essential FInancial
Information" in Part One and will generally be reduced by .5 of 1% annually to a
minimum sales charge of 3.5%.
Any sales charge reduction will primarily be the responsibility of the
selling broker, dealer or agent. Employees, officers and directors (including
their spouses, children, grandchildren, parents, grandparents, siblings,
mothers-in-law, fathers-in-law, sons-in-law and daughters-in-law, and trustees,
custodians or fiduciaries for the benefit of such persons) of Van Kampen
American Capital Distributors, 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.
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 spouse or children and (4)
officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything to
the contrary in this Prospectus, such investors, bank trust departments, firm
employees and bank holding company officers and directors who purchase Units
through this program will not receive sales charge reductions for quantity
purchases.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in Part One in
accordance with fluctuations in the prices of the underlying Securities in the
Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to the total sales charge and dividing the sum so obtained by the number
of Units outstanding. The Public Offering Price shall also include the
proportionate share of any cash held in the Capital Account. This computation
produced a gross underwriting profit equal to the total sales charge. Such price
determination as of the close of business on the day before the Initial Date of
Deposit was made on the basis of an evaluation of the Securities in the Trust
prepared by Interactive Data Corporation, a firm regularly engaged in the
business of evaluating, quoting or appraising comparable securities. After the
close of business on the day before the Initial Date of Deposit, the Evaluator
will appraise or cause to be appraised daily the value of the underlying
Securities as of the Evaluation Time on days the New York Stock Exchange is open
and will adjust the Public Offering Price of the Units commensurate with such
valuation. Such Public Offering Price will be effective for all orders received
prior to the Evaluation Time on each such day. Orders received by the Trustee or
Sponsor for purchases, sales or redemptions after that time, or on a day when
the New York Stock Exchange is closed, will be held until the next determination
of price. The Sponsor currently does not intend to maintain a secondary market
during the last six months of a Trust's life.
The value of the Equity Securities is determined on each business day by the
Evaluator in the following manner: If the Equity Securities are listed on a
national securities exchange this evaluation is generally based on the closing
sale prices on that exchange (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale price on
that exchange, at the closing bid prices. If the Equity Securities are not so
listed or, if so listed and the principal market therefor is other than on the
exchange, the evaluation shall generally be based on the current bid price on
the over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current bid prices are unavailable,
the evaluation is generally determined (a) on the basis of current bid prices
for comparable securities, (b) by appraising the value of the Equity Securities
on the bid side of the market or (c) by any combination of the above.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities in the Trust
but rather the entire pool of Securities, taken as a whole, which are
represented by the Units.
Unit Distribution. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. Units repurchased in the
secondary market, if any, may be offered by this Prospectus at the secondary
market Public Offering Price in the manner described above.
The Sponsor intends to qualify the Units for sale in a number of states. Any
discount provided to investors will be borne by the selling dealer or agent as
indicated under "General" above. For secondary market transactions, the
concession or agency commission will amount to 70% of the sales charge
applicable to the transaction. The breakpoint concession or agency commission
are applied on either a Unit or a dollar basis utilizing a breakpoint equivalent
of $10 per Unit and will be applied on whichever basis is more favorable to the
broker-dealer. The breakpoints will be adjusted to take into consideration
purchase orders stated in dollar which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge (equal to the agency
commission referred to above) is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions and the banking
regulators have not indicated that these particular agency transactions are not
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units except as stated
herein. In connection with fully disclosed transactions with the Sponsor, the
minimum purchase requirement will be that number of Units set forth in the
contract between the Sponsor and the related broker or agent. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units and to change the amount of the concession or agency commission to dealers
and others from time to time.
Sponsor Compensation. The Sponsor will receive a gross sales commission equal
to the total sales charge imposed on Units, less any reduced sales charge (as
described under "General" above). Any discount provided to investors will be
borne by the selling broker, dealer or agent as indicated under " General"
above.
In addition, the Sponsor realized a profit or sustained 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. The Sponsor has not participated
as sole underwriter or as manager or as a member of the underwriting syndicates
or as an agent in a private placement for any of the Securities in the Trust
portfolio. The Sponsor may further realize additional profit or loss as a result
of the possible fluctuations in the market value of the Securities in the Trust
after a date of deposit, since all proceeds received from purchasers of Units
(excluding dealer concessions and agency commissions allowed, if any) will be
retained by the Sponsor.
Broker-dealers of the Trust, banks and/or others may be eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their representatives who have sold a minimum number of units
of unit investment trusts created by the Sponsor during a specified time period.
In addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, banks and/or others may be eligible
to win other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to such brokers, dealers, banks and/or others that sponsor
sales contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by such
persons at the public offering price during such programs. Also, the Sponsor in
its discretion may from time to time pursuant to objective criteria established
by the Sponsor pay fees to qualifying entities for certain services or
activities which are primarily intended to result in sales of Units of the
Trust. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of the Trust. These programs will not change the price Unitholders
pay for their Units or the amount that the Trust will receive from the Units
sold.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior to
the date of settlement for the purchase of Units may be used in the Sponsor's
business and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor intends to maintain a
secondary market for Units of the Trust for the period indicated. In so
maintaining a market, the Sponsor will also realize profits or sustain losses in
the amount of any difference between the price at which Units are purchased and
the price at which Units are resold (which price includes the applicable sales
charge). In addition, the Sponsor will also realize profits or sustain losses
resulting from a redemption of such repurchased Units at a price above or below
the purchase price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Sponsor intends to
maintain a market for the Units offered hereby and offer continuously to
purchase Units at prices, subject to change at any time, based upon the
aggregate underlying value of the Equity Securities in the Trust. If the supply
of Units exceeds demand or if some other business reason warrants it, the
Sponsor may either discontinue all purchases of Units or discontinue purchases
of Units at such prices. It is the current intention of the Sponsor not to
maintain a market for Units during the final six months of the Trust's life. In
the event that a market is not maintained for the Units and the Unitholder
cannot find another purchaser, a Unitholder desiring to dispose of his Units may
be able to dispose of such Units only by tendering them to the Trustee for
redemption at the Redemption Price. See "Rights of Unitholders--Redemption of
Units." A Unitholder who wishes to dispose of his Units should inquire of his
broker as to current market prices in order to determine whether there is in
existence any price in excess of the Redemption Price and, if so, the amount
thereof.
Tax-Sheltered Retirement Plans. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The purchase
of Units of the Trust may be limited by the plans' provisions and does not
itself establish such plans.
RIGHTS OF UNITHOLDERS
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust will be evidenced by certificates unless a
Unitholder or the Unitholder's registered broker-dealer makes a written request
to the Trustee that ownership be in book entry form. Units are transferable by
making a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred with
the signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program (" STAMP" ) or such other signature guarantee program in
addition to, or in substitution for, STAMP as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Certificates will be
issued in denominations of one Unit or any whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require
a Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in connection
with each such transfer or interchange. Destroyed, stolen, mutilated or lost
certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity, evidence of ownership and payment of expenses incurred. Mutilated
certificates must be surrendered to the Trustee for replacement.
Distributions of Income and Capital. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account of the Trust. Proceeds
from the sale of Securities to meet redemptions of Units shall be segregated
within the Capital Account from proceeds from the sale of Securities made to
satisfy the fees, expenses and charges of the Trust.
The Trustee will distribute any income received with respect to any of the
Securities in the Trust on or about the Income Distribution Dates to Unitholders
of record on the preceding Income Record Dates. See "Summary of Essential
Financial Information" in Part One. Proceeds received on the sale of any
Securities in the Trust, to the extent not used to meet redemptions of Units,
pay the deferred sales charge or pay fees and expenses, will be distributed
annually on the Capital Account Distribution Date to Unitholders of record on
the preceding Capital Account Record Date. Proceeds received from the
disposition of any of the Securities after a record date and prior to the
following distribution date will be held in the Capital Account and not
distributed until the next distribution date applicable to such Capital Account.
The Trustee is not required to pay interest on funds held in the Capital or
Income Accounts (but may itself earn interest thereon and therefore benefits
from the use of such funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account. Because dividends
are not received by the Trust at a constant rate throughout the year, such
distributions to Unitholders are expected to fluctuate from distribution to
distribution. Persons who purchase Units will commence receiving distributions
only after such person becomes a record owner. Notification to the Trustee of
the transfer of Units is the responsibility of the purchaser, but in the normal
course of business such notice is provided by the selling broker-dealer.
As of the tenth day of each month, the Trustee will deduct from the Capital
Account amounts necessary to pay the expenses of the Trust (as determined on the
basis set forth under "Trust Operating Expenses" ). The Trustee also may
withdraw from the Income and Capital Accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of the
Trust. Amounts so withdrawn shall not be considered a part of the Trust's assets
until such time as the Trustee shall return all or any part of such amounts to
the appropriate accounts. In addition, the Trustee may withdraw from the Income
and Capital Accounts such amounts as may be necessary to cover redemptions of
Units.
Reinvestment Option. Unitholders of the Trust may elect to have each
distribution of income, capital gains and/or capital on their Units
automatically reinvested in additional Units of the Trust (to the extent Units
may be lawfully offered for sale in the state in which the Unitholder resides).
To participate in the reinvestment plan, a Unitholder may either contact his or
her broker or agent or file with the Trustee a written notice of election at
least ten days prior to the Record Date for which the first distribution is to
apply. A Unitholder's election to participate in the reinvestment plan will
apply to all Units of the Trust owned by such Unitholder and such election will
remain in effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market" ) or, until such
time as additional Units cease to be issued by the Trust (see " The Trust" ),
distributions may be reinvested in such additional Units. If Units are
unavailable in the secondary market, distributions which would otherwise have
been reinvested shall be paid in cash to the Unitholder on the applicable
Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made based on the net asset value for Units of the Trust as of the Evaluation
Time on the related Distribution Dates. Under the reinvestment plan, the Trust
will pay the Unitholder's distributions to the Trustee which in turn will
purchase for such Unitholder full and fractional Units of the Trust and will
send such Unitholder a statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of income, capital gains
and/or capital on their Units automatically reinvested in Class A shares of
certain Van Kampen American Capital or Morgan Stanley mutual funds which are
registered in the Unitholder's state of residence. Such mutual funds are
hereinafter collectively referred to as the "Reinvestment Funds" .
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trust. The prospectus relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen American
Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois
60181. Texas residents who desire to reinvest may request that a broker-dealer
registered in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
income, capital gains and/or capital on the participant's Units will, on the
applicable distribution date, automatically be applied, as directed by such
person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange on such date.
Unitholders with an existing Guaranteed Reinvestment Option (GRO) Program
account (whereby a sales charge is imposed on distribution reinvestments) may
transfer their existing account into a new GRO account which allows purchases of
Reinvestment Fund shares at net asset value as described above. Confirmations of
all reinvestments by a Unitholder into a Reinvestment Fund will be mailed to the
Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next
succeeding distribution date, by so notifying the Trustee in writing, elect to
terminate his or her reinvestment plan and receive future distributions on his
or her Units in cash. There will be no charge or other penalty for such
termination. The Sponsor, each Reinvestment Fund, and its investment adviser
shall have the right to suspend or terminate the reinvestment plan at any time.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit outstanding. For as long as the Sponsor deems it to be in the best
interest of the Unitholders, the accounts of the Trust shall be audited, not
less frequently than annually, by independent certified public accountants, and
the report of such accountants shall be furnished by the Trustee to Unitholders
upon request. Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each person who at any time during the
calendar year was a registered Unitholder a statement (i) a statement 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) a
statement as to the Capital Account: the dates of disposition of any Securities
and the net proceeds received therefrom, deductions for payment of applicable
taxes, fees and expenses of the Trust held for distribution to Unitholders of
record as of a date prior to the determination and the balance remaining after
such distributions and deductions expressed both as a total dollar amount and as
a dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (iii) a list of the Securities held and
the number of Units outstanding on the last business day of such calendar year;
(iv) the Redemption Price per Unit based upon the last computation thereof made
during such calendar year; and (v) amounts actually distributed during such
calendar year from the Income and Capital Accounts, separately stated, expressed
as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286 and, in the case of Units evidenced by a
certificate, by tendering such certificate to the Trustee, duly endorsed or
accompanied by proper instruments of transfer with signature guaranteed (or by
providing satisfactory indemnity, as in connection with lost, stolen or
destroyed certificates) and by payment of applicable governmental charges, if
any. No redemption fee will be charged. On the third business day following such
tender, the Unitholder will be entitled to receive in cash an amount for each
Unit equal to the Redemption Price per Unit next computed after receipt by the
Trustee of such tender of Units. The "date of tender" is deemed to be the date
on which Units are received by the Trustee, except that as regards Units
received after the Evaluation Time the date of tender is the next day on which
the New York Stock Exchange is open for trading and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the redemption
price computed on that day.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by the
Trustee from those designated on a current list provided by the Supervisor for
this purpose. Units so redeemed shall be cancelled.
Unitholders tendering 1,000 Units or more for redemption may request from the
Trustee in lieu of a cash redemption a distribution in kind ("In Kind
Distributions" ) of an amount and value of Securities per Unit equal to the
Redemption Price per Unit as determined as of the evaluation next following the
tender. An In Kind Distribution on redemption of Units will be made by the
Trustee through the distribution of each of the Securities in book-entry form to
the account of the Unitholder's bank or broker-dealer at Depository Trust
Company. The tendering Unitholder will receive his pro rata number of whole
shares of each of the Securities comprising the portfolio and cash from the
Capital Account equal to the fractional shares to which the tendering Unitholder
is entitled. In implementing these redemption procedures, the Trustee shall make
any adjustments necessary to reflect differences between the Redemption Price of
the Securities distributed in kind as of the date of tender. If funds in the
Capital Account are insufficient to cover the required cash distribution to the
tendering Unitholder, the Trustee may sell Securities according to the criteria
discussed above. For the tax consequences related to an In Kind Distribution see
"Federal Taxation."
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result in
lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder depending
on the value of the Securities in the portfolio at the time of redemption.
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the aggregate underlying
value of the Equity Securities in the Trust, plus or minus cash, if any, in the
Income and Capital Accounts. On the Initial Date of Deposit, the Public Offering
Price per Unit (which includes the sales charge) exceeded the values at which
Units could have been redeemed by the amounts shown under "Summary of Essential
Financial Information" in Part One. While the Trustee has the power to determine
the Redemption Price per Unit when Units are tendered for redemption, such
authority has been delegated to the Evaluator which determines the price per
Unit on a daily basis. The Redemption Price per Unit is the pro rata share of
each Unit in the Trust determined on the basis of (i) the cash on hand in the
Trust, (ii) the value of the Securities in the Trust and (iii) dividends
receivable on the Equity Securities trading ex-dividend as of the date of
computation, less (a) amounts representing taxes or other governmental charges
payable out of the Trust and (b) the accrued sales charges or expenses of the
Trust. The Evaluator may determine the value of the Equity Securities in the
Trust in the following manner: if the Equity Securities are listed on a national
securities exchange this evaluation is generally based on the closing sale
prices on that exchange (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale price on
that exchange, at the closing bid prices. If the Equity Securities are not so
listed or, if so listed and the principal market therefore is other than on the
exchange, the evaluation shall generally be based on the current bid price on
the over-the-counter market (unless these prices are inappropriate as a basis
for evaluation). If current bid prices are unavailable, the evaluation is
generally determined (a) on the basis of current bid prices for comparable
securities, (b) by appraising the value of the Equity Securities on the bid side
of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the Securities
in the Trust is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any
tender of Units for redemption. If the Sponsor's bid in the secondary market at
that time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by the
Trustee. Units held by the Sponsor may be tendered to the Trustee for redemption
as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord
with the Public Offering Price described in the then currently effective
prospectus describing such Units. Any profit resulting from the resale of such
Units will belong to the Sponsor which likewise will bear any loss resulting
from a lower offering or redemption price subsequent to its acquisition of such
Units.
Portfolio Administration. The portfolio of the Trust is not "managed" by the
Sponsor, Supervisor or the Trustee; their activities described herein are
governed solely by the provisions of the Trust Agreement. Traditional methods of
investment management for a managed fund typically involve frequent changes in a
portfolio of securities on the basis of economic, financial and market analyses.
The Trust, however, will not be managed. The Trust Agreement, however, provides
that the Sponsor may (but need not) direct the Trustee to dispose of an Equity
Security in certain events such as the issuer having defaulted on the payment on
any of its outstanding obligations or the price of an Equity Security has
declined to such an extent or other such credit factors exist so that in the
opinion of the Sponsor, the retention of such Securities would be detrimental to
the Trust. Pursuant to the Trust Agreement and with limited exceptions, the
Trustee may sell any securities or other properties acquired in exchange for
Equity Securities such as those acquired in connection with a merger or other
transaction. If offered such new or exchanged securities or property, the
Trustee shall reject the offer. However, in the event such securities or
property are nonetheless acquired by the Trust, they may be accepted for deposit
in the Trust and either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Supervisor).
Therefore, except as stated under " Trust Portfolio" for failed securities and
as provided in this paragraph, the acquisition by the Trust of any securities
other than the Securities is prohibited. Proceeds from the sale of Securities
(or any securities or other property received by the Trust in exchange for
Equity Securities) are credited to the Capital Account for distribution to
Unitholders or to pay fees and expenses of the Trust.
As indicated under "Rights of Unitholders--Redemption of Units" above, the
Trustee may also sell Securities designated by the Supervisor, or if not so
directed, in its own discretion, for the purpose of redeeming Units of the Trust
tendered for redemption and the payment of expenses.
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. To the extent this is not practicable, the composition and
diversity of the Equity Securities may be altered. In order to obtain the best
price for the Trust, it may be necessary for the Supervisor to specify minimum
amounts (generally 100 shares) in which blocks of Equity Securities are to be
sold.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor and
the Trustee), provided, however, that the Trust Agreement may not be amended to
increase the number of Units (except as provided in the Trust Agreement). The
Trust Agreement may also be amended in any respect by the Trustee and Sponsor,
or any of the provisions thereof may be waived, with the consent of the holders
of 51% of the Units then outstanding, provided that no such amendment or waiver
will reduce the interest in the Trust of any Unitholder without the consent of
such Unitholder or reduce the percentage of Units required to consent to any
such amendment or waiver without the consent of all Unitholders. The Trustee
shall advise the Unitholders of any amendment promptly after execution thereof.
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Trust Units then outstanding or by the Trustee when
the value of the Trust, as shown by any evaluation, is less than that amount set
forth under Minimum Termination Value in "Summary of Essential Financial
Information" in Part One. 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" in Part One.
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trust. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. The Sponsor shall direct the liquidation of the Securities in such
manner as to effectuate orderly sales and a minimal market impact. In the event
the Sponsor does not so direct, the Securities shall be sold within a reasonable
period and in such manner as the Trustee, in its sole discretion, shall
determine. Written notice of any termination specifying the time or times at
which Unitholders may surrender their certificates for cancellation, if any are
then issued and outstanding, shall be given by the Trustee to each Unitholder so
holding a certificate at his address appearing on the registration books of the
Trust maintained by the Trustee. At least 30 days before the Mandatory
Termination Date the Trustee will provide written notice thereof to all
Unitholders and will include with such notice a form to enable Unitholders
owning 1,000 or more Units to request an In Kind Distribution rather than
payment in cash upon the termination of the Trust. To be effective, this request
must be returned to the Trustee at least five business days prior to the
Mandatory Termination Date. On the Mandatory Termination Date (or on the next
business day thereafter if a holiday) the Trustee will deliver each requesting
Unitholder's pro rata number of whole shares of each of the Equity Securities in
the portfolio to the account of the broker-dealer or bank designated by the
Unitholder at Depository Trust Company. The value of the Unitholder's fractional
shares of the Equity Securities will be paid in cash. Unitholders with less than
1,000 Units and those not requesting an In Kind Distribution will receive a cash
distribution from the sale of the remaining Equity Securities within a
reasonable time following the Mandatory Termination Date. Regardless of the
distribution involved, the Trustee will deduct from the funds of the Trust any
accrued costs, expenses, advances or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee, costs of liquidation
and any amounts required as a reserve to provide for payment of any applicable
taxes or other governmental charges. Any sale of Equity Securities in the Trust
upon termination may result in a lower amount than might otherwise be realized
if such sale were not required at such time. The Trustee will then distribute to
each Unitholder his pro rata share of the balance of the Income and Capital
Accounts.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement, in substantially the same form as the annual
distribution statement, of the amount distributable. At such time as the Trustee
in its sole discretion will determine that any amounts held in reserve are no
longer necessary, it will make distribution thereof to Unitholders in the same
manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and
the Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any of the Securities. In the event of the failure of the Sponsor to act under
the Trust Agreement, the Trustee may act thereunder and shall not be liable for
any action taken by it in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the Trust
which the Trustee may be required to pay under any present or future law of the
United States of America or of any other taxing authority having jurisdiction.
In addition, the Trust Agreement contains other customary provisions limiting
the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the Evaluator shall be under no liability to the Trustee, Sponsor
or Unitholders for errors in judgment. This provision shall not protect the
Evaluator in any case of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect subsidiary
of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly owned subsidiary of MSAM
Holdings II, Inc., which in turn is a wholly owned subsidiary of Morgan Stanley,
Dean Witter, Discover & Co. ("MSDWD" ).
MSDWD is a global financial services firm with a market capitalization of
more than $21 billion which was created by the merger of Morgan Stanley Group
Inc. with and into Dean Witter, Discover & Co. on May 31, 1997. 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, supervision or 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 $10.85 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 Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law. The duties of the Trustee
are primarily ministerial in nature. It did not participate in the selection of
Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may from
time to time be required under any applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided" ). The Trustee is
required to keep a certified copy or duplicate original of the Trust Agreement
on file in its office available for inspection at all reasonable times during
the usual business hours by any Unitholder, together with a current list of the
Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Winston & Strawn has acted as counsel for the Trustee.
Independent Certified Public Accountants. The financial statements 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.
<PAGE>
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Van Kampen American Capital Equity Opportunity Trust, Series 73, certifies that
it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment to its Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Chicago and State of Illinois
on the 24th day of December, 1998.
Van Kampen American Capital Equity Opportunity Trust, Series 73
(Registrant)
By Van Kampen Funds Inc.
(Depositor)
By Gina Costello
Assistant Secretary
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on December 24, 1998 by the
following persons who constitute a majority of the Board of Directors of Van
Kampen Funds Inc.:
Signature Title
Don G. Powell Chairman and Chief )
Executive Officer )
John H. Zimmerman President and Chief Operating)
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Gina Costello ) (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 Van
Kampen American Capital Equity Opportunity Trust, Series 87 (File No.
333-44581) and the same are hereby incorporated herein by this
reference.
Consent of Independent Certified Public Accountants
We have issued our report dated October 23, 1998 accompanying the financial
statements of Van Kampen American Capital Equity Opportunity Trust, Series 73 as
of August 31, 1998, and for the period then ended, contained in this
Post-Effective Amendment No. 1 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton LLP
Chicago, Illinois
December 24, 1998
