MEMORANDUM OF CHANGES
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 97
The Prospectus filed with Amendment No. 1 of the Registration Statement
on Form S-6 has been revised to reflect information regarding the deposit of Van
Kampen American Capital Equity Opportunity Trust, Series 97 on April 21, 1998.
An effort has been made to set forth below each of the major changes and also to
reflect the same by blacklining the marked counterparts of the Prospectus
submitted with the Amendment.
Cover Page. The date of the Prospectus has been completed.
Pages 4-6. "The Summary of Essential Financial Information" section
and "Fee Table" have been completed.
Pages 9-16. Revisions have been made and the portfolios have been
completed.
Pages 42-46. The Report of Independent Certified Public Accountants
and Statements of Condition have been completed.
The "Portfolios" and the "Notes to Portfolios" sections have been
completed.
<PAGE>
FILE NO. 333-49215
CIK #1025243
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: VAN KAMPEN AMERICAN CAPITAL EQUITY
OPPORTUNITY TRUST, SERIES 97
B. Name of Depositor: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
CHAPMAN AND CUTLER VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title of securities being registered: Units of proportionate interest
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT
/ X / Check box if it is proposed that this filing will become effective at
- ---- 2:00 p.m. on April 21, 1998 pursuant to Rule 487.
<PAGE>
<TABLE>
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VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST
SERIES 97
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(C) OF REGULATION C
UNDER THE SECURITIES ACT OF 1933
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTION
1 AS TO PROSPECTUS ON FORM S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
<S> <C>
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) *
underwriter
5. Organization of trust ) The Trusts
6. Execution and termination of ) The Trusts
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
<PAGE>
II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
10. General information regarding ) The Trusts
trust's securities and ) Federal Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trusts
) Trust Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Portfolios
)
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or ) Trust Operating Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received ) Public Offering
by depositor, principal ) *
underwriter, trustee or any ) Trust Portfolios
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trusts
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special Trusts ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
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III. ORGANIZATION, PERSONNEL AND AFFILIATED
PERSONS OF DEPOSITOR
<S> <C>
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
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IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
<S> <C>
35. Distribution of trust's securities ) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
<CAPTION>
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
<S> <C>
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
<CAPTION>
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
<S> <C>
51. Insurance of holders of trust's ) Cover Page
securities ) Trust Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Trust Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Trust Administration
securities )
(d) Trustamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Federal Taxation
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VII. FINANCIAL AND STATISTICAL INFORMATION
<S> <C>
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions ) Report of Independent Certified
1(c) to Form S-6) ) Public Accountants
) Statements of Condition
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* Inapplicable, omitted, answer negative or not required
</TABLE>
April 21, 1998
VAN KAMPEN AMERICAN CAPITAL
GLOBAL ENERGY TRUST, SERIES 5
BANKING TRUST, SERIES 2 MORGAN STANLEY HIGH-TECHNOLOGY 35 INDEXSM TRUST,
SERIES 2
- --------------------------------------------------------------------------------
THE FUND. Van Kampen American Capital Equity Opportunity Trust, Series 97
(the "Fund") is comprised of the underlying separate unit investment trusts
described above (the "Trusts"). The Trusts offer investors the opportunity to
purchase Units representing proportionate interests in separate fixed portfolios
of actively traded equity securities issued by companies diversified within a
specific industry sector, which may include securities of foreign issuers in
American Depositary Receipt ("ADRs") form ("Equity Securities" or "Securities").
See "Trust Portfolios". Unless terminated earlier, the Trusts will terminate on
the Mandatory Termination Date and any Securities then held will, within a
reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Securities liquidated at termination will be sold at the then current market
value for such Securities; therefore, the amount distributable in cash to a
Unitholder upon termination may be more or less than the amount such Unitholder
paid for his Units. Upon liquidation, Unitholders may choose to reinvest their
proceeds into a new trust, if available, at a reduced sales charge, to receive a
cash distribution or to receive a pro rata distribution of the Securities (if
they own the requisite number of Units).
ATTENTION FOREIGN INVESTORS. If you are not a United States citizen or
resident, distributions 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 TRUSTS. The objective of the Trusts is to provide the
potential for capital appreciation by investing in a portfolio of equity
securities diversified within a particular industry sector. See "Objectives and
Securities Selection". There is, of course, no guarantee that the objective of a
Trust will be achieved.
PUBLIC OFFERING PRICE. The Public Offering Price of the Units during the
initial offering period and for secondary market transactions after the initial
offering period includes the aggregate underlying value of the Securities, an
initial sales charge, and cash, if any, in the Income and Capital Accounts. The
initial sales charge is computed as described under "Public Offering--General".
Unitholders will also be subject to a deferred sales charge as described under
"Public Offering--General". During the initial offering period, the sales charge
is reduced on a graduated scale for sales involving at least 10,000 Units of a
Trust. If Units were available for purchase at the close of business on the day
before the Initial Date of Deposit, the Public Offering Price per Unit would
have been that amount set forth under "Summary of Essential Financial
Information". Except as provided in "Public Offering--Unit Distribution", the
minimum purchase is 100 Units (25 Units for qualified retirement plans) but may
vary by selling firm. See "Public Offering".
ADDITIONAL DEPOSITS. The Sponsor may, from time to time after the Initial
Date of Deposit, deposit additional Securities in the Trusts as provided under
"The Trusts". Units are not insured by the FDIC, are not deposits or other
obligations of, or guaranteed by, any depositary institution or any government
agency and are subject to investment risk, including possible loss of the
principal amount invested.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION 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 a Trust will be paid in cash on the Distribution Dates to
Unitholders of record on the record date as set forth in the "Summary of
Essential Financial Information". The estimated initial distribution for each
Trust is set forth under "Summary of Essential Financial Information" and will
be made on June 25, 1998 to Unitholders of the Banking Trust and the Global
Energy Trust and on December 25, 1998 to Unitholders of the Morgan Stanley High
Technology 35 Indexsm Trust. Gross dividends received by a Trust will be
distributed to Unitholders. Expenses of a Trust will be paid with proceeds from
the sale of Securities. For the consequences of such sales, see "Federal
Taxation". Additionally, upon surrender of Units for redemption or termination
of a Trust, the Trustee will distribute to each Unitholder his pro rata share of
the Trust's assets, less expenses, in the manner set forth under "Rights of
Unitholders--Distributions of Income and Capital".
SECONDARY MARKET FOR UNITS. Although not obligated to do so, the Sponsor
currently intends to maintain a market for Units and offer to repurchase such
Units at prices which are based on the aggregate underlying value of Equity
Securities (generally determined by the closing sale or bid prices of the
Securities) plus or minus cash, if any, in the Capital and Income Accounts. If a
secondary market is not maintained, a Unitholder may redeem Units at prices
based upon the aggregate underlying value of the Equity Securities plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts. See
"Rights of Unitholders--Redemption of Units". Units sold or tendered for
redemption prior to such time as the entire deferred sales charge on such Units
has been collected will be assessed the amount of the remaining deferred sales
charge at the time of sale or redemption. A Unitholder tendering 1,000 or more
Units for redemption may request a distribution of shares of Securities (reduced
by customary transfer and registration charges) in lieu of payment in cash.
See "Rights of Unitholders--Redemption of Units".
TERMINATION. The Trusts will terminate approximately two years following the
Initial Date of Deposit. At least 30 days prior to the Mandatory Termination
Date the Trustee will provide written notice thereof to all Unitholders and will
include with such notice a form to enable Unitholders to elect a distribution of
shares of the Securities (reduced by customary transfer and registration
charges) if such Unitholder owns at least 1,000 Units, rather than to receive
payment in cash for such Unitholder's pro rata share of the amounts realized
upon the disposition of such Securities. Unitholders will receive cash in lieu
of any fractional shares. To be effective, the election form, and any other
documentation required by the Trustee, must be returned to the Trustee at least
five business days prior to the Mandatory Termination Date. Unitholders may
elect to become Rollover Unitholders as described in "Special Redemption and
Rollover in New Trust" below. Rollover Unitholders will not receive the final
liquidation distribution but will receive units of a new trust, if one is being
offered. Unitholders not electing the Rollover Option or a distribution of
shares of Securities will receive a cash distribution from the sale of the
remaining Securities within a reasonable time after a Trust is terminated. See
"Trust Administration--Amendment or Termination".
REINVESTMENT OPTION. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase Units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales charge
to the extent stated in the related prospectus (which may be deferred in certain
cases).
In the event that a distribution is made to Unitholders prior to a Trust's
termination, Unitholders will have such distributions reinvested into additional
Units of the Trust subject only to the remaining deferred sales charge payments
as set forth herein, if Units are available at the time of reinvestment, or
distributed in cash. See "Rights of Unitholders--Reinvestment Option".
SPECIAL REDEMPTION AND ROLLOVER IN NEW TRUST. The Sponsor currently
anticipates that new series of the Fund will be created throughout the year.
Unitholders will have the option, subject to any necessary regulatory approval,
of specifying by either Rollover Notification Date stated in "Summary of
Essential Financial Information" to have all of their Units redeemed and the
distributed Securities sold by the Trustee, in its capacity as Distribution
Agent, on the related Special Redemption Date. (Unitholders so electing are
referred to herein as "Rollover Unitholders".) The Distribution Agent will
appoint the Sponsor as its agent to determine the manner, timing and execution
of sales of underlying Securities. The proceeds of the redemption will then be
invested in units of a new trust (the "New Trust"), if one is offered, at a
reduced sales charge. The Sponsor may, however, stop offering units of the New
Trust at any time in its sole discretion without regard to whether all the
proceeds to be invested have been invested. Cash which has not been invested on
behalf of the Rollover Unitholders in the New Trust will be distributed shortly
after the related Special Redemption Date. However, the Sponsor anticipates that
sufficient Units will be available, although moneys in the current Trusts may
not be fully invested on the next business day. The New Trust will contain a
portfolio of common stocks of diversified within a specific industry sector.
Rollover Unitholders will receive the amount of dividends in the Income Account
which will be included in the reinvestment in units of the New Trust.
RISK FACTORS. An investment in Units 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 stock price volatility. An investment should also be made with an
understanding of the special risks related to companies concentrated within a
single industry sector. For certain risk considerations related to the Trusts,
see "Risk Factors".
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 97
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AT THE CLOSE OF BUSINESS ON THE DAY BEFORE THE INITIAL DATE OF DEPOSIT:
APRIL 20, 1998
SPONSOR: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
SUPERVISOR: VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
(AN AFFILIATE OF THE SPONSOR)
EVALUATOR: AMERICAN PORTFOLIO EVALUATION SERVICES
(A DIVISION OF AN AFFILIATE OF THE SPONSOR)
TRUSTEE: THE BANK OF NEW YORK
<TABLE>
<CAPTION>
GLOBAL
ENERGY BANKING TECHNOLOGY
TRUST TRUST TRUST
--------------- --------------- ---------------
<S> <C> <C> <C>
Number of Units (1) 14,947 14,977 15,139
Fractional Undivided Interest in the Trust per Unit (1) 1/14,947 1/14,977 1/15,139
Public Offering Price:
Aggregate Value of Securities in Portfolio (2) $ 147,972 $ 148,264 $ 149,870
Aggregate Value of Securities per Unit $ 9.90 $ 9.90 $ 9.90
Sales Charge (3) $ .325 $ .325 $ .325
Less Deferred Sales Charge per Unit $ .225 $ .225 $ .225
Public Offering Price per Unit (3)(4) $ 10.00 $ 10.00 $ 10.00
Redemption Price per Unit (5) $ 9.67 $ 9.64 $ 9.67
Initial Secondary Market Repurchase Price per Unit (5) $ 9.67 $ 9.67 $ 9.67
Excess of Public Offering Price per Unit over Redemption
Price per Unit (5) $ .33 $ .36 $ .33
Estimated Initial Distribution $ .05 $ .02 $ .01
Estimated Annual Dividends per Unit (6) $ .18204 $ .19319 $ .01767
Estimated Annual Organizational Expenses per Unit (7) $ .00961 $ .00885 $ .00895
Trustee's Annual Fee and Miscellaneous Expense per Unit $ .01037 $ .01078 $ .01130
Supervisor's Annual Supervisory Fee Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee Maximum of $.0025 per Unit Rollover
Notification Date March 18, 2000
Special Redemption Date April 18, 2000
Mandatory Termination Date April 18, 2000
Minimum Termination Value The Trust may be terminated if the net asset value of the Trust is
less than $500,000 unless the net asset value of the Trust's
deposits have exceeded $15,000,000, then the Trust Agreement may be
terminated if the net asset value of the Trust is less than $3,000,000.
Income and Capital Account Record Dates (8) June 10 and December 10
Income and Capital Account Distribution Dates (8) June 25 and December 25
Evaluation Time Close of New York Stock Exchange
- ---------------
(1)As of the close of business on any day on which the Sponsor is the sole
Unitholder of a Trust, the number of Units may be adjusted so that the Public
Offering Price per Unit will equal approximately $10. Therefore, to the extent
of any such adjustment the fractional undivided interest per Unit will increase
or decrease from the amount indicated above.
(2)Each Security listed on a national securities exchange is valued at the
closing sale price or if the Security is not so listed, at the asked price
thereof.
(3)The Sales Charge consists of an initial sales charge and a deferred sales
charge. The initial sales charge is applicable to all Units and represents an
amount equal to the difference between the total sales charge (3.25% of the
Public Offering Price) and the amount of the deferred sales charge ($0.225 per
Unit). Unitholders will also be subject to a deferred sales charge equal to
$0.225 per Unit. Subsequent to the Initial Date of Deposit, the amount of the
initial sales charge will vary with changes in the aggregate value of the
Securities. Units purchased subsequent to the initial deferred sales charge
payment will be subject only to that portion of the deferred sales charge
payments not yet collected. These deferred sales charge payments will be paid
from funds in the Capital Account, if sufficient, or from the periodic sale of
Securities. See the "Fee Table" below and "Public Offering--General".
(4)On the Initial Date of Deposit there will be no cash in the Income or Capital
Accounts. Anyone ordering Units after such date will have included in the
Public Offering Price a pro rata share of any cash in such Accounts.
(5)The Redemption Price per Unit and the Initial Secondary Market Repurchase
Price per Unit are reduced by the unpaid portion of the deferred sales charge.
(6)Estimated annual dividends are based on annualizing the most recently
declared dividends. Estimated Annual Dividends per Unit are based on the number
of Units, the fractional undivided interest in the Securities per Unit and the
aggregate value of the Securities per Unit as of the Initial Date of Deposit.
Investors should note that the actual annual dividends received per Unit will
vary from the estimated amount due to changes in the factors described in the
preceding sentence and actual dividends declared and paid by the issuers of the
Securities.
(7)Each 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 two
years and paid from funds in the Capital Account, if sufficient, or from the
sale of Securities. See "Trust Operating Expenses" and "Statements of
Condition".
(8)No distribution will be made unless the amount available for distribution in
the Income and Capital Accounts equals at least $0.01 per Unit.
</TABLE>
FEE TABLE
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This Fee Table is intended to assist investors in understanding the costs and
expenses that an investor will bear directly or indirectly. See "Public
Offering--General" and "Trust Operating Expenses". Although each Trust has a
fixed two year term, and is a unit investment trust rather than a mutual fund,
this information is presented to permit a comparison of fees. The example below
assumes that the principal amount of and distributions on an investment are
rolled over into a new Series of the Trust at termination subject only to the
anticipated reduced sales charge applicable to Rollover Unitholders. See "Right
of Unitholders--Special Redemption and Rollover in New Trust." Investors should
note that while this example is based on the public offering price and the
estimated fees for the current Trusts, the actual public offering price and fees
for any new trusts created in the future periods indicated could vary from those
of the current Trusts.
<TABLE>
<CAPTION>
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GLOBAL
ENERGY BANKING TECHNOLOGY
TRUST TRUST TRUST
-------------- --------------- -----------------
<S> <C> <C> <C>
UNITHOLDER TRANSACTION EXPENSES
(AS A PERCENTAGE OF OFFERING PRICE)
Initial Sales Charge Imposed on Purchase(1) 1.00% 1.00% 1.00%
Deferred Sales Charges(2) 2.25% 2.25% 2.25%
------- ------- -------
Total Sales Charge 3.25% 3.25% 3.25%
======= ======= =======
Maximum Sales Charge Imposed on Reinvested Dividends(3) 2.25% 2.25% 2.25%
======= ======= =======
ESTIMATED ANNUAL TRUST OPERATING EXPENSES
(AS A PERCENTAGE OF AGGREGATE VALUE)
Trustee's Fee 0.081% 0.081% 0.081%
Portfolio Supervision and Evaluation Fees 0.051% 0.051% 0.051%
Organizational Costs 0.097% 0.089% 0.090%
Other Operating Expenses 0.031% 0.035% 0.040%
------- ------- -------
Total 0.260% 0.256% 0.262%
======= ======= =======
<CAPTION>
EXAMPLE
CUMULATIVE EXPENSES PAID FOR PERIOD OF:
-----------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment, assuming a 5% annual return
and redemption at the end of each time period $ 35 $ 65 N/A N/A
</TABLE>
The example assumes reinvestment of all dividends and distributions at the
end of each year and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations applicable to mutual funds. For
purposes of the example, the deferred sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the dividend; the
cumulative expenses would be higher if sales charges on reinvested dividends
were reflected in the year of reinvestment. The example should not be considered
representations of past or future expenses or annual rate of return; the actual
expenses and annual rate of return may be more or less than those assumed for
purposes of the example.
- -----------------
(1)The Initial Sales Charge is actually the difference between the Total Sales
Charge (3.25% of the Public Offering Price) and the Deferred Sales Charges
($0.225 per Unit) and would exceed 1.00% if the Public Offering Price exceeds
$10 per Unit.
(2)The actual deferred sales charge is $0.225 per Unit, irrespective of purchase
or redemption price, deducted over eight months. If a Unitholder sells or
redeems Units before all of the deferred sales charge payments have been
deducted, the balance of the remaining payments will be deducted from the
sales or redemption proceeds. If Unit price exceeds $10 per Unit, the
deferred portion of the sales charge will be less than 2.25%; if Unit price
is less than $10 per Unit, the deferred portion of the sales charge will
exceed 2.25%. Units purchased subsequent to the initial deferred sales charge
payment will be subject to only that portion of the deferred sales charge
payments not yet collected.
(3)Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment. See "Rights of Unitholders--
Reinvestment Option".
THE TRUSTS
- --------------------------------------------------------------------------------
Van Kampen American Capital Equity Opportunity Trust, Series 97 is comprised
of three underlying separate unit investment trusts designated as Global Energy
Trust, Series 5, Banking Trust, Series 2 and Morgan Stanley High-Technology 35
Index Trust, Series 2 (the "Technology Trust"). The Fund was created under the
laws of the State of New York pursuant to a Trust Indenture and Trust Agreement
(the "Trust Agreement"), dated the date of this Prospectus (the "Initial Date of
Deposit"), among Van Kampen American Capital Distributors, Inc., as Sponsor, Van
Kampen American Capital Investment Advisory Corp., as Supervisor, The Bank of
New York, as Trustee, and American Portfolio Evaluation Services, a division of
Van Kampen American Capital Investment Advisory Corp., as Evaluator.
The Trusts offer investors the opportunity to purchase Units representing
proportionate interests in separate portfolios of actively traded equity
securities issued by companies within a specific industry sector.
Diversification of assets in a Trust will not eliminate the risk of loss always
inherent in the ownership of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolio" herein, including delivery statements
relating to contracts for the purchase of certain such Securities and an
irrevocable letter of credit issued by a financial institution in the amount
required for such purchases. Thereafter, the Trustee, in exchange for such
Securities (and contracts) so deposited, delivered to the Sponsor documentation
evidencing the ownership of that number of Units indicated in "Summary of
Essential Financial Information". Unless terminated earlier, each Trust will
terminate on the Mandatory Termination Date set forth under "Summary of
Essential Financial Information" and any Securities then held will, within a
reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Securities liquidated at termination will be sold at the then current market
value for such Securities; therefore, the amount distributable in cash to a
Unitholder upon termination may be more or less than the amount such Unitholder
paid for his Units. Upon the Rollover Notification Date, Unitholders may choose
to reinvest their proceeds into a subsequent trust, if available, at a reduced
sales charge, to receive a pro rata distribution of the Securities then included
in a Trust (if they own the requisite minimum number of Units) or to receive a
cash distribution.
Additional Units of a Trust may be issued at any time by depositing in the
Trust (i) additional Securities, (ii) contracts to purchase securities together
with cash or irrevocable letters of credit or (iii) cash (or a letter of credit)
with instructions to purchase additional Securities. As additional Units are
issued by a Trust as a result of the deposit of additional Securities, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits of Securities or
cash with instructions to purchase Securities into a Trust following the Initial
Date of Deposit, provided that such additional deposits will be in amounts which
will maintain, as nearly as practicable, the same percentage relationship among
the number of shares of each Equity Security in the Trust's portfolio that
existed immediately prior to any such subsequent deposit (however, for the first
90 days, any such deposit into the Banking Trust shall replicate, as nearly as
practicable, the original proportionate relationship among the Securities in
such Trust). Any deposit of additional Equity Securities will duplicate, as
nearly as is practicable, this actual proportionate relationship and not the
original proportionate relationship on the Initial Date of Deposit, since the
actual proportionate relationship may be different than the original
proportionate relationship. Any such difference may be due to the sale,
redemption or liquidation of any of the Equity Securities. Existing and new
investors may experience a dilution of their investments and a reduction in
their anticipated income as a result of an additional deposit because of
fluctuations in the prices of the Securities between the time of the deposit and
the purchase of the Securities and because the Trusts will pay the associated
brokerage fees.
Each Unit initially offered represents an undivided interest in the related
Trust. To the extent that any Units are redeemed by the Trustee or additional
Units are issued as a result of additional Securities being deposited by the
Sponsor, the fractional undivided interest in a Trust represented by each
unredeemed Unit will increase or decrease accordingly, although the actual
interest in the Trust represented by such fraction will remain unchanged. Units
will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor, or until the termination of the
Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------------
The objective of each Trust is to provide the potential for capital
appreciation. There is, of course, no assurance that a Trust (which includes
expenses and sales charges) will achieve its objective.
EQUITY SECURITIES. Stocks have been acknowledged as one of the best ways to
stay ahead of inflation over time. For example, common stocks (as represented by
the Standard & Poor's 500 Index) have generally outperformed long-term U.S.
Government bonds, U.S. Treasury bills and the rate of inflation over the
long-term. Of course, this represents past performance of these categories and
there is no guarantee of future results, either of these categories or of the
Trust. In addition, the Global Energy Trust seeks to provide access to
international markets which have often generated historical returns superior to
those in the United States. For example, during 1993-1997, the United States
stock market ranked among the top three developed markets in total return only
once and never ranked first (measured by the Morgan Stanley Capital
International USA Index and MSCI country indexes).
GLOBAL ENERGY TRUST. Oil and natural gas are leading sources of energy
worldwide. Recent developments in the industry and global economic growth may
increase the future demand for these natural resources. The industry's
dedication to research, exploration and technology has improved exploration and
extraction techniques. From new drilling methods to three-dimensional
seismographic mapping, oil and natural gas companies are better able to target
potential sites--and better able to benefit from them. The modern global economy
also provides substantial growth potential for the energy industry. Oil and
natural gas companies from around the world are forming joint ventures and
exploration partnerships that were unheard of less than a decade ago. From
Eastern Europe to the Pacific Rim, such ventures provide important production
opportunities. In the former Soviet Union, for instance, several companies have
formed joint ventures and signed production sharing contracts to export oil from
the Caspian Sea area. While political uncertainty and other factors can affect
such development projects, the potential reserves available in this area of the
world may provide significant earnings momentum for energy companies.
The United States represents the largest market for energy products. The U.S.
economy is currently characterized, in relative historical terms, by low
inflation and moderate growth. As the world's largest energy product consumer,
the United States provides stability for energy prices. A more dramatic change
in energy usage may come from the former Soviet Union, Eastern European
countries and the Pacific Rim. As economies grow and modernize, there is an
essential demand for energy resources for both industries and consumers. With
more efficient exploration and production techniques and new reserve potential,
the supply of oil and other energy products appears promising for energy
products and ultimately benefiting oil and natural gas companies.
BANKING TRUST. During the late 1980s, the banking industry suffered with
recession and asset quality problems. Today, the Sponsor believes that many
institutions are reporting solid earnings due to an offsetting improvement in
loan demand and an increase in fee-based income. An economy marked by moderate
growth and low inflation may have helped solidify the industry's position. Other
fundamental changes, including federal deregulation and an increase in
retirement planning, have helped establish banking institutions across the
country as more comprehensive financial institutions. Certain trends suggest
that bank and thrift stocks may offer a potential for growth and income, such as
increased consolidations and mergers, growing assets under management,
deregulation, relatively stable interest rates, low inflation expectations,
steady economic growth, strong credit quality, operational efficiencies, shifts
in investment products and services offered, and increased demand for private
banking and asset management.
TECHNOLOGY TRUST. The Technology Trust consists of the stocks included in the
Morgan Stanley High-Technology 35 Index (the "Tech-35 Index") on the Initial
Date of Deposit. The Tech-35 Index was created by the Morgan Stanley Technology
Research Group and consists of 35 pure technology companies representing the
full breadth of technology industry segments, including Computer Services,
Networking and Telecommunications Equipment, PC Hardware and Peripherals,
Electronic Connectors and Components, Server/Technical Software, Wireless
Telecommunications Equipment, Semiconductor Capital Equipment, PC
Software/Internet/New Media and Server Hardware and Semiconductors. While
investment risks cannot be eliminated, a diversified portfolio and may help to
reduce overall investment risk.
The following tables compare the historical total returns of the Tech-35
Index with other major stock indexes. This is not the past performance of the
Trust and is not intended to indicate the future performance of the Technology
Trust. The performance of the Technology Trust may differ from the Tech-35 Index
because the Trust includes a sales charge and expenses which are not included in
the figures below. In addition, the Trust may not exactly replicate the Tech-35
Index and the portfolio will not be adjusted if the Tech-35 Index changes.
<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS
DOW JONES
INDUSTRIAL S&P 500 NASDAQ 100 TECH-35
AVERAGE INDEX INDEX INDEX
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1994 2.1% (1.5%) 1.5% 34.7%
1995 33.5 34.1 42.5 50.9
1996 26.0 20.3 42.5 21.3
1997 22.6 31.0 20.6 16.8
<CAPTION>
COMPOUND AVERAGE ANNUAL TOTAL RETURNS
(PERIODS ENDED 12/31/97)
DOW JONES
INDUSTRIAL S&P 500 NASDAQ 100 TECH-35
AVERAGE INDEX INDEX INDEX
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1 Year 22.6% 31.0% 20.6% 16.8%
3 Years 19.8 20.6 25.1 20.9
4 Years 20.5 20.1 25.6 30.3
Source: Factset
</TABLE>
The Tech-35 Index is an equal weighted index whose value was set to 200.00 as
of the close of trading on December 16, 1994. The value of the Tech-35 Index is
computed in real-time by the American Stock Exchange during New York trading
hours under the symbol "MSH". The Index is rebalanced to an equal weighting per
company on the third Friday of each December. In creating the Tech-35 Index,
Morgan Stanley sought to design a benchmark that provided broad industry
representation of equally-weighted, highly liquid, pure technology companies
that is rebalanced annually. The index attempts to include bellwether stocks
that provide a balanced representation of "pure" technology sub-industries. The
index is composed of only electronics-based technology companies and excludes
biotechnology, medical, test and instrumentation companies. In addition, the
index includes liquid component companies which represented $400 billion in
market capitalization when the index was created, with the smallest company
valued at a capitalization of more than $1 billion. The index is an equal
weighted index that includes both large and small industry bellwethers and seeks
to minimize the pitfalls of market capitalization indices which, Morgan Stanley
believes, fail to accommodate the wide range of market capitalizations and
revenue bases common to the technology industry. The index is rebalanced
annually to return all companies to an equal weighting regardless of their
performances during the year. This allows company shares that appreciate during
the year to command increasing influence in the index, while guarding against
the long-term negatives of a market-capitalization weighted index. Investors
should note that the Securities in the Trust portfolio are fixed and will not be
rebalanced annually. Changes in the Tech-35 Index will not result in changes in
the Trust portfolio. See "Trust Administration--Portfolio Administration". As
part of the Rollover strategy, however, the Sponsor may offer subsequent series
of the Trust that will invest in the then current components of the Tech-35
Index. See "Rights of Unitholders--Special Redemption and Rollover in New
Trust".
The Tech-35 Index is the exclusive property of Morgan Stanley and is a
service mark of Morgan Stanley and has been licensed for use by the Trust and
Van Kampen American Capital Distributors, Inc.
This fund is not sponsored, endorsed, sold or promoted by Morgan Stanley.
Morgan Stanley makes no representation or warranty, express or implied, to the
owners of this fund or any member of the public regarding the advisability of
investing in funds generally or in this fund particularly or the ability of the
Tech-35 Index to track general stock market performance. Morgan Stanley is the
licensor of certain trademarks, service marks and trade names of Morgan Stanley
and of the Tech-35 Index which is determined, composed and calculated by Morgan
Stanley without regard to the issuer of this fund or this fund. Morgan Stanley
has no obligation to take the needs of the issuer of this fund or the owners of
this fund into consideration in determining, composing or calculating the
Tech-35 Index. Morgan Stanley is not responsible for and has not participated in
the determination of or the timing of, prices at, or quantities of this fund to
be issued or in the determination or calculation of the equation by which Units
of this fund is redeemable for cash. Morgan Stanley has no obligation or
liability to owners of this fund in connection with the administration,
marketing or trading of this fund.
ALTHOUGH MORGAN STANLEY SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE
IN THE CALCULATION OF THE INDEX FROM SOURCES WHICH MORGAN STANLEY CONSIDERS
RELIABLE, NEITHER MORGAN STANLEY NOR ANY OTHER PARTY GUARANTEES THE ACCURACY
AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN. NEITHER
MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES,
OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR
ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR
FOR ANY OTHER USE. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY EXPRESS
OR IMPLIED WARRANTIES, AND MORGAN STANLEY HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL MORGAN STANLEY OR ANY OTHER PARTY HAVE ANY
LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY
OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES.
GENERAL. Investors will be subject to taxation on the dividend income, if
any, received by a Trust and on gains from the sale or liquidation of
Securities. Investors should be aware that there is not any guarantee that the
objective of a Trust will be achieved because it is subject to the continuing
ability of the respective issuers to declare and pay dividends and because the
market value of the Securities can be affected by a variety of factors. Common
stocks may be especially susceptible to general stock market movements and to
volatile increases and decreases of value as market confidence in and
perceptions of the issuers change. Investors should be aware that there can be
no assurance that the value of the underlying Securities will increase or that
the issuers of the Securities, will pay dividends on outstanding common shares.
Any distribution of income will generally depend upon the declaration of
dividends by the issuers of the Securities and the declaration of any dividends
depends upon several factors including the financial condition of the issuers
and general economic conditions. See "Risk Factors".
Investors should be aware that the Trusts are not "managed" funds and as a
result the adverse financial condition of a company will not result in its
elimination from a portfolio except under extraordinary circumstances (see
"Trust Administration--Portfolio Administration"). In addition, Securities will
not be sold by the Trusts to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in particular that the
Securities were selected for inclusion in each Trust as of the Initial Date of
Deposit. Subsequent to the Initial Date of Deposit, the Securities may no longer
meet the criteria necessary for inclusion on the Initial Date of Deposit. Should
a Security fail to meet such criteria following the Initial Date of Deposit,
such Security will not as a result thereof be removed from a portfolio. In
addition, since the Sponsor may deposit additional Equity Securities which were
originally selected through this process, the Sponsor may continue to sell Units
even though the Equity Securities would no longer be chosen for deposit into the
Trusts if the selection process were to be made again at a later time. Because
certain of the Equity Securities from time to time may be sold under certain
circumstances described herein, and because the proceeds from such events will
in most cases be distributed to Unitholders and will not be reinvested, no
assurance can be given that a Trust will retain for any length of time its
present size and composition. Although the portfolios are not managed, the
Sponsor may instruct the Trustee to sell Equity Securities under certain limited
circumstances. See "Trust Administration--Portfolio Administration."
TRUST PORTFOLIOS
- --------------------------------------------------------------------------------
Each Trust consists of a diversified portfolio of common stocks issued by
companies within its related industry sector, which may include common stocks of
foreign issuers in ADR form. All of the Securities are listed on a national
securities exchange, the NASDAQ National Market System or are traded in the
over-the-counter market. A general description of the issuers in a each Trust is
listed below.
GLOBAL ENERGY TRUST, SERIES 5
Amoco Corporation. Amoco Corporation is a worldwide integrated petroleum and
chemical company. Through its subsidiaries, Amoco explores for and produces
crude oil and natural gas worldwide. The company also manufactures, transports
and markets petroleum products and chemicals.
Arch Coal, Inc. Arch Coal, Inc. mines, processes, and markets coal. The
company markets its coal primarily to domestic electric utilities and
internationally, primarily Europe.
Atlantic Richfield Company. Atlantic Richfield Company (ARCO) and its
affiliates explore, produce, and market crude oil, natural gas, and natural gas
liquids. The Company also refines, markets, and transports petroleum products.
Atlantic Richfield owns interests in chemicals and coal, and has created
businesses ancillary to its operations,including retail convenience stores,
electronic payment systems, and others.
Bouygues Offshore S.A. Bouygues Offshore S.A. provides design, construction,
installation and management of offshore and onshore oil and gas production
facilities. The company also provides maintenance services, principally to oil
refineries, petrochemical facilities, and offshore platforms. Bouygues Offshore
also constructs high-end maritime and river-related civil works projects.
British Petroleum Company Plc. British Petroleum Company Plc explores for,
produces, refines and retails petroleum products, and manufactures chemicals.
The company produces and retails petroleum products throughout the world and
owns and operates approximately 18,000 gasoline stations. British Petroleum's
chemicals business's key products are acetic acid, acrylonitrile, and
polyethylene.
Camco International, Inc. Camco International, Inc. provides oilfield
equipment and services for specialty applications in key phases of oil and gas
drilling, completion, and production. The company's equipment is manufactured
under various tradenames and includes electric submersible pumps, electric
cables and wire, and more. Camco also provides a variety of well related
maintenance and services worldwide.
Chevron Corporation. Chevron Corporation is an international oil company
with activities in the United States and abroad. The company is involved in
worldwide, integrated petroleum operations which consist of exploring for,
developing and producing petroleum liquids and natural gas as well as
transporting the products. Chevron is also active in the mineral and chemical
industry.
Coflexip S.A. Coflexip S.A. designs, manufactures and installs offshore
flexible pipe and offers project management and engineering services to the
subsea oil industry. The company manufactures offshore and onshore flexible
pipe, cables that carry hydraulic, electrical or optical signals between surface
platforms and the seabed, and installs and maintains undersea telecommunications
and power cables.
Columbia Energy Group. Columbia Energy Group, through its subsidiaries,
transmits and distributes natural gas, as well as explores for and produces
natural gas and oil. The company also markets natural gas and electricity,
generates electricity fueled by natural gas, and distributes propane. Columbia
serves customers in 15 Northeastern, Midatlantic, Midwestern, and Southern
states and the Disctrict of Columbia.
ENI SPA. ENI SPA is an integrated oil and gas company. The company explores,
develops, and produces oil and natural gas; supplies, transmits and distributes
natural gas; refines and markets oil and petroleum products; and produces and
sells petro- chemicals. ENI also provides oilfield services contracting and
engineering.
Kerr-McGee Corporation. Kerr-McGee Corporation produces crude oil and
natural gas, manufactures chemicals, and mines coal. The company's oil and gas
exploration and production operations are located in the North Sea, the Gulf of
Mexico, China, and Yemen.
Lukoil Holding. Lukoil Holding prospects for, extracts, transports, refines,
and provides oil and gas, mainly from Western Siberia. The company also
manufactures petrochemicals, fuels, and other petroleum products. Lukoil Holding
operates two refineries, 162 oil and gas fields, and 800 filling stations.
The company transports oil through pipelines and petroleum products by two
commissioned ships.
Murphy Oil Corporation. Murphy Oil Corporation is a worldwide oil and gas
exploration and production company with refining and marketing operations. The
company's principal exploration and production activities are located in the
United States, the United Kingdom, Ecuador, and Canada. Murphy also operates two
refineries in the UnitedStates and shares ownership of one in the United
Kingdom.
NGC Corporation. NGC Corporation markets natural gas liquids, electricity,
and crude oil. The company also gathers, processes, and transports natural gas
through direct and indirect ownership and operation of plants, fractionators,
storage facilities, and pipelines. NCG is involved in electric power generation
through direct and indirect ownership of cogeneration and electric power
producing facilities.
NOVA Corporation. NOVA Corporation transports natural gas by pipeline and
produces and markets petrochemical and plastic products. The company also
provides consulting services.
Phillips Petroleum Company. Phillips Petroleum Company operates in four
business segments. The company explores for and produces petroleum worldwide;
gathers and processes natural gas; refines, markets, and transports petroleum
products; and manufactures and markets petroleum-based chemical products.
Royal Dutch Petroleum Company. Royal Dutch Petroleum Company owns 60% of the
Royal Dutch/Shell Group of companies. These companies are involved in all phases
of the petroleum industry from exploration to final processing and delivery.
Royal Dutch Petroleum Company has no operations of its own, and virtually the
whole of its income is derived from its 60% interest.
Rowan Companies, Inc. Rowan Companies, Inc. performs contract drilling of
oil and gas wells in the United States and abroad. The company, through its
subsidiaries also operates mini-steel mill, a manufacturing facility that
produces equipment for the timber, mining and transport industries, an aviation
firm that provides forest fire control, flightseeing and medivac services, and a
marine rig construction yard.
Texaco, Inc. Texaco, Inc. and its subsidiaries explore for, produce,
transport, refine and market crude oil, natural gas and petroleum products,
including petrochemicals, worldwide. The company owns, leases or has interests
in extensive production, manufacturing, marketing, transportation and other
facilities throughout the world.
Total S.A. Total S.A. explores for, produces, refines, transports and
markets oil and natural gas. The company also operates a chemicals division
which produces rubber, paint, ink, adhesives and resins. Total operates
worldwide.
Tubos de Acero de Mexico S.A. Tubos de Acero de Mexico S.A. manufactures and
sells seamless drill pipe, casing, and tubing. The company also produces steel
line pipes, cold-drawn pipes, sponge irons. and steel ingots/bars. The company
operates a steel plant in Veracruz, Mexico.
Ultramar Diamond Shamrock Corporation. Ultramar Diamond Shamrock Corporation
is an independent refining and marketing company. The corporation owns seven
refineries in the United States and Canada and operates branded retail gasoline
outlets, primarily under the "Diamond Shamrock," "Ultramar,""Beacon," or "Total"
names. Ultramar also has petrochemicals, home heating oil, and convenience store
merchandising businesses.
Unocal Corporation. Unocal Corporation explores for and produces oil and gas
in Asia, Latin America, and the United States Gulf of Mexico. The company also
produces geothermal energy; provides electrical power; and manufactures and
markets nitrogen-based fertilizers, petroleum coke, graphites, and specialty
minerals.
USX-Marathon Group. USX-Marathon Group, a business unit of USX Corporation,
includes Marathon Oil company and certain other subsidiaries of USX. The Group
explores for, produces, transports, and markets crude oil and natural gas
worldwide. Marathon also refines, markets, and transports petroleum products in
the United States.
Valero Energy Corporation. Valero Energy Corporation is an independent
refining and marketing company. The company currently owns and operates four
refineries in Texas and Louisiana with a combined throughput capacity of
approximately 500,000 barrels per day. Valero produces reformulated gasoline,
CARB Phase II gasoline, low-sulfur diesel and oxygenates.
Vintage Petroleum, Inc. Vintage Petroleum, Inc. is an independent oil and gas
company, which acquires producing oil and gas properties that have the potential
for increased value through exploitation and development. The company's core
United States properties are on the West and Gulf coasts, in Texas and
Mid-Continent United States. Vintage also has interests in Bolivia and
Argentina.
YPF Sociedad Anonima. YPF Sociedad Anonima is an integrated oil and gas
company which explores for, develops and produces oil and natural gas in
Argentina. The company also refines, markets, transports and distributes oil and
various other petroleum products, petroleum derivatives, petrochemicals and
liquid petroleum gas.
BANKING TRUST, SERIES 2
Banc One Corporation. Banc One Corporation, a bank holding company, provides
a full range of consumer and commercial banking related financial services. The
company operates banking offices in AZ, CO, IL, IN, LA, OH, OK, TX, UT, WV, and
WI and operates facilities in 33 states. Banc One is also involved in credit
card and merchant processing, consumer and education finance, mortgage banking,
insurance, and more.
Bank of New York Company, Inc. The Bank of New York Company, Inc., through
its subsidiaries, provides a complete range of banking and other services to
corporations and individuals worldwide. The bank's services include retail
banking, processing of securities, investment management and trust services. The
Bank of New York operates in the greater New York City area and internationally.
Bank United Corporation. Bank United Corporation, through its subsidiary
Bank United, provides financial services to consumers and businesses in Texas
and other selected regional markets throughout the United States. The company
operates 73 Texas based branches, 11 commercial banking offices, and a
nationwide network of mortgage offices that originate primarily single family
mortgage loans.
BankAmerica Corporation. BankAmerica Corporation provides diverse financial
products and services to individuals, businesses, government agencies, and
financial institutions throughout the world. The company's banking subsidiaries
operate approximately 1,800 branches throughout the western United States.
BankAmerica also operates corporate banking and business credit offices in major
cities in the United States and worldwide.
BankBoston Corporation. BankBoston Corporation, a bank holding company,
offers a variety of banking services to consumers, small businesses, and
corporate customers in southern New England. The corporation also delivers
financial solutions to mid-size and large corporations nationally and
internationally, as well as provides full-service banking in certain Latin
American markets.
Charter One Financial, Inc. Charter One Financial, Inc. is a holding company
for Charter One Bank. The bank operates through 100 banking offices in Ohio, 82
in Michigan, and 38 in western New York. Charter attracts deposits, makes real
estate and other loans, leases equipment, processes data, appraises real estate,
and provides various other services.
Chase Manhattan Corporation. Chase Manhattan Corporation is a bank holding
company which conducts domestic and international financial services through
various bank and non-bank subsidiaries. The company provides corporate finance,
wholesale banking, and investment services, as well as emphasizes originations,
underwriting, distribution, risk management products, and private banking.
Citicorp. Citicorp, the parent of Citibank, N.A., provides a broad range of
financial services. The company's operations include commercial, mortgage and
investment banking, trust services, consumer finance, and credit card services.
The companyserves individuals, businesses, governments, and financial
institutions in approximately 3,000 locations in 98 countries and territories
worldwide.
Citizens National Bank of Texas. Citizens National Bank of Texas provides a
full range of traditional retail and commercial banking services primarily to
individual consumers and small businesses in the Houston metropolitan area of
Texas. The bank offers small business, commercial and residential real estate
and consumer loans.
Comerica, Inc. Comerica, Inc. is the holding company for business,
individual, and investment banks. The company operates banking offices in
Michigan, Texas, California, and Florida. Comerica's operations include middle
market lending, corporate banking, trust services, consumer lending, annuities,
mutual funds, life insurance, investment banking, and advisory services.
First Chicago NBD Corporation. First Chicago NBD Corporation, through its
banking subsidiaries, provides consumer and corporate banking products and
services. The banks offer regional banking, corporate banking, corporate
investment, and credit cards. First Chicago's customer base is primarily located
in metropolitan Chicago and the states of Michigan and Indiana.
First Hawaiian, Inc. First Hawaiian, Inc., through its banking subsidiaries,
conducts a general commercial banking business. The company's principal
subsidiary, First Hawaiian Bank, operates 60 branches located throughout Hawaii.
First Hawaiian is a full-servicechartered bank. The company's other subsidiary,
Pacific One Bank, operates 28 branches throughout the West Coast in the United
States.
First Union Corporation. First Union Corporation is a bank holding company
for First Union National Bank and First Union Mortgage Corporation. The company
provides a wide range of commercial and retail banking and trust services
through full-service banking offices in 12 eastern states and Washington, D.C.
First Union also provides mortgage banking, leasing, securities brokerage
services, and other services.
Fleet Financial Group, Inc. Fleet Financial Group, Inc. is a diversified
financial services company. The company's lines of business include investment
management, commercial and business banking, mortgage banking, corporate
finance, government banking, asset-based lending, equipment leasing and student
loan processing. Fleet has more than 1,200 branches and 2,400 ATMs in the
northeastern United States.
Golden West Financial Corporation. Golden West Financial Corporation is a
savings and loan holding company. The company, through its subsidiaries,
attracts deposits from the general public and primarily uses those funds to
invest in a variety of loans. The company operates in the United States.
J.P. Morgan & Company, Inc. J.P. Morgan & Company, Inc., through
subsidiaries, offers financial services to corporations, governments, financial
institutions, institutional investors, professional firms, privately-held
companies and individuals. The company offers loans, advises on mergers,
acquisitions and privatizations, underwrites debt and equity issues and deals in
government-issued securities worldwide.
KeyCorp. KeyCorp is a national banking franchise of 16 banking subsidiaries
with more than 1200 offices in 15 states. The company's three primary lines of
business include retail, commercial and investment management and trust
services. KeyCorp also owns non-bank subsidiaries which provide trust, leasing
and credit life insurance, data processing, mortgage banking and investment
services.
National City Corporation. National City Corporation is a multi-bank holding
company. The company owns substantially all of eight commercial banks in Ohio,
Pennsylvania, Kentucky, and Indiana. National City subsidiaries provide a
variety of financial services including commerial and retail banking, brokerage,
and trust and investment services.
NationsBank Corporation. NationsBank Corporation is a product of the merger
between NCNB Corporation and C&S/Sovran Corporation. The company operates in 16
states and the District of Columbia, covering a region from MD to TX with over
1,900 branches. Businesses include retail banking services, asset mangagement,
financial products, corporate finance, specialized finance, capital markets and
financial services.
Norwest Corporation. Norwest Corporation is a diversified financial services
company. The company provides banking, insurance, investments, mortgage, and
consumer finance through 4,087 stores in all 50 states, Canada, the Caribbean,
Latin America and elsewhere worldwide. Norwest also provides equipment leasing,
agricultural finance, commercial finance, trust services, and other services
through its subsidiaries.
Pacific Century Financial Corporation. Pacific Century Financial Corporation
is a regional bank holding company. The company operates more than 160 locations
from Singapore to New York. Pacific and its subsidiaries provide varied
financial services to businesses, governments and individuals in Hawaii, the
Asia-Pacific region and in selected markets on the United States mainland.
PNC Bank Corporation. PNC Bank Corporation is a financial services company
with banking subsidiaries in Pennsylvania, New Jersey, Delaware, Ohio, Kentucky,
Indiana, Massachusetts, and Florida. The company provides diversified financial
services including consumer banking, corporate banking, mortgage banking, real
estate banking, and asset management.
Republic New York Corporation. Republic New York Corporation is a holding
company for Republic National Bank of New York. The bank provides a variety of
banking and financial services worldwide to corporations, financial
institutions, governmental units, and individuals. Republic National provides
services to individuals who are not citizens of the United States through its
international private banking department.
TCF Financial Corporation. TCF Financial Corporation is a national bank
holding company. The banks operate in Minnesota, Illinois, Wisconsin, and
Colorado as TCF National Bank and in Michigan as Great Lakes National Bank.
TCF's other affiliates include business equipment leasing, consumer finance,
mortgage banking, title insurance, annuity and mutual fund sales companies.
UnionBanCal Corporation. UnionBanCal Corporation is a bank holding company
whose primary subsidiary is Union Bank of California, N.A. The bank is a
commercial bank with 237 offices in California, five banking offices in Oregon
and Washington and 18 international facilities, primarily along the Pacific Rim.
U.S. Bancorp. U.S. Bancorp is a bank holding company with subsidiary banks
that provide comprehensive banking, trust investment and payment systems to
customers, businesses and institutions. The banks currently operate more than
1,000 offices in17 states and operate a network of 4,500 ATMs throughout the
United States, as well as 24 hour, seven days a week telephone customer service
centers.
UST Corp. UST Corp. is a bank holding company for USTrust and the United
States Trust Company. The banks provide a broad range of financial services,
including commercialbanking, consumer financial services, trust and money
management, and equipment leasing. UST serves individuals and small- and
medium-sized companies through 66 offices located throughout eastern
Massachusetts.
Wachovia Corporation. Wachovia Corporation is a bank holding company. The
company, through its subsidiary banks, attracts deposits and offers retail and
corporate banking services, including trust services. Wachovia serves customers
through 700 offices and 1,300 ATMs in North Carolina, Georgia, South Carolina,
and Virginia. Other subsidiaries offer mortgage banking, brokerage, and
insurance services.
Washington Federal, Inc. Washington Federal, Inc. is the holding company for
Washington Federal Savings. The bank operates 104 offices in the states of
Washington, Idaho, Oregon, Utah, and Arizona. Washington Federal operates as a
traditional thrift, obtaining its funds primarily through savings deposits from
the general public and providing real estate loans.
Washington Mutual, Inc. Washington Mutual, Inc. is a financial services
company. The company's subsidiaries provide consumer and commercial banking
services, mortgage lending, securities brokerage, mutual fund management,
property/casualty and life insurance sales, and underwriting for insurance
annuities. Washington Mutual operates offices throughout the United States.
TECHNOLOGY TRUST 3Com Corporation. 3Com Corporation supplies data, voice, and
video communications technology and delivers networking solutions to customers
worldwide. The company gives enterprises, network service providers and
carriers, small businesses and consumers information access products and system
solutions for building local and wide area networks. America Online, Inc.
America Online, Inc. offers subscribers a wide variety of interactive services
including electronic mail, "Instant Message" features, entertainment, reference,
financial information, computing support, interactive magazines and newspapers.
The company also provides easy access to all the services of the Internet.
Applied Materials, Inc. Applied Materials, Inc. develops, manufactures, markets
and services semiconductor wafer fabrication equipment and related spare parts
for the worldwide semiconductor industry. The company's customers include
semiconductor wafer manufacturers and semiconductor integrated circuit
manufacturers. Through a joint venture, Applied develops and markets thin film
transistor fabrication systems. Ascend Communications, Inc. Ascend
Communications, Inc. develops, manufactures and sells wide area networking
solutions. The company provides these solutions to telecommunications carriers,
Internet service providers and corporate customers worldwide. Automatic Data
Processing, Inc. Automatic Data Processing, Inc. offers a variety of data
processing services, including employer services, financial services and
specialized services in the United States. The company's employer services
consist of payroll processing and tax filing. Bay Networks, Inc. Bay Networks,
Inc. provides products that support seamless communications across local and
wide area bounderies. The company serves enterprise groups, small offices and
mobile workers. Bay's products include LAN and ATM switches, intelligent hubs,
highly available multiprotocol routers, remote and Internet access solutions,
and sophisticated network management products. Cisco Systems, Inc. Cisco
Systems, Inc. supplies data networking products to the corporate enterprise and
public wide area service provider markets. The company offers a variety of
products including routers, LAN switches, frame relay/ATM, and remote access
concentrators. Cisco's clients include utilities, corporations, universities,
governments, and small to medium businesses worldwide. Compaq Computer
Corporation. Compaq Computer Corporation develops and markets hardware,
software, solutions, and services. The company offers enterprise computing
solutions, fault-tolerant business-critical solutions, networking products,
commercial desktop and portable products, and consumer PCs. Compaq markets its
products primarily to business, home, government, and education customers.
Computer Associates International, Inc. Computer Associates International, Inc.
designs and markets standardized computer software products. The software is
produced for integrated systems, database management, business applications and
application development solutions. These products are used on IBM, DG, DEC,
Hewlett-Packard and other mini and microcomputers. The company has subsidiaries
worldwide. Computer Sciences Corporation. Computer Sciences Corporation, a
computer services company, designs, engineers, develops, integrates, installs
and operates computer-based systems and communications systems. While the United
States government is a primary customer, the company also offers consulting
services to non-Federal governmental agencies in the United States and to
European organizations. Dell Computer Corporation. Dell Computer Corporation
designs, develops, manufactures, markets, services, and supports a variety of
computer systems, including desktops, notebooks, and network servers. The
company also customizes products and services to end-user requirements. Dell
sells its products around the world. Electronic Arts, Inc. Electronic Arts, Inc.
creates, markets and distributes interactive entertainment software for a
variety of hardware platforms. The products are primarily developed for 16-bit
and 32-bit computer platforms, including Sega Genesis, the Super Nintendo
Entertainment System and floppy-disk based computers. Also, the products are
available in retail outlets throughout the United States and Canada. Electronic
Data Systems Corporation. Electronic Data Systems Corporation offers systems and
technology services, business process management, management consulting, and
electronic business. The company's services include the management of computers,
networks, information systems, information processing facilities, business
operations, and related personnel. EMC Corporation. EMC Corporation designs,
manufactures, markets, and supports a variety of storage and retrieval
technology for mainframe and open system environments, as well as
network-attached storage systems. First Data Corporation. First Data Corporation
and its business units provide payment systems, electronic commerce and
information management services. The corporation's clients include financial
institutions, merchants, insurance companies, health care providers, public
utilities and consumers worldwide. Hewlett-Packard Company. Hewlett-Packard
Company designs, manufactures, and services products and systems for
measurement, computation, and communications. The company's products include
computers, calculators, workstations, printers, disc and tape drives, and
medical diagnostic and monitoring devices. Hewlett-Packard sells its products
around the world. Intel Corporation. Intel Corporation designs, manufactures,
and sells computer components and related products. The company's major products
include conferencing products, microprocessors, flash memory products, chipsets,
graphics products, embedded processors and microcontrollers, network and
communications products, and digital imaging products. Intel sells its products
worldwide. International Business Machines Corporation. International Business
Machines Corporation manufactures micro and personal computers. The company also
supplies mainframe computers and other information processing equipment,
software and networking products and peripheral equipment. Products are sold or
leased for use in business, government, science, education, space, medicine, and
other areas on a worldwide basis. Intuit, Inc. Intuit, Inc. develops and markets
software products and related services. The company provides software units that
allow households and small businesses to automate financial tasks, including
accounting and personal finances. Intuit also offers supplies, checks and
invoices, and financial services. The company sells its products worldwide.
Linear Technology Corporation. Linear Technology Corporation designs,
manufactures and markets a line of linear integrated circuits. The company's
products include telecommunications, computers, computer peripherals, cellular
telephones, process controls, automation products and satellites. Linear markets
its products worldwide. Lucent Technologies, Inc. Lucent Technologies, Inc.
designs, develops, and manufactures communications systems, software, and
products. The company sells public communications systems and supplies systems
and software worldwide. Lucent's research and development arm is Bell
Laboratories. Microsoft Corporation. Microsoft Corporation develops,
manufactures, licenses and supports computer software products. The company
offers "Microsoft MS-DOS," "Microsoft Windows," and "Microsoft Windows 95"
operating systems. Microsoft also offers "Microsoft Access," "Microsoft FoxPro,"
"Microsoft SQL Server" and "Microsoft Excel" networking, database and
spreadsheet programs, books and other computer products. Motorola, Inc.
Motorola, Inc. provides wireless communications, semiconductors and advanced
electronic systems, components and services. The company's equipment businesses
include cellular telephone, two-way radio, paging and data communications,
personal communications, automotive, defense and space electronics and
computers. Netscape Communications Corporation. Netscape Communications
Corporation provides open software for linking people and information over
intranets and the Internet. The company offers an array of enterprise server and
client software, development tools, and commercial applications that create a
single communications platform. Netscape's product "Navigator" allows users to
browse the Internet. Oracle Corporation. Oracle Corporation supplies software
for information management. The company offers its database, tools and
application products, along with related consulting, education and support
services in more than 140 countries around the world. Parametric Technology
Company. Parametric Technology Company supplies software tools used to automate
the mechanical development of a product from its conceptual design through
production. The company's products are used in approximately 15,000 companies
worldwide. Parametric operates through sales and support offices in North
America, Europe, and Asia. PeopleSoft, Inc. PeopleSoft, Inc. designs, develops,
markets, and supports client/server application software products for use
throughout large and medium sized organizations. The company's software is
developed using "PeopleTools," an application development toolset. PeopleSoft's
products are used in the finance, accounting, and administration industries.
Seagate Technology, Inc. Seagate Technology, Inc. is a data technology company
that provides products for storing, managing, and accessing digital information.
The company manufactures disc drives, magnetic discs and read-write heads, and
tape drives, as well as develops software for information availability, access,
and analysis. SGS-Thomson Microelectronics N.V. SGS-Thomson Microelectronics
N.V. designs, develops, manufactures and markets semiconductor integrated
circuits and discrete devices. The company's products are used in the
telecommunications, consumer, automotive, computer and industrial sectors.
Geographically, customers are located in North America, Europe, Asia/Pacific and
Japan. Solectron Corporation. Solectron Corporation provides pre-manufacturing,
manufacturing, and post-manufacturing services to electronics original equipment
manufacturers. The company operates 17 manufacturing facilities worldwide. Sun
Microsystems, Inc. Sun Microsystems, Inc. provides hardware, software and
services for establishing enterprise-wide intranets and expanding the power of
the Internet. The company's products are sold in more than 150 countries.
Tellabs, Inc. Tellabs, Inc. designs, manufactures, markets, and services voice,
data, and video transport and network access systems. The company's products are
used worldwide by public telephone companies, long-distance carriers, alternate
service providers, cellular service providers, cable operators, government
agencies, utilities, and business end-users. Texas Instruments, Inc. Texas
Instruments, Inc. provides semiconductor products worldwide, and designs and
supplies digital signal processing solutions. The company's products also
include calculators, controls and sensors, metallurgical materials, and digital
light processing technologies. Texas Instruments has manufacturing or sales
operations in more than 25 countries. Xilinx, Inc. Xilinx, Inc. designs,
develops and markets CMOS programmable logic devices and related design
software. The company's programmable logic product lines include field
programmable gate arrays and complex programmable logic devices. Xilinx also
markets HardWire Arrays.
Yahoo! Inc. Yahoo! Inc. offers a network of branded Web programming that
serves users on a daily basis. The company provides targeted Internet resources
and communications services for a broad range of audiences, based on
demographic, key-subject, and geographic interests. Yahoo!'s principal offering,
"Yahoo!," provides the product for its worldwide internet media network.
GENERAL. Each Trust consists of (a) the Equity Securities (including
contracts for the purchase thereof) listed under "Portfolio" as may continue to
be held from time to time in the Trust, (b) any additional Equity Securities
acquired and held by the Trust pursuant to the provisions of the Trust Agreement
and (c) any cash held in the Income and Capital Accounts. Neither the Sponsor
nor the Trustee shall be liable in any way for any failure in any of the Equity
Securities. However, should any contract for the purchase of any of the Equity
Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in a Trust to cover such purchase are
reinvested in substitute Equity Securities in accordance with the Trust
Agreement, refund the cash and sales charge attributable to such failed contract
to all Unitholders on or before the next scheduled distribution date.
RISK FACTORS
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GENERAL. An investment in Units should be made with an understanding of the
risks which an investment in common stocks entails, including the risk that the
financial condition of the issuers of the Equity Securities or the general
condition of the common stock market may worsen and the value of the Equity
Securities and therefore the value of the Units may decline. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of the
issuers change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Shareholders of common stocks
have rights to receive payments from the issuers of those common stocks that are
generally subordinate to those of creditors of, or holders of debt obligations
or preferred stocks of, such issuers. Shareholders of common stocks of the type
held by the Trusts have a right to receive dividends only when and if, and in
the amounts, declared by each issuer's board of directors and have a right to
participate in amounts available for distribution by such issuer only after all
other claims on such issuer have been paid or provided for. Common stocks do not
represent an obligation of the issuer and, therefore, do not offer any assurance
of income or provide the same degree of protection of capital as do debt
securities. The issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends which could
adversely affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock with
respect to assets of the issuer upon liquidation or bankruptcy. The value of
common stocks is subject to market fluctuations for as long as the common stocks
remain outstanding, and thus the value of the Equity Securities in a portfolio
may be expected to fluctuate over the life of the Trusts to values higher or
lower than those prevailing on the Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred stocks
and debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Cumulative preferred stock dividends must be paid before
common stock dividends and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on liquidation
which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made for
any of the Equity Securities, that any market for the Equity Securities will be
maintained or of the liquidity of the Equity Securities in any markets made. In
addition, the Trusts 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 Trusts, will be
adversely affected if trading markets for the Equity Securities are limited or
absent.
The Trust Agreement authorizes the Sponsor to increase the size of each
Trust and the number of Units thereof by the deposit of additional Securities,
or cash (or a letter of credit) with instructions to purchase additional
Securities, in the Trust and issuance of a corresponding number of additional
Units. If the Sponsor deposits cash, existing and new investors may experience a
dilution of their investments and reduction in their anticipated income because
of fluctuations in the prices of the Securities between the time of the cash
deposit and the purchase of the Securities and because the Trusts will pay the
associated brokerage fees.
As described under "Trust Operating Expenses," all of the expenses of the
Trusts will be paid from the sale of Securities. 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 Trusts. Such sales will result in capital gains and
losses and may be made at times and prices which adversely affect the Trusts.
For a discussion of the tax consequences of such sales, see "Federal Taxation."
Unitholders will be unable to dispose of any of the Equity Securities, as
such, and will not be able to vote the Equity Securities. As the holder of the
Equity Securities, the Trustee will have the right to vote all of the voting
stocks in the Trusts 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 Trusts.
Like other investment companies, financial and business organizations and
individuals around the world, the Trusts could be adversely affected if the
computer systems used by the Sponsor, Evaluator, Supervisor or Trustee or other
service providers to the Trusts do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Sponsor, Evaluator, Supervisor
and Trustee are taking steps that they believe are reasonably designed to
address the Year 2000 Problem with respect to computer systems that they use and
to obtain reasonable assurances that comparable steps are being taken by the
Trusts' other service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Trusts. The Year 2000 Problem is expected to impact corporations, which may
include issuers of the Securities, to varying degrees based upon various
factors, including, but not limited to, their industry sector and degree of
technological sophistication. The Sponsor is unable to predict what impact, if
any, the Year 2000 Problem will have on issuers of the Securities.
Each Trust portfolio is concentrated in a single industry and may present
more risk than a portfolio broadly diversified over several industries. Each
Trust, and therefore Unitholders, may be particularly susceptible to a negative
impact resulting from adverse market conditions or other factors affecting
issuers within the related industry because any negative impact on that industry
will not be diversified among issuers within other unrelated industries.
ENERGY INDUSTRY. The Global Energy Trust is concentrated in issuers within
the energy industry. A portfolio concentrated in a single industry may present
more risk than a portfolio of more broadly diversified investments. The Trust,
and therefore Unitholders, may be particularly susceptible to a negative impact
resulting from adverse market conditions or other factors affecting issuers in
the energy industry because any negative impact on the energy industry will not
be diversified among issuers within other unrelated industries. Accordingly, an
investment in Units should be made with an understanding of the risks inherent
in the energy industry.
These factors include political conditions in oil producing regions,
including the Middle East, the actions of the Organization of Petroleum
Exporting Countries (OPEC), the domestic and foreign supply of oil and gas, the
level of consumer demand, weather conditions, the price and availability of
alternative fuels and overall economic conditions. In addition, various factors,
including the capacity and availability of oil and gas gathering systems and
pipelines, changes in supply due to drilling by other producers and changes in
demand, may have an adverse impact on the issuers of Securities. An issuer's
revenues, profitability and liquidity are substantially dependent upon
prevailing prices for oil and natural gas which can be extremely volatile and in
past years have been depressed by excess total domestic and imported supplies.
There can be no assurance that current price levels can be sustained. Prices
also are affected by actions of state and local agencies, the United States and
foreign governments, and international cartels. Any substantial or extended
decline in the price of oil and/or natural gas would have a material adverse
effect on the financial condition and results of operations of the issuers of
the Securities, including reduced cash flow and borrowing capacity. If market
factors were to change dramatically, the financial impact on an issuer could be
substantial. The nature of the oil and gas business also involves a variety of
risks, including the risks of operating hazards such as fires, explosions,
cratering, blow-outs, and encountering formations with abnormal pressures, the
occurrence of any of which could have a material adverse impact on the issuers
of the Securities. Companies generally maintain insurance against some, but not
all, of these risks. The occurrence of a significant event, however, that is not
fully insured could have a material adverse effect on a issuer's financial
position. In addition, the issuers may engage in oil and gas hedging activities
to help reduce exposure to the volatility of oil and gas prices by hedging a
portion of its production. These hedging arrangements may have an adverse impact
on the financial condition of the issuers under certain circumstances and may
limit potential gains by an issuer if the market prices for oil and gas were to
rise substantially over the price established by the hedge.
The future performance of oil and gas issuers is dependent upon the ability
to find or acquire additional oil and gas reserves that are economically
recoverable. Unless an issuer successfully replaces the reserves that it
produces, reserves will decline, resulting eventually in a decrease in oil and
gas production and lower revenues and cash flow from operations. There can be no
assurance that any issuer will be able to acquire, at acceptable costs,
producing oil and gas properties that contain economically recoverable reserves
or that it will make such acquisitions at acceptable prices. In addition,
exploitation, development and exploration involve numerous risks, including
depositional or trapping uncertainties or other conditions that may result in
dry holes, the failure to produce oil and gas in commercial quantities and the
inability to fully produce discovered reserves.
The production and sale of oil and gas are subject to a variety of federal,
state, local and foreign government regulations, including regulations
concerning the prevention of waste, the discharge of materials in the
environment, the conservation of oil and natural gas, pollution, permits for
drilling operations, drilling bonds, reports concerning operations, the spacing
of wells, the unitization and pooling of properties, and various other matters.
Such laws and regulations have increased the costs of planning designing,
drilling, installing, operating and abandoning oil and gas facilities. Many
jurisdictions have imposed limitations on the production of oil and gas by
restricting the rate of flow for oil and gas wells below their actual capacity
to produce. During recent years there has been significant discussion by
legislators concerning a variety of energy tax proposals. May states have raised
state taxes on energy sources and additional increases may occur. There can be
no assurance that significant costs for compliance will not be incurred by any
issuer in the future.
International investments may represent a significant portion of an issuer's
total assets or reserves. Foreign properties, operations or investments may be
adversely affected by local political and economic developments, exchange
controls, currency fluctuations, royalty and tax increases, retroactive tax
claims, expropriation, import and export regulations and other foreign laws or
policies as well as by laws and policies of the United States affecting foreign
trade, taxation and investment. In addition, in the event of a dispute arising
from foreign operations, an issuer may be subject to the exclusive jurisdiction
of foreign courts or may not be successful in subjecting foreign person to the
jurisdiction of the courts in the United States.
BANKING ISSUERS. The Banking Trust is concentrated insecurities issued by
companies in the banking industry. In view of this, an investment in Units
should be made with an understanding of the problems and risks inherent in the
banking industry in general. Banking institutions are especially subject to the
adverse effects of economic recession, volatile interest rates, portfolio
concentrations in geographic markets and in commercial and residential real
estate loans, and competition from new entrants in their fields of business.
Economic conditions in the real estate markets can have a significant effect
upon banking institutions because they generally have a substantial percentage
of their assets invested in loans secured by real estate. Banking institutions
are subject to extensive federal regulation and, when such institutions are
state-chartered, to state regulation as well. Regulatory actions, such as
increases in minimum capital requirements applicable to commercial banks to the
FDIC, can negatively impact earning and the ability of an institution to pay
dividends. Furthermore, neither federal insurance or deposits nor governmental
regulation, however, ensures the solvency or profitability of banking
institutions, or insures against any risk of investment in the securities issued
by such institutions.
Financial institutions and their holding companies are extensively regulated
under federal and state laws. As a result, the business, financial condition and
prospects of banks can be materially affected not only by management decisions
and general economic conditions, but also by applicable statutes and regulations
and other regulatory pronouncements and policies promulgated by regulatory
agencies with jurisdiction over the banks, such as the Board of Governors of the
Federal Reserve System ("FRB"), the Office of the Comptroller of the Currency
("OCC"), the Office of Thrift Supervision ("OTS"), the Federal Deposit Insurance
Corporation ("FDIC") and the state banking regulators. The effect of such
statutes, regulations, and other pronouncements and policies can be significant,
cannot be predicted with a high degree of certainty and can change over time.
Furthermore, such statutes, regulations, and other pronouncements and policies
are intended to protect depositors and the FDIC's deposit insurance funds, not
to protect stockholders. Bank holding companies as well as their subsidiary
banks are subject to enforcement actions by their regulators for regulatory
violations. In addition to compliance with statutory and regulatory limitations
and requirements concerning financial and operating matters, regulated financial
institutions must file periodic and other reports and information with their
regulators and are subject to examination by each of their regulators.
The statutory requirements applicable to and regulatory supervision of
banking holding companies and their subsidiary banks have increased
significantly and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act ("FIRREA"), enacted in August 1989, the Federal
Deposit Insurance Corporations Improvement Act of 1991 ("FDICA"), enacted in
December 1991, and the regulations promulgated under FIRREA and FDICIA. The
impact of regulations promulgated pursuant to FDICIA on the business and
financial condition and prospects of banks cannot be predicted with certainty.
Banks currently face significant competition from other financial institutions
such as mutual funds, securities and brokerage companies, credit unions,
mortgage banking corporations and insurance companies, and increased competition
may result from broadening national interstate banking powers and liberalization
of certain restrictions on the activities of nonbank subsidiaries of banks. Many
of these competitors are much larger in total assets and capitalization, have
greater access to capital markets and offer a broader array of financial
services than the issuers of the Securities. There can be no assurance that such
issuers will be able to compete effectively in their markets, and the results of
operations could be adversely affected if circumstances affecting the nature or
level of competition change.
Federal legislation has become effective in recent years which serves to
lessen or remove certain legal barriers to interstate banking and branching by
financial institutions. The legislation may result in an increase in the
nationwide consolidation activity occurring among financial institutions by
facilitating interstate bank operations and acquisitions. The legislation does,
however, allow states to "opt out" of interstate branching and certain states
have opted out of the legislation. The effects of changes in interstate banking
cannot be predicted, however, it is likely that there will be increased
competition within the regional banking industry which could have an adverse
impact on certain issuers. In addition, the Federal Reserve Board has approved
applications by bank holding companies to engage, through nonbank subsidiaries,
in certain securities-related activities, provided that the subsidiaries would
not be "principally engaged" in such activities for purposes of Section 20 of
the Glass-Steagall Act. In certain situations, holding companies may be able to
use such subsidiaries to underwrite and deal in corporate debt and equity
securities. The Federal Reserve Board has recently liberalized the standards
used in determining whether a subsidiary is principally engaged in such
activities. From time to time bills have been introduced in Congress that would
remove many of the Glass-Steagall Act restraints. This and any future
liberalization of Glass-Steagall could result in increased competition which
could be have an adverse impact on certain issuers. The Sponsor makes no
prediction as to what, if any, additional bank regulatory reform might be
adopted or what ultimately effect such reform might have on the Banking Trust's
portfolio.
TECHNOLOGY ISSUERS. The Technology Trust is concentrated in issuers within
the technology industry. A portfolio concentrated in a single industry may
present more risk than a portfolio broadly diversified over several industries.
The Technology Trust, and therefore Unitholders, may be particularly susceptible
to a negative impact resulting from adverse market conditions or other factors
affecting technology issuers because any negative impact on the technology
industry will not be diversified among issuers within other unrelated
industries. Accordingly, an investment in Units should be made with an
understanding of the characteristics of the technology industry and the risks
which such an investment may entail.
Technology companies generally include companies involved in the development,
design, manufacture and sale of computers, computer related equipment, computer
networks, communications systems, telecommunications products, electronic
products, and other related products, systems and services. The market for
technology products and services, especially those specifically related to the
Internet, is characterized by rapidly changing technology, rapid product
obsolescence, cyclical market patterns, evolving industry standards and frequent
new product introductions. The success of the issuers of the Securities depends
in substantial part on the timely and successful introduction of new products.
An unexpected change in one or more of the technologies affecting an issuer's
products or in the market for products based on a particular technology could
have a material adverse affect on an issuer's operating results. Furthermore,
there can be no assurance that the issuers of the Securities will be able to
respond timely to compete in the rapidly developing marketplace.
The market for certain technology products and services may have only
recently begun to develop, is rapidly evolving and is characterized by an
increasing number of market entrants. Additionally, certain technology companies
may have only recently commenced operations or offered equity securities to the
public. Such companies are in the early stage of development and have a limited
operating history on which to analyze future operating results. It is important
to note that following its initial public offering a security is likely to
experience substantial stock price volatility and speculative trading.
Accordingly, there can be no assurance that upon redemption of Units or
termination of a Trust a Unitholder will receive an amount greater than or equal
to the Unitholder's initial investment.
Based on trading history, factors such as announcements of new products or
development of new technologies and general conditions of the industry have
caused and are likely to cause the market price of technology common stocks to
fluctuate substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to the
operating performance of such companies. This market volatility may adversely
affect the market price of the Securities and therefore the ability of a
Unitholder to redeem units, or roll over Units into a new trust, at a price
equal to or greater than the original price paid for such Units.
Some key components of certain products of technology issuers are currently
available only from single sources. There can be no assurance that in the future
suppliers will be able to meet the demand for components in a timely and cost
effective manner. Accordingly, an issuer's operating results and customer
relationships could be adversely affected by either an increase in price for, or
and interruption or reduction in supply of, any key components. Additionally,
many technology issuers are characterized by a highly concentrated customer base
consisting of a limited number of large customers who may require product
vendors to comply with rigorous and constantly developing industry standards.
Any failure to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies are incorporated into
other related products, certain companies are often highly dependent on the
performance of other computer, electronics and communications companies. There
can be no assurance that these customers will place additional orders, or that
an issuer of Securities will obtain orders of similar magnitude as past orders
form other customers. Similarly, the success of certain companies is tied to a
relatively small concentration of products or technologies with intense
competition between companies. Accordingly, a decline in demand of such
products, technologies or from such customers could have a material adverse
impact on issuers of the Securities.
FOREIGN ISSUERS. Since certain of the Equity Securities consist of securities
of foreign issuers, and investment in Units involves some investment risks that
are different in some respects from an investment in a trust that invests
entirely in securities of domestic issuers. Those investment risks include
future political and governmental restrictions which might adversely affect the
payment or receipt of payment of dividends on the relevant Equity Securities. In
addition, for the foreign issuers that are not subject to the reporting
requirements of the Securities Exchange Act of 1934, there may be less publicly
available information than is available from a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic issuers. However, due to the nature of the issuers of
Equity Securities included in the Trusts, the Sponsor believes that adequate
information will be available to allow the Supervisor to provide portfolio
surveillance.
The securities of the foreign issuers in the Trusts are in ADR form. ADRs
evidence American Depositary Receipts which represent common stock deposited
with a custodian in a depositary. American Depositary Shares, and receipts
therefor (ADRs), are issued by an American bank or trust company to evidence
ownership of underlying securities issued by a foreign corporation. These
instruments may not necessarily be denominated in the same currency as the
securities into which they may be converted. For purposes of the discussion
herein, the term ADR generally includes American Depositary Shares, ADRs may be
sponsored or unsponsored. In an unsponsored facility, the depositary initiates
and arranges the facility at the request of market makers and acts as agent for
the ADR holder, while the company itself is not involved in the transaction. In
a sponsored facility, the issuing company initiates the facility and agrees to
pay certain administrative and shareholder-related expenses. Sponsored
facilities use a single depositary and entail a contractual relationship between
the issuer, the shareholder and the depositary: unsponsored facilities involve
several depositaries with no contractual relationship to the company. The
depositary bank that issues an ADR generally charges a fee, based on the price
of the ADR, upon issuance and cancellation of the ADR. This fee would be in
addition to the brokerage commissions paid upon the acquisition or surrender of
the security. In addition, the depositary bank incurs expenses in connection
with the conversion of dividends or other cash distributions paid in local
currency into U.S. dollars and such expenses are deducted from the amount of the
dividend or distribution paid to holders, resulting in a lower payout per
underlying shares represented by the ADR than would be the case if the
underlying share were held directly. Investors should be aware that the Trustee
of the Trust may act as the depositary bank for certain ADRs which may include
certain of the Securities. Certain tax considerations, including tax rate
differentials and withholding requirements, arising from applications of the tax
laws of one nation to nationals of another and from certain practices in the ADR
market may also exist with respect to certain ADRs. In varying degrees, any or
all of these factors may affect the value of the ADR compared with the value of
the underlying shares in the local market. In addition, the rights of holders of
ADRs may be different than those of holders of the underlying shares, and the
market for ADRs may be less liquid than that for the underlying shares. ADRs are
registered securities pursuant to the Securities Act of 1933 and may be subject
to the reporting requirements of the Securities Exchange Act of 1934.
For those Equity Securities that are ADRs, currency fluctuations will affect
the U.S. dollar equivalent of the local currency price of the underlying
domestic share and, as a result, are likely to affect the value of the ADRs and
consequently the value of the Equity Securities. The foreign issuers of
securities that are ADRs may pay dividends in foreign currencies which must be
converted into dollars. Most foreign currencies have fluctuated widely in value
against the United States dollar for many reasons, including supply and demand
of the respective currency, the soundness of the world economy and the strength
of the respective economy as compared to the economies of the United States and
other countries. Therefore, for any securities of issuers (whether or not they
are in ADR form) whose earnings are stated in foreign currencies, or which pay
dividends in foreign currencies or which are traded in foreign currencies, there
is a risk that their United States dollar value will vary with fluctuations in
the United States dollar foreign exchange rates for the relevant currencies.
On the basis of the best information available to the Sponsor at the present
time, none of the Equity Securities are subject to exchange control restriction
under existing law which would materially interfere with payment to a Trust of
dividends due on, or proceeds from the sale of, the Equity Securities. However,
there can be no assurance that exchange control regulations might not be adopted
in the future which might adversely affect payment to a Trust. In addition, the
adoption of exchange control regulations and other legal restrictions could have
an adverse impact on the marketability of international securities in a Trust
and on the ability of a Trust to satisfy its obligation to redeem Units tendered
to the Trustee for redemption.
FEDERAL TAXATION
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GENERAL. The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as capital assets
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986 (the "Code"). Unitholders should consult their
tax advisers in determining the federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in the Trust.
For purposes of the following discussion and opinion, it is assumed that each
Security is equity for Federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for Federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Trust asset when such income is considered to be received by
the Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his pro rata portion of each Security when such dividends are considered to
be received by the Trust regardless of whether such dividends are used to pay a
portion of the deferred sales charge. Unitholders will be taxed in this manner
regardless of whether distributions from the Trust are actually received by the
Unitholder or are automatically reinvested (see "Rights of
Unitholders--Reinvestment Option").
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, taxable exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unitholder (except to
the extent an in kind distribution of stock is received by such Unitholder as
described below). The price a Unitholder pays for his Units, generally including
sales charges, is allocated among his pro rata portion of each Security held by
the Trust (in proportion to the fair market values thereof on the valuation date
nearest to the date the Unitholder purchases his Units) in order to determine
his tax basis for his pro rata portion of each Security held by the Trust. It
should be noted that certain legislative proposals have been made which could
affect the calculation of basis for Unitholders holding securities that are
substantially identical to the Securities. Unitholders should consult their own
tax advisors with regard to the calculation of basis. For Federal income tax
purposes, a Unitholder's pro rata portion of dividends, as defined by Section
316 of the Code, paid by a corporation with respect to a Security held by the
Trust is taxable as ordinary income to the extent of such corporation's current
and accumulated "earnings and profits". A Unitholder's pro rata portion of
dividends paid on such Security which exceeds such current and accumulated
earnings and profits will first reduce a Unitholder's tax basis in such
Security, and to the extent that such dividends exceed a Unitholder's tax basis
in such Security shall generally be treated as capital gain. In general, the
holding period for such capital gain will be determined by the period of time a
Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unitholders should consult their tax advisers regarding
the recognition of gains and losses for Federal income tax purposes. In
particular, a Rollover Unitholder should be aware that a Rollover Unitholder's
loss, if any, incurred in connection with the exchange of Units for units in the
next new trust (the "New Trust") will generally be disallowed with respect to
the disposition of any Securities pursuant to such exchange to the extent that
such Unitholder is considered the owner of substantially identical securities
under the wash sale provisions of the Code taking into account such Unitholder's
deemed ownership of the securities underlying the Units in the New Trust in the
manner described above, if such substantially identical securities were acquired
within a period beginning 30 days before and ending 30 days after such
disposition. However, any gains incurred in connection with such an exchange by
a Rollover Unitholder would be recognized. Unitholders should consult their tax
advisers regarding the recognition of gains and losses for Federal income tax
purposes.
DEFERRED SALES CHARGE. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trust is deferred. The income (or proceeds from redemption) a
Unitholder must take into account for Federal income tax purposes is not reduced
by amounts deducted to pay the deferred sales charge. Unitholders should consult
their own tax advisers as to the income tax consequences of the deferred sales
charge.
DIVIDENDS RECEIVED DEDUCTION. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
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.
Unitholders should consult with their tax advisers regarding the limitations on
the deductibility of Trust expenses.
RECOGNITION OF TAXABLE GAIN OR LOSS UPON DISPOSITION OF SECURITIES BY THE
TRUST OR DISPOSITION OF UNITS. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit (although losses incurred by Rollover Unitholders
may be subject to disallowance, as discussed above). For taxpayers other than
corporations, net capital gain (which is defined as net long-term capital gain
over net short-term capital loss for the taxable year) is subject to a maximum
marginal stated tax rate of either 28% or 20%, depending upon the holding
periods of the capital assets. Capital gain or loss is long-term if the holding
period for the asset is more than one year, and is short-term if the holding
period for the asset is one year or less. Generally, capital gains realized from
assets held for more than one year but not more than 18 months are taxed at a
maximum marginal stated tax rate of 28% and capital gains realized from assets
(with certain exclusions) held for more than 18 months are taxed at a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Further, capital gains realized from assets held for one
year or less are taxed at the same rates as ordinary income. Legislation is
currently pending that provides the appropriate methodology that should be
applied in netting the realized capital gains and losses. Such legislation is
proposed to be effective retroactively for tax years ending after May 6, 1997.
Note that 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 or she is deemed thereby to have
disposed of his entire pro rata interest in all the assets of the Trust
including his pro rata portion of all Securities represented by a Unit. The
Taxpayer Relief Act of 1997 (the "1997 Tax Act") includes provisions that treat
certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their own
tax advisors with regard to any such constructive sale rules.
SPECIAL TAX CONSEQUENCES OF IN KIND DISTRIBUTIONS UPON REDEMPTION OF UNITS OR
TERMINATION OF THE TRUST. As discussed in "Rights of Unitholders--Redemption of
Units," under certain circumstances a Unitholder tendering Units for redemption
may request an In Kind Distribution. A Unitholder may also under certain
circumstances request an In Kind Distribution upon the termination of the Trust.
See "Rights of Unitholders--Redemption of Units". The Unitholder requesting an
In Kind Distribution will be liable for expenses related thereto (the
"Distribution Expenses") and the amount of such In Kind Distribution will be
reduced by the amount of the Distribution Expenses. See "Rights of
Unitholders--Redemption of Units". As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is considered
as owning a pro rata portion of each of the Trust's assets for federal income
tax purposes. The receipt of an In Kind Distribution will result in a Unitholder
receiving an undivided interest in whole shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution
with respect to each Security owned by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion of the Securities held by
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will generally
recognize gain or loss based upon the difference between the amount of cash
received by the Unitholder and his tax basis in such fractional share of a
Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an In
Kind Distribution will have to analyze the tax consequences with respect to each
Security owned by the Trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by the Trust. Unitholders who request an In Kind Distribution are advised
to consult their tax advisers in this regard.
As discussed in "Rights of Unitholders--Special Redemption and Rollover in
New Trust," a Unitholder may elect to become a Rollover Unitholder. To the
extent a Rollover Unitholder exchanges his Units for Units of the New Trust in a
taxable transaction, such Unitholder will recognize gains, if any, but generally
will not be entitled to a deduction for any losses recognized upon the
disposition of any Securities pursuant to such exchange to the extent that such
Unitholder is considered the owner of substantially identical securities under
the wash sale provisions of the Code taking into account such Unitholder's
deemed ownership of the securities underlying the Units in the New Trust in the
manner described above, if such substantially identical securities were acquired
within a period beginning 30 days before and ending 30 days after such
disposition under the wash sale provisions contained in Section 1091 of the
Code. In the event a loss is disallowed under the wash sale provisions, special
rules contained in Section 1091(d) of the Code apply to determine the
Unitholder's tax basis in the securities acquired. Rollover Unitholders are
advised to consult their tax advisers.
COMPUTATION OF THE UNITHOLDER'S TAX BASIS. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder for
his Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
as described above.
GENERAL. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified by the Internal Revenue Service that payments to the
Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
Distributions by the Trust (other than those that are not treated as United
States source income, if any) will generally be subject to United States income
taxation and withholding in the case of Units held by non-resident alien
individuals, foreign corporations or other non-United States persons. Such
persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporation for a three-year period ending with the close
of its taxable year preceding payment was not effectively connected to the
conduct of a trade or business within the United States. In addition, such
earnings may be exempt from U.S. withholding pursuant to a specific treaty
between the United States and a foreign country. Non-U.S. Unitholders should
consult their own tax advisers regarding the imposition of U.S. withholding on
distributions from the Trust.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their own tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trust. Any dividends withheld as a result thereof will
nevertheless be treated as income to the Unitholders. Because, under the grantor
trust rules, an investor is deemed to have paid directly his share of foreign
taxes that have been paid or accrued, if any, an investor may be entitled to a
foreign tax credit or deduction for United States income tax purposes with
respect to such taxes. The 1997 Tax Act imposes a required holding period for
such credits. Investors should consult their tax advisers with respect to
foreign withholding taxes and foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
a statement containing information relating to the dividends received by the
Trust on the Securities, the gross proceeds received by the Trust from the
disposition of any Security (resulting from redemption or the sale of any
Security), and the fees and expenses paid by the Trust. The Trustee will also
furnish annual information returns to Unitholders and to the Internal Revenue
Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unitholders under the existing income tax
laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal and certain aspects of
New York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit
of the Trust that (a) is (i) for United States Federal income tax purposes a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unitholder in paragraph (a) but whose
income from a Unit is effectively connected with such Unitholder's conduct of a
United States trade or business. The term also includes certain former citizens
of the United States whose income and gain on the Units will be taxable.
Unitholders should consult their tax advisors regarding potential state or local
taxation with respect to the Units.
TRUST OPERATING EXPENSES
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COMPENSATION OF SPONSOR AND EVALUATOR. The Sponsor will not receive any fees
in connection with its activities relating to the Trusts. 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 Trusts. Such fee (which is
based on the number of Units outstanding on January 1 of each year except during
the initial offering period in which event the calculation is based on the
number of Units outstanding at the end of the month of such calculation) may
exceed the actual costs of providing such supervisory services for these Trusts,
but at no time will the total amount received for portfolio supervisory services
rendered to all unit investment trusts sponsored by the Sponsor for which the
Supervisor provides portfolio supervisory services in any calendar year exceed
the aggregate cost to the Supervisor of supplying such services in such year. In
addition, American Portfolio Evaluation Services, which is a division of Van
Kampen American Capital Investment Advisory Corp., shall receive for regularly
providing evaluation services to the Trust the annual per Unit evaluation fee
set forth under "Summary of Essential Financial Information" (which is based on
the number of Units outstanding on January 1 of each year for which such
compensation relates except during the initial offering period in which event
the calculation is based on the number of Units outstanding at the end of the
month of such calculation) for regularly evaluating the Trust portfolios. The
fees set forth herein are payable as described under "General" below. Both of
the foregoing fees may be increased without approval of the Unitholders by
amounts not exceeding proportionate increases under the category "All Services
Less Rent of Shelter" in the Consumer Price Index published by the United States
Department of Labor or, if such category is no longer published, in a comparable
category. The Sponsor will receive sales commissions and may realize other
profits (or losses) in connection with the sale of Units and the deposit of the
Securities as described under "Public Offering--Sponsor and Other Compensation".
TRUSTEE'S FEE. For its services the Trustee will receive the annual per Unit
fee from the Trusts set forth under "Summary of Essential Financial Information"
(which is based on the number of Units outstanding at the end of the month of
such calculation until the end of the initial offering period at which time such
calculation is based on the number of Units outstanding on such date). The fees
set forth herein are payable as described under "General" below. The Trustee
benefits to the extent there are funds for future distributions, payment of
expenses and redemptions in the Capital and Income Accounts since these Accounts
are non-interest bearing to Unitholders and the amounts earned by the Trustee
are retained by the Trustee. Part of the Trustee's compensation for its services
to the Trusts 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 each Trust,
including the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and closing documents), federal and
state registration fees, the initial fees and expenses of the Trustee, legal and
accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over two years. The following
additional charges are or may be incurred by a Trust: (a) normal expenses
(including the cost of mailing reports to Unitholders) incurred in connection
with the operation of the Trust, (b) fees of the Trustee for extraordinary
services, (c) expenses of the Trustee (including legal and auditing expenses)
and of counsel designated by the Sponsor, (d) various governmental charges, (e)
expenses and costs of any action taken by the Trustee to protect the Trust and
the rights and interests of Unitholders, (f) indemnification of the Trustee for
any loss, liability or expenses incurred in the administration of the Trust
without negligence, bad faith or wilful misconduct on its part, (g) accrual of
costs associated with liquidating securities and (h) expenditures incurred in
contacting Unitholders upon termination of the Trust. The fees set forth herein
are payable as described under "General" below.
GENERAL. During the initial offering period of each Trust, all of the fees
and expenses of the Trust will accrue on a daily basis and will be charged to
the Trust, in arrears, at the end of the initial offering period. After the
initial offering period, all of the fees and expenses of a Trust will accrue on
a daily basis and will be charged to the Trust, in arrears, on a monthly basis.
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
related Trust's portfolio. If the balance in the Capital Account is insufficient
to provide for amounts payable by a Trust, the Trustee has the power to sell
Equity Securities to pay such amounts. It is expected that the balance in the
Capital Account will be insufficient to provide for amounts payable by the
Trusts and that Equity Securities will be sold from the Trusts to pay such
amounts. These sales may result in capital gains or losses to Unitholders. See
"Federal Taxation".
PUBLIC OFFERING
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GENERAL. Units are offered at the Public Offering Price. During the initial
offering period and for secondary market transactions after the initial offering
period the Public Offering Price is based on the aggregate underlying value of
the Securities, the initial sales charge described below, and cash, if any, in
the Income and Capital Accounts. The initial sales charge is equal to the
difference between the total sales charge for a Trust (3.25% of the Public
Offering Price) and the deferred sales charge ($0.225 per Unit). The monthly
deferred sales charge will begin accruing on a daily basis on August 18, 1998
and will continue to accrue through April 17, 1999. The monthly deferred sales
charge will be charged, in arrears, commencing September 18, 1998 and will be
charged on the 18th day of each month thereafter through April 18, 1999. If any
deferred sales charge payment date is not a business day, the payment will be
charged on the next business day. Unitholders will be assessed only that portion
of the deferred sales charge accrued from the time they became Unitholders of
record. Units purchased subsequent to the initial deferred sales charge payment
will be subject to only that portion of the deferred sales charge payments not
yet collected. The deferred sales charges will be paid from funds in the Capital
Account, if sufficient, or from the periodic sale of Securities. The sales
charge applicable to quantity purchases is reduced on a graduated basis to any
person acquiring 10,000 or more Units as follows:
AGGREGATE NUMBER OF UNITS PURCHASED* SALES CHARGE PER UNIT
------------------------------------ ---------------------
10,000-24,999 3.00%
25,000-49,999 2.75
50,000-99,999 2.50
100,000 or more 2.00
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*The breakpoint sales charges are also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied on
whichever basis is more favorable to the investor. The breakpoints will be
adjusted to take into consideration purchase orders stated in dollars which
cannot be completely fulfilled due to the Trusts' requirement that only whole
Units be issued.
Any sales charge reduction will primarily be the responsibility of the
selling broker, dealer or agent. This reduced sales charge structure will apply
on all purchases by the same person from any one dealer of units of Van Kampen
American Capital-sponsored unit investment trusts which are being offered in the
initial offering period (a) on any one day (the "Initial Purchase Date") or (b)
on any day subsequent to the Initial Purchase Date if (1) the units purchased
are of a unit investment trust purchased on the Initial Purchase Date, and (2)
the person purchasing the units purchased a sufficient amount of units on the
Initial Purchase Date to qualify for a reduced sales charge on such date. In the
event units of more than one trust are purchased on the Initial Purchase Date,
the aggregate dollar amount of such purchases will be used to determine whether
purchasers are eligible for a reduced sales charge. Such aggregate dollar amount
will be divided by the public offering price per unit (on the day preceding the
date of purchase) of each respective trust purchased to determine the total
number of units which such amount could have purchased of each individual trust.
Purchasers must then consult the applicable trust's prospectus to determine
whether the total number of units which could have been purchased of a specific
trust would have qualified for a reduced sales charge and, if so qualified, the
amount of such reduction. Assuming a purchased qualified for a sales charge
reduction or reductions, to determine the applicable sales charge reduction or
reductions it is necessary to accumulate all purchases made on the Initial
Purchase Date and all purchases made in accordance with (b) above. Units
purchased in the name of the spouse or a child of such purchaser ("immediate
family members") or a corporation controlled by such purchaser will be deemed
for the purposes of calculating the applicable sales charge to be additional
purchases by the purchaser. The reduced sales charges will also be applicable to
a trustee or other fiduciary purchasing securities for one or more trust estate
or fiduciary accounts.
A purchaser desiring to purchase during a 13 month period $500,000 or more of
any combination of series of Van Kampen American Capital unit investment trusts
may qualify for a reduced sales charge by signing a nonbinding Letter of Intent
with any single broker-dealer. After signing a Letter of Intent, at the date
total purchases, less redemptions, of units of any combination of series of Van
Kampen American Capital unit investment trusts by a purchaser (including units
purchased in the name of the spouse of a purchaser or in the name of a child of
such purchaser under 21 years of age) exceed $500,000, the selling
broker-dealer, bank or other will credit the unitholder with cash as a
retroactive reduction of the sales charge on such units equal to the amount
which would have been paid for the total aggregated sale amount. If a purchaser
does not complete the required purchases under the Letter of Intent within the
13 month period, no such retroactive sales charge reduction shall be made. To
qualify under a Letter of Intent each purchase of units of Van Kampen Capital
unit investment trusts must equal or exceed $100,000.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge reduction
for quantity purchases) less the concession the Sponsor typically allows to
brokers and dealers for purchases (see "Public Offering--Unit Distribution") by
(1) investors who purchase Units through registered investment advisers,
certified financial planners and registered broker-dealers who in each case
either charge periodic fees for financial planning, investment advisory or asset
management service, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap fee"
charge is imposed, (2) bank trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in a
fiduciary, agency, custodial or similar capacity, (3) any person who for at
least 90 days, has been an officer, director or bona fide employee of any firm
offering Units for sale to investors or their immediate family members (as
described above) and (4) officers and directors of bank holding companies that
make Units available directly or through subsidiaries or bank affiliates.
Notwithstanding anything to the contrary in this Prospectus, such investors,
bank trust departments, firm employees and bank holding company officers and
directors who purchase Units through this program will not receive sales charge
reductions for quantity purchases.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law and daughters-in-law, and trustees, custodians or fiduciaries for
the benefit of such persons) of Van Kampen American Capital Distributors, Inc.
and its affiliates, dealers and their affiliates, and vendors providing services
to the Sponsor may purchase Units at the Public Offering Price less the
applicable dealer concession.
During the initial offering period of the Trusts, unitholders of unaffiliated
unit investment trusts having an investment objective similar to the investment
objective of the Trusts may utilize proceeds received upon termination or upon
redemption immediately preceding termination of such unaffiliated trust to
purchase Units of the Trusts at the Public Offering Price per Unit less 1%.
During the initial offering period, unitholders of any Van Kampen American
Capital-sponsored unit investment trust may utilize their redemption or
termination proceeds to purchase Units of these Trusts at the Public Offering
Price per Unit less 1%.
OFFERING PRICE. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in accordance
with fluctuations in the prices of the underlying Securities.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to the difference between the total sales charge of 3.25% of the Public
Offering Price and the deferred sales charge ($0.225 per Unit) and dividing the
sum so obtained by the number of Units outstanding. The Public Offering Price
per Unit shall include the proportionate share of any cash held in the Income
and Capital Accounts. Such price determination as of the close of the relevant
stock market on the day before the Initial Day of Deposit was made on the basis
of an evaluation of the Securities prepared by Interactive Data Corporation, a
firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities. Thereafter, the Evaluator on each business day will
appraise or cause to be appraised the value of the underlying Securities as of
the Evaluation Time and will adjust the Public Offering Price of the Units
commensurate with such valuation. Such Public Offering Price will be effective
for all orders received prior to the Evaluation Time on each such day. Orders
received by the Trustee or Sponsor for purchases, sales or redemptions after
that time, or on a day which is not a business day for a Trust, will be held
until the next determination of price. Unitholders who purchase Units subsequent
to the Initial Date of Deposit will pay an initial sales charge equal to the
difference between the total sales charge and the deferred sales charge ($0.225
per Unit) and will be assessed a deferred sales charge of $0.225 per Unit as set
forth in "Public Offering--General". Effective April 21, 1999 the sales charge
will be 2.75% and will not include deferred payments.
The aggregate underlying value of the Equity Securities during the initial
offering period is determined on each business day by the Evaluator in the
following manner: if the Equity Securities are listed on a national securities
exchange, this evaluation is generally based on the closing sale prices on that
exchange (unless it is determined that these prices are inappropriate as a basis
for valuation) or, if there is no closing sale price on that exchange, at the
closing ask prices. If the Equity Securities are not so listed or, if so listed
and the principal market therefore is other than on the exchange, the evaluation
shall generally be based on the current ask price on the over-the-counter market
(unless it is determined that these prices are inappropriate as a basis for
evaluation). If current ask prices are unavailable, the evaluation is generally
determined (a) on the basis of current ask prices for comparable securities, (b)
by appraising the value of the Equity Securities on the ask side of the market
or (c) by any combination of the above.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities in a Trust but
rather the entire pool of Securities, taken as a whole, which are represented by
the Units.
UNIT DISTRIBUTION. During the initial offering period, Units will be
distributed to the public by the Sponsor, broker-dealers and others at the
Public Offering Price. Upon the completion of the initial offering period, Units
repurchased in the secondary market, if any, may be offered by this Prospectus
at the secondary market Public Offering Price in the manner described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Brokers, dealers and others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period as
set forth in the following table. A portion of such concessions or agency
commissions represents amounts paid by the Sponsor to such brokers, dealers and
others out of its own assets as additional compensation.
<TABLE>
<CAPTION>
INITIAL OFFERING PERIOD CONCESSION OR
AGGREGATE NUMBER OF UNITS PER TRUST PURCHASED* AGENCY COMMISSION PER UNIT
- ---------------------------------------------- ------------------------------------
<S> <C> <C>
1-9,999 2.25%
10,000-24,999 2.00
25,000-49,999 1.90
50,000-99,999 1.75
100,000 or more 1.40
- ---------------
*The breakpoint concessions, agency commissions or additional payments are
also applied on a dollar basis utilizing a breakpoint equivalent in the above
table of $10 per Unit and will be applied on whichever basis is more favorable
to the investor. The breakpoints will be adjusted to take into consideration
purchase orders stated in dollars which cannot be completely fulfilled due to
the requirement that only whole Units be issued.
</TABLE>
In addition to the amounts set forth above, any firm that distributes a total
of 500,000-999,999 Units of a Trust during the initial offering period will be
paid additional compensation by the Sponsor of $0.005 per Unit distributed; or
any firm that distributes a total of 1,000,000 - 1,999,999 Units of a Trust
during the initial offering period will be paid additional compensation by the
Sponsor of $0.01 per Unit distributed; or any firm that distributes a total of
2,000,000 - 2,999,999 Units of a Trust during the initial offering period will
be paid additional compensation by the Sponsor of $0.015 per Unit distributed;
or any firm that distributes a total of 3,000,000 or more Units of a Trust
during the initial offering period will be paid additional compensation by the
Sponsor of $.02 per Unit distributed. Such additional compensation will be paid
at the end of the initial offering period of a Trust.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For transactions involving Rollover
Unitholders, the total concession or agency commission will amount to 1.50% per
Unit (or such lesser amount resulting from quantity sales discounts). For all
secondary transactions, the total concession or agency commission will amount to
70% of the sales charge applicable to the transaction. Notwithstanding anything
to the contrary herein, the total of any concessions, agency commissions and any
additional compensation allowed or paid to any broker, dealer or other
distributor of Units with respect to any individual transaction, shall in no
case exceed the total sales charge applicable to such transaction.
Certain commercial banks are making Units available to their customers on an
agency basis. A portion of the sales charge (equal to the agency commission
referred to above) is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions and the banking
regulators have not indicated that these particular agency transactions are not
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units per Trust (25 Units for
qualified retirement plans) but may vary by selling firm. In connection with
fully disclosed transactions with the Sponsor, the minimum purchase requirement
will be that number of Units set forth in the contract between the Sponsor and
the related broker or agent. The Sponsor reserves the right to reject, in whole
or in part, any order for the purchase of Units and to change the amount of the
concession or agency commission to dealers and others from time to time.
SPONSOR AND OTHER COMPENSATION. The Sponsor will receive a gross sales
commission equal to 3.25% of the Public Offering Price of the Units less any
reduced sales charge for purchases as described under "General" above. Any such
discount provided to investors will be borne by the selling dealer or agent.
In addition, the Sponsor will realize a profit or will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Securities by the Sponsor and the cost of such Securities to the Trusts on the
Initial Date of Deposit as well as on subsequent deposits. See "Notes to
Portfolios". 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. The Sponsor may further realize additional
profit or loss during the initial offering period as a result of the possible
fluctuations in the market value of the Securities after a date of deposit,
since all proceeds received from purchasers of Units.
Broker-dealers, banks and/or others may be eligible to participate in a
program in which such firms receive from the Sponsor a nominal award for each of
their representatives who have sold a minimum number of units of unit investment
trusts created by the Sponsor during a specified time period. In addition, at
various times the Sponsor may implement other programs under which the sales
forces of brokers, dealers, banks and/or others may be eligible to win other
nominal awards for certain sales efforts, or under which the Sponsor will
reallow to such brokers, dealers, banks and/or others that sponsor sales
contests or recognition programs conforming to criteria established by the
Sponsor or participate in sales programs by the Sponsor, an amount not exceeding
the total applicable sales charges on the sales generated by such persons at the
public offering price during such programs. Also, the Sponsor in its discretion
may from time to time pursuant to objective criteria established by the Sponsor
paid fees to qualifying entities for certain services or activities which are
primarily intended to result in sales of Units of the Trusts. Such payments are
made by the Sponsor out of its own assets, and not out of assets of the Trusts.
These programs will not change the price Unitholders pay for their Units or the
amount that the Trusts will receive from the Units sold.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior to
the date of settlement for the purchase of Units may be used in the Sponsor's
business and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor currently intends to
maintain a secondary market for Units. In so maintaining a market, the Sponsor
will also realize profits or sustain losses in the amount of any difference
between the price at which Units are purchased and the price at which Units are
resold (which price includes the applicable sales charge). In addition, the
Sponsor will also realize profits or sustain losses resulting from a redemption
of such repurchased Units at a price above or below the purchase price for such
Units, respectively.
PUBLIC MARKET. Although it is not obligated to do so, the Sponsor currently
intends to maintain a market for the Units offered hereby and offer continuously
to purchase Units at prices, subject to change at any time, based upon the
aggregate underlying value of the Equity Securities (computed as indicated under
"Offering Price" above and "Rights of Unitholders--Redemption of Units"). If the
supply of Units exceeds demand or if some other business reason warrants it, the
Sponsor may either discontinue all purchases of Units or discontinue purchases
of Units at such prices. In the event that a market is not maintained for the
Units and the Unitholder cannot find another purchaser, a Unitholder desiring to
dispose of his Units will be able to dispose of such Units by tendering them to
the Trustee for redemption at the Redemption Price. See "Rights of
Unitholders--Redemption of Units". A Unitholder who wishes to dispose of his
Units should inquire of his broker as to current market prices in order to
determine whether there is in existence any price in excess of the Redemption
Price and, if so, the amount thereof. Units sold prior to such time as the
entire deferred sales charge on such Units has been collected will be assessed
the amount of the remaining deferred sales charge at the time of sale (however,
Units sold on or prior to the first Special Redemption Date will not be assessed
the unpaid $0.225 per Unit deferred sales charge remaining after such date).
TAX-SHELTERED RETIREMENT PLANS. Units are available for purchase in
connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for the individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The purchase
of Units may be limited by the plans' provisions and does not itself establish
such plans. The minimum purchase for retirement plans is 25 Units.
RIGHTS OF UNITHOLDERS
- --------------------------------------------------------------------------------
CERTIFICATES. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units will be evidenced by certificates unless a Unitholder or the
Unitholder's registered broker-dealer makes a written request to the Trustee
that ownership be in book entry form. Units are transferable by making a written
request to the Trustee and, in the case of Units evidenced by a certificate, by
presentation and surrender of such certificate to the Trustee properly endorsed
or accompanied by a written instrument or instruments of transfer. A Unitholder
must sign such written request, and such certificate or transfer instrument,
exactly as his name appears on the records of the Trustee and on the face of any
certificate representing the Units to be transferred with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or such other signature guarantee program in addition to, or in
substitution for, STAMP as may be accepted by the Trustee. In certain instances
the Trustee may require additional documents such as, but not limited to, trust
instruments, certificates of death, appointments as executor or administrator or
certificates of corporate authority. Certificates will be issued in
denominations of one Unit or any whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require
a Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in connection
with each such transfer or interchange. Destroyed, stolen, mutilated or lost
certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity, evidence of ownership and payment of expenses incurred. Mutilated
certificates must be surrendered to the Trustee for replacement.
DISTRIBUTIONS OF INCOME AND CAPITAL. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds from the sales
of Securities to meet redemptions of Units shall be segregated within the
Capital Account from proceeds from the sale of Securities made to satisfy the
fees, expenses and charges of a Trust.
The Trustee will distribute any net income received with respect to any of
the Securities on or about the Income Account Distribution Date to Unitholders
of record on the preceding Record Date. See "Summary of Essential Financial
Information". Proceeds received on the sale of any Securities, to the extent not
used to meet redemptions of Units, pay the deferred sales charge or pay
expenses, will be distributed on the Capital Account Distribution Date to
Unitholders of record on the preceding Capital Account Record Date. Proceeds
received from the disposition of any of the Securities after a record date and
prior to the following distribution date will be held in the Capital Account and
not distributed until the next distribution date applicable to such Capital
Account. The Trustee is not required to pay interest on funds held in the
Capital or Income Accounts (but may itself earn interest thereon and therefore
benefits from the use of such funds) nor to make a distribution from the Income
or Capital Accounts unless the amount available for distribution therein shall
equal at least $0.01 per Unit.
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account. Because dividends
are not received by the Trusts at a constant rate throughout the year, such
distributions to Unitholders are expected to fluctuate from distribution to
distribution. Persons who purchase Units will commence receiving distributions
only after such person becomes a record owner. Notification to the Trustee of
the transfer of Units is the responsibility of the purchaser, but in the normal
course of business such notice is provided by the selling broker-dealer.
At the end of the initial offering period and each month thereafter, the
Trustee will deduct from the Capital Account amounts necessary to pay the
expenses of the Trust (as determined on the basis set forth under "Trust
Operating Expenses"). The Trustee also may withdraw from the Income and Capital
Accounts such amounts, if any, as it deems necessary to establish a reserve for
any governmental charges payable out of a Trust. Amounts so withdrawn shall not
be considered a part of a Trust's assets until such time as the Trustee shall
return all or any part of such amounts to the appropriate accounts. In addition,
the Trustee may withdraw from the Income and Capital Accounts such amounts as
may be necessary to cover redemptions of Units.
It is anticipated that the deferred sales charge will be collected from the
Capital Account. To the extent that amounts in the Capital Account are
insufficient to satisfy the then current deferred sales charge obligation,
Equity Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made to an
account maintained by the Trustee for purposes of satisfying Unitholders'
deferred sales charge obligations.
REINVESTMENT OPTION. In the event that any distribution is made to
Unitholders prior to termination of the Trust, Unitholders will initially have
each such distribution of dividend income, capital gains and/or principal on
their Units automatically reinvested in additional Units under the "Automatic
Reinvestment Option" (to the extent Units may be lawfully offered for sale in
the state in which the Unitholder resides). Unitholders receiving Units pursuant
to participation in the Automatic Reinvestment Option will be subject to the
remaining deferred sales charge payments due on Units (assuming for these
purposes such Units had been outstanding during the primary offering period).
Unitholders may also elect to receive distributions of dividend income, capital
gains and/or principal on their Units in cash. To receive cash, a Unitholder may
either contact his or her broker or agent or file with the Trustee a written
notice of election at least five days prior to the Record Date for which the
first distribution is to apply. A Unitholder's election to receive cash will
apply to all Units owned by such Unitholder and such election will remain in
effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market") or, until such
time as additional Units cease to be issued by a Trust (see "The Trusts"),
distributions may be reinvested in such additional Units. If Units are
unavailable in the secondary market, distributions which would otherwise have
been reinvested shall be paid in cash to the Unitholder on the applicable
Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made at the net asset value for Units as of the Evaluation Time on the related
Income or Capital Distribution Dates. Under the reinvestment plan, a Trust will
pay the Unitholder's distributions to the Trustee which in turn will purchase
for such Unitholder full and fractional Units and will send such Unitholder a
statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of income, capital gains
and/or capital on their Units automatically reinvested in shares of 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 Trusts. The prospectus relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen American
Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois
60181. Texas residents who desire to reinvest may request that a broker-dealer
registered in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
income, capital gains and/or capital on the participant's Units will, on the
applicable distribution date, automatically be applied, as directed by such
person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange on such date.
Unitholders with an existing Guaranteed Reinvestment Option (GRO) Program
account (whereby a sales charge is imposed on distribution reinvestments) may
transfer their existing account into a new GRO account which allows purchases of
Reinvestment Fund shares at net asset value as described above. Confirmations of
all reinvestments by a Unitholder into a Reinvestment Fund will be mailed to the
Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next
succeeding distribution date, by so notifying the Trustee in writing, elect to
terminate his or her reinvestment plan and receive future distributions on his
or her Units in cash. There will be no charge or other penalty for such
termination. The Sponsor, each Reinvestment Fund, and its investment adviser
shall have the right to suspend or terminate the reinvestment plan at any time.
REPORTS PROVIDED. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit outstanding. Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each person who at any time during
the calendar year was a registered Unitholder of a Trust (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 by the Trust and the number of Units outstanding on the last
business day of such calendar year; (iv) the Redemption Price per Unit based
upon the last computation thereof made during such calendar year; and (v)
amounts actually distributed during such calendar year from the Income and
Capital Accounts, separately stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
REDEMPTION OF UNITS. A Unitholder may redeem all or a portion of his Units
by tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286 and, in the case of Units evidenced
by a certificate, by tendering such certificate to the Trustee, duly endorsed or
accompanied by proper instruments of transfer with signature guaranteed as
described above (or by providing satisfactory indemnity, as in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. No redemption fee will be charged. On the third
business day following such tender, the Unitholder will generally receive in
cash (unless the redeeming Unitholder elects an In Kind Distribution as
described below) an amount for each Unit equal to the Redemption Price per Unit
next computed after receipt by the Trustee of such tender of Units. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received after the applicable Evaluation Time
the date of tender is the next business day as defined under "Public
Offering--Offering Price" and such Units will be deemed to have been tendered to
the Trustee on such day for redemption at the redemption price computed on that
day. Units redeemed prior to such time as the entire deferred sales charge has
been collected will be assessed the amount of the remaining deferred sales
charge at the time of redemption.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by the
Trustee from those designated on a current list provided by the Supervisor for
this purpose. Units so redeemed shall be cancelled. Units tendered for
redemption prior to such time as the entire deferred sales charge on such Units
has been collected will be assessed the amount of the remaining deferred sales
charge at the time of redemption.
Unitholders tendering 1,000 or more Units for redemption may request from the
Trustee, in lieu of a cash redemption, an in kind distribution ("In Kind
Distribution") of an amount and value of Securities per Unit equal to the
Redemption Price per Unit as determined as of the evaluation next following the
tender. An In Kind Distribution on redemption of Units will be made by the
Trustee through the distribution of each of the Securities in book-entry form to
the account of the Unitholder's bank or broker-dealer at Depositary Trust
Company. The tendering Unitholder will receive his pro rata number of whole
shares of each of the Securities comprising the related Trust portfolio and cash
from the Capital Account equal to the fractional shares to which the tendering
Unitholder is entitled. The Trustee may adjust the number of shares of any issue
of Securities included in a Unitholder's In Kind Distribution to facilitate the
distribution of whole shares, such adjustment to be made on the basis of the
value of Securities on the date of tender. If funds in the Capital Account are
insufficient to cover the required cash distribution to the tendering
Unitholder, the Trustee may sell Securities according to the criteria discussed
above.
To the extent that Securities are redeemed in kind or sold, the size of a
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result in
lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder depending
on the value of the Securities in the portfolio at the time of redemption.
Special federal income tax consequences will result if a Unitholder requests an
In Kind Distribution. See "Federal Taxation".
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the aggregate underlying
value of the Equity Securities, plus or minus cash, if any, in the Income and
Capital Accounts. On the Initial Date of Deposit, the Public Offering Price per
Unit (which includes the initial sales charge) exceeded the values at which
Units could have been redeemed by the amounts shown under "Summary of Essential
Financial Information". The Redemption Price per Unit is the pro rata share of
each Unit in a Trust determined on the basis of (i) the cash on hand in the
Trust, (ii) the value of the Securities and (iii) dividends receivable on the
Equity Securities trading ex-dividend as of the date of computation, less (a)
amounts representing taxes or other governmental charges payable out of the
Trust, (b) the accrued expenses of the Trust and (c) any unpaid deferred sales
charge payments. The Evaluator may determine the value of the Equity Securities
in the following manner: if the Equity Securities are listed on a national
securities exchange, this evaluation is generally based on the closing sale
prices on that exchange (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale price on
that exchange, at the closing bid prices. If the Equity Securities are not so
listed or, if so listed and the principal market therefore is other than on the
exchange, the evaluation shall generally be based on the current bid price on
the over-the-counter market (unless these prices are inappropriate as a basis
for evaluation). If current bid prices are unavailable, the evaluation is
generally determined (a) on the basis of current bid prices for comparable
securities, (b) by appraising the value of the Equity Securities on the bid side
of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the Securities
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit.
SPECIAL REDEMPTION AND ROLLOVER IN NEW TRUST. It is expected that a special
redemption will be made of all Units held by any Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee in writing that he desires
to rollover his Units by the Rollover Notification Date specified in the
"Summary of Essential Financial Information".
All Units of Rollover Unitholders will be redeemed on the Special Redemption
Date and the underlying Securities will be distributed to the Distribution Agent
on behalf of the Rollover Unitholders. On the Special Redemption Date (as set
forth in "Summary of Essential Financial Information"), the Distribution Agent
will be required to sell all of the underlying Securities on behalf of Rollover
Unitholders. The sales proceeds will be net of brokerage fees, governmental
charges or any expenses involved in the sales.
The Distribution Agent will attempt to sell the Securities as quickly as is
practicable on the Special Redemption Date. The Sponsor does not anticipate that
the period will be longer than one day given that the Securities are usually
liquid. However, certain of the factors discussed under "Risk Factors" could
affect the ability of the Sponsor to sell the Securities and thereby affect the
length of the sale period somewhat. The liquidity of any Security depends on the
daily trading volume of the Security and the amount that the Sponsor has
available for sale on any particular day.
The Rollover Unitholders' proceeds will be invested in a new trust (the "New
Trust"), if then being offered, which will contain a portfolio of common stocks
of companies diversified within a specific industry sector. The proceeds of
redemption will be used to buy New Trust units in the portfolio as the proceeds
become available.
The Sponsor intends to create a New Trust shortly prior to the Special
Redemption Date, dependent upon the availability and reasonably favorable prices
of the securities included in the New Trust portfolio, and it is intended that
Rollover Unitholders will be given first priority to purchase the New Trust
units. There can be no assurance, however, as to the exact timing of the
creation of the New Trust units or the aggregate number of New Trust units which
the Sponsor will create. The Sponsor may, in its sole discretion, stop creating
new units in a trust portfolio at any time it chooses, regardless of whether all
proceeds of the Special Redemption have been invested on behalf of Rollover
Unitholders. Cash which has not been invested on behalf of the Rollover
Unitholders in New Trust units will be distributed shortly after the Special
Redemption Date.
Any Rollover Unitholder may thus be redeemed out of the Trust and become a
holder of an entirely different unit investment trust in the New Trust with a
different portfolio of Securities. The Rollover Unitholders' Units will be
redeemed and the distributed Securities shall be sold on the Special Redemption
Date. In accordance with the Rollover Unitholders' offer to purchase the New
Trust units, the proceeds of the sales (and any other cash distributed upon
redemption) will be invested in the New Trust at the public offering price,
including a reduced sales charge.
This process of redemption and rollover into a new trust is intended to allow
for the fact that the portfolios selected by the Sponsor is chosen on the basis
of growth potential only for the near term, at which point a new portfolio is
chosen. It is contemplated that a similar process of redemption and rollover in
new unit investment trusts will be available for each subsequent series of the
Trusts.
There can be no assurance that the redemption and rollover in a new trust
will avoid any negative market price consequences stemming from the trading of
large volumes of securities and of the underlying Securities. The above
procedures may be insufficient or unsuccessful in avoiding such price
consequences. In fact, market price trends may make it advantageous to sell or
buy more quickly or more slowly than permitted by these procedures. Investors
should note that, because aggressive growth stocks generally experience stock
price volatility to a greater extent than other securities and because the Trust
is not a "managed" fund, there can be no assurance that these procedures will
result in advantageous sales or purchases of securities or that any future
rollover will occur at an advantageous time. See "Trust
Administration--Portfolio Administration" and "Risk Factors".
It should also be noted that Rollover Unitholders may realize taxable capital
gains on the Special Redemption and Rollover but, in certain circumstances, will
not be entitled to a deduction for certain capital losses and, due to the
procedures for investing in the subsequent trust, no cash would be distributed
at that time to pay any taxes. Included in the cash for the Special Redemption
and Rollover will be any amount of cash attributable to the last distribution of
dividend income; accordingly, Rollover Unitholders also will not have such cash
distributed to pay any taxes. See "Federal Taxation". Unitholders who do not
inform the Distribution Agent that they wish to have their Units so redeemed and
liquidated will not realize capital gains or losses due to the Special
Redemption and Rollover.
The Sponsor may for any reason, in its sole discretion, decide not to sponsor
subsequent trust, without penalty or incurring liability to any Unitholder. If
the Sponsor so decides, the Sponsor shall notify the Unitholders before the
Special Redemption Date. The Sponsor may modify the terms of any subsequent
trust. The Sponsor may also modify the terms of the Special Redemption and
Rollover upon notice to the Unitholders prior to the Rollover Notification Date
specified in the "Summary of Essential Financial Information".
Pursuant to an exemptive order, each terminating Trust (and the Distribution
Agent on behalf of Rollover Unitholders) can sell Securities to a New Trust if
those Securities continue to meet the related investment strategy of the
respective Series. The exemption will enable each Trust to eliminate commission
costs on these transactions. The price for those securities will be the closing
sale price on the sale date on the exchange where the Securities are principally
traded, as certified by the Trustee.
TRUST ADMINISTRATION
- --------------------------------------------------------------------------------
SPONSOR PURCHASES OF UNITS. The Trustee shall notify the Sponsor of any Units
tendered for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such Units
by notifying the Trustee before the close of business on the next succeeding
business day and by making payment therefore to the Unitholder not later than
the day on which the Units would otherwise have been redeemed by the Trustee.
Units held by the Sponsor may be tendered to the Trustee for redemption as any
other Units.
The offering price of any Units acquired by the Sponsor will be in accord
with the Public Offering Price described in the then currently effective
prospectus describing such Units. Any profit resulting from the resale of such
Units will belong to the Sponsor which likewise will bear any loss resulting
from a lower offering or redemption price subsequent to its acquisition of such
Units.
PORTFOLIO ADMINISTRATION. The portfolios of the Trusts are 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 Trusts, 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
a 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 a Trust, they may be accepted for deposit
in the Trust and either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Supervisor).
Proceeds from the sale of Securities (or any securities or other property
received by a Trust in exchange for Equity Securities) are credited to the
Capital Account for distribution to Unitholders or to pay certain costs or
expenses of the Trust. Except as stated under "Trust Portfolios" for failed
securities and as provided in this paragraph, the acquisition by the Trust of
any securities other than the Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above, the
Trustee may also sell Securities designated by the Supervisor, or if no such
designation has been made, in its own discretion, for the purpose of redeeming
Units tendered for redemption and the payment of expenses.
To the extent practicable, the Supervisor may (but is not obligated to)
designate Securities to be sold by the Trustee in order to maintain the
proportionate relationship among the number of shares of individual issues of
Equity Securities in a Trust. To the extent this is not practicable, the
composition and diversity of the Equity Securities in a Trust may be altered. In
order to obtain the best price for a 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. In effecting purchases and sales of a Trust's
portfolio securities, the Sponsor may direct that orders be placed with and
brokerage commissions be paid to brokers, including brokers which may be
affiliated with the Trust, the Sponsor or dealers participating in the offering
of Units. In addition, in selecting among firms to handle a particular
transaction, the Sponsor may take into account whether the firm has sold or is
selling units of unit investment trusts which it sponsors.
AMENDMENT OR TERMINATION. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor and
the Trustee), provided, however, that the Trust Agreement may not be amended to
increase the number of Units (except as provided in the Trust Agreement). The
Trust Agreement may also be amended in any respect by the Trustee and Sponsor,
or any of the provisions thereof may be waived, with the consent of the holders
representing 51% of the Units of a Trust then outstanding, provided that no such
amendment or waiver will reduce the interest in such Trust of any Unitholder
without the consent of such Unitholder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Unitholders. The Trustee shall advise the Unitholders of any amendment promptly
after execution thereof.
A Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units then outstanding or by the Trustee when the value of the
Equity Securities owned by the Trust, as shown by any evaluation, is less than
that amount set forth under Minimum Termination Value in "Summary of Essential
Financial Information." A Trust will be liquidated by the Trustee in the event
that a sufficient number of Units not yet sold are tendered for redemption by
the Sponsor so that the net worth of the Trust would be reduced to less than 40%
of the value of the Securities at the time they were deposited in the Trust. If
a Trust is liquidated because of the redemption of unsold Units by the Sponsor,
the Sponsor will refund to each purchaser of Units the entire sales charge paid
by such purchaser. The Trust Agreement will terminate upon the sale or other
disposition of the last Security in a Trust held thereunder, but in no event
will it continue beyond the Mandatory Termination Date stated under "Summary of
Essential Financial Information".
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trusts. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. The Sponsor shall direct the liquidation of the Securities in such
manner as to effectuate orderly sales and a minimal market impact. In the event
the Sponsor does not so direct, the Securities shall be sold within a reasonable
period and in such manner as the Trustee, in its sole discretion, shall
determine. At least 30 days before the Mandatory Termination Date the Trustee
will provide written notice of any termination to all Unitholders and will
include with such notice a form to enable Unitholders owning 1,000 or more Units
to request an In Kind Distribution rather than payment in cash upon the
termination of a Trust. To be effective, this request must be returned to the
Trustee at least five business days prior to the Mandatory Termination Date. On
the Mandatory Termination Date (or on the next business day thereafter if a
holiday) the Trustee will deliver each requesting Unitholder's pro rata number
of whole shares of each of the Securities to the account of the broker-dealer or
bank designated by the Unitholder at Depositary Trust Company. The value of the
Unitholder's fractional shares of the Securities will be paid in cash.
Unitholders with less than 1,000 Units, Unitholders with 1,000 or more Units not
requesting an In Kind Distribution and Unitholders who do not elect the Rollover
Option will receive a cash distribution from the sale of the remaining
Securities within a reasonable time following the Mandatory Termination Date.
Regardless of the distribution involved, the Trustee will deduct from the funds
of the Trusts any accrued costs, expenses, advances or indemnities provided by
the Trust Agreement, including estimated compensation of the Trustee, costs of
liquidation and any amounts required as a reserve to provide for payment of any
applicable taxes or other governmental charges. Any sale of Securities upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder his pro rata share of the balance of the Income and Capital
Accounts.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent trust pursuant to the Rollover Option (see "Rights of
Unitholders--Special Redemption and Rollover in New Trust"). There is, however,
no assurance that units of any new trust will be offered for sale at that time,
or if offered, that there will be sufficient units available for sale to meet
the requests of any or all Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
LIMITATIONS ON LIABILITIES. The Sponsor, the Evaluator, the Supervisor and
the Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason
of the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under the Trust
Agreement. The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon or upon it as Trustee under the Trust Agreement or upon or in respect of
a Trust which the Trustee may be required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the Evaluator shall be under no liability to the Trustee, Sponsor
or Unitholders for errors in judgment. This provision shall not protect the
Evaluator in any case of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
SPONSOR. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect subsidiary
of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly owned subsidiary of MSAM
Holdings II, Inc., which in turn is a wholly owned subsidiary of Morgan Stanley
Dean Witter, & Co. ("MSDW").
MSDW, together with various of its directly and indirectly owned
subsidiaries, is engaged in a wide range of financial services through three
primary businesses: securities, asset management and credit services. These
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; asset
management; trading of futures, options, foreign exchange commodities and swaps
(involving foreign exchange, commodities, indices and interest rates); real
estate advice, financing and investing; global custody, securities clearance
services and securities lending; and credit card services.
Van Kampen American Capital Distributors, Inc. specializes in the
underwriting and distribution of unit investment trusts and mutual funds with
roots in money management dating back to 1926. The Sponsor is a member of the
National Association of Securities Dealers, Inc. and has offices at One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak
Boulevard, Houston, Texas 77056, (713) 993-0500. As of November 30, 1996, the
total stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not to
the Trusts or to any other Series thereof. The information is included herein
only for the purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual obligations. More
detailed financial information will be made available by the Sponsor upon
request.)
As of September 30, 1997, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $65.3 billion of investment
products, of which over $10.85 billion is invested in municipal securities. The
Sponsor and its Van Kampen American Capital affiliates managed $54 billion of
assets, consisting of $34.3 billion for 55 open-end mutual funds (of which 45
are distributed by Van Kampen American Capital Distributors, Inc.) $14.2 billion
for 37 closed-end funds and $5.5 billion for 106 institutional accounts. The
Sponsor has also deposited approximately $26 billion of unit investment trusts.
All of Van Kampen American Capital's open-end funds, closed-ended funds and unit
investment trusts are professionally distributed by leading financial firms
nationwide. Based on cumulative assets deposited, the Sponsor believes that it
is the largest sponsor of insured municipal unit investment trusts, primarily
through the success of its Insured Municipals Income Trust(R) or the IM-IT(R)
trust. The Sponsor also provides surveillance and evaluation services at cost
for approximately $13 billion of unit investment trust assets outstanding. Since
1976, the Sponsor has serviced over two million investor accounts, opened
through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trusts. Such
records shall include the name and address of, and the number of Units held by,
every Unitholder of the Trusts. 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 each 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 statements of condition and the
related securities portfolios at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton LLP, independent certified public
accountants, as set forth in their report in this Prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors,
Inc. and the Unitholders of Van Kampen American Capital Equity Opportunity
Trust, Series 97:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen American Capital Equity Opportunity Trust, Series 97
as of April 21, 1998. The statement of condition and portfolios are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of irrevocable letters of credit
deposited to purchase securities by correspondence with the Trustee. An audit
also includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall financial
statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen American Capital
Equity Opportunity Trust, Series 97 as of April 21, 1998, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
April 21, 1998
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 97
STATEMENTS OF CONDITION
AS OF APRIL 21, 1998
GLOBAL
ENERGY BANKING TECHNOLOGY
INVESTMENT IN SECURITIES TRUST TRUST TRUST
--------------- --------------- ---------------
<S> <C> <C> <C>
Contracts to purchase Securities (1) $ 147,972 $ 148,264 $ 149,870
Organizational costs (2) 38,449 35,403 35,806
--------------- --------------- ---------------
Total $ 186,421 $ 183,667 $ 185,676
=============== =============== ===============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued organizational costs (2) $ 38,449 $ 35,403 $ 35,806
Deferred sales charge liability (3) 3,363 3,370 3,406
Interest of Unitholders--
Cost to investors (4) 149,470 149,770 151,390
Less: Gross underwriting commission (4)(5) 4,861 4,876 4,926
--------------- --------------- ---------------
Net interest to Unitholders (4) 144,609 144,894 146,464
--------------- --------------- ---------------
Total $ 186,421 $ 183,667 $ 185,676
=============== =============== ===============
- ----------------
(1)The value of the Securities is determined by Interactive Data Corporation on
the bases set forth under "Public Offering--Offering Price". The contracts to
purchase Securities are collateralized by separate irrevocable letters of
credit which have been deposited with the Trustee.
(2)Each Trust will bear all or a portion of its organizational costs, which will
be deferred and amortized over two years. Organizational costs have been
estimated based on a projected Trust size of $20,000,000 for each of the
Trusts. To the extent a Trust is larger or smaller, the estimate will vary.
(3)Represents the amount of mandatory distributions from a Trust on the bases
set forth under "Public Offering"
(4)The aggregate public offering price and the aggregate sales charge are
computed on the bases set forth under "Public Offering--Offering Price".
(5)Assumes the maximum sales charge.
</TABLE>
<TABLE>
GLOBAL ENERGY TRUST, SERIES 5
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 97) AS
OF THE INITIAL DATE OF DEPOSIT: APRIL 21, 1998
- -------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
85 Amoco Corporation $ 87.188 $ 3.00 $ 7,410.94
138 Arch Coal, Inc. 26.813 0.46 3,700.13
94 Atlantic Richfield Company 77.938 2.85 7,326.13
+ 179 Bouygues Offshore S.A. 21.000 0.00 3,759.00
+ 83 British Petroleum Company Plc 89.750 2.39 7,449.25
60 Camco International, Inc. 60.563 0.20 3,633.75
89 Chevron Corporation 83.813 2.44 7,459.31
+ 53 Coflexip S.A. 69.000 0.00 3,657.00
91 Columbia Energy Group 82.125 1.00 7,473.38
+ 112 ENI SPA 66.563 1.12 7,455.00
54 Kerr McGee Corporation 68.313 1.80 3,688.88
+ 105 Lukoil Holding 68.017 0.20 7,141.79
73 Murphy Oil Corporation 49.688 1.40 3,627.19
258 NGC Corporation 14.438 0.05 3,724.88
+ 328 Nova Corporation 11.438 0.24 3,751.50
146 Philips Petroleum Company 50.188 1.36 7,327.38
240 Rowan Companies, Inc. 30.000 0.00 7,200.00
+ 65 Royal Dutch Petroleum Company 56.500 1.11 3,672.50
120 Texaco, Inc. 63.625 1.80 7,635.00
+ 129 Total S.A. 58.188 0.77 7,506.19
+ 205 Tubos de Acero de Mexico S.A. 18.375 0.00 3,766.88
106 Ultramar Diamond Shamrock Corporation 34.938 1.10 3,703.38
92 Unocal Corporation 41.125 0.80 3,783.50
195 USX-Marathon Group 37.813 0.84 7,373.44
106 Valero Energy Corporation 34.688 0.32 3,676.88
189 Vintage Petroleum, Inc. 19.563 0.08 3,697.31
+ 216 YPF Sociedad Anonima 34.125 0.88 7,371.00
- ---------- ------------------
3,611 $ 147,971.59
========== ==================
<CAPTION>
BANKING TRUST, SERIES 2
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 97) AS
OF THE INITIAL DATE OF DEPOSIT: APRIL 21, 1998
- -------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
98 Banc One Corporation $ 60.250 $ 1.52 $ 5,904.50
34 Bank of New York Company, Inc. 64.188 1.04 2,182.38
67 Bank United Corporation 55.750 0.64 3,735.25
67 BankAmerica Corporation 88.438 1.38 5,925.31
33 BankBoston Corporation 111.438 2.32 3,677.44
53 Charter One Financial, Inc. 70.313 1.00 3,726.56
44 Chase Manhattan Corporation 134.563 2.88 5,920.75
14 Citicorp 158.000 2.30 2,212.00
236 Citizens National Bank of Texas 16.000 0.36 3,776.00
53 Comerica, Inc. 68.750 1.28 3,643.75
62 First Chicago NBD Corporation 95.500 1.76 5,921.00
151 First Hawaiian, Inc. 39.438 1.24 5,955.06
96 First Union Corporation 62.250 1.48 5,976.00
67 Fleet Financial Group, Inc. 87.625 1.96 5,870.88
54 Golden West Financial Corporation 109.063 0.50 5,889.38
26 J.P. Morgan & Company, Inc. 142.375 3.80 3,701.75
144 KeyCorp 41.125 0.94 5,922.00
80 National City Corporation 74.438 1.84 5,955.00
75 NationsBank Corporation 78.000 1.52 5,850.00
88 Norwest Corporation 42.000 0.66 3,696.00
243 Pacific Century Financial Corporation 24.625 0.65 5,983.88
60 PNC Bank Corporation 61.250 1.56 3,675.00
42 Republic New York Corporation 140.500 1.00 5,901.00
111 TCF Financial Corporation 33.250 0.50 3,690.75
46 U.S. Bancorp 129.000 2.10 5,934.00
57 UnionBanCal Corporation 108.250 1.68 6,170.25
198 UST Corporation 30.125 0.48 5,964.75
42 Wachovia Corporation 87.500 1.76 3,675.00
197 Washington Federal, Inc. 30.000 0.88 5,910.00
85 Washington Mutual, Inc. 69.625 1.16 5,918.13
- ---------- ------------------
2,623 $ 148,263.75
========== ==================
<CAPTION>
MORGAN STANLEY HIGH-TECHNOLOGY 35 INDEXSM TRUST, SERIES 2 PORTFOLIO (VAN KAMPEN
AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 97) AS OF THE INITIAL DATE OF
DEPOSIT: APRIL 21, 1998
- -------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
126 3Com Corporation $ 34.563 $ 0.00 $ 4,354.88
57 America Online, Inc. 75.938 0.00 4,328.44
116 Applied Materials, Inc. 36.688 0.00 4,255.75
100 Ascend Communications, Inc. 43.063 0.00 4,306.25
63 Automatic Data Processing, Inc. 68.250 0.53 4.299.75
182 Bay Networks, Inc. 23.125 0.00 4,208.75
59 Cisco Systems, Inc. 72.313 0.00 4,266.44
163 Compaq Computer Corporation 26.000 0.00 4,238.00
74 Computer Associates International, Inc. 56.375 0.08 4.171.75
81 Computer Sciences Corporation 51.000 0.00 4,131.00
62 Dell Computer Corporation 69.688 0.00 4,320.63
98 Electronic Arts, Inc. 43.063 0.00 4,220.13
99 Electronic Data Systems Corporation 42.688 0.60 4,226.06
112 EMC Corporation 39.375 0.00 4,410.00
127 First Data Corporation 34.500 0.08 4,381.50
67 Hewlett-Packard Company 64.250 0.56 4,304.75
56 Intel Corporation 76.500 0.12 4,284.00
39 International Business Machines Corporation 109.625 0.80 4,275.38
81 Intuit, Inc. 50.875 0.00 4,120.88
58 Linear Technology Corporation 75.750 0.24 4,393.50
60 Lucent Technologies, Inc. 71.438 0.16 4,286.25
45 Microsoft Corporation0.00 94.625 0.00 4,258.13
74 Motorola, Inc. 57.063 0.48 4,222.63
178 Netscape Communications Corporation 25.563 0.00 4,550.13
155 Oracle Corporation 27.563 0.00 4,272.19
127 Parametric Technology Company 33.000 0.00 4,191.00
75 PeopleSoft, Inc. 55.625 0.00 4,171.88
153 Seagate Technology, Inc. 27.875 0.00 4,264.88
51 SGS-Thomson Microelectronics, N.V. 85.000 0.00 4,335.00
105 Solectron Corporation 40.688 0.00 4,272.19
105 Sun Microsystems, Inc. 41.000 0.00 4,305.00
62 Tellabs, Inc. 71.313 0.00 4,421.38
71 Texas Instruments, Inc. 61.375 0.34 4,357.63
98 Xilinix, Inc. 44.000 0.00 4,312.00
33 Yahoo!, Inc. 125.813 0.00 4,151.81
- ---------- ------------------
3,212 $ 149,869.94
========== ==================
</TABLE>
NOTES TO PORTFOLIOS
- --------------------------------------------------------------------------------
(1) All of the Securities are represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited with
the Trustee. At the Initial Date of Deposit, the Sponsor has assigned to the
Trustee all of its right, title and interest in and to such Securities.
Contracts to acquire Securities were entered into on April 20, 1998 and are
expected to settle on April 23, 1998. (see "The Trust").
(2) The market value of each of the Equity Securities is based on the closing
sale price of each listed Security on the applicable exchange, or on the
asked price if not so listed, on the day prior to the Initial Date of
Deposit. Estimated annual dividends are based on the most recently declared
dividends. Other information regarding the Securities, as of the Initial
Date of Deposit, is as follows:
<TABLE>
<CAPTION>
AGGREGATE AGGREGATE BID
PROFIT (LOSS) TO ESTIMATED PRICE OF
COST TO SPONSOR SPONSOR ANNUAL DIVIDENDS SECURITIES
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Global Energy Trust $ 147,928 $ 44 $ 2,721 $ 147,853
Banking Trust $ 148,078 $ 186 $ 2,893 $ 147,787
Technology Trust $ 149,694 $ 176 $ 267 $ 149,741
A security marked by "+" indicates an American Depositary Receipt or New York
Share.
</TABLE>
-------------------------------------------------
An affiliate of the Sponsor may have participated as issuer, sole
underwriter, managing underwriter or member of an underwriting syndicate in a
public offering of one or more of the stocks in the Trusts. An affiliate of the
Sponsor may serve as a specialist in the stocks in the Trusts on one or more
stock exchanges and may have a long or short position in any of these stocks or
in options on any of these stocks, and may be on the opposite side of public
orders executed on the floor of an exchange where such stocks are listed. An
officer, director or employee of the Sponsor or an affiliate may be an officer
or director of one or more of the issuers of the stocks in the Trusts. An
affiliate of the Sponsor may trade for its own account as an odd-lot dealer,
market maker, block positioner and/or arbitrageur in any stocks or options
relating thereto. The Sponsor, its affiliates, directors, elected officers and
employee benefit programs may have either a long or short position in any stock
or option of the issuers.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the Fund
or the Sponsor. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
- --------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------
TITLE PAGE
----- ----
Summary of Essential Financial Information.. 3
The Trusts.................................. 6
Objectives and Securities Selection......... 7
Trust Portfolios............................ 10
Risk Factors................................ 18
Federal Taxation............................ 24
Trust Operating Expenses.................... 29
Public Offering............................. 30
Rights of Unitholders....................... 35
Trust Administration........................ 40
Other Matters............................... 44
Report of Independent Certified Public
Accountants........................... 45
Statements of Condition .................... 46
Portfolios.................................. 47
Notes to Portfolios......................... 50
- --------------
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration statement
and exhibits relating thereto, which the Fund has filed with the Securities and
Exchange Commission, Washington, D.C., under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
- ------------------
When Units of the Trusts are no longer available, or for investors who will
reinvest into subsequent series of the Trusts, this When Units of the Trusts are
no longer available, or for investors who will reinvest into subsequent series
of the Trusts, this Propsectus may be used as a preliminary prospectus for a
future series, in which case investors would note the following:
Information contained herein is subject to completion or amendment. A
registration statement relating to securities of a future series has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. The Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
- --------------------------------------------------------------------------------
APRIL 21, 1998
VAN KAMPEN
AMERICAN CAPITAL
EQUITY OPPORTUNITY
TRUST, SERIES 97
GLOBAL ENERGY TRUST,
SERIES 5
BANKING TRUST, SERIES 2
MORGAN STANLEY HIGH-
TECHNOLOGY 35 INDEX (SM)
TRUST, SERIES 2
------ A Wealth of Knowledge oA Knowledge of Wealthsm ------
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
<PAGE>
This Amendment of Registration Statement comprises the following papers
and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to the Federal Income tax status of securities being
registered.
3.3 Opinion and consent of counsel as to New York tax status of securities
being registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Accountants.
EX-27 Financial Data Schedules.
<PAGE>
SIGNATURES
The Registrant, Van Kampen American Capital Equity Opportunity Trust,
Series 97, hereby identifies Van Kampen Merritt Equity Opportunity Trust, Series
1, Series 2, Series 4 and Series 7 and Van Kampen American Capital Equity
Opportunity Trust, Series 13, Series 14 and Series 57 for purposes of the
representations required by Rule 487 and represents the following: (1) that the
portfolio securities deposited in the series as to the securities of which this
Registration Statement is being filed do not differ materially in type or
quality from those deposited in such previous series; (2) that, except to the
extent necessary to identify the specific portfolio securities deposited in, and
to provide essential financial information for, the series with respect to the
securities of which this Registration Statement is being filed, this
Registration Statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such previous
series as to which the effective date was determined by the Commission or the
staff; and (3) that it has complied with Rule 460 under the Securities Act of
1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series 97 has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago and
State of Illinois on the 21st day of April, 1998.
Van Kampen American Capital Equity Opportunity Trust, Series 97 By Van
Kampen American Capital Distributors, Inc.
By Gina M. Costello
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on April 21, 1998
by the following persons who constitute a majority of the Board of Directors of
Van Kampen American Capital Distributors, Inc.
SIGNATURE TITLE
Don G. Powell Chairman and Chief Executive )
Officer )
John H. Zimmerman President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
Gina M. Costello
(Attorney-in-fact*)
- --------------------------------------------------------------------------------
*An executed copy of each of the related powers of attorney is filed
herewith or was filed with the Securities and Exchange Commission in connection
with the Registration Statement on Form S-6 of Van Kampen 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.
<PAGE>
EXHIBIT 1.1
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST
SERIES 97
TRUST AGREEMENT
Dated: April 21, 1998
This Trust Agreement among Van Kampen American Capital Distributors,
Inc., as Depositor, American Portfolio Evaluation Services, a division of Van
Kampen American Capital Investment Advisory Corp., as Evaluator, Van Kampen
Capital Investment Advisory Corp., as Supervisory Servicer, and The Bank of New
York, as Trustee, sets forth certain provisions in full and incorporates other
provisions by reference to the document entitled "Van Kampen American Capital
Equity Opportunity Trust, Series 87 and Subsequent Series, Standard Terms and
Conditions of Trust, Effective January 27, 1998" (herein called the "Standard
Terms and Conditions of Trust") and such provisions as are set forth in full and
such provisions as are incorporated by reference constitute a single instrument.
All references herein to Articles and Sections are to Articles and Sections of
the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(24), listed in the
Schedule hereto, have been deposited in trust under this Trust
Agreement.
2. The fractional undivided interest in and ownership of each
Trust represented by each Unit is the amount set forth under "Summary
of Essential Financial Information - Fractional Undivided Interest in
the Trust per Unit" in the Prospectus. Such fractional undivided
interest may be (a) increased by the number of any additional Units
issued pursuant to Section 2.03, (b) increased or decreased in
connection with an adjustment to the number of Units pursuant to
Section 2.03, or (c) decreased by the number of Units redeemed
pursuant to Section 5.02.
3. The terms "Capital Account Record Date" and "Income
Account Record Date" shall mean the "Income and Capital Account Record
Dates" set forth under "Summary of Essential Financial Information" in
the Prospectus.
4. The terms "Capital Account Distribution Date" and "Income
Account Distribution Date" shall mean the "Income and Capital Account
Distribution Dates" set forth under "Summary of Essential Financial
Information" in the Prospectus.
5. The term "Mandatory Termination Date" shall mean the
"Mandatory Termination Date" set forth under "Summary of Essential
Financial Information" in the Prospectus.
6. The term "Rollover Notification Date" shall mean the
"Rollover Notification Date" set forth under "Summary of Essential
Financial Information" in the Prospectus.
7. The term "Special Redemption Date" shall mean the "Special
Redemption Date" set forth under "Summary of Essential Financial
Information" in the Prospectus.
8. Section 1.01(19) shall be amended to read as follows:
"(19) "Percentage Ratio" shall mean, for each Trust which will
issue additional Units pursuant to Section 2.03 hereof, (a)
the percentage relationship among the Equity Securities based
on the number of shares of each Equity Security per Unit
existing immediately prior to such additional deposit with
respect to Global Energy Trust Series 5 and Morgan Stanley
High Technology 35 Index Trust, Series 2 and (b) with respect
to Banking Trust, Series 2 the percentage relationship
existing on the Initial Date of Deposit among the Equity
Securities based on market value for the first 90 days of such
Trust's term and thereafter shall mean the percentage
relationship among the Equity Securities based on the number
of shares of each Equity Security per Unit existing
immediately prior to such additional deposit. The Percentage
Ratio shall be adjusted to the extent necessary, and may be
rounded, to reflect the occurrence of a stock dividend, a
stock split or a similar event which affects the capital
structure of the issuer of an Equity Security."
<PAGE>
IN WITNESS WHEREOF, Van Kampen American Capital Distributors, Inc. has
caused this Trust Agreement to be executed by one of its Vice Presidents or
Assistant Vice Presidents and its corporate seal to be hereto affixed and
attested by its Secretary or one of its Vice Presidents or Assistant
Secretaries, American Portfolio Evaluation Services, a division of Van Kampen
American Capital Investment Advisory Corp., and Van Kampen American Capital
Investment Advisory Corp., have each caused this Trust Indenture and Agreement
to be executed by their respective President or one of their respective Vice
Presidents and the corporate seal of each to be hereto affixed and attested to
by the Secretary, Assistant Secretary or one of their respective Vice Presidents
or Assistant Vice Presidents and The Bank of New York, has caused this Trust
Agreement to be executed by one of its Vice Presidents and its corporate seal to
be hereto affixed and attested to by one of its Assistant Treasurers all as of
the day, month and year first above written.
Van Kampen American Capital Distributors, Inc.
By James J. Boyne
Vice President, Associate General Counsel
and Assistant Secretary
Attest:
By Cathy Napoli
Assistant Secretary
American Portfolio Evaluation Services, a division of Van
Kampen American Capital Investment Advisory Corp.
By Dennis J. McDonnell
President
Attest
By James J. Boyne
Assistant Secretary
Van Kampen American Capital Investment Advisory Corp.
By Dennis J. McDonnell
President
Attest
By James J. Boyne
Assistant Secretary
The Bank of New York
By Jeffrey Bieselin
Vice President
Attest
By Jeffrey Cohen
Assistant Treasurer
<PAGE>
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 97
(Note: Incorporated herein and made a part hereof is each "Portfolio" as set
forth in the Prospectus.)
<PAGE>
EXHIBIT 3.1
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
April 21, 1998
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Van Kampen American Capital Equity Opportunity Trust, Series 97
---------------------------------------------------------------
Gentlemen:
We have served as counsel for Van Kampen American Capital Distributors,
Inc. as Sponsor and Depositor of Van Kampen American Capital Equity Opportunity
Trust, Series 97 (hereinafter referred to as the "Trust"), in connection with
the preparation, execution and delivery of a Trust Agreement dated April 21,
1998, among Van Kampen American Capital Distributors, Inc., as Depositor,
American Portfolio Evaluation Services, a division of Van Kampen American
Capital Investment Advisory Corp., as Evaluator, Van Kampen American Capital
Investment Advisory Corp., as Supervisory Servicer, and The Bank of New York, as
Trustee, pursuant to which the Depositor has delivered to and deposited the
Securities listed in the Schedule to the Trust Agreement with the Trustee and
pursuant to which the Trustee has provided to or on the order of the Depositor
documentation evidencing ownership of Units of fractional undivided interest in
and ownership of the Trust (hereinafter referred to as the "Units"), created
under said Trust Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units in the
Trust have been duly authorized; and
2. The certificates evidencing the Units in the Trust, when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will constitute
valid and binding obligations of such Trust and the Depositor in
accordance with the terms thereof.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-49215) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE>
EXHIBIT 3.2
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
April 21, 1998
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Van Kampen American Capital Equity Opportunity Trust, Series 97
---------------------------------------------------------------
Gentlemen:
We have acted as counsel for Van Kampen American Capital Distributors,
Inc., Depositor of Van Kampen American Capital Equity Opportunity Trust, Series
97 (the "Fund"), in connection with the issuance of Units of fractional
undivided interest in the Fund, under a Trust Agreement dated April 21, 1998
(the "Indenture") among Van Kampen American Capital Distributors, Inc., as
Depositor, Van Kampen American Capital Investment Advisory Corp., as Evaluator,
Van Kampen American Capital Investment Advisory Corp., as Supervisory Servicer,
and The Bank of New York, as Trustee. The Fund is comprised of three unit
investment trusts, Global Energy Trust, Series 5, Banking Trust, Series 2,
Morgan Stanley High-Technology 35 Index Trust, Series 2 (each a "Trust").
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we have
deemed pertinent.
The assets of the Trust will consist of a portfolio of equity
securities (the "Securities") as set forth in the Prospectus. For the purposes
of the following discussion and opinion, it is assumed that each Security is
equity for federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters of
law as we consider to be applicable, we are of the opinion that, under existing
United States Federal income tax law:
(i) The Trust is not an association taxable as a corporation
for Federal income tax purposes but will be governed by the provisions
of subchapter J (relating to trusts) of chapter 1, Internal Revenue
Code of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata
share of each asset of the Trust in the proportion that the number of
Units held by him bears to the total number of Units outstanding. Under
subpart E, subchapter J of chapter 1 of the Code, income of the Trust
will be treated as income of each Unitholder in the proportion
described, and an item of Trust income will have the same character in
the hands of a Unitholder as it would have in the hands of the Trustee.
Each Unitholder will be considered to have received his pro rata share
of income derived from each Trust asset when such income is considered
to be received by the Trust. A Unitholder's pro rata portion of
distributions of cash or property by a corporation with respect to a
Security ("dividends" as defined by Section 316 of the Code ) are
taxable as ordinary income to the extent of such corporation's current
and accumulated "earnings and profits." A Unitholder's pro rata portion
of dividends which exceed such current and accumulated earnings and
profits will first reduce the Unitholder's tax basis in such Security,
and to the extent that such dividends exceed a Unitholder's tax basis
in such Security, shall be treated as gain from the sale or exchange of
property.
(iii) The price a Unitholder pays for his Units, generally
including sales charges, is allocated among his pro rata portion of
each Security held by the Trust (in proportion to the fair market
values thereof on the valuation date closest to the date the Unitholder
purchases his Units), in order to determine his tax basis for his pro
rata portion of each Security held by the Trust.
(iv) Gain or loss will be recognized to a Unitholder (subject
to various nonrecognition provisions under the Code) upon redemption or
sale of his Units, except to the extent an in kind distribution of
stock is received by such Unitholder from the Trust as discussed below.
Such gain or loss is measured by comparing the proceeds of such
redemption or sale with the adjusted basis of his Units. Before
adjustment, such basis would normally be cost if the Unitholder had
acquired his Units by purchase. Such basis will be reduced, but not
below zero, by the Unitholder's pro rata portion of dividends with
respect to each Security which are not taxable as ordinary income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unitholder (subject
to various nonrecognition provisions under the Code) and the amount
thereof will be measured by comparing the Unitholder's aliquot share of
the total proceeds from the transaction with his basis for his
fractional interest in the asset disposed of. Such basis is ascertained
by apportioning the tax basis for his Units (as of the date on which
his Units were acquired) among each of the Trust assets (as of the date
on which his Units were acquired) ratably according to their values as
of the valuation date nearest the date on which he purchased such
Units. A Unitholder's basis in his Units and of his fractional interest
in each Trust asset must be reduced, but not below zero, by the
Unitholder's pro rata portion of dividends with respect to each
Security which are not taxable as ordinary income.
(vi) Under the Indenture, under certain circumstances, a
Unitholder tendering Units for redemption may request an in kind
distribution of Securities upon the redemption of Units or upon the
termination of the Trust. As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust's assets.
The receipt of an in kind distribution will result in a Unitholder
receiving an undivided interest in whole shares of stock and possibly
cash. The potential federal income tax consequences which may occur
under an in kind distribution with respect to each Security owned by
the Trust will depend upon whether or not a Unitholder receives cash in
addition to Securities. A "Security" for this purpose is a particular
class of stock issued by a particular corporation. A Unitholder will
not recognize gain or loss if a Unitholder only receives Securities in
exchange for his or her pro rata portion of the Securities held by the
Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will
generally recognize gain or loss based upon the difference between the
amount of cash received by the Unitholder and his tax basis in such
fractional share of a Security held by the Trust. The total amount of
taxable gains (or losses) recognized upon such redemption will
generally equal the sum of the gain (or loss) recognized under the
rules described above by the redeeming Unitholder with respect to each
Security owned by the Trust.
A domestic corporation owning Units in the Trust may be eligible for
the 70% dividends received deduction pursuant to Section 243(a) of the Code with
respect to such Unitholder's pro rata portion of dividends received by the Trust
(to the extent such dividends are taxable as ordinary income and are
attributable to domestic corporations), subject to the limitations imposed by
Sections 246 and 246A of the Code.
To the extent dividends received by the Trust are attributable to
foreign corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Section 67 of the Code provides that certain itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by individuals only to the extent they exceed 2% of
such individual's adjusted gross income. Unitholders may be required to treat
some or all of the expenses of the Trust as miscellaneous itemized deductions
subject to this limitation.
A Unitholder will recognize taxable gain (or loss) when all or part of
his pro rata interest in a Security is either sold by the Trust or redeemed or
when a Unitholder disposes of his Units in a taxable transaction, in each case
for an amount greater (or less) than his tax basis therefor, subject to various
non-recognition provisions of the Code.
It should be noted that payments to a Trust of dividends on Securities
that are attributable to foreign corporations may be subject to foreign
withholding taxes and Unitholders should consult their tax advisers regarding
the potential tax consequences relating to the payment of any such withholding
taxes by the Trust. Any dividends withheld as a result thereof will nevertheless
be treated as income to the Unitholders. Because under the grantor trust rules,
an investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor my be entitled to a foreign tax credit
or deduction for United States tax purposes with respect to such taxes. A
required holding period is imposed for such credits.
Any gain recognized on a sale or exchange will, under current law,
generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including foreign, state or local taxes or
collateral tax consequences with respect to the purchase, ownership and
disposition of Units.
Very truly yours,
CHAPMAN AND CUTLER
<PAGE>
Van Kampen American Capital Equity
Opportunity Trust, Series 97
April 21, 1998
EXHIBIT 3.3
April 20, 1998
WINSTON & STRAWN
200 Park Avenue
New York, New York 10166-4193
April 21, 1998
Van Kampen American Capital Equity
Opportunity Trust, Series 97
c/o The Bank of New York, As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen American Capital
Equity Opportunity Trust, Series 97 (the "Fund") consisting of Global Energy
Trust, Series 5, Banking Trust, Series 2, Morgan Stanley High-Technology 35
Index Trust, Series 2, (individually a "Trust" and, in the aggregate, the
"Trusts") for purposes of determining the applicability of certain New York
taxes under the circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the "Indenture"),
dated as of today (the "Date of Deposit") among Van Kampen American Capital
Distributors, Inc. (the "Depositor"), American Portfolio Evaluation Services, a
division of an affiliate of the Depositor, as Evaluator, Van Kampen American
Capital Investment Advisory Corp., an affiliate of the Depositor, as Supervisory
Servicer (the "Supervisory Servicer"), and The Bank of New York, as trustee (the
"Trustee"). As described in the prospectus relating to the Fund dated today to
be filed as an amendment to a registration statement heretofore filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Prospectus") (File Number 333-49215, the objectives of the Fund are to
provide the potential for dividend income and capital appreciation through
investment in a fixed portfolio of actively traded equity securities of
companies engaged in, providing services to companies in, the industry
identified in Trust's name, or are the type of securities identified in the name
of the Trust. It is noted that no opinion is expressed herein with regard to the
Federal tax aspects of the securities, the Trusts, units of the Trusts (the
"Units"), or any income, gains or losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to the Trust the securities and/or contracts and cash for the
purchase thereof together with an irrevocable letter of credit in the amount
required for the purchase price of the securities comprising the corpus of the
Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities to
be deposited in the Trust, and, upon the receipt thereof, will deliver to the
Depositor a registered certificate for the number of Units representing the
entire capital of the Trusts as more fully set forth in the Prospectus. The
Units, which are represented by certificates ("Certificates"), will be offered
to the public upon the effectiveness of the registration statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash dividends
received by the Fund and with the proceeds from the disposition of securities
held in the Fund and the proceeds of the treasury obligation on maturity and the
distribution of such cash dividends and proceeds to the Unit holders. The
Trustee will also maintain records of the registered holders of Certificates
representing an interest in the Fund and administer the redemption of Units by
such Certificate holders and may perform certain administrative functions with
respect to an automatic reinvestment option.
Generally, equity securities held in the Trust may be removed therefrom
by the Trustee at the direction of the Depositor upon the occurrence of certain
specified events which adversely affect the sound investment character of the
Fund, such as default by the issuer in payment of declared dividends or of
interest or principal on one or more of its debt obligations.
Prior to the termination of the Fund, the Trustee is empowered to sell
equity securities designated by the Supervisory Servicer only for the purpose of
redeeming Units tendered to it and of paying expenses for which funds are not
available. The Trustee does not have the power to vary the investment of any
Unit holder in the Fund, and under no circumstances may the proceeds of sale of
any equity securities held by the Fund be used to purchase new equity securities
to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on business
corporations, and, for purposes of that Article, Section 208(l) defines the term
"corporation" to include, among other things, "any business conducted by a
trustee or trustees wherein interest or ownership is evidenced by certificate or
other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in which
interest or ownership is evidenced by certificate or other
written instrument includes, but is not limited to, an
association commonly referred to as a "business trust" or
"Massachusetts trust". In determining whether a trustee or
trustees are conducting a business, the form of the agreement
is of significance but is not controlling. The actual
activities of the trustee or trustees, not their purposes and
powers, will be regarded as decisive factors in determining
whether a trust is subject to tax under Article 9-A. The mere
investment of funds and the collection of income therefrom,
with incidental replacement of securities and reinvestment of
funds, does not constitute the conduct of a business in the
case of a business conducted by a trustee or trustees. 20
NYCRR 1-2.5(b)(2) (July 11, 1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that where a
trustee merely invests funds and collects and distributes the income therefrom,
the trust is not engaged in business and is not subject to the franchise tax.
Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171 (3rd Dept. 1948), order
resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd Dept. 1949).
In an Opinion of the Attorney General of the State of New York, 47 N.Y.
Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee of an
unincorporated investment trust was without authority to reinvest amounts
received upon the sales of securities and could dispose of securities making up
the trust only upon the happening of certain specified events or the existence
of certain specified conditions, the trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to, and we
assume will not, sell equity securities contained in the corpus of the Fund and
reinvest the proceeds therefrom. Further, the power to sell such equity
securities is limited to circumstances in which the credit-worthiness or
soundness of the issuer of such equity security is in question or in which cash
is needed to pay redeeming Unit holders or to pay expenses, or where the Fund is
liquidated subsequent to the termination of the Indenture. In substance, the
Trustee will merely collect and distribute income and will not reinvest any
income or proceeds, and the Trustee has no power to vary the investment of any
Unit holder in the Fund.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust will be
deemed to be the owner of the trust under certain circumstances, and therefore
taxable on his proportionate interest in the income thereof. Where this Federal
tax rule applies, the income attributed to the grantor will also be income to
him for New York income tax purposes. See TSB-M-78(9)(c), New York Department of
Taxation and Finance, June 23, 1978.
By letter dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be considered as
owning a share of each asset of the Trust in the proportion that the number of
Units held by such holder bears to the total number of Units outstanding and the
income of a Trust will be treated as the income of each Unit holder in said
proportion pursuant to Subpart E of Part I, Subchapter J of Chapter 1 of the
Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we specifically rely,
we are of the opinion that under existing laws, rulings, and court decisions
interpreting the laws of the State and City of New York:
1. Each of the Trusts will not constitute an association
taxable as a corporation under New York law, and, accordingly, will not
be subject to tax on its income under the New York State franchise tax
or the New York City general corporation tax.
2. The income of the Trusts will be treated as the income
of the Unit holders under the income tax laws of the State and City
of New York.
3. Unit holders who are not residents of the State of New
York are not subject to the income tax laws thereof with respect to any
interest or gain derived from the Fund or any gain from the sale or
other disposition of the Units, except to the extent that such interest
or gain is from property employed in a business, trade, profession or
occupation carried on in the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name and the
reference to our firm in the Registration Statement and in the Prospectus.
Very truly yours,
WINSTON & STRAWN
<PAGE>
EXHIBIT 4.1
April 20, 1998
Interactive Data
14 Wall Street, 11th Floor
New York, NY 10005
April 20, 1998
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital
Global Energy Trust, Series 5,
Banking Trust, Series 2,
Morgan Stanley High-Technology 35 Index Trust, Series 2
(A Unit Investment Trust) Registered Under the Securities Act of 1933,
File No. 333-49215
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund, a copy of which is attached hereto.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Corporation, as the
Evaluator, and to the use of the Obligations prepared by us which are referred
to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
<PAGE>
EXHIBIT 4.2
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
We have issued our report datedApril 21, 1998 on the statements of
condition and related securities portfolios of Van Kampen American Capital
Equity Opportunity Trust, Series 97 as of April 21, 1998 contained in the
Registration Statement on Form S-6 and Prospectus. We consent to the use of our
report in the Registration Statement and Prospectus and to the use of our name
as it appears under the caption "Other Matters-Independent Certified Public
Accountants."
Grant Thornton LLP
Chicago, Illinois
April 21, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on April 21, 1998
it is unaudited
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> GENT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-21-1998
<PERIOD-END> APR-21-1998
<INVESTMENTS-AT-COST> 147,972
<INVESTMENTS-AT-VALUE> 147,972
<RECEIVABLES> 0
<ASSETS-OTHER> 38,449
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 186,421
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41,812
<TOTAL-LIABILITIES> 41,812
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 144,609
<SHARES-COMMON-STOCK> 14,947
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 144,609
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on April 21, 1998
it is unaudited
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> BANK
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-21-1998
<PERIOD-END> APR-21-1998
<INVESTMENTS-AT-COST> 148,264
<INVESTMENTS-AT-VALUE> 148,264
<RECEIVABLES> 0
<ASSETS-OTHER> 35,403
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 183,667
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,773
<TOTAL-LIABILITIES> 38,773
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 144,894
<SHARES-COMMON-STOCK> 14,977
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 144,894
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on April 21, 1998
it is unaudited
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> MSHT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-21-1998
<PERIOD-END> APR-21-1998
<INVESTMENTS-AT-COST> 149,870
<INVESTMENTS-AT-VALUE> 149,870
<RECEIVABLES> 0
<ASSETS-OTHER> 35,806
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 185,676
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,212
<TOTAL-LIABILITIES> 39,212
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 146,464
<SHARES-COMMON-STOCK> 15,139
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 144,464
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
