File No: 333-
CIK # 1025247
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM S-6
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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 101
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 undivided fractional beneficial interests.
F. Approximate date of proposed sale to the public:
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AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
_________________________________ _________________________________
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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
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VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST
SERIES 101
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)
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FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
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I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) Trust Administration
underwriter
5. Organization of trust ) The Trust
6. Execution and termination of ) The Trust
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
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II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
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10. General information regarding ) The Trust
Trust's securities and ) Federal Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
) Risk Factors
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trust
) Trust Portfolio
) Risk Factors
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Portfolio
)
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or ) Trust Operating Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received ) Public Offering
by depositor, principal ) Trust Portfolio
underwriter, trustee or any )
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of Trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trust
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special Trusts ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolio
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
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III. ORGANIZATION, PERSONNEL AND AFFILIATED
PERSONS OF DEPOSITOR
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25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35. Distribution of trust's securities ) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
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V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
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48. Organization and regulation of ) Trust Administration
trustee )
49. Fees and expenses of trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's )
securities ) *
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) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Federal Taxation
VII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions ) Report of Independent Certified
1(c) to Form S-6) ) Public Accountants
) Statement of Condition
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Inapplicable, omitted, answer negative or not required
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Preliminary Prospectus Dated April 16, 1998
Subject to Completion
April 21, 1998
Van Kampen American Capital
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securitites 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. This 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, solictation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
Select Growth Trust, April 1998 Series
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The Fund. Van Kampen American Capital Equity Opportunity Trust, Series 101 (the
"Fund") is comprised of one unit investment trust, Select Growth Trust, April
1998 Series (the "Trust"). The Trust offers investors the opportunity to
purchase Units representing proportionate interests in a fixed portfolio of
equity securities issued primarily by some of the most widely held and
well-capitalized companies in the United States ("Equity Securities" or
"Securities"). See "Trust Portfolio". Unless terminated earlier, the Trust will
terminate on April 21, 2003 and any Securities then held will, within a
reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Securities liquidated at termination will be sold at the then current market
value for such Securities; therefore, the amount distributable in cash to a
Unitholder upon termination may be more or less than the amount such Unitholder
paid for his Units.
Attention Foreign Investors. If you are not a United States citizen or resident,
distributions will generally be subject to U.S. federal withholding taxes;
however, under certain circumstances treaties between the United States and
other countries may reduce or eliminate such withholding tax. See "Federal
Taxation." Such investors should consult their tax advisers regarding the
imposition of U.S. withholding on distributions.
Objective of the Trust. The objective of the Trust is to provide the potential
for capital appreciation by investing in a portfolio of equity securities issued
primarily by some of the most widely held and well-capitalized companies in the
United States. See "Objective and Securities Selection." There is, of course, no
guarantee that the objective of the Trust will be achieved.
Public Offering Price. The Public Offering Price of the Units of the Trust
includes the aggregate underlying value of the Securities in the Trust's
portfolio, a sales charge of 3.80% of the Public Offering Price (3.950% of the
aggregate value of the Securities), and cash, if any, in the Income and Capital
Accounts held or owned by the Trust. During the initial offering period, the
sales charge is reduced on a graduated scale for sales involving at least 2,500
Units. 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". For sales charges in the secondary market, see "Public Offering."
The minimum purchase is 150 Units except for certain transactions described
under "Public Offering--Unit Distribution". See "Public Offering."
Additional Deposits. The Sponsor may, from time to time after the Initial Date
of Deposit, deposit additional Securities in the Trust as provided under "The
Trust."
Units of the Trust are not insured by the FDIC, are not deposits or
other obligations of, or guaranteed by, any depository institution or any
government agency and are subject to investment risk, including possible loss of
the principal amount invested.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE
Dividend and Capital Distributions. Distributions of dividends and capital, if
any, received by the Trust will be paid in cash on the applicable Distribution
Date to Unitholders of record on the record date as set forth in the "Summary of
Essential Financial Information." The initial estimated distribution will be
$.__ per Unit and will be made on June 25, 1998 to Unitholders of record on June
10, 1998. Gross dividends received by the Trust will be distributed to
Unitholders. Expenses of the Trust will be paid with proceeds from the sale of
Securities. For the consequences of such sales, see "Federal Taxation".
Additionally, upon termination of the Trust, the Trustee will distribute, upon
surrender of Units for redemption, to each Unitholder his pro rata share of the
Trust's assets, less expenses, in the manner set forth under "Rights of
Unitholders--Distributions of Income and Capital."
Secondary Market for Units. After the initial offering period, although not
obligated to do so, the Sponsor intends to maintain a market for Units of the
Trust and offer to repurchase such Units at prices which are based on the
aggregate underlying value of Equity Securities in the Trust (generally
determined by the closing sale or bid prices of the Securities) plus or minus
cash, if any, in the Capital and Income Accounts of the Trust. If a secondary
market is maintained during the initial offering period, the prices at which
Units will be repurchased will be based upon the aggregate underlying value of
the Equity Securities in the Trust (generally determined by the closing sale or
asked prices of the Securities) plus or minus cash, if any, in the Capital and
Income Accounts of the Trust. If a secondary market is not maintained, a
Unitholder may redeem Units through redemption at prices based upon the
aggregate underlying value of the Equity Securities in the Trust plus or minus a
pro rata share of cash, if any, in the Capital and Income Accounts of the Trust.
A Unitholder tendering 2,500 or more Units for redemption may request a
distribution of shares of Securities (reduced by customary transfer and
registration charges) in lieu of payment in cash. See "Rights of
Unitholders--Redemption of Units."
Termination. Commencing on the Mandatory Termination Date Equity Securities will
begin to be sold in connection with the termination of the Trust. The Sponsor
will determine the manner, timing and execution of the sale of the Equity
Securities. Written notice of any termination of the Trust specifying the time
or times at which Unitholders may surrender their certificates for cancellation
shall be given by the Trustee to each Unitholder at his address appearing on the
registration books of the Trust maintained by the Trustee. At least 30 days
prior to the Mandatory Termination Date the Trustee will provide written notice
thereof to all Unitholders and will include with such notice a form to enable
Unitholders to elect a distribution of shares of Equity Securities if such
Unitholder owns at least 2,500 Units of the Trust, rather than to receive
payment in cash for such Unitholder's pro rata share of the amounts realized
upon the disposition by the Trustee of Equity Securities. All Unitholders will
receive cash in lieu of any fractional shares. To be effective, the election
form, together with surrendered certificates if issued, and other documentation
required by the Trustee, must be returned to the Trustee at least five business
days prior to the Mandatory Termination Date. Unitholders not electing a
distribution of shares of Equity Securities will receive a cash distribution
from the sale of the remaining Securities within a reasonable time after the
Trust is terminated. See "Trust Administration--Amendment or Termination."
Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales charge
to the extent stated in the related prospectus (which may be deferred in certain
cases). Unitholders also have the opportunity to have their distributions
reinvested into additional Units of the Trust, if Units are available at the
time of reinvestment, or into an open-end management investment company as
described herein. See "Rights of Unitholders--Reinvestment Option."
Risk Factors. An investment in the Trust should be made with an understanding of
the risks associated therewith, including the possible deterioration of the
financial condition of the issuers, the general condition of the stock market,
volatile interest rates and risks related to an investment in the energy
industry. See "Risk Factors."
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Select Growth Trust, April 1998 Series
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: Edward D. Jones
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
GENERAL INFORMATION
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Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/
Public Offering Price:
Aggregate Value of Securities in Portfolio (2) $
Aggregate Value of Securities per Unit $ 9.62
Sales Charge of 3.80% of Public Offering Price (3.950% of the aggregate
value of the Securities) $ .38
Public Offering Price Per Unit (3)(4) $ 10.00
Redemption Price per Unit $
Secondary Market Repurchase Price per Unit $ 9.62
Excess of Public Offering Price per Unit over Redemption Price per Unit $ .38
Supervisor's Annual Supervisory Fee Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee Maximum of $.0025 per Unit
Evaluation Time Close of the New York Stock Exchange
Mandatory Termination Date April 21, 2003
Minimum Termination Value The Trust may be terminated if the net asset value of the Trust is less
than $500,000 unless the net asset value of the Trust deposits has
exceeded $15,000,000, then the Trust Agreement may be terminated if the
net asset value of the Trust is less than $3,000,000.
Estimated Annual Dividends per Unit (5) $.__
Trustee's Annual Fee and Miscellaneous Expense per Unit $.__
Estimated Annual Organizational Expenses per Unit (6) $.__
Income Distribution Record Date Tenth day of March, June, September and December
Income Distribution Date Twenty-fifth of March, June, September and December
Capital Account Record Date Tenth day of December
Capital Account Distribution Date Twenty-fifth day of December
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(1)As of the close of business on any day on which the Sponsor
is the sole Unitholder of the Trust, the number of Units may be adjusted so that
the Public Offering Price per Unit will equal approximately $10. Therefore, to
the extent of any such adjustment the fractional undivided interest per Unit
will increase or decrease from the amount indicated above.
(2)Each Equity Security listed on a national securities exchange is valued at
the closing sale price or, if the Equity Security is not listed, at the closing
ask price thereof.
(3)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.
(4)Commencing on April 21, 1999, the secondary market sales charge will be
reduced by .5 of 1% on each subsequent April 21 to a minimum sales charge of
2.30%. See "Public Offering."
(5)Estimated annual dividends are based on annualizing the most recently
declared dividends taking into consideration any foreign withholding taxes.
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.
(6)The Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration statement,
the trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of the
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 material and any other selling expenses) as is common for mutual
funds. Total organizational expenses will be amortized over a five year period.
See "Trust Operating Expenses" and "Statement of Condition." Historically, the
sponsors of unit investment trusts have paid all the costs of establishing such
trusts.
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THE TRUST
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Van Kampen American Capital Equity Opportunity Trust, Series 101 is comprised of
one unit investment trust, Select Growth Trust, April 1998 Series. The Trust was
created under the laws of the State of New York pursuant to a Trust Indenture
and Agreement (the "Trust Agreement"), dated the date of this Prospectus (the
"Initial Date of Deposit"), among Van Kampen American Capital Distributors,
Inc., as Sponsor, American Portfolio Evaluation Services, a division of Van
Kampen American Capital Investment Advisory Corp., as Evaluator, Edward D.
Jones, as Supervisor, and The Bank of New York, as Trustee.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities
issued by some of the most widely held and well-capitalized companies in the
United States. Diversification of assets in the Trust will not eliminate the
risk of loss always inherent in the ownership of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolio" herein, including delivery statements
relating to contracts for the purchase of certain such Securities and an
irrevocable letter of credit issued by a financial institution in the amount
required for such purchases. Thereafter, the Trustee, in exchange for such
Securities (and contracts) so deposited, delivered to the Sponsor documentation
evidencing the ownership of that number of Units of the Trust indicated in
"Summary of Essential Financial Information." Unless otherwise terminated as
provided in the Trust Agreement, the Trust will terminate on the Mandatory
Termination Date and Securities then held will within a reasonable time
thereafter be liquidated or distributed by the Trustee.
Additional Units of the Trust may be issued at any time by depositing in the
Trust (i) additional Securities, (ii) contracts to purchase securities together
with cash or irrevocable letters of credit or (iii) cash (or a letter of credit)
with instructions to purchase additional Securities. As additional Units are
issued by the Trust as a result of the deposit of additional Securities, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits of Securities or
cash with instructions to purchase Securities into the Trust following the
Initial Date of Deposit, provided that such additional deposits will be in
amounts which will maintain, as nearly as practicable, the same percentage
relationship among the number of shares of each Equity Security in the Trust's
portfolio that existed immediately prior to any such subsequent deposit. Any
deposit of additional Equity Securities will duplicate, as nearly as is
practicable, this actual proportionate relationship and not the original
proportionate relationship on the Initial Date of Deposit, since the actual
proportionate relationship may be different than the original proportionate
relationship. Any such difference may be due to the sale, redemption or
liquidation of any of the Equity Securities deposited in the Trust on the
Initial, or any subsequent, Date of Deposit. Existing and new investors may
experience a dilution of their investments and a reduction in their anticipated
income because of fluctuations in the prices of the Securities between the time
of the cash deposit and the purchase of the Securities and because the Trust
will pay the associated brokerage fees.
Each Unit of the Trust initially offered represents an undivided interest in the
Trust. To the extent that any Units are redeemed by the Trustee or additional
Units are issued as a result of additional Securities being deposited by the
Sponsor, the fractional undivided interest in the Trust represented by each
unredeemed Unit will increase or decrease accordingly, although the actual
interest in the Trust represented by such fraction will remain unchanged. Units
will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor, or until the termination of the
Trust Agreement.
OBJECTIVE AND SECURITIES SELECTION
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The objective of the Trust is to provide the potential for capital appreciation.
The portfolio is described under "Trust Portfolio" and in "Portfolio". In
selecting the Securities, Edward Jones & Co. (the "Managing Underwriter")
considered companies recognized as leaders in their respective industries,
diversification across a broad range of economic sectors seeking to manage the
inherent risk associated with stocks, and companies in a position to benefit
from worldwide growth. Investing in blue chip stocks may provide the potential
for capital appreciation and dividend income. Equities have historically
outperformed other investments, such as Treasury bills and government bonds over
the long term.
Many of the blue chip companies in the Trust are considered industry leaders in
their respective markets. These companies are typically well-managed,
financially strong and proven performers. As large corporations, they also share
several characteristics: leading market share in their industry; diversified
line of products and/or services; well-capitalized; research and development
prowess providing new high-quality products; and large advertising budgets
capable of producing consistent sales.
Companies that demonstrate both worldwide business prospects and a dominant
position in a particular industry may have a distinct competitive advantage.
Such companies are targeted by the Trust. Although the world economy may be more
interconnected than ever before, not all regions of the world have the same
economic environment. Consequently, a company that provides products and
services in several countries can often weather difficult periods in one
geographic region while gaining business in another. The Trust offers a broad
base of companies whose goods and services are used worldwide, which may help
reduce overall investment risk.
The Trust seeks to benefit from wide diversification by including __ stocks in
the portfolio. Companies included in the Trust cover several industry sectors
and offer many products and services. Such sectors and products include: basic
materials - chemical, natural resources and industrial products; capital
goods/industrials - machine tools; communication services - long distance, local
and cellular communications products and services; consumer staples - food,
household and entertainment products; energy - oil, natural gas and fossil
fuels; financial services - insurance and investment products and services;
health care - HMOs, medical devices and pharmaceuticals and technology -
computer software, hardware and Internet products.
General. An investor will be subject to taxation on the dividend income received
from the Trust and on gains from the sale or liquidation of Securities (see
"Federal Taxation"). Investors should be aware that there is not any guarantee
that the objectives of the Trust will be achieved because they are subject to
the continuing ability of the respective Security issuers to continue to declare
and pay dividends and because the market value of the Securities can be affected
by a variety of factors. Common stocks may be especially susceptible to general
stock market movements and to volatile increases and decreases of value as
market confidence in and perceptions of the issuers change. Investors should be
aware that there can be no assurance that the value of the underlying Securities
will increase or that the issuers of the Equity Securities will pay dividends on
outstanding common shares. Any distributions of income will generally depend
upon the declaration of dividends by the issuers of the Securities and the
declaration of any dividends depends upon several factors including the
financial condition of the issuers and general economic conditions.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust as of the Initial Date of
Deposit. Subsequent to the Initial Date of Deposit, the Securities may no longer
meet such criteria. Should an Equity Security no longer meet such criteria, such
Equity Security will not, simply as a result of such fact, be removed from the
portfolio of the Trust.
Investors should be aware that the Trust is not a "managed" fund and as a result
the adverse financial condition of a company will not result in its elimination
from the portfolio except under extraordinary circumstances (see "Trust
Administration--Portfolio Administration"). In addition, Securities will not be
sold by the Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in particular that the
Securities were selected by the Sponsor as of the Initial Date of Deposit. The
Trust may continue to purchase or hold Securities originally selected through
this process even though the evaluation of the attractiveness of the Securities
may have changed and, if the evaluation were performed again at that time, the
Securities would not be selected for the Trust.
TRUST PORTFOLIO
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The Trust consists of __ different issues of Equity Securities issued primarily
by some of the most widely held and well-capitalized companies in the United
States. All of the Equity Securities are listed on a national securities
exchange, the NASDAQ National Market System or are traded in the
over-the-counter market. The following is a general description of each of the
companies currently anticipated to be included in the Trust. The actual
portfolio is subject to change at the Initial Date of Deposit.
Basic Materials
DuPont (E.I.) de Nemours. E.I. du Pont de Nemours and Company is a research and
technology-based company offering products including chemicals, polymers, fibers
and petroleum. The company serves worldwide markets in the aerospace,
agriculture, apparel, automotive, construction, packaging, printing, refining
and transportation industries.
Sigma-Aldrich Corporation. Sigma-Aldrich Corporation develops, manufactures and
distributes biochemicals, organic chemicals, chromatography products and
diagnostic reagents. The company's products are used in research and
development, in the diagnosis of disease and as specialty chemicals for
manufacturing purposes. Sigma also manufactures and markets metal products used
in installation and retrofitting.
Capital Goods/Industrials
AlliedSignal Inc. AlliedSignal Inc. and its subsidiaries manufacture aerospace
and automotive products, chemicals, fibers, plastics and advanced materials. The
company has 300 facilities in 40 countries serving customers worldwide.
General Electric Company. General Electric Company is a diversified
manufacturing, technology and services company. Operations include appliance
manufacturing, capital services, information services and electrical
distribution. General Electric also owns the National Broadcasting Company.
Illinois Tool Works, Inc. Illinois Tool Works, Inc. manufactures construction
fasteners and packaging systems. The company produces plastic and metal
fasteners, consumer and industrial packaging systems, non-destructive testing
equipment, electronic switches, adhesives, gear measuring instruments and
coating systems. Illinois Tool sells to the aerospace, appliance, automotive,
truck, computer and electronics markets.
Johnson Controls, Inc. Johnson Controls, Inc. manufactures and markets
automotive systems and building controls. Through its Automotive System Group,
the company designs and produces seating and interior systems for automakers and
batteries for the original equipment and replacement markets. The Controls Group
services the non-residential buildings market with controls systems and
services. Johnson operates worldwide.
Communication Services
AirTouch Communications, Inc. AirTouch Communications, Inc. provides wireless
communication services with interests in cellular, paging and personal
communications services (PCS) operations. The company has operations in the
United States, Germany, Portugal, Sweden, Belgium, Spain, Italy, Poland, Japan,
Romania, South Korea and India. AirTouch also has interests in the Globalstar
satellite system.
AT&T Corporation. AT&T Corporation provides communication services and products.
The company's products consist of network equipment and computer systems, which
service businesses, consumers, communication services providers and government
agencies. AT&T is involved in basic research as well as product and service
development and offers a general-purpose credit card and financial and leasing
services.
SBC Communications, Inc. SBC Communications, Inc. is a telecommunications
company with wireless customers across the United States, as well as investments
in telecommunications businesses in nine countries. The company offers a wide
range of services, including local and long-distance telephone service, wireless
communications, paging, Internet access, cable TV and messaging and other
products and services.
Consumer Cyclicals
Dollar General Corporation. Dollar General Corporation operates a chain of more
than 3,146 neighborhood stores. The company stores are located in 24 states,
with distribution centers in Kentucky, Georgia, Oklahoma and Virginia.
Home Depot, Inc. Home Depot, Inc. sells building materials and home improvement
products. The company's stores sell plumbing, heating and electrical supplies,
lumber, floor and wall coverings, hardware, tools, paint and lawn and garden
products. Home Depot operates more than 600 stores in the United States and
Canada.
Interpublic Group of Companies, Inc. The Interpublic Group of Companies, Inc.
owns and operates three advertising agency systems. McCann-Erickson Worldwide,
Ammirati Puris Lintas and the Lowe Group agencies plan and create advertising
programs for clients and place advertising in radio, television, magazines and
newspapers. Interpublic has operations in approximately 110 countries.
Leggett & Platt, Inc. Leggett & Platt, Inc. manufactures furniture components
and related products. The company offers products for use in bedding, furniture
and other furnishings including commercial fixtures, store displays and
shelving. Leggett also manufactures and sells finished furnishings such as metal
and wood shelving, bed frames and non-skid rug pads. The company markets its
products nationwide.
Sears, Roebuck and Company. Sears, Roebuck and Company is a retailer of apparel,
home and automotive products and services. The company operates department and
specialty stores across the United States, including "HomeLife" furniture and
"Sears Hardware" stores. Sears also operates a network of automotive product and
service outlets which include "Sears Auto Centers" and "Western Auto."
Sherwin-Williams Company. Sherwin-Williams Company manufactures, distributes and
sells coatings and related products. The company's products are marketed under
such tradenames as "Sherwin-Williams", "Dutch Boy" and "Kemtone".
Sherwin-Williams products are sold to professional, industrial, commercial and
retail customers primarily throughout North America.
Consumer Staples
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.
Campbell Soup Company. Campbell Soup Company, with its subsidiaries,
manufactures and markets branded convenience food products. The company's three
core divisions include soups and sauces, biscuits and confectionery, and food
service. Campbell's brand names include "Prego", "Swanson", "Pace", "Campbells",
"V8" and many other names. The company distributes its products worldwide.
Clorox Company. The Clorox Company manufactures and markets non-durable
household consumer products. The company's products are sold primarily through
grocery and other retail stores in the United States and internationally.
Clorox' products include "Formula 409", "Clorox" and "Pine-Sol" cleaning agents;
"Black Flag" and "Combat" insect control products; and "Armor All" and "Rain
Dance" automobile products.
Colgate-Palmolive Company. Colgate-Palmolive Company is a global consumer
products company whose core products consist of oral care, personal care,
household care, fabric care and pet nutrition. The company sells its products in
212 countries and territories under a variety of brand names including
"Colgate", "Palmolive", "Mennen", "Kolynos", "Ajax", "Soupline", "Suavitel",
"Fab" and "Hill's Science Diet".
Gillette Company. Gillette Company manufactures grooming products, writing
instruments and stationary, toothbrushes and oral care products, and alkaline
batteries. The company's products include blades and razors, shaving
preparations, electric shavers, hair epilation devices and other products.
Gillette sells its goods around the world.
McDonald's Corporation. McDonald's Corporation develops, operates, franchises
and services a worldwide system of restaurants. These restaurants prepare,
assemble, package and sell a limited menu of quickly-prepared, moderately-priced
foods. There are over 22,000 restaurants in the United States and 109 countries
worldwide. Food items include hamburgers, chicken, salads, breakfast foods and
beverages.
PepsiCo, Inc. PepsiCo, Inc. operates on a worldwide basis in the soft drink,
snack food and restaurant business segments. Some of the company's products
include "Pepsi-Cola", "Slice" and "Mountain Dew" soft drinks and "Frito-Lay",
"Cracker Jack" and "Doritos" snack foods.
Sara Lee Corporation. Sara Lee Corporation is a worldwide manufacturer and
marketer of consumer products including packaged meats, bakery items, coffee,
personal products, and household and personal care items. The company's brand
names include "Sara Lee" food items, "Jimmy Dean" packaged meats, "Coach"
leatherware, "Hanes" clothing and hosiery, "L'eggs" hosiery, "Champion"
activewear and other name brands.
Walgreen Company. Walgreen Company operates retail drugstores. The company's
stores sell prescription and nonprescription drugs, general merchandise, liquor
and beverages, cosmetics and tobacco products. Walgreen operates approximately
2,390 stores in 34 states and Puerto Rico.
The Walt Disney Company. The Walt Disney Company is a diversified international
entertainment company. The company, through its subsidiaries, owns and operates
theme parks and resorts, film studios, consumer products, television networks,
radio networks, cable networks, newspapers and magazines. Disney owns, among
others, ABC Television, ABC Radio, The Disney Channel, Disney Land and
Disney-MGM Studios.
Energy
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.
Exxon Corporation. Exxon Corporation and its affiliated companies explore for
and produce crude oil and natural gas, manufacture petroleum products and
transport and sell their products worldwide. Through a division, the company
manufactures and markets petrochemicals. Exxon and its affiliates explore for,
mine and sell coal and other minerals.
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.
Financial Services
Allstate Corporation. Allstate Corporation provides property-liability and life
insurance policies. The company primarily offers private passenger automobile
and homeowners insurance. Allstate also markets commercial property and casualty
lines for small and medium sized businesses and offers life insurance and
annuity products. The company underwrites insurance through agents in the United
States and Canada.
American Express Company. American Express Company provides a variety of
diversified travel and financial services. The company offers charge cards,
Travelers Cheques, travel, financial planning, investment products, insurance
and international banking services.
Banc One Corporation. Banc One Corporation operates 1,502 banking offices in 12
states. The company also owns several additional corporations that offer credit
card and merchant processing, consumer and education finance, mortgage banking,
insurance, trust and investment management, brokerage, investment and merchant
banking, venture capital, equipment leasing and data processing.
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 over 2,000 offices throughout the western United States. The company
also operates corporate banking and business credit offices in major U.S. cities
and 37 countries.
Citicorp. Citicorp, the parent of Citibank, 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 company
operates in over 3,200 locations in 98 countries and territories throughout the
world.
Federal National Mortgage Association. Fannie Mae buys and holds mortgages and
issues and sells guaranteed mortgage-backed securities to facilitate housing
ownership for low- to middle-income Americans. The company was chartered by the
United States Congress, but went public in 1970.
First Union Corporation. First Union Corporation is a bank holding company. The
company operates financial centers in 12 eastern states and the District of
Columbia. First Union provides financial products and services to approximately
12 million customers nationwide.
Hartford Life, Inc. Hartford Life, Inc. is an insurance and financial services
company that provides investment products, life insurance, estate planning and
employee benefits products.
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 Maryland to Texas
with over 1,900 branches. Businesses include retail banking services, asset
management, financial products, corporate finance, specialized finance, capital
markets and financial services.
Health Care
Abbott Laboratories. Abbott Laboratories is a global, diversified health care
company that discovers, develops, manufactures and markets pharmaceutical,
diagnostic, nutritional and hospital products. The company markets its products
in more than 130 countries.
American Home Products Corporation. American Home Products Corporation is a
research-based pharmaceutical and health care products company. The company
discovers, develops, manufactures and markets prescription drugs and
over-the-counter medications. American Home Products is also involved with
vaccines, biotechnology, agricultural products, animal health care and medical
devices.
Johnson & Johnson. Johnson & Johnson manufactures and sells a broad range of
products in health care and other fields. The company's business is divided into
the consumer, professional and pharmaceutical segments. Products include
contraceptives, therapeutics, veterinary products, dental products, surgical
instruments, dressing apparel and nonprescription drugs.
Medtronic, Inc. Medtronic, Inc., along with its subsidiaries, manufactures
pacemakers, heart valves (both tissue and mechanical), neurological stimulation
devices, therapeutic catheters and blood oxygenators. The company markets its
products through hospitals, physicians and other medical institutions in the
United States and abroad.
Merck & Co., Inc. Merck & Co., Inc. is a worldwide research-intensive health
products company. The company operates through five divisions: human health,
managed pharmaceutical care, manufacturing, research and vaccine. Merck's
products include treatments for osteoporosis and high blood pressure. The
company markets its products under brand names such as "Cozar", "Fosamax",
"Trusopt" and "Pepcid AC".
Schering-Plough Corporation. Schering-Plough Corporation discovers, develops,
manufactures and markets pharmaceuticals and health care products worldwide. The
company's products include prescription drugs, animal health, over-the-counter,
foot care and sun care products.
Technology
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.
Cisco Systems, Inc. Cisco Systems, Inc. develops, manufactures and markets
software products which enable customers to build secure and reliable
information networks that support productivity-enhancing applications. The
company's clients include utilities, corporations, universities, governments,
service providers and small to medium businesses worldwide.
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
sells and supports its products in more than 100 countries through a network of
authorized marketing partners.
Hewlett-Packard Company. Hewlett-Packard Company designs, manufactures and
services electronic measurement, analysis and computation instruments. The
company's products include computers, calculators, workstations, printers, disc
and tape drives and medical diagnostic and monitoring devices. Hewlett-Packard
sells its products in the United States and other countries.
Intel Corporation. Intel Corporation designs, manufactures and sells
microcomputer components and related products. The company's products include
microprocessors, embedded products, memory chips, computer modules and boards,
network and communication hardware and software products, personal conferencing
software and cards and parallel supercomputers. Intel sells 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.
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.
Raytheon Company. Raytheon Company, a manufacturer of diverse electronic
equipment and components has operations in electronics, aircraft products,
energy services, major appliances and other lines. Raytheon is active in air
defense missiles, radar systems and other military electronics, with the U.S.
Government accounting for a large portion of sales. Other operations include
engineering and construction.
General. The Trust consists of (a) the Securities listed under "Portfolio" as
may continue to be held from time to time in the Trust, (b) any additional
Securities acquired and held by the Trust pursuant to the provisions of the
Trust Agreement and (c) any cash held in the Income and Capital Accounts.
Neither the Sponsor nor the Trustee shall be liable in any way for any failure
in any of the Securities. However, should any contract for the purchase of any
of the Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the Trust to cover such purchase are
reinvested in substitute Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract to all
Unitholders on the next distribution date.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will in most cases be distributed to Unitholders and will not be
reinvested, no assurance can be given that the Trust will retain for any length
of time its present size and composition. Although the portfolio is not managed,
the Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. See "Trust Administration--Portfolio Administration."
Equity Securities, however, will not be sold by the Trust to take advantage of
market fluctuations or changes in anticipated rates of appreciation or
depreciation.
RISK FACTORS
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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, global or
regional political, economic or banking crises. Shareholders of common stocks
have rights to receive payments from the issuers of those common stocks that are
generally subordinate to those of creditors of, or holders of debt obligations
or preferred stocks of, such issuers. Shareholders of common stocks of the type
held by the Trust have a right to receive dividends only when and if, and in the
amounts, declared by the issuer's board of directors and have a right to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. Common stocks do not
represent an obligation of the issuer and, therefore, do not offer any assurance
of income or provide the same degree of protection of capital as do debt
securities. The issuance of additional debt securities or preferred stock will
create prior claims for payment of principal, interest and dividends which could
adversely affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock with
respect to assets of the issuer upon liquidation or bankruptcy. The value of
common stocks is subject to market fluctuations for as long as the common stocks
remain outstanding, and thus the value of the Equity Securities in the portfolio
may be expected to fluctuate over the life of the Trust to values higher or
lower than those prevailing on the Initial Date of Deposit or at the time a
Unitholder purchases Units.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Cumulative preferred stock dividends must be paid before
common stock dividends and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on liquidation
which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made for
any of the Equity Securities, that any market for the Equity Securities will be
maintained or of the liquidity of the Equity Securities in any markets made. In
addition, the Trust may be restricted under the Investment Company Act of 1940
from selling Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions, and the value of the Trust, will be
adversely affected if trading markets for the Equity Securities are limited or
absent.
The Trust is concentrated in issuers within the consumer products industry.
Accordingly, an investment in Units should be made with an understanding of the
risks inherent in the consumer products industry. Investment in securities
issued by consumer products companies should be made with an understanding of
the factors which may have an adverse impact on the credit quality of the
particular company or industry. These include cyclicality of revenues and
earnings, changing consumer demands, regulatory restrictions, products liability
litigation and other litigation resulting from accidents, extensive competition
(including that of low-cost foreign companies), unfunded pension fund
liabilities and employee and retiree benefit costs and financial deterioration
resulting from leveraged buy-outs, takeovers or acquisitions. In general,
expenditures on consumer products will be affected by the economic health of
consumers. Various factors such as recession and any related tightening of
consumer credit and spending may have a continuing adverse effect on the
industry. Other factors of particular relevance to the profitability of the
industry are the effects of increasing environmental regulation on packaging and
on waste disposal, the continuing need to conform with foreign regulations
governing packaging and the environment, the outcome of trade negotiations and
their effect on foreign subsidies and tariffs, foreign exchange rates, the price
of oil and its effect on energy costs, inventory cutbacks by retailers,
transportation and distribution costs, health concerns relating to the
consumption of certain products, the effect of demographics on consumer demand,
the availability and cost of raw materials and the ongoing need to develop new
products and to improve productivity.
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 the issuance of a corresponding number of additional Units. If the
Sponsor deposits cash, existing and new investors may experience a dilution of
their investments and a reduction in their anticipated income because of
fluctuations in the prices of the Securities between the time of the cash
deposit and the purchase of the Securities and because each Trust will pay the
associated brokerage fees. As described under "Trust Operating Expenses," all of
the expenses of the Trust will be paid from the sale of Securities from the
Trust. It is expected that such sales will be made at the end of the initial
offering period and each month thereafter through termination of the Trust. Such
sales will result in capital gains and losses and may be made at times and
prices which adversely affect the Trust. For a discussion of the tax
consequences of such sales, see "Federal Taxation."
Unitholders will be unable to dispose of any of the Equity Securities in the
portfolio, as such, and will not be able to vote the Equity Securities. As the
holder of the Equity Securities, the Trustee will have the right to vote all of
the voting stocks in the Trust and will vote such stocks in accordance with the
instructions of the Sponsor. In the absence of any such instructions by the
Sponsor, the Trustee will vote such stocks so as to insure that the stocks are
voted as closely as possible in the same manner and the same general proportion
as are shares held by owners other than the Trust.
Like other investment companies, financial and business organizations and
individuals around the world, the Trust could be adversely affected if the
computer systems used by the Sponsor, Evaluator, Supervisor or Trustee or other
service providers to the Trust do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Sponsor, Evaluator, Supervisor
and Trustee are taking steps that they believe are reasonably designed to
address the Year 2000 Problem with respect to computer systems that they use and
to obtain reasonable assurances that comparable steps are being taken by the
other service providers. At this time, however, there can be no assurance that
these steps will be sufficient to avoid any adverse impact to the Trust.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of Equity Securities contained in the Trust, to varying degrees based
upon various factors, including, but not limited to, their industry sector and
degree of technological sophistication. The Sponsor is unable to predict what
impact, if any, the Year 2000 Problem will have on issuers of the Equity
Securities contained in the Trust. FEDERAL TAXATION
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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 opinions, it is assumed that each
Equity Security is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal income
tax purposes; each Unitholder will be treated as the owner of a pro rata portion
of each of the assets of the Trust under the Code; and the income of the Trust
will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Trust asset when such income is considered to be received by
the Trust.
2. A Unitholder will be considered to have received all of the dividends paid on
his pro rata portion of each Equity Security when such dividends are considered
to be received by the Trust. Unitholders will be taxed in this manner regardless
of whether distributions from the Trust are actually received by the Unitholder
or are automatically reinvested.
3. Each Unitholder will have a taxable event when the Trust disposes of an
Equity Security (whether by sale, exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unitholder (except to
the extent an in kind distribution of stock is received by such Unitholder as
described below). The price a Unitholder pays for his Units, generally including
sales charges, is allocated among his or her pro rata portion of each Equity
Security held by the Trust (in proportion to the fair market values thereof on
the valuation date nearest the date the Unitholder purchase his Units) in order
to determine his or her tax basis for his or her pro rata portion of each Equity
Security held by the Trust. Unitholders should consult their own tax advisers
with regard to the calculation of basis. For federal income tax purposes, a
Unitholder's pro rata portion of dividends, as defined by Section 316 of the
Code, paid by a corporation with respect to an Equity Security held by the Trust
are taxable as ordinary income to the extent of such corporation's current and
accumulated "earnings and profits". A Unitholder's pro rata portion of dividends
paid on such Equity Security which exceeds such current and accumulated earnings
and profits will first reduce a Unitholder's tax basis in such Equity Security,
and to the extent that such dividends exceed a Unitholder's tax basis in such
Equity Security shall generally be treated as capital gain. In general, the
holding period for such capital gain will be determined by the period of time a
Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of Units
or the disposition of Equity Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholderportion of loss, if any, upon the sale or redemption
of Units or the disposition of Equity Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unitholders should consult their tax advisers regarding
the recognition of such capital gains and losses for federal income tax
purposes.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Equity Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. It should be noted that various
legislative proposals that would affect the dividends received deduction have
been introduced. Unitholders should consult with their tax advisers with respect
to the limitations on and possible modifications to the dividends received
deduction. To the extent dividends received by the Trust are attributable to
foreign corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unitholders. Each Unitholder's
pro rata share of each expense paid by the Trust is deductible by the Unitholder
to the same extent as though the expense had been paid directly by him. It
should be noted that as a result of the Tax Reform Act of 1986, certain
miscellaneous itemized deductions, such as investment expenses, tax return
preparation fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income. Unitholders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Equity Securities by the
Trust or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when an Equity Security is disposed of by the Trust or if
the Unitholder disposes of a Unit. For taxpayers other than corporations, net
capital 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 is deemed thereby to have disposed of his
entire pro rata interest in all assets of the Trust including his pro rata
portion of all Equity Securities represented by a Unit. The Taxpayer Relief Act
of 1997 (the "1997 Tax Act") includes provisions that treat certain transactions
designed to reduce or eliminate risk of loss and opportunities for gain (e.g.,
short sales, off-setting notional principal contracts, futures or forward
contracts, or similar transactions) as constructive sales for purposes of
recognition of gain (but not loss) and for purposes of determining the holding
period. Unitholders should consult their own tax advisers with regard to any
such constructive sales rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of Unitholders--Redemption of
Units", under certain circumstances a Unitholder tendering Units for redemption
may request an In Kind Distribution. A Unitholder may also under certain
circumstances request an In Kind Distribution upon the termination of the Trust.
See "Rights of Unitholders--Redemption of Units." As previously discussed, prior
to the redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust assets for federal
income tax purposes. The receipt of an In Kind Distribution will result in a
Unitholder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution with
respect to each Security owned by the Trust will depend on whether or not a
Unitholder receives cash in addition to Equity Securities. An "Equity Security"
for this purpose is a particular class of stock issued by a particular
corporation. A Unitholder will not recognize gain or loss if a Unitholder only
receives Equity Securities in exchange for his or her pro rata portion in the
Equity Securities held by the Trust. However, if a Unitholder also receives cash
in exchange for a fractional share of an Equity Security held by the Trust, such
Unitholder will generally recognize gain or loss based upon the difference
between the amount of cash received by the Unitholder and his tax basis in such
fractional share of an Equity Security held by the Trust.
Because the Trust will own many Equity Securities, a Unitholder who requests an
In Kind Distribution will have to analyze the tax consequences with respect to
each Equity Security owned by the Trust. The amount of taxable gain (or loss)
recognized upon such exchange will generally equal the sum of the gain (or loss)
recognized under the rules described above by such Unitholder with respect to
each Equity Security owned by the Trust. Unitholders who request an In Kind
Distribution are advised to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax basis
in his or her Units will generally equal the price paid by such Unitholder of
his or her Units. The cost of the Units is allocated among the Equity Securities
held in the Trust in accordance with the proportion of the fair market values of
such Equity Securities on the valuation date nearest the date the Units are
purchased in order to determine such Unitholder's tax basis for his pro rata
portion of each Equity Security.
A Unitholder's tax basis in his Units and his or her pro rata portion of an
Equity Security held by the Trust will be reduced to the extent dividends paid
with respect to such Equity Security are received by the Trust which are not
taxable as ordinary income as described above.
General. Each Unitholder will be requested to provide the Unitholder's taxpayer
identification number to the Trustee and to certify that the Unitholder has not
been notified by the Internal Revenue Service that payments to the Unitholder
are subject to back-up withholding. If the proper taxpayer identification number
and appropriate certification are not provided when requested, distributions by
the Trust to such Unitholder (including amounts received upon the redemption of
Units) will be subject to back-up withholding. Distributions by the Trust (other
than those that are not treated as United States source income, if any) will
generally be subject to United States income taxation and withholding in the
case of Units held by non-resident alien individuals, foreign corporations or
other non-United States persons. Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a trade
or business within the United States that is earned by non-U.S. Unitholders and
derived from dividends of foreign corporations will not be subject to U.S.
withholding tax provided that less than 25 percent of the gross income of the
foreign corporation for a three-year period ending with the close of its taxable
year preceding payment was not effectively connected to the conduct of a trade
or business within the United States. In addition, such earnings may be exempt
from U.S. withholding pursuant to a specific treaty between the United States
and a foreign country. Non-U.S. Unitholders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions from the
Trust.
It should be noted that payments to the Trust of dividends on Equity Securities
that are attributable to foreign corporations may be subject to foreign
withholding taxes and Unitholders should consult their tax advisers regarding
the potential tax consequences relating to the payment of any such withholding
taxes by the Trust. Any dividends withheld as a result thereof will nevertheless
be treated as income to the Unitholders. Because, under the grantor trust rules,
an investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect to such taxes.
The 1997 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 of
the Trust a statement containing information relating to the dividends received
by the Trust on the Equity Securities, the gross proceeds received by the Trust
from the disposition of any Equity Security (resulting from redemption or the
sale of any Equity Security), and the fees and expenses paid by the Trust. The
Trustee will also furnish annual information returns to Unitholders and to the
Internal Revenue Service.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unitholders under the existing income tax
laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
("U.S. Unitholders") with regard to federal and certain aspects of New York
State and City income taxes. Unitholders may be subject to taxation in New York
or in other jurisdictions and should consult their own tax advisers in this
regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit of
the Trust that (a) is (i) for United States federal income tax purposes a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unitholder in paragraph (a) but whose
income from a Unit is effectively connected with such Unitholder's conduct of a
United States trade or business. The term also includes certain former citizens
of the United States whose income and gain on the Units will be taxable.
TRUST OPERATING EXPENSES
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Compensation of Sponsor, Supervisor and Evaluator. The Sponsor will not receive
any fees in connection with its activities relating to the Trust. Edward D.
Jones will receive an annual supervisory fee which is not to exceed the amount
set forth under "Summary of Essential Financial Information," for providing
portfolio supervisory services for the Trust. Such fee (which is based on the
number of Units outstanding on January 1 of each year for which such
compensation relates except during the initial offering period in which event
the calculation is based on the number of Units outstanding at the end of the
month of such calculation) may exceed the actual costs of providing such
supervisory services for this Trust, but at no time will the total amount
received for portfolio supervisory services rendered to all unit investment
trusts by the Supervisor in any calendar year exceed the aggregate cost to the
Supervisor of supplying such services in such year. In addition, the Evaluator,
which is a division of Van Kampen American Capital Investment Advisory Corp.,
shall receive the annual per Unit evaluation fee set forth under "Summary of
Essential Financial Information" (which amount is based on the number of Units
outstanding on January 1 of each year for which such compensation relates except
during the initial offering period in which event the calculation is based on
the number of Units outstanding at the end of the month of such calculation) for
regularly evaluating the Trust portfolio. The foregoing fees are payable as
described under "General" below. Both of the foregoing fees may be increased
without approval of the Unitholders by amounts not exceeding proportionate
increases under the category "All Services Less Rent of Shelter" in the Consumer
Price Index published by the United States Department of Labor or, if such
category is no longer published, in a comparable category. The Sponsor will
receive sales commissions and may realize other profits (or losses) in
connection with the sale of Units and the deposit of the Securities as described
under "Public Offering--Sponsor Compensation."
Trustee's Fee. For its services the Trustee will receive the annual per Unit fee
from the Trust set forth under "Summary of Essential Financial Information"
(which amount is based on the number of Units outstanding on January 1 of each
year for which such compensation relates except during the initial offering
period in which event the calculation is based on the number of Units
outstanding at the end of the month of such calculation). The Trustee's fees are
payable as described under "General" below. The Trustee benefits to the extent
there are funds for future distributions, payment of expenses and redemptions in
the Capital and Income Accounts since these Accounts are non-interest bearing to
Unitholders and the amounts earned by the Trustee are retained by the Trustee.
Part of the Trustee's compensation for its services to the Trust is expected to
result from the use of these funds. Such fees may be increased without approval
of the Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price Index
published by the United States Department of Labor or, if such category is no
longer published, in a comparable category. For a discussion of the services
rendered by the Trustee pursuant to its obligations under the Trust Agreement,
see "Rights of Unitholders--Reports Provided" and "Trust Administration."
Miscellaneous Expenses. Expenses incurred in establishing the Trust, including
the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and certificates), federal and state
registration fees, the initial fees and expenses of the Trustee, legal and
accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over a five year period. The
following additional charges are or may be incurred by the Trust: (a) normal
expenses (including the cost of mailing reports to Unitholders) incurred in
connection with the operation of the Trust, (b) fees of the Trustee for
extraordinary services, (c) expenses of the Trustee (including legal and
auditing expenses) and of counsel designated by the Sponsor, (d) various
governmental charges, (e) expenses and costs of any action taken by the Trustee
to protect the Trust and the rights and interests of Unitholders, (f)
indemnification of the Trustee for any loss, liability or expenses incurred in
the administration of the Trust without negligence, bad faith or wilful
misconduct on its part, (g) accrual of costs associated with liquidating the
securities and (h) expenditures incurred in contacting Unitholders upon
termination of the Trust. The expenses set forth herein are payable as described
under "General" below.
General. During the initial offering period of the Trust, all of the fees and
expenses will accrue on a daily basis and will be charged to the Trust, in
arrears, at the end of the initial offering period. After the initial offering
period of the Trust, all of the fees and expenses of the Trust will accrue on a
daily basis and will be charged to the Trust, in arrears, on a monthly basis as
of the tenth day of each month. The fees and expenses are payable out of the
Capital Account. When such fees and expenses are paid by or owing to the
Trustee, they are secured by a lien on the Trust's portfolio. It is expected
that the balance in the Capital Account will be insufficient to provide for
amounts payable by the Trust and that Equity Securities will be sold from the
Trust to pay such amounts. These sales will result in capital gains or losses to
Unitholders. See "Federal Taxation".
PUBLIC OFFERING
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General. Units are offered at the Public Offering Price. The Public Offering
Price is based on the aggregate underlying value of the Securities in the
Trust's portfolio, a sales charge of 3.80% of the Public Offering Price (3.950%
of the aggregate value of the Securities), and cash, if any, in the Income and
Capital Accounts held or owned by the Trust. The sales charge for secondary
market transactions is described under "Offering Price" below. The sales charge
applicable to quantity purchases is, during the initial offering period, reduced
on a graduated basis as follows:
Aggregate Dollar Amount Sales
of Units Purchased * Charge
------------------------- ------------------
$25,000-$249,999 2.80%
$250,000-$999,999 2.20%
$1,000,000 or more 1.60%
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*The breakpoint sales charges are also applied on a Unit 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 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 purchaser qualifies for a sales charge
reduction or reductions, to determine the applicable sales charge reduction or
reductions it is necessary to accumulate all purchases made on the Initial
Purchase Date and all purchases made in accordance with (b) above. Units
purchased in the name of the spouse of a purchaser or in the name of a child of
such purchaser ("immediate family members") will be deemed for the purposes of
calculating the applicable sales charge to be additional purchases by the
purchaser. The reduced sales charges will also be applicable to a trustee or
other fiduciary purchasing securities for one or more trust estate or fiduciary
accounts.
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 as a purchase under a Letter of Intent each purchase of units of Van
Kampen American Capital unit investment trusts must equal or exceed $100,000.
During the initial offering period of the Trust, unitholders of any Van Kampen
American Capital-sponsored unit investment trust may utilize their redemption or
termination proceeds to purchase Units of this Trust at the Public Offering
Price less 1%.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law and daughters-in-law and trustees, custodians or fiduciaries for the
benefit of such persons) of Van Kampen American Capital Distributors, Inc. and
its affiliates, dealers and their affiliates, and vendors providing services to
the Sponsor may purchase Units at the Public Offering Price less the applicable
dealer concession.
Units may be purchased in the primary or secondary market at the Public Offering
Price (for purchases which do not qualify for a sales charge reduction for
quantity purchases) less the concession the Sponsor typically allows to brokers
and dealers for purchases (see "Public Offering--Unit Distribution") by (1)
investors who purchase Units through registered investment advisers, certified
financial planners and registered broker-dealers who in each case either charge
periodic fees for financial planning, investment advisory or asset management
service, or provide such services in connection with the establishment of an
investment account for which a comprehensive "wrap fee" charge is imposed, (2)
bank trust departments investing funds over which they exercise exclusive
discretionary investment authority and that are held in a fiduciary, agency,
custodial or similar capacity, (3) any person who for at least 90 days, has been
an officer, director or bona fide employee of any firm offering Units for sale
to investors or their 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.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in accordance
with fluctuations in the prices of the underlying Securities in the Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to the 3.80% of the Public Offering Price and dividing the sum so obtained
by the number of Units outstanding. The Public Offering Price shall also include
the proportionate share of any cash held in the Capital Account. This
computation produced a gross underwriting profit equal to 3.80% of the Public
Offering Price. Such price determination as of the close of business on the day
before the Initial Date of Deposit was made on the basis of an evaluation of the
Securities in the Trust prepared by Interactive Data Corporation, a firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities. After the close of business on the day before the Initial
Date of Deposit, the Evaluator will appraise or cause to be appraised daily the
value of the underlying Securities as of the Evaluation Time on days the New
York Stock Exchange is open and will adjust the Public Offering Price of the
Units commensurate with such valuation. Such Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each such day.
Orders received by the Trustee or Sponsor for purchases, sales or redemptions
after that time, or on a day when the New York Stock Exchange is closed, will be
held until the next determination of price. The Sponsor currently does not
intend to maintain a secondary market after October 21, 2002. Commencing on
April 21, 1999, the secondary market sales charge will be reduced by .5% of 1%
on each subsequent April 21, to a minimum sales charge of 2.30%.
The 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 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 therefor 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 the 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. The
Managing Underwriter will be allowed a concession or agency commission in
connection with the distribution of Units of 3.00%. Broker-dealers or others
will be allowed a concession or agency commission in connection with the
distribution of Units of 65% of the sales charge applicable to the transaction.
Any discount provided to investors will be borne by the selling dealer or agent
as indicated under "General" above. However, for transactions involving
unitholders of any Van Kampen American Capital-sponsored unit investment trust
who purchase Units during the initial offering period with redemption or
termination proceeds from such trust, the concession or agency commission will
be 2.00% per Unit. For secondary market transactions, the concession or agency
commission will amount to 65% of the sales charge applicable to the transaction.
The breakpoint concessions or agency commissions are applied on either a Unit or
dollar basis utilizing a breakpoint equivalent of $10 per Unit and will be
applied on whichever basis is more favorable to the broker-dealer. The
breakpoints will be adjusted to take into consideration purchase orders stated
in dollars which cannot be completely fulfilled due to requirement that only
whole Units be issued.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge (equal to the agency
commission referred to above) is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions and the banking
regulators have not indicated that these particular agency transactions are not
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 150 Units except as stated
herein. In connection with fully disclosed transactions with the Sponsor, the
minimum purchase requirement will be that number of Units set forth in the
contract between the Sponsor and the related broker or agent. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units and to change the amount of the concession or agency commission to dealers
and others from time to time.
Sponsor Compensation. The Sponsor will receive a gross sales commission equal to
3.80% of the Public Offering Price of the Units (equivalent to 3.950% of the
aggregate value of Securities), less any reduced sales charge for purchases (as
described under "General" above). Any discount provided to investors will be
borne by the Managing Underwriter or the selling broker, dealer or agent as
indicated under "General" above.
In addition, the Sponsor or Managing Underwriter will realize a profit or will
sustain a loss, as the case may be, as a result of the difference between the
price paid for the Securities by the Sponsor or Managing Underwriter and the
cost such Securities to the Trust on the Initial Date of Deposit. See "Notes to
Portfolio." The Sponsor has not participated as sole underwriter or as manager
or as a member of the underwriting syndicates or as an agent in a private
placement for any of the Securities in the Trust portfolio. The Sponsor may
further realize additional profit or loss during the initial offering period as
a result of the possible fluctuations in the market value of the Securities in
the Trust after a date of deposit, since all proceeds received from purchasers
of Units (excluding dealer concessions and agency commissions allowed, if any)
will be retained by the Sponsor.
Broker-dealers of the Trust, banks and/or others may be eligible to participate
in a program in which such firms receive from the Sponsor a nominal award for
each of their representatives who have sold a minimum number of units of unit
investment trusts created by the Sponsor during a specified time period. In
addition, at various times the Sponsor may implement other programs under which
the sales forces of brokers, dealers, banks and/or others may be eligible to win
other nominal awards for certain sales efforts, or under which the Sponsor will
reallow to such brokers, dealers, banks and/or others that sponsor sales
contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by such
persons at the public offering price during such programs. Also, the Sponsor in
its discretion may from time to time pursuant to objective criteria established
by the Sponsor pay fees to qualifying entities for certain services or
activities which are primarily intended to result in sales of Units of the
Trust. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of the Trust. These programs will not change the price Unitholders
pay for their Units or the amount that the Trust will receive from the Units
sold.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior to
the date of settlement for the purchase of Units may be used in the Sponsor's
business and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor intends to maintain a
secondary market for Units of the Trust for the period indicated. In so
maintaining a market, the Sponsor will also realize profits or sustain losses in
the amount of any difference between the price at which Units are purchased and
the price at which Units are resold (which price includes the applicable sales
charge). In addition, the Sponsor will also realize profits or sustain losses
resulting from a redemption of such repurchased Units at a price above or below
the purchase price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Sponsor intends to
maintain a market for the Units offered hereby and offer continuously to
purchase Units at prices, subject to change at any time, based upon the
aggregate underlying value of the Equity Securities in the Trust (computed as
indicated under "Offering Price" above and "Rights of Unitholders--Redemption of
Units"). If the supply of Units exceeds demand or if some other business reason
warrants it, the Sponsor may either discontinue all purchases of Units or
discontinue purchases of Units at such prices. It is the current intention of
the Sponsor to maintain a market for Units through October 21, 2002 only. In the
event that a market is not maintained for the Units and the Unitholder cannot
find another purchaser, a Unitholder desiring to dispose of his Units may be
able to dispose of such Units only by tendering them to the Trustee for
redemption at the Redemption Price. See "Rights of Unitholders--Redemption of
Units." A Unitholder who wishes to dispose of his Units should inquire of his
broker as to current market prices in order to determine whether there is in
existence any price in excess of the Redemption Price and, if so, the amount
thereof.
Tax-Sheltered Retirement Plans. Units of the Trust are available for purchase in
connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The purchase
of Units of the Trust may be limited by the plans' provisions and does not
itself establish such plans.
RIGHTS OF UNITHOLDERS
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Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust will be evidenced by certificates unless a
Unitholder or the Unitholder's registered broker-dealer makes a written request
to the Trustee that ownership be in book entry form. Units are transferable by
making a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred with
the signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guarantee program in
addition to, or in substitution for, STAMP as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Certificates will be
issued in denominations of one Unit or any whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or transferred
and to pay any governmental charge that may be imposed in connection with each
such transfer or interchange. Destroyed, stolen, mutilated or lost certificates
will be replaced upon delivery to the Trustee of satisfactory indemnity,
evidence of ownership and payment of expenses incurred. Mutilated certificates
must be surrendered to the Trustee for replacement.
Distributions of Income and Capital. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account of the Trust. Proceeds
from the sale of Securities to meet redemptions of Units shall be segregated
within the Capital Account from proceeds from the sale of Securities made to
satisfy the fees, expenses and charges of the Trust.
The Trustee will distribute any income received with respect to any of the
Securities in the Trust on or about the Income Distribution Dates to Unitholders
of record on the preceding Income Record Dates. See "Summary of Essential
Financial Information." Proceeds received on the sale of any Securities in the
Trust, to the extent not used to meet redemptions of Units, pay the deferred
sales charge or pay fees and expenses, will be distributed annually on the
Capital Account Distribution Date to Unitholders of record on the preceding
Capital Account Record Date. Proceeds received from the disposition of any of
the Securities after a record date and prior to the following distribution date
will be held in the Capital Account and not distributed until the next
distribution date applicable to such Capital Account. The Trustee is not
required to pay interest on funds held in the Capital or Income Accounts (but
may itself earn interest thereon and therefore benefits from the use of such
funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account. Because dividends
are not received by the Trust at a constant rate throughout the year, such
distributions to Unitholders are expected to fluctuate from distribution to
distribution. Persons who purchase Units will commence receiving distributions
only after such person becomes a record owner. Notification to the Trustee of
the transfer of Units is the responsibility of the purchaser, but in the normal
course of business such notice is provided by the selling broker-dealer.
At the end of the initial offering period and as of the tenth day of each month
thereafter, the Trustee will deduct from the Capital Account amounts necessary
to pay the expenses of the Trust (as determined on the basis set forth under
"Trust Operating Expenses"). The Trustee also may withdraw from the Income and
Capital Accounts such amounts, if any, as it deems necessary to establish a
reserve for any governmental charges payable out of the Trust. Amounts so
withdrawn shall not be considered a part of the Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Capital
Accounts such amounts as may be necessary to cover redemptions of Units.
Reinvestment Option. Unitholders of the Trust may elect to have each
distribution of income, capital gains and/or capital on their Units
automatically reinvested in additional Units of the Trust without a sales
charge, pursuant to the "Automatic Reinvestment Option" (to the extent Units may
be lawfully offered for sale in the state in which the Unitholder resides). To
participate in the reinvestment plan, a Unitholder may either contact his or her
broker or agent or file with the Trustee a written notice of election at least
five days prior to the Record Date for which the first distribution is to apply.
A Unitholder's election to participate in the reinvestment plan will apply to
all Units of the Trust owned by such Unitholder and such election will remain in
effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market") or, until such
time as additional Units cease to be issued by the Trust (see "The Trust"),
distributions may be reinvested in such additional Units. If Units are
unavailable in the secondary market, distributions which would otherwise have
been reinvested shall be paid in cash to the Unitholder on the applicable
Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made based on the net asset value for Units of the Trust as of the Evaluation
Time on the related Distribution Dates. Under the reinvestment plan, the Trust
will pay the Unitholder's distributions to the Trustee which in turn will
purchase for such Unitholder full and fractional Units of the Trust and will
send such Unitholder a statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of income, capital gains
and/or capital on their Units automatically reinvested in Class A shares of
certain Van Kampen American Capital or Morgan Stanley mutual funds which are
registered in the Unitholder's state of residence. Such mutual funds are
hereinafter collectively referred to as the "Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trust. The prospectus relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen American
Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois
60181. Texas residents who desire to reinvest may request that a broker-dealer
registered in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
income, capital gains and/or capital on the participant's Units will, on the
applicable distribution date, automatically be applied, as directed by such
person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange on such date.
Unitholders with an existing Guaranteed Reinvestment Option (GRO) Program
account (whereby a sales charge is imposed on distribution reinvestments) may
transfer their existing account into a new GRO account which allows purchases of
Reinvestment Fund shares at net asset value as described above. Confirmations of
all reinvestments by a Unitholder into a Reinvestment Fund will be mailed to the
Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
The Sponsor, each Reinvestment Fund, and its investment adviser shall have the
right to suspend or terminate the reinvestment plan at any time.
Reports Provided. The Trustee shall furnish Unitholders in connection with each
distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit outstanding. For as long as the Sponsor deems it to be in the best
interest of the Unitholders, the accounts of the Trust shall be audited, not
less frequently than annually, by independent certified public accountants, and
the report of such accountants shall be furnished by the Trustee to Unitholders
upon request. Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each person who at any time during the
calendar year was a registered Unitholder (i) a statement as to the Income
Account: income received, deductions for applicable taxes and for fees and
expenses of the Trust, for redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed in each case both
as a total dollar amount and as a dollar amount representing the pro rata share
of each Unit outstanding on the last business day of such calendar year; (ii) a
statement as to the Capital Account: the dates of disposition of any Securities
and the net proceeds received therefrom, deductions for payment of applicable
taxes, fees and expenses of the Trust held for distribution to Unitholders of
record as of a date prior to the determination and the balance remaining after
such distributions and deductions expressed both as a total dollar amount and as
a dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (iii) a list of the Securities held and
the number of Units outstanding on the last business day of such calendar year;
(iv) the Redemption Price per Unit based upon the last computation thereof made
during such calendar year; and (v) amounts actually distributed during such
calendar year from the Income and Capital Accounts, separately stated, expressed
as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286 and, in the case of Units evidenced by a
certificate, by tendering such certificate to the Trustee, duly endorsed or
accompanied by proper instruments of transfer with signature guaranteed (or by
providing satisfactory indemnity, as in connection with lost, stolen or
destroyed certificates) and by payment of applicable governmental charges, if
any. No redemption fee will be charged. On the third business day following such
tender, the Unitholder will be entitled to receive in cash an amount for each
Unit equal to the Redemption Price per Unit next computed after receipt by the
Trustee of such tender of Units. The "date of tender" is deemed to be the date
on which Units are received by the Trustee, except that as regards Units
received after the Evaluation Time the date of tender is the next day on which
the New York Stock Exchange is open for trading and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the redemption
price computed on that day.
The Trustee is empowered to sell Securities in order to make funds available for
redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by the
Trustee from those designated on a current list provided by the Supervisor for
this purpose. Units so redeemed shall be cancelled.
Unitholders tendering 2,500 Units or more for redemption may request from the
Trustee a distribution in kind ("In Kind Distribution") of an amount and value
of Securities per Unit equal to the Redemption Price per Unit as determined as
of the evaluation next following the tender. An In Kind Distribution on
redemption of Units will be made by the Trustee through the distribution of each
of the Securities in book-entry form to the account of the Unitholder's bank or
broker-dealer at Depository Trust Company. The tendering Unitholder will receive
his pro rata number of whole shares of each of the Securities comprising the
portfolio and cash from the Capital Account equal to the fractional shares to
which the tendering Unitholder is entitled. In implementing these redemption
procedures, the Trustee shall make any adjustments necessary to reflect
differences between the Redemption Price of the Securities distributed in kind
as of the date of tender. If funds in the Capital Account are insufficient to
cover the required cash distribution to the tendering Unitholder, the Trustee
may sell Securities according to the criteria discussed above. For the tax
consequences related to an In Kind Distribution see "Federal Taxation."
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result in
lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder depending
on the value of the Securities in the portfolio at the time of redemption.
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the aggregate underlying value of the
Equity Securities in the Trust, plus or minus cash, if any, in the Income and
Capital Accounts. On the Initial Date of Deposit, the Public Offering Price per
Unit (which includes the sales charge) exceeded the values at which Units could
have been redeemed by the amounts shown under "Summary of Essential Financial
Information." While the Trustee has the power to determine the Redemption Price
per Unit when Units are tendered for redemption, such authority has been
delegated to the Evaluator which determines the price per Unit on a daily basis.
The Redemption Price per Unit is the pro rata share of each Unit in the Trust
determined on the basis of (i) the cash on hand in the Trust, (ii) the value of
the Securities in the Trust and (iii) dividends receivable on the Equity
Securities trading ex-dividend as of the date of computation, less (a) amounts
representing taxes or other governmental charges payable out of the Trust and
(b) the accrued expenses of the Trust. The Evaluator may determine the value of
the Equity Securities in the Trust in the following manner: if the Equity
Securities are listed on a national securities exchange this evaluation is
generally based on the closing sale prices on that exchange (unless it is
determined that these prices are inappropriate as a basis for valuation) or, if
there is no closing sale price on that exchange, at the closing bid prices. If
the Equity Securities are not so listed or, if so listed and the principal
market therefore is other than on the exchange, the evaluation shall generally
be based on the current bid price on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If current bid prices are
unavailable, the evaluation is generally determined (a) on the basis of current
bid prices for comparable securities, (b) by appraising the value of the Equity
Securities on the bid side of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the Securities
in the Trust is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
- --------------------------------------------------------------------------------
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any tender
of Units for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such Units
by notifying the Trustee before the close of business on the next succeeding
business day and by making payment therefor to the Unitholder not later than the
day on which the Units would otherwise have been redeemed by the Trustee. Units
held by the Sponsor may be tendered to the Trustee for redemption as any other
Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The portfolio of the Trust is not "managed" by the
Sponsor, Supervisor or the Trustee; their activities described herein are
governed solely by the provisions of the Trust Agreement. Traditional methods of
investment management for a managed fund typically involve frequent changes in a
portfolio of securities on the basis of economic, financial and market analyses.
The Trust, however, will not be managed. The Trust Agreement, however, provides
that the Sponsor may (but need not) direct the Trustee to dispose of an Equity
Security in certain events such as the issuer having defaulted on the payment on
any of its outstanding obligations or the price of an Equity Security has
declined to such an extent or other such credit factors exist so that in the
opinion of the Sponsor, the retention of such Securities would be detrimental to
the Trust. Pursuant to the Trust Agreement and with limited exceptions, the
Trustee may sell any securities or other properties acquired in exchange for
Equity Securities such as those acquired in connection with a merger or other
transaction. If offered such new or exchanged securities or property, the
Trustee shall reject the offer. However, in the event such securities or
property are nonetheless acquired by the Trust, they may be accepted for deposit
in the Trust and either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Supervisor).
Therefore, except as stated under "Trust Portfolio" for failed securities and as
provided in this paragraph, the acquisition by the Trust of any securities other
than the Securities is prohibited. Proceeds from the sale of Securities (or any
securities or other property received by the Trust in exchange for Equity
Securities) are credited to the Capital Account for distribution to Unitholders
or to pay fees and expenses of the Trust.
As indicated under "Rights of Unitholders--Redemption of Units" above, the
Trustee may also sell Securities designated by the Supervisor, or if not so
directed, in its own discretion, for the purpose of redeeming Units of the Trust
tendered for redemption and the payment of expenses.
To the extent practicable, the Supervisor may (but is not obligated to)
designate Securities to be sold by the Trustee in order to maintain the
proportionate relationship among the number of shares of individual issues of
Equity Securities. To the extent this is not practicable, the composition and
diversity of the Equity Securities may be altered. In order to obtain the best
price for the Trust, it may be necessary for the Supervisor to specify minimum
amounts (generally 100 shares) in which blocks of Equity Securities are to be
sold. 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
of 51% of the Units then outstanding, provided that no such amendment or waiver
will reduce the interest in the Trust of any Unitholder without the consent of
such Unitholder or reduce the percentage of Units required to consent to any
such amendment or waiver without the consent of all Unitholders. The Trustee
shall advise the Unitholders of any amendment promptly after execution thereof.
The Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Trust Units then outstanding or by the Trustee when the value of
the Trust, as shown by any evaluation, is less than that amount set forth under
Minimum Termination Value in "Summary of Essential Financial Information." The
Trust will be liquidated by the Trustee in the event that a sufficient number of
Units not yet sold are tendered for redemption by the Sponsor so that the net
worth of the Trust would be reduced to less than 40% of the value of the
Securities at the time they were deposited in the Trust. If the Trust is
liquidated because of the redemption of unsold Units the Sponsor will refund to
each purchaser of Units the entire sales charge paid by such purchaser. The
Trust Agreement will terminate upon the sale or other disposition of the last
Security held thereunder, but in no event will it continue beyond the Mandatory
Termination Date stated under "Summary of Essential Financial Information."
Commencing on the Mandatory Termination Date, Equity Securities will begin to be
sold in connection with the termination of the Trust. The Sponsor will determine
the manner, timing and execution of the sales of the Equity Securities. The
Sponsor shall direct the liquidation of the Securities in such manner as to
effectuate orderly sales and a minimal market impact. In the event the Sponsor
does not so direct, the Securities shall be sold within a reasonable period and
in such manner as the Trustee, in its sole discretion, shall determine. Written
notice of any termination specifying the time or times at which Unitholders may
surrender their certificates for cancellation, if any are then issued and
outstanding, shall be given by the Trustee to each Unitholder so holding a
certificate at his address appearing on the registration books of the Trust
maintained by the Trustee. At least 30 days before the Mandatory Termination
Date the Trustee will provide written notice thereof to all Unitholders and will
include with such notice a form to enable Unitholders owning 2,500 or more Units
to request an In Kind Distribution rather than payment in cash upon the
termination of the Trust. To be effective, this request must be returned to the
Trustee at least five business days prior to the Mandatory Termination Date. On
the Mandatory Termination Date (or on the next business day thereafter if a
holiday) the Trustee will deliver each requesting Unitholder's pro rata number
of whole shares of each of the Equity Securities in the portfolio to the account
of the broker-dealer or bank designated by the Unitholder at Depository Trust
Company. The value of the Unitholder's fractional shares of the Equity
Securities will be paid in cash. Unitholders with less than 2,500 Units and
those not requesting an In Kind Distribution will receive a cash distribution
from the sale of the remaining Equity Securities within a reasonable time
following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the Trust any accrued costs,
expenses, advances or indemnities provided by the Trust Agreement, including
estimated compensation of the Trustee, costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or other
governmental charges. Any sale of Equity Securities in the Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder his pro rata share of the balance of the Income and Capital
Accounts.
Within 60 days of the final distribution, Unitholders will be furnished a final
distribution statement, in substantially the same form as the annual
distribution statement, of the amount distributable. At such time as the Trustee
in its sole discretion will determine that any amounts held in reserve are no
longer necessary, it will make distribution thereof to Unitholders in the same
manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or for
refraining from taking any action in good faith pursuant to the Trust Agreement,
or for errors in judgment, but shall be liable only for their own willful
misfeasance, bad faith or gross negligence (negligence in the case of the
Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any of the Securities. In the event of the failure of the Sponsor to act under
the Trust Agreement, the Trustee may act thereunder and shall not be liable for
any action taken by it in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the Trust
which the Trustee may be required to pay under any present or future law of the
United States of America or of any other taxing authority having jurisdiction.
In addition, the Trust Agreement contains other customary provisions limiting
the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the Evaluator shall be under no liability to the Trustee, Sponsor
or Unitholders for errors in judgment. This provision shall not protect the
Evaluator in any case of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware corporation,
is the Sponsor of the Trust. The Sponsor is an indirect subsidiary of VK/AC
Holding, Inc. VK/AC Holding, Inc. is a wholly owned subsidiary of MSAM Holdings
II, Inc., which in turn is a wholly owned subsidiary of Morgan Stanley Dean
Witter & Co. ("MSDW").
MSDW, together with various of its directly and indirectly owned subsidiaries,
is engaged in a wide range of financial services through three primary
businesses: securities, asset management and credit services. These principal
businesses include securities underwriting, distribution and trading; merger,
acquisition, restructuring and other corporate finance advisory activities;
merchant banking; stock brokerage and research services; asset management;
trading of futures, options, foreign exchange commodities and swaps (involving
foreign exchange, commodities, indices and interest 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 Trust or to any other Series thereof. The information is included herein
only for the purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual obligations. More
detailed financial information will be made available by the Sponsor upon
request.)
As of 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 46
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 Trust as provided therein or
(iii) continue to act as Trustee without terminating the Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286, (800)
221-7668. The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such records
shall include the name and address of, and the number of Units of the Trust held
by, every Unitholder of the Fund. Such books and records shall be open to
inspection by any Unitholder at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided"). The Trustee is
required to keep a certified copy or duplicate original of the Trust Agreement
on file in its office available for inspection at all reasonable times during
the usual business hours by any Unitholder, together with a current list of the
Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
- --------------------------------------------------------------------------------
Legal Opinions. The legality of the Units offered hereby has been passed upon by
Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as counsel
for the Sponsor. Winston & Strawn has acted as counsel for the Trustee.
Independent Certified Public Accountants. . The statement of condition and the
related securities portfolio at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton LLP, independent certified public
accountants, as set forth in their report in this Prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc. and
the Unitholders of Van Kampen American Capital Equity Opportunity Trust, Series
101 (Select Growth Trust):
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen American Capital Equity Opportunity Trust, Series 101
(Select Growth Trust) as of April 21, 1998. The statement of condition and
portfolio are the responsibility of the Sponsor. Our responsibility is to
express an opinion on such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of an irrevocable letter 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 101 (Select Growth Trust) as of April 21, 1998,
in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
April 21, 1998
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 101
STATEMENT OF CONDITION
As of April 21, 1998
Investment in Securities:
Contracts to purchase securities (1) $
Organizational costs (2)
-------------
$
=============
Liability and Interest of Unitholders:
Liability--
Accrued organizational costs (2) $
Interest of Unitholders--
Cost to investors (3)
Less: Gross underwriting commission (3)
-------------
Net interest to Unitholders (3)
-------------
Total $
=============
- ----------------
(1) The aggregate value of the Securities listed under "Portfolio" and their
cost to the Trust are the same. The value of the Securities is determined by
Interactive Data Corporation on the bases set forth under "Public
Offering--Offering Price". The contracts to purchase Securities are
collateralized by an irrevocable letter of credit of $_______ which has been
deposited with the Trustee.
(2)The Trust will bear all or a portion of its organizational costs, which will
be deferred and amortized over a five year period. Organizational costs have
been estimated based on a projected trust size of $____________. To the extent
the Trust is larger or smaller, the estimate will vary.
(3)The aggregate public offering price and the aggregate sales charge of 3.8%
are computed on the bases set forth under "Public Offering--Offering Price" and
"Public Offering--Sponsor Compensation" and assume all single transactions
involve less than 2,500 Units. For single transactions involving 2,500 or more
Units, the sales charge is reduced (see "Public Offering--General") resulting in
an equal reduction in both the Cost to investors and the Gross underwriting
commission while the Net interest to Unitholders remains unchanged.
<TABLE>
<CAPTION>
SELECT GROWTH TRUST, APRIL 1998 SERIES
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 101)
as of the Initial Date of Deposit: _____________, 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>
Basic Materials
DuPont (E.I.) de Nemours $ $ $
Sigma-Aldrich Corporation
Capital Goods/Industrials
AlliedSignal, Inc.
General Electric Company
Illinois Tool Works, Inc.
Johnson Controls, Inc.
Communication Services
AirTouch Communications, Inc.
AT&T Corporation
SBCCommunications, Inc.
Consumer Cyclicals
Dollar General Corporation
Home Depot, Inc.
Interpublic Group of Companies, Inc.
Leggett &Platt, Inc.
Sears, Roebuck and Company
Sherwin-Williams Company
Consumer Staples
Automatic Data Processing, Inc.
Campbell Soup Company
Clorox Company
Colgate-Palmolive Company
Gillette Company
McDonald's Corporation
PepsiCo, Inc.
Sara Lee Corporation
Walgreen Company
Walt Disney Company
Energy
Amoco Corporation
Exxon Corporation
Royal Dutch Petroleum Company
- ----------------
*NOTE: The securities listed above are currently anticipated to be included in
the Trust. The actual portfolio is subject to change at the Initial Date of
Deposit.
<CAPTION>
SELECT GROWTH TRUST, APRIL 1998 SERIES
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 101)
as of the Initial Date of Deposit: _____________, 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>
Financial Services
Allstate Corporation $ $ $
American Express Company
Banc One Corporation
BankAmerica Corporation
Citicorp
Federal National Mortgage Association
First Union Corporation
Hartford Life, Inc.
NationsBank Corporation
Health Care
Abbott Laboratories
American Home Products Corporation
Johnson & Johnson
Medtronic, Inc.
Merck & Co., Inc.
Schering-Plough Corporation
Technology
Applied Materials, Inc.
Cisco Systems, Inc.
Compaq Computer Corporation
Hewlett-Packard Company
Intel Corporation
Lucent Technologies Inc.
Motorola, Inc.
Oracle Corporation
Raytheon Company
- ---------- ------------------
$
========== ==================
- ----------------
*NOTE: The securities listed above are currently anticipated to be included in
the Trust. The actual portfolio is subject to change at the Initial Date of
Deposit.
</TABLE>
NOTES TO PORTFOLIO
(1) All of the Securities are represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited with the
Trustee. At the Initial Date of Deposit, Securities may have been delivered to
the Sponsor pursuant to certain of these contracts; 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 Trust").
(2) The market value of each of the Securities is based on the closing sale
price of each listed Security on the applicable exchange, or if not so listed,
on the ask price on the day prior to the Initial Date of Deposit. Estimated
annual dividends are based on annualizing the most recently declared dividends.
The aggregate value of the Securities on the day prior to the Initial Date of
Deposit based on the closing sale price of each listed Security, and on the bid
price if not so listed, (which is the basis on which the Redemption Price per
Unit will be determined) was $--------. The ask price of the applicable
Securities (the basis on which the Public Offering Price per Unit will be
determined during the initial offering period) is greater than the bid price of
such Securities. Other information regarding the Securities in the Trust, as of
the Initial Date of Deposit, is as follows:
Profit Estimated
Cost To (Loss) To Annual
Sponsor Sponsor Dividends
-------------- -------------- --------------
$ -- $ -- $ --
A Security marked by "+" indicates a New York Share issued by a foreign
corporation. The estimated annual dividends for this Security are net of
applicable foreign withholding taxes.
-------------------------------------------------
The Managing Underwriter or an affiliate of the Sponsor may have participated as
issuer, sole underwriter, managing underwriter or member of an underwriting
syndicate in a public offering of one or more of the stocks in the Trust. The
Managing Underwriter or an affiliate of the Sponsor may serve as a specialist in
the stocks in the Trust on one or more stock exchanges and may have a long or
short position in any of these stocks or in options on any of these stocks, and
may be on the opposite side of public orders executed on the floor of an
exchange where such stocks are listed. An officer, director or employee of the
Managing Underwriter, the Sponsor or an affiliate may be an officer or director
of one or more of the issuers of the stocks in the Trust. The Managing
Underwriter or 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 Managing Underwriter, the Sponsor, their
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 Trust................................... 4
Objective and Securities Selection.......... 5
Trust Portfolio............................. 6
Risk Factors................................ 11
Federal Taxation............................ 13
Trust Operating Expenses.................... 17
Public Offering............................. 18
Rights of Unitholders....................... 22
Trust Administration........................ 26
Other Matters............................... 30
Report of Independent Certified
Public Accountants.................... 31
Statement of Condition ..................... 32
Portfolio................................... 33
Notes to Portfolio.......................... 35
- --------------
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration statements
and exhibits relating thereto, which the Fund has filed with the Securities and
Exchange Commission, Washington, D.C., under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
PROSPECTUS
- --------------------------------------------------------------------------------
April 21, 1998
Van Kampen
American Capital
Equity Opportunity
Trust, Series 101
Select Growth Trust,
April 1998 Series
------ 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>
S-1
CONTENTS OF REGISTRATION STATEMENT
This 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 Proposed form of Trust Agreement (to be supplied by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be supplied by amendment).
3.2 Opinion and consent of counsel as to New York tax status of securities
being registered (to be supplied by amendment).
4.1 Consent of Interactive Data Corporation (to be supplied by amendment).
4.2 Consent of Grant Thornton LLP (to be supplied by amendment).
EX-27 Financial Data Schedule (to be supplied by amendment).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Van Kampen American Capital Equity Opportunity Trust, Series 101 has duly caused
this 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
16th day of April, 1998.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 101
(Registrant)
By VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
(Depositor)
Gina M. Costello
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on April 16, 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 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.
