MEMORANDUM OF CHANGES
VAN KAMPEN EQUITY OPPORTUNITY TRUST, SERIES 107
The Prospectus filed with Amendment No. 1 of the Registration Statement
on Form S-6 has been revised to reflect information regarding the deposit of Van
Kampen Equity Opportunity Trust, Series 107 on July 28, 1998. An effort has been
made to set forth below each of the major changes and also to reflect the same
by blacklining the marked counterparts of the Prospectus submitted with the
Amendment.
Cover Page. The date of the Prospectus has been completed.
Pages 2-3. "The Summary of Essential Financial Information" section and
"Fee Table" have been completed.
Pages 4-6. Revisions have been made and the portfolio has been completed.
Pages 7-11. The descriptions of the Security issuers have been completed.
Pages 12-13. The Report of Independent Certified Public Accountants and
Statement of Condition have been completed.
FILE NO. 333-57401
CIK #1025253
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: VAN KAMPEN EQUITY OPPORTUNITY TRUST, SERIES 107
(formerly known as Van Kampen American Capital
Equity Opportunity Trust, Series 107)
B. Name of Depositor: VAN KAMPEN FUNDS 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 FUNDS INC.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title of securities being registered: Units of proportionate interest
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT
/ X / Check box if it is proposed that this filing will become
- ----- effective at 2:00 p.m. on July 28, 1998 pursuant to Rule 487.
VAN KAMPEN EQUITY OPPORTUNITY TRUST
SERIES 107
CROSS REFERENCE SHEET
PURSUANT TO RULE 404(C) OF REGULATION C
UNDER THE SECURITIES ACT OF 1933
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTION
1 AS TO PROSPECTUS ON FORM S-6)
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) *
underwriter
5. Organization of trust ) The Trust
6. Execution and termination of ) The Trust
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. General information regarding ) The Trust
trust's securities and ) Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trust
) Portfolio
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust 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 ) 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 Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35. Distribution of trust's securities ) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering )
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's ) Cover Page
securities ) Trust Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Trust Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Trust Administration
securities )
(d) Trustamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Taxation
VII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions ) Report of Independent Certified
1(c) to Form S-6) ) Public Accountants
) Statement of Condition
- ----------------------------------------------
* Inapplicable, omitted, answer negative or not required
Gruntal &Co.
L.L.C.
ESTABLISHED1880
Member New York Stock Exchange
Global Transport Growth Trust, Series 1
- -------------------------------------------------------------------------------
Van Kampen Equity Opportunity Trust, Series 107 includes the unit investment
trust described above (the "Trust"). The Trust seeks to increase the value of
your Units by investing in a diversified portfolio of common stocks of companies
within the transportation industry. Of course, we cannot guarantee that the
Trust will achieve its objective.
The Units are not deposits or obligations of any bank or government agency
and are not guaranteed.
July 28, 1998
You should read this prospectus and retain it for future reference.
- --------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved of
the Units or passed upon the adequacy or accuracy of this prospectus. Any
contrary representation is a criminal offense.
Summary of Essential Financial Information
July 28, 1998
Public Offering Price
Aggregate value of Securities per Unit (1) $ 9.90
Sales charge 0.45
Less deferred sales charge 0.35
Public offering price per Unit (2) $ 10.00
Trust Information
Initial number of Units (3) 15,146
Aggregate value of Securities (1) $ 149,942
Estimated initial distribution per Unit (4) $ .04
Estimated annual dividends per Unit (4) $ .07492
Redemption price per Unit (5) $ 9.53
General Information
Initial Date of Deposit July 28, 1998
Mandatory Termination Date July 18, 2002
Record Dates June 10 and December 10
Distribution Dates June 25 and December 25
- --------------------------------------------------------------------------------
(1)Each Security is valued at the last closing sale price on its principal
trading exchange or, if not listed, at the last asked price on the day before
the Initial Date of Deposit. You will bear all or a portion of the expenses
incurred in organizing and offering your Trust. The Public Offering Price
includes the estimated amount of these costs. The Trustee will deduct these
expenses from your Trust at the end of the initial offering period. The
estimated amount is described on the next page.
(2)The Public Offering Price will include any accumulated dividends or cash in
the Income or Capital Accounts.
(3)The number of Units may be adjusted so that the Public Offering Price per
Unit equals $10 at the Evaluation Time on the Initial Date of Deposit. The
number of Units and fractional interest of each Unit will increase or
decrease to the extent of any adjustment.
(4)This estimate is based on the most recently declared quarterly dividends or
interim and final dividends accounting for any foreign withholding taxes.
Actual dividends may vary due to a variety of factors. See "Risk Factors".
(5)The redemption price is reduced by any remaining deferred sales charge. See
"Rights of Unitholders--Redemption of Units". The redemption price includes
the estimated organizational and offering costs. The redemption price will
not include these costs after the initial offering period.
Fee Table
Transaction Fees (as % of offering price)
Initial sales charge (1)............................................. 1.00%
Deferred sales charge (2)............................................ 3.50%
----------
Maximum sales charge ................................................ 4.50%
==========
Maximum sales charge on reinvested dividends......................... 3.50%
==========
Estimated Organizational Costs per Unit (3)..........................$ .03615
==========
Estimated Annual Expenses per Unit
Trustee's fee and operating expenses.................................$ 0.01195
Evaluation fees......................................................$ 0.00250
Supervisory fees.....................................................$ 0.00250
----------
Estimated annual expenses per Unit...................................$ 0.01695
==========
Estimated Costs Over TIme
One year.............................................................$ 50
Three years..........................................................$ 54
Five years...........................................................$ 58
Ten years............................................................ N/A
This fee table is intended to assist you in understanding the costs that you
will bear and to present a comparison of fees. The "Estimated Costs Over Time"
example illustrates the expenses you would pay on a $1,000 investment assuming a
5% annual return and redemption at the end of each period. This example assumes
that you reinvest your Trust distributions at the end of each year. Of course,
you should not consider this example a representation of actual past or future
expenses or annual rate of return which may differ from those assumed for this
example. The sales charge and expenses are described under "Public Offering" and
"Trust Operating Expenses".
- --------------------------------------------------------------------------------
(1)The initial sales charge is the difference between the maximum sales charge
and the deferred sales charge.
(2)The deferred sales charge is actually equal to $0.35 per Unit. This amount
will exceed the percentage above if the Public Offering Price per Unit falls
below $10 and will be less than the percentage above if the Public Offering
Price per Unit exceeds $10. The deferred sales charge accrues daily and is
assessed from February 28, 1999 through June 28, 1999.
(3)You will bear all or a portion of the expenses incurred in organizing and
offering your Trust. The Trustee will deduct the actual amount of these
expenses from your Trust at the end of the initial offering period.
Global Transport Growth Trust
The Trust seeks to offer diversification and to increase the value of your
Units over time by investing in transportation companies. Gruntal & Co., L.L.C.
believes that three forces may create growth opportunities in the transportation
sector:
Consolidation and Restructuring of Transportation Companies. Past economic
deregulation of airlines, railroads and truckers motivated synergistic
consolidations, deep cost-cutting and changes in labor relations and management
styles. Gruntal believes that these trends may persist in the future. In
Gruntal's opinion, these changes are also dampening inflation and negative
inventory cycles while permitting the U.S. to become the center of world trade
in the future. Unique technologies and additional consolidations may have a
positive impact on stocks of companies with low price-earnings ratios. In
addition, opportunities in orbital space transit may evolve in the future as the
cost of launch platforms declines fifty percent as mandated by the U.S.
government.
North American railroads have undergone substantial consolidation since 1980
and seek to develop profitable, single line, high-speed, time-definite
transcontinental service to widen market share against trucking companies. In
Gruntal's opinion, many U.S. airlines have overcome costly market share
competition in the 1980s and have become more efficient. Gruntal believes that
airlines are changing into a cyclical growth industry with favorable
demographics, advances in travel safety and efficient, customer-friendly
aircraft. International treaties and alliances may also help cross-border air
transport markets.
Time-Definite Globalizations and Favorable Economics. The movement of air
cargo, time-definite and express freight, parcels and documents in the U.S. is
spreading worldwide. Gruntal believes that advanced Internet-based systems are
evolving to spur growth of international freight companies into new markets. The
less-than-truckload (LTL) industry is undergoing major restructurings and
technological changes to offer premium-priced, highly profitable
business-to-business time-sensitive service. The maritime industry has exhibited
overcapacity and apprehension regarding potential deregulation. However, the
industry is promoting service-sensitive operations by stimulating evolution of
the doublestack (two stacked containers on a railcar) and intermodal transport
(combined use of railroad, trucks and ships).
Low Valuations and Deregulated Growth. Changes in the transportation industry
may offer growth-oriented opportunities. Price-earnings ratios, while improving,
generally remain at a discount to the overall stock market. Combined with
secular income growth and potential upward revisions in capitalization,
transport stocks may offer potential long-term total return opportunities.
Of course, we cannot guarantee that the Trust will achieve its objective or
that expectations of the transportation industry will be realized. The value of
your Units may fall below the price you paid for the Units. You should read the
"Risk Factors" section before you invest. This section describes the risks of
investing in stocks and of investing in a single market sector.
<TABLE>
<CAPTION>
Portfolio
- -----------------------------------------------------------------------------------------------------------
Cost of
Number Market Value Percentage Securities
of Shares Name of Issuer (1) per Share (2) of Portfolio to Trust (2)
- ---------- ----------------------------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Airlines and Railroads
112 Kansas City Southern Industries, Inc. $ 54.000 4.03% $ 6,048.00
190 Southwest Airlines Company 31.938 4.05 6,068.13
146 Union Pacific Corporation 41.063 4.00 5,995.13
41 AMR Corporation 72.188 1.97 2,959.69
+ 29 British Airways Plc 104.688 2.02 3,035.94
29 Burlington Northern Santa Fe Corporation 104.250 2.02 3,023.25
# 54 Canadian National Railway Company 54.625 1.97 2,949.75
71 CSX Corporation 42.938 2.03 3,048.56
+ 68 KLM Royal Dutch Airlines 44.438 2.02 3,021.75
101 Norfolk Southern Corporation 29.313 1.97 2,960.56
39 US Airways Group, Inc. 75.063 1.95 2,927.44
37 UAL Corporation 79.750 1.97 2,950.75
Orbital Transport
154 Boeing Company 38.938 4.00 5,996.38
44 Lockheed Martin Corporation 101.313 2.97 4,457.75
80 Raytheon Company - Class A 56.188 3.00 4,495.00
79 TRW, Inc. 56.250 2.96 4,443.75
100 AlliedSignal, Inc. 45.625 3.04 4,562.50
3 365 British Aerospace Plc 8.382 2.04 3,059.32
107 Loral Space & Communications Limited 27.750 1.98 2,969.25
103 Orbital Sciences Corporation 28.750 1.97 2,961.25
3 17 Societe Europeenne des Satellites 163.132 1.85 2,773.25
+ 40 TDK Corporation 74.813 2.00 2,992.50
Transport Systems & Suppliers
156 ABR Information Systems, Inc. 19.250 2.00 3,003.00
128 Ballard Power Systems, Inc. 24.000 2.05 3,072.00
93 BE Aerospace, Inc. 32.000 1.98 2,976.00
+ 29 Dalmer-Benz AG 102.375 1.98 2,968.88
33 General Electric Company 92.000 2.02 3,036.00
24 International Business Machines Corporation 125.375 2.01 3,009.00
48 QUALCOMM, Inc. 62.813 2.01 3,015.00
73 Sabre Group Holdings, Inc. 41.000 2.00 2,993.00
+ 13 SAP AG 225.135 1.95 2,926.76
+ 33 Sony Corporation 91.188 2.01 3,009.19
Trucks, Integrators, Forwarders, Logistics
139 Expeditors International of Washington, Inc. 43.500 4.03% 6,046.50
519 Rollins Truck Leasing Corporation 11.563 4.00 6,000.94
349 Yellow Corporation 17.063 3.97 5,954.81
99 Airborne Freight Corporation 30.813 2.03 3,050.44
68 CNF Transportation, Inc. 43.938 1.99 2,987.75
249 Consolidated Freightways Corporation 12.250 2.03 3,050.25
89 Eagle USA Airfreight, Inc. 35.875 2.13 3,192.88
47 FDX Corporation 63.188 1.98 2,969.81
149 Swift Transportation Company, Inc. 20.000 1.99 2,980.00
- ---------- -------------
4,344 $ 149,942.11
========== =============
</TABLE>
(1) The Securities are initially represented by "regular way" contracts for
the performance of which an irrevocable letter of credit has been deposited with
the Trustee. Contracts to acquire Securities were entered into on July 27, 1998
and have a settlement date of July 30, 1998 (see "The Trust").
(2) The market value of each Security is based on the closing sale price on
the applicable exchange or, if not listed, the last asked price on the day prior
to the Initial Date of Deposit. Other information regarding the Securities, as
of the Initial Date of Deposit, is as follows:
Profit
Cost to (Loss) To
Sponsor Sponsor
-------------- --------------
$ 149,966 $ (24)
"+" indicates that the stock is held in the form of American Depositary
Receipts or similar receipts.
"3" indicates that the stock is traded on a foreign securities exchange.
"#" indicates that the stock is a foreign common stock traded on a United
States securities exchange.
The Securities. A brief description of each of the issuers of the Securities
is listed below.
Airlines and Railroads
Kansas City Southern Industries, Inc. Kansas City Southern Industries, Inc.
provides rail freight transportation. The company operates along a contiguous
rail network of approximately 10,000 miles that links markets in the United
States and Mexico. Kansas City Southern also provides financial asset management
services through its Janus Capital Corporation and Berger Associates, Inc.
subsidiaries.
Southwest Airlines Company. Southwest Airlines Company is a United States
airline that provides primarily shorthaul, high frequency, point-to-point
service. The company currently provides service to 52 airports in 51 cities
located in 25 states. Southwest offers unrestricted, unlimited, everyday coach
fares to its customers.
Union Pacific Corporation. Union Pacific Corporation, through its
subsidiaries, operates rail transportation and trucking businesses. The
company's railroad operates on approximately 35,000 miles of track in the United
States. Union Pacific's Overnite Transportation company is an interstate
trucking company serving all 50 states, as well as portions of Canada and
Mexico.
AMR Corporation. AMR Corporation operates scheduled air transportation,
information technology for aviation and travel and tourism, and aviation-related
management services. The corporation is the parent of American Airlines, Inc.
and services over 165 destinations. AMR also operates various subsidiaries,
including The SABRE Group which offers electronic distribution of travel through
its reservation system.
British Airways Plc. British Airways Plc provides scheduled passenger and
cargo airline services reaching approximately 174 destinations in 83 countries.
British Airways maintains strategic alliance with several worldwide airlines and
has interests in Qantas, TAT European Airlines, USAir Group Inc. and also owns a
percentage of Deutsche BA.
Burlington Northern Santa Fe Corporation. Burlington Northern Santa Fe
Corporation, through Burlington Northern Railroad Company, operates a large
railroad system in the United States. Through its subsidiary, the company
transports coal, industrial, agricultural, intermodal, automotive products and
various merchandise. Burlington Northern operates along a track of 35,000 miles
in 28 western states and two Canadian provinces.
Canadian National Railway Company. Canadian National Railway Company operates
a transcontinental railway in North America. The company's railway has direct
access to Canada's natural resources. Canadian National Railway serves Canada's
major ports and certain connections in the United States, including Chicago and
Detroit. The company moves several commodities, including industrial, forest,
grain, and automotive products.
CSX Corporation. CSX Corporation is an international transportation company.
The company provides rail, intermodal, container-shipping, barging, and contract
logistics services. CSX provides rail transportation and distribution services
in 20 states, the District of Columbia, and the Canadian province of Ontario.
KLM Royal Dutch Airlines. KLM Royal Dutch Airlines is an international
airline. The company operates from Amsterdam Schiphol Airport. KLM and its
partners fly to more than 350 cities in 80 countries on six continents. The
company operates both passenger and cargo services. KLM also provides hotel
management, leasing, aerial photography and aircraft handling services.
Norfolk Southern Corporation. Norfolk Southern Corporation is a holding
company which owns Norfolk Southern Railway Company, a freight railroad. In
addition, through Pocahontas Land Corporation, the company produces natural
resources. The railroad system's lines extend over 14,400 miles of road in 20
states and the Province of Ontario.
US Airways Group, Inc. US Airways Group, Inc. is a holding company whose
principal operating subsidiary is US Airways, Inc. The company's subsidiary is a
United States air carrier which transports passengers, property, and mail. US
Airways operates predominantly in the eastern United States. The company also
owns partial interests in other travel services companies.
UAL Corporation. UAL Corporation is a holding company whose primary
subsidiary is United Airlines, Inc. The airline transports persons, property,
and mail throughout the United States and overseas. United provides passenger
service in 27 countries.
Orbital Transport
Boeing Company. Boeing Company, together with its subsidiaries, develops,
produces and markets commercial jet aircrafts and provides related support
services to the commercial airline industry worldwide. The company also,
researches, develops, produces, modifies and supports information, space and
defense systems, including military aircraft, helicopters, space and missile
systems and others.
Lockheed Martin Corporation. Lockheed Martin Corporation is a diversified
global enterprise that primarily researches, designs, develops, manufactures and
integrates advanced-technology products and services. The corporation's core
businesses span aeronautics, electronics, energy and environment, information
technology, missiles, space, telecommunications, services and systems
integration.
Raytheon Company. Raytheon Company, a manufacturer of diverse electronic
equipment and components, operates in electronics, aircraft products, energy
services, major appliances, and other lines. The company is active in air
defense missiles, radar systems, and other military electronics with the US
Government accounting for a large portion of sales. Raytheon also operates in
engineering and construction.
TRW Inc. TRW Inc. and its subsidiaries design, manufacture, and sell
automotive, space, and defense products for industries and the United States
Government. The company also provides systems engineering, research, and
technical services. TRW operates worldwide.
AlliedSignal Inc. AlliedSignal Inc. and its subsidiaries manufacture
aerospace and automotive products and engineered materials. The company's
products include chemicals, fibers, plastics, and advanced materials.
AlliedSignal's aerospace products include engines and electronic and avionics
systems. The company's automotive products include truck brake systems and
turbocharging systems.
British Aerospace Plc. British Aerospace Plc operates through its civil
aerospace, military and property divisions. The Company produces military
aircraft, including the "Tornado," "Hawk" and "Eurofighter 2000" combat
aircraft, satellites, guidance weapons and other systems. British Aerospace also
operates Avro Intl., a regional aircraft business, and Jetstream, a turboprop
unit.
Loral Space & Communications Ltd. Loral Space & Communications Ltd.
manufactures satellites and provides satellite-based services. The company
provides broadcast transponder leasing, domestic and international corporate
data networks, global wireless telephony, broadband data transmission, and
Internet connection, digital audio radio services, and international satellite
services.
Orbital Sciences Corporation. Orbital Sciences Corporation is a space and
information systems company that designs, manufactures, operates and markets a
variety of space-technology and products and satellite-based services. Products
include launch vehicles, spacecraft, space sensors and electronics, satellite
ground systems and software and satellite communications, navigation and Earth
observation services.
Societe Europeenne des Satellites. Societe Europeenne des Satellites
broadcasts television and radio programming in Europe by satellite. The company
owns and operates the European Astra network of seven broadcast satellites. The
Astra network is used by British Sky Broadcasting Group Plc, Cable News Network
and other broadcasters.
TDK Corporation. TDK Corporation manufactures magnetic tapes and floppy
discs. The company also makes ferrite cores and ferrite magnetics. TDK is moving
into the optical disk market as well.
Transport Systems and Suppliers
ABR Information Services, Inc. ABR Information Services, Inc. provides
comprehensive benefits administration, compliance and information services to
employers seeking to outsource their benefits administration functions. The
company provides compliance services, and benefits administration services with
respect to benefits provided to retirees and inactive employees, including
retiree healthcare, disability, and others.
Ballard Power Systems, Inc. Ballard Power Systems, Inc. develops proton
exchange membrane fuel cell power systems. The company's product, "Ballard Fuel
Cell," is a proprietary zeroemission engine that converts natural gas, methanol,
or hydrogen fuel into electricity without combustion. Ballard is working with
major international automobile manufacturers to develop zero emission engines
for vehicles.
BE Aerospace, Inc. BE Aerospace, Inc. manufactures interior products for
commercial and general aviation aircraft cabins. The company serves major
airlines and commercial and general aviation original equipment manufacturers.
Products include a variety of aircraft seating products, food and beverage
preparation and storage equipment, cabin interior structures, oxygen delivery
systems, and entertainment systems.
Daimler-Benz AG. Daimler-Benz AG designs, manufactures and markets luxury
automobiles, trucks and other vehicles worldwide. The company provides
electronics and telecommunications services. Daimler-Benz also provides
aerospace and defense services, as well as financial services.
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.
International Business Machines Corporation. International Business Machines
Corporation manufactures micro and personal computers. The company also supplies
mainframe computers and other information processing equipment, software and
networking products and peripheral equipment. Products are sold or leased for
use in business, government, science, education, space, medicine, and other
areas on a worldwide basis.
QUALCOMM, Inc. QUALCOMM, Inc. develops, manufactures, markets, licenses and
operates communications systems and products based on its proprietary digital
wireless technologies. The company's primary products include the "OmniTRACS"
system, a geostationary satellite-based mobile communications system, "CDMA"
wireless communications systems, and the development of "Globalstar" satellite
system.
SABRE Group Holdings, Inc. SABRE Group Holdings, Inc., through its
subsidiaries, provides the "SABRE" electronic travel reservation and information
system. The company also provides information technology solutions to the travel
and transportation industry. In addition, SABRE fulfills the data processing,
network, and distributed systems needs of American Airlines, Inc. and other
customers.
SAP AG. SAP AG (Systeme, Anwendungen, Produkte in der Datenverarbeitung) is a
multinational software company with its headquarter in Walldorf, Germany. The
company develops business software, consults on organizational usage of its
application software and provides training services. SAP markets its products
and services through subsidiaries, distributors and other business partners
worldwide.
Sony Corporation. Sony Corporation develops and manufactures consumer and
industrial electronic equipment. The company's products include audio and video
equipment, televisions, displays, semiconductors, electronic components,
computers and computer peripherals, and telecommunication equipment. Sony is
also active in the worldwide music and image-based software markets.
Trucks, Integrators, Forwarders, Logistics
Expeditors International of Washington, Inc. Expeditors International of
Washington, Inc. is a global logistics company. The company provides air and
ocean freight forwarding, supplier consolidation, customs clearance, cargo
insurance, distribution, and logistics services.
Rollins Truck Leasing Corporation. Rollins Truck Leasing Corporation provides
truck leasing and rental services. The company also provides separate
maintenance, driver leasing, emergency road service and a variety of
administrative services to private carriers. Rollins has a network of 205
branches throughout the United States.
Yellow Corporation. Yellow Corporation provides transportation services
primarily to the less-thantruckload market. The company operates throughout
North America and, through partnership alliances, other international markets.
Yellow provides interstate transportation of general commodity freight.
Airborne Freight Corporation. Airborne Freight Corporation, an air express
company and air freight forwarder, operates under the "Airborne Express" name.
The company provides door-to-door express delivery of small packages and
documents throughout the United States and internationally, as well as acts as
an international and domestic freight forwarder for shipments of any size.
Airborne operates 285 facilities.
CNF Transportation, Inc. CNF Transportation, Inc. and its subsidiaries
provide regional less-than-truckload trucking, heavy air freight, and logistics
services. The company also provides domestic and international air freight
services and operates a contract logistics company. CNF's other transportation
services include truckload services, ocean forwarding, and customs brokerage.
Consolidated Freightways Corporation. Consolidated Freightways Corporation
provides general freight services throughout the US, Canada, and Mexico. The
company provides less-than-truck load shipping services through approximately
350 centers in North America. Consolidated offers one-stop international freight
service between the US and 70 countries through operating agreements with ocean
carriers and international partners.
Eagle USA Airfreight, Inc. Eagle USA Airfreight, Inc. provides air freight
forwarding and other transportation and logistics services internationally. The
company's services include local pick-up and delivery and truck brokerage
services. Eagle maintains a network of 60 terminals.
FDX Corporation. FDX Corporation is a global transportation and logistics
company. The company, through its independent operating entities, provides a
global express delivery network and business-to-business ground, surface
expedited, and less-than-atruckload carrier services in the United States. FDX
also offers logistics and warehouse management and order fulfillment.
Swift Transportation Company, Inc. Swift Transportation Company, Inc. is a
national truckload carrier. The company operates primarily throughout the
continental United States, combining regional operations with a transcontinental
van operation. Swift principally transports retail and discount department store
merchandise, manufactured goods, paper products, non-perishable food, beverages,
and building materials.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of
Van Kampen Equity Opportunity Trust, Series 107:
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen Equity Opportunity Trust, Series 107 as of July 28,
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 Equity Opportunity
Trust, Series 107 as of July 28, 1998, in conformity with generally accepted
accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
July 28, 1998
STATEMENT OF CONDITION
As of July 28, 1998
INVESTMENT IN SECURITIES
Contracts to purchase Securities (1) $ 149,942
-----------
Total $ 149,942
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Organizational costs (2) $ 548
Deferred sales charge liability (3) 5,301
Interest of Unitholders--
Cost to investors (4) 151,460
Less: Gross underwriting commission and organizational
costs (2)(4)(5) 7,367
-----------
Net interest to Unitholders (4) 144,093
-----------
Total $ 149,942
===========
- --------------------------------------------------------------------------------
(1)The value of the Securities is determined by Interactive Data Corporation on
the bases set forth under "Public Offering--Offering Price". The contracts to
purchase Securities are collateralized by an irrevocable letter of credit
which has been deposited with the Trustee.
(2)A portion of the Public Offering Price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing the Trust. The
amount of these costs are set forth in the "Fee Table". A distribution will
be made as of the close of the initial offering period to an account
maintained by the Trustee from which this obligation of the investors will be
satisfied.
(3)Represents the amount of mandatory distributions from the Trust on the bases
set forth under "Public Offering".
(4)The aggregate public offering price and the aggregate sales charge are
computed on the bases set forth under "Public Offering--Offering Price".
(5)Assumes the maximum sales charge.
THE TRUST
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The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the date of
this Prospectus (the "Initial Date of Deposit"), among Van Kampen Funds Inc., as
Sponsor, Van Kampen Investment Advisory Corp., as Supervisor, The Bank of New
York, as Trustee, and American Portfolio Evaluation Services, a division of Van
Kampen Investment Advisory Corp., as Evaluator.
The Trust offers the opportunity to purchase Units representing proportionate
interests in a portfolio of actively traded equity securities. The Trust may be
an appropriate medium for investors who desire to participate in a portfolio of
common stocks with greater diversification than they might be able to acquire
individually.
On the Initial Date of Deposit, the Sponsor deposited delivery statements
relating to contracts for the purchase of the Securities and an irrevocable
letter of credit in the amount required for these purchases with the Trustee. In
exchange for these contracts the Trustee delivered to the Sponsor documentation
evidencing the ownership of Units of the Trust. Unless otherwise terminated as
provided in the Trust Agreement, the Trust will terminate on the Mandatory
Termination Date and any remaining Securities will be liquidated or distributed
by the Trustee within a reasonable time. As used in this Prospectus the term
"Securities" means the securities (including contracts to purchase these
securities) listed in "Portfolio" any additional securities deposited into the
Trust.
Additional Units 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 or the
equivalent) with instructions to purchase additional Securities. As additional
Units are issued by the Trust, the aggregate value of the Securities will be
increased and the fractional undivided interest represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits into the Trust
following the Initial Date of Deposit provided that the additional deposits will
be in amounts which will maintain, as nearly as practicable, the same percentage
relationship among the number of shares of each Security in the Trust's
portfolio that existed immediately prior to the subsequent deposit. 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 deposit and the purchase of the Securities and because
the Trust will pay the associated brokerage or acquisition fees.
Each Unit initially offered represents an undivided interest in the Trust. To
the extent that any Units are redeemed by the Trustee or additional Units are
issued as a result of additional Securities being deposited by the Sponsor, the
fractional undivided interest in the Trust represented by each unredeemed Unit
will increase or decrease accordingly, although the actual interest in the Trust
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.
The Trust consists of (a) the Securities (including contracts for the
purchase thereof) listed under the "Portfolio" as may continue to be held from
time to time in the Trust, (b) any additional Securities acquired and held by
the Trust pursuant to the provisions of the Trust Agreement and (c) any cash
held in the related Income and Capital Accounts. Neither the Sponsor nor the
Trustee shall be liable in any way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
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The objective of the Trust is to provide capital appreciation by investing
in a portfolio of actively traded equity securities of companies within the
transportation industry. We cannot guarantee that the Trust will achieve its
objective. The Securities were selected by Gruntal & Co., L.L.C. (the
"Underwriter"). In selecting the Securities, the Underwriter selected companies
which, in its opinion, are well-positioned for future growth and represented
above average investment opportunities in the transportation sector. The
Securities were selected by Steven Lewins, Vice President, Investment Research
with Gruntal. Mr. Lewins has 25 years of experience as an investment
professional, has been named a Wall Street Journal #1 All-Star Analyst, has been
cited in the Bloomberg Annual Analyst Survey and is listed in "Who's Who in
America". Mr. Lewins earned his B.A. in History-Physics from Queens College and
his M.A. in Economic Theory and M.B.A. in Finance from CUNY(NYC). He also
possesses an advanced certificate in Public Administration. Mr. Lewins has
appeared on NBC, CNBC and CNN.
The Underwriter uses the list of Securities in its independent capacity as an
investment adviser and distributes this information to various individuals and
entities. The Underwriter may recommend or effect transactions in the
Securities. This may have an adverse effect on the prices of the Securities.
This also may have an impact on the price the Trust pays for the Securities and
the price received upon Unit redemptions or Trust termination.
The Underwriter has acquired or may acquire the Securities for the Sponsor
and may benefit from doing so. The Underwriter acts as agent or principal in
connection with the purchase and sale of equity securities, including the
Securities, and may act as a market maker in the Securities. The Underwriter
also issues reports and makes recommendations on the Securities. The
Underwriter's research department, including Mr. Lewins, will receive
compensation based on the broker commissions generated by research and/or sales
of Units. Mr. Lewins may trade the Securities in his personal accounts.
Investors should note that the above criteria were applied to the Securities
for inclusion in the Trust as of the Initial Date of Deposit. Subsequent to this
date, the Securities may no longer meet the above criteria. Should a Security no
longer meet the selection criteria, the Security generally will not be removed
from the Trust portfolio as a result thereof.
RISK FACTORS
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Price Volatility. The Trust invests in common stocks. The value of Units will
fluctuate with the value of these stocks and may be more or less than the price
you originally paid for your Units. The market value of common stocks sometimes
moves up or down rapidly and unpredictably. Because the Trust is unmanaged, the
Trustee will not sell stocks in response to market fluctuations as is common in
managed investments. As with any investment, we cannot guarantee that the
performance of the Trust will be positive over any period of time.
Dividends. Common stocks represent ownership interests in the issuers and are
not obligations of the issuers. Accordingly, common stockholders have a right to
receive dividends only after the company has provided for payment of its
creditors, bondholders and preferred stockholders. Common stocks do not assure
dividend payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
Transportation Companies. The portfolio only includes issuers from the
transportation industry. Any negative impact on this industry will have a
greater impact on the value of Units than on a portfolio diversified over
several industries. The transportation companies in the portfolio include
airlines, railroads, trucking companies, courier services and manufacturers of
aircraft, motor vehicles and space vehicles and parts and equipment for these
vehicles. You should understand the risks of these companies before you invest.
Government authorities impose a variety of regulations on transportation
companies. These regulations address issues such as driver/pilot qualifications,
safety standards, rates, routes and vehicle maintenance and operational
standards. Any change or increase in regulations could negatively impact the
operating results of these companies. As many governments increasingly focus on
environmental issues, transportation companies could also face increased costs
associated with complying with reduced emissions requirements or environmental
cleanup. On the other hand, any future deregulation could result in increased
competition which could limit profitability within the industry.
The earnings of transportation companies are highly dependent on the price
and availability of fuel. A significant increase in the price of fuel could
negatively impact these companies. Transportation companies can face significant
liabilities resulting from accidents which injure passengers or damage cargo or
other property. While companies may be insured against these liabilities, any
accident could have a significantly negative impact on a company. Many
transportation companies have been subject to seasonal trends due to customer
demands. These companies may exhibit especially strong results during certain
seasons of the year but may exhibit especially weak results during others. In
addition, the United States government is a significant customer of many
aerospace companies. As a result, these companies may be particularly dependent
on Congressional appropriations, administrative allotment of funds and changes
in government policies that may reflect military and political developments.
Foreign Stocks. Because the Trust invests in common stocks of foreign
companies, it involves additional risks that differ from an investment only in
domestic stocks. These risks include the risk of losses due to future political
and economic developments, international trade conditions, foreign withholding
taxes and restrictions on foreign investments and exchange of securities. The
Trust also involves the risk that fluctuations in exchange rates between the
U.S. dollar and foreign currencies may negatively affect the value of the
stocks. The Trust involves the risk that information about the stocks is not
publicly available or is inaccurate due to the absence of uniform accounting and
financial reporting standards. In addition, some foreign securities markets are
less liquid than U.S. markets. This could cause the Trust to buy stocks at a
higher price or sell stocks at a lower price than would be the case in a highly
liquid market. Foreign securities markets are often more volatile and involve
higher trading costs than U.S. markets, and foreign companies, securities
markets and brokers are also generally not subject to the same level of
supervision and regulation as in the U.S. Certain stocks may be held in the form
of American Depositary Receipts or other similar receipts ("ADRs"). ADRs
represent receipts for foreign common stock deposited with a custodian (which
may include the Trustee). The ADRs in the Trust trade in the U.S. in U.S.
dollars and are registered with the Securities and Exchange Commission. ADRs
generally involve the same types of risks as foreign common stock held directly.
Some ADRs may experience less liquidity than the underlying common stocks traded
in their home market.
PUBLIC OFFERING
- --------------------------------------------------------------------------------
General. Units are offered at the Public Offering Price which includes the
underlying value of the Securities, the initial sales charge, and cash, if any,
in the Income and Capital Accounts. The initial sales charge is equal to the
difference between the maximum sales charge (4.50% of the Public Offering Price)
and the deferred sales charge ($0.35 per Unit). Unitholders are subject to a
deferred sales charge of $0.35 per Unit during the first year. The deferred
sales charge is assessed as described in note (2) to the "Fee Table". If any
deferred sales charge payment date is not a business day, the payment will be
charged on the next business day. Units purchased subsequent to the initial
deferred sales charge payment will be subject to only that portion of the
deferred sales charge payments not yet collected. The maximum sales charge
assessed to each Unitholder is 4.50% of the Public Offering Price (4.712% of the
aggregate value of the Securities less the deferred sales charge). A portion of
the Public Offering Price includes an amount of Securities to pay for all or a
portion of the costs incurred in establishing your Trust, including the cost of
preparing documents relating to the Trust (such as the prospectus, trust
agreement and closing documents, federal and state registration fees, the
initial fees and expenses of the Trustee and legal and audit expenses).
Beginning on July 28, 1999, the secondary market sales charge will be 4.00% and
will not include deferred payments. This sales charge will reduce by 0.5% on
each following July 28 to a minimum of 3.00%. The initial offering period sales
charge is reduced as follows:
Aggregate
Dollar Amount
of Units Purchased* Sales Charge
------------------- ------------
$50,000 - $99,999 4.25%
$100,000 - $249,999 4.00
$250,000 - $499,999 3.50
$500,000 or more 2.50
- ---------------
*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.
Any sales charge reduction is the responsibility of the selling broker,
dealer or agent. Units may be purchased in the primary or secondary market at
the Public Offering Price less the concession the Sponsor typically allows to
brokers and dealers for purchases 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
spouses or children under 21 and (4) officers and directors of bank holding
companies that make Units available directly or through subsidiaries or bank
affiliates. Notwithstanding anything to the contrary in this Prospectus, such
investors, bank trust departments, firm employees and bank holding company
officers and directors who purchase Units through this program will not receive
sales charge reductions for quantity purchases.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, and trustees, custodians or fiduciaries for the
benefit of such persons) of Van Kampen Funds 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.
The minimum purchase is 100 Units (25 Units for retirement accounts) but may
vary by selling firm. However, 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.
Offering Price. The Public Offering Price of 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. The
initial price of the Securities was determined by Interactive Data Corporation,
a firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities. The Evaluator will generally determine the value of the
Securities as of the Evaluation Time on each business day and will adjust the
Public Offering Price of Units accordingly. This Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each business
day. The Evaluation Time is the close of the New York Stock Exchange on each
Trust business day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a business day,
will be held until the next determination of price. The term "business day", as
used herein and under of Unitholders--Redemption of Units", excludes Saturdays,
Sundays and holidays observed by the New York Stock Exchange.
The aggregate underlying value of the Securities during the initial offering
period is determined on each business day by the Evaluator in the following
manner: If the Securities are listed on a national or foreign 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 Securities are not listed on a national or foreign
securities exchange 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
Securities on the ask side of the market or (c) by any combination of the above.
The value of any foreign securities is based on the applicable currency exchange
rate in U.S. dollars as of the Evaluation Time. The value of the Securities for
purposes of secondary market transactions and redemptions is described under
"Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather the
entire pool of Securities in a Trust, taken as a whole, which are represented by
the Units.
Unit Distribution. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. Units repurchased in the
secondary market, if any, may be offered by this Prospectus at the secondary
market Public Offering Price in the manner described above.
The Sponsor intends to qualify Units for sale in a number of states.
Brokers, dealers and others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period of
3.00% of the Public Offering Price per Unit.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For all secondary market transactions
the total concession or agency commission will amount to 70% of the applicable
sales charge. Notwithstanding anything to the contrary herein, in no case shall
the total of any concessions, agency commissions and any additional compensation
allowed or paid to any broker, dealer or other distributor of Units with respect
to any individual transaction exceed the total sales charge applicable to such
transaction. 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.
Broker-dealers of the Trusts, 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
Trusts. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of any Trust. These programs will not change the price Unitholders
pay for their Units or the amount that a Trust will receive from the Units sold.
Sponsor and Underwriter Compensation. The Underwriter will receive a gross
sales commission equal to the total sales charge applicable to each transaction.
Any sales charge discount provided to investors will be borne by the selling
dealer or agent. The Sponsor will receive from the Underwriter the difference
between the gross sales commission and 3.30% of the Public Offering Price per
Unit. In addition, the Sponsor will realize a profit or loss as a result of the
difference between the price paid for the Securities by the Sponsor and the cost
of the Securities to each Trust on the Initial Date of Deposit as well as on
subsequent deposits. See "Notes to Portfolio". The Sponsor has not participated
as sole underwriter or as manager or as a member of the underwriting syndicates
or as an agent in a private placement for any of the Securities. The Sponsor may
realize profit or loss as a result of the possible fluctuations in the market
value of the Securities, since all proceeds received from purchasers of Units
are retained by the Underwriter. In maintaining a secondary market, the
Underwriter will realize profits or 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) or from a redemption
of repurchased Units at a price above or below the purchase price. 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.
An affilliate of the Sponsor may have participated in a public offering of
one or more of the Securities. The Sponsor, an affiliate or their employees may
have a long or short position in these Securities. An affiliate may act as a
specialist or market marker for these Securities. An officer, director or
employee of the Sponsor or an affiliate may be an officer or director for
issuers of the Securities.
Market for Units. Although it is not obligated to do so, the Underwriter
currently intends to maintain a market for Units and to purchase Units at the
secondary market repurchase price (which is described under "Right of
Unitholders--Redemption of Units"). The Underwriter may discontinue purchases of
Units or discontinue purchases at this price at any time. In the event that a
secondary market is not maintained, a Unitholder will be able to dispose of
Units by tendering them to the Trustee for redemption at the Redemption Price.
See "Rights of Unitholders--Redemption of Units". Unitholders should contact
their broker to determine the best price for Units in the secondary market.
Units sold prior to the time the entire deferred sales charge has been collected
will be assessed the amount of any remaining deferred sales charge at the time
of sale. The Trustee will notify the Underwriter of any tendered of Units for
redemption. If the Underwriter's bid in the secondary market equals or exceeds
the Redemption Price per Unit, it may purchase the Units not later than the day
on which Units would have been redeemed by the Trustee. The Underwriter may sell
repurchased Units at the secondary market Public Offering Price per Unit.
Tax-Sheltered Retirement Plans. Units are available for purchase in
connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for the individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The minimum
purchase for these accounts is reduced to 25 Units but may vary by selling firm.
The purchase of Units may be limited by the plans' provisions and does not
itself establish such plans.
RIGHTS OF UNITHOLDERS
- --------------------------------------------------------------------------------
Distributions. Dividends and any net proceeds from the sale of Securities
received by a Trust will be distributed to Unitholders on each Distribution Date
to Unitholders of record on the preceding Record Date and as determined by the
Trustee. These dates are listed under "Summary of Essential Financial
Information". A person becomes a Unitholder of record on the date of settlement
(generally three business days after Units are ordered). Unitholders may elect
to receive distributions in cash or to have distributions reinvested into
additional Units. See "Rights of Unitholders--Reinvestment Option".
Dividends received by a Trust are credited to the Income Account of the
Trust. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds received on the
sale of any Securities, to the extent not used to meet redemptions of Units or
pay deferred sales charges, fees or expenses, will be distributed to
Unitholders. Any distribution to Unitholders consists of each Unitholder's pro
rata share of the available cash in the Income and Capital Accounts as of the
related Record Date.
Reinvestment Option. Unitholders may have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option (to the
extent Units may be lawfully offered for sale in the state in which the
Unitholder resides). Unitholders will be subject to the remaining deferred sales
charge payments due on Units. To participate in this reinvestment option, a
Unitholder should purchase Units with the Automatic Reinvestment Option CUSIP
number. A Unitholder's election will apply to all Units owned by the Unitholder
and will remain in effect until changed by the Unitholder. If Units are
unavailable for reinvestment, distributions will be paid in cash. Purchases of
additional Units made pursuant to the reinvestment plan will be made at the net
asset value for Units as of the Evaluation Time on the Distribution Date.
A participant may elect to terminate his or her reinvestment plan and receive
future distributions in cash by notifying the Trustee in writing no later than
five days before a distribution date. The Sponsor shall have the right to
suspend or terminate the reinvestment plan at any time.
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. Certificates must be tendered to the
Trustee, duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed (or by providing satisfactory indemnity in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. On the seventh day following the tender, the
Unitholder will be entitled to receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received by the Trustee after the Evaluation
Time or on a day which is not a Trust business day, the date of tender is deemed
to be the next business day.
Unitholders tendering 2,500 or more Units of a Trust for redemption may
request an in kind distribution of Securities equal to the Redemption Price per
Unit on the date of tender. The Trust will not make in kind distributions of
stocks held in foreign securities markets. An in kind distribution 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 broker-dealer at Depository Trust
Company. Amounts representing fractional shares will be distributed in cash. The
Trustee may adjust the number of shares of any Security included in a
Unitholder's in kind distribution to facilitate the distribution of whole
shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in kind or sold, the size of a Trust will be, and
the diversity of a 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
at the time of redemption. Special federal income tax consequences will result
if a Unitholder requests an in kind distribution. See "Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in each 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 Securities in the Trust
trading ex-dividend as of the date of computation, less (a) amounts representing
taxes or other governmental charges payable out of the Trust, (b) the accrued
expenses of the Trust and (c) any unpaid deferred sales charge payments. During
the initial offering period, the redemption price and the secondary market
repurchase price will also include estimated organizational costs. For these
purposes, the Evaluator may determine the value of the Securities in the
following manner: If the Securities are listed on a national or foreign
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 Securities are not so listed
or, if so listed and the principal market therefore is other than on the
exchange, the evaluation may be based on the current bid price on the
over-the-counter market. If current bid prices are unavailable or inappropriate,
the evaluation may be determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the Securities on the bid side of the
market or (c) by any combination of the above. The value of any foreign
securities is based on the applicable currency exchange rate in U.S. dollars as
of the Evaluation Time.
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 SEC determines that
trading on that Exchange is restricted or an emergency exists, as a result of
which disposal or evaluation of the Securities is not reasonably practicable, or
for other periods as the SEC may permit.
Certificates. Ownership of Units is evidenced by certificates unless a
Unitholder 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 in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program 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. Fractional certificates
will not be issued. 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 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.
Reports Provided. Unitholders will receive a statement of dividends and
other amounts received by the Trust for each distribution. Within a reasonable
time after the end of each year, each person who was a Unitholder during that
year will receive a statement describing dividends and capital received, actual
Trust distributions, Trust expenses, a list of the Securities and other Trust
information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
TRUST ADMINISTRATION
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Portfolio Administration. The Trust is not managed funds and, except as
provided in the Trust Agreement, Securities generally will not be sold or
replaced. The Sponsor may, however, direct that Securities be sold in certain
limited circumstances to protect the Trust based on advice from the Supervisor.
These situations may include events such as the issuer having defaulted on
payment of any of its outstanding obligations or the price of a Security has
declined to such an extent or other credit factors exist so that in the opinion
of the Sponsor retention of the Security would be detrimental to the Trust. In
addition, the Trustee may sell Securities to redeem Units or pay Trust expenses
or deferred sales charges. The Trustee must reject any offer for securities or
property in exchange for the Securities. If securities or property are
nonetheless acquired by the Trust, the Sponsor may direct the Trustee to sell
the securities or property and distribute the proceeds to Unitholders or to
accept the securities or property for deposit in the Trust. Should any contract
for the purchase of any of the Securities fail, the Sponsor will (unless
substantially all of the moneys held in the Trust to cover the purchase are
reinvested in substitute Securities in accordance with the Trust Agreement)
refund the cash and sales charge attributable to the failed contract to all
Unitholders on or before the next distribution date.
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
Securities in the Trust. To the extent this is not practicable, the composition
and diversity of the Securities in the Trust may be altered. In order to obtain
the best price for the Trust, it may be necessary for the Supervisor to specify
minimum amounts (generally 100 shares) in which blocks of Securities are to be
sold. In effecting purchases and sales of the 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 is sponsors.
Amendment of the Trust Agreement. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
Termination. The Trust will terminate on the Mandatory Termination Date or
upon the sale or other disposition of the last Security held in the Trust. The
Trust may be terminated at any time with consent of Unitholders representing
two-thirds of the outstanding Units or by the Trustee when the value of the
Trust is less than $500,000 ($3,000,000 if the value of the Trust has exceeded
$15,000,000) (the "Minimum Termination Value"). Unitholders will be notified of
any termination. The Trustee may begin to sell Securities in connection with a
Trust termination during a period beginning nine business days before, and no
later than, the Mandatory Termination Date. Approximately thirty days before
this date, the Trustee will notify Unitholders of the termination and provide a
form enabling qualified Unitholders to elect an in kind distribution of
Securities. See "Rights of Unitholders--Redemption of Units". This form must be
returned at least five business days prior to the Mandatory Termination Date.
Unitholders will receive a final cash distribution within a reasonable time
after the Mandatory Termination Date. All distributions will be net of Trust
expenses and costs. Unitholders will receive a final distribution statement
following termination. The Information Supplement contains further information
regarding termination of the Trust. See "Additional Information".
Limitations on Liabilities. The Sponsor, Evaluator, Supervisor and Trustee
are under no liability 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 is 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 is not be liable for any action taken by it in good faith under
the Trust Agreement. The Trustee is not liable for any taxes or other
governmental charges imposed on the Securities, on it as Trustee under the Trust
Agreement or on 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
and Supervisor may rely on any evaluation furnished by the Evaluator and have no
responsibility for the accuracy thereof. Determinations by the Evaluator shall
be made in good faith upon the basis of the best information available to it.
The Underwriter. Gruntal & Co., L.L.C. is a full-service investment bank
headquartered at 14 Wall Street in New York, New York. Established in 1880,
Gruntal has a proud history of client service, financial stability and growth.
Today, Gruntal has over 2,100 employees in 29 offices across the United States.
The scope of Gruntal's business spans a broad range of financial services
including investment banking, research, trading, asset management and brokerage
services to individuals, institutions and corporations worldwide.
Sponsor. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of
the Trust. The Sponsor is an indirect subsidiary of Morgan Stanley Dean Witter &
Co. Van Kampen Funds Inc. specializes in the underwriting and distribution of
unit investment trusts and mutual funds with roots in money management dating
back to 1926. The Sponsor is a member of the National Association of Securities
Dealers, Inc. and has offices at One Parkview Plaza, Oakbrook Terrace, Illinois
60181, (630) 684-6000 and 2800 Post Oak Boulevard, Houston, Texas 77056, (713)
993-0500. As of November 30, 1997, the total stockholders' equity of Van Kampen
Funds Inc. was $132,381,000 (audited). The Information Supplement contains
additional information about the Sponsor.
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. Additional information
regarding the Trustee is set forth in the Information Supplement, including the
Trustee's qualifications and duties, its ability to resign, the effect of a
merger involving the Trustee and the Sponsor's ability to remove and replace the
Trustee. See "Additional Information".
Performance Information. The Sponsor may from time to time in its advertising
and sales materials compare the then current estimated returns on the Trust and
returns over specified time periods on other similar trusts (which may show
performance net of expenses and charges which the Trust would have charged) with
returns on other taxable investments such as the common stocks comprising the
Dow Jones Industrial Average, the S&P 500, other investment indices, corporate
or U.S. government bonds, bank CDs, money market accounts or money market funds,
or with performance data from Lipper Analytical Services, Inc., Morningstar
Publications, Inc. or various publications, each of which has characteristics
that may differ from those of the Trust. Information on percentage changes in
the dollar value of Units may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective Unitholders. Total return figures may not be averaged and may not
reflect deduction of the sales charge, which would decrease return. No provision
is made for any income taxes payable. Past performance may not be indicative of
future results. The Trust portfolio is not managed and Unit price and return
fluctuate with the value of common stocks in the portfolios, so there may be a
gain or loss when Units are sold. As with other performance data, performance
comparisons should not be considered representative of the Trust's relative
performance for any future period.
TAXATION
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Federal Taxation
General. The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as capital assets
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust.
For purposes of the following discussion and opinions, it is assumed that
each Security is equity for federal income tax purposes. In the opinion of
Chapman and Cutler, special counsel for the Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Security when such income is considered to be received by the
Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his pro rata portion of each Security when such dividends are considered to
be received by the Trust regardless of whether such dividends are used to pay a
portion of any deferred sales charge imposed. Unitholders will be taxed in this
manner regardless of whether distributions from the Trust are actually received
by the Unitholder or are automatically reinvested (see "Rights of
Unitholders--Reinvestment Option").
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent an
in kind distribution of stock is received by such Unitholder from the Trust as
described below). The price a Unitholder pays for his Units, generally including
sales charges, is allocated among his pro rata portion of each Security held by
the Trust (in proportion to the fair market values thereof on the valuation date
closest to the date the Unitholder purchases his Units) in order to determine
his initial tax basis for his pro rata portion of each Security held by the
Trust. Unitholders should consult their own tax advisers with regard to the
calculation of basis. For federal income tax purposes, a Unitholder's pro rata
portion of the dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to a Security held by the Trust is taxable as ordinary
income to the extent of such corporation's current and accumulated "earnings and
profits". A Unitholder's pro rata portion of dividends paid on such Security
which exceed such current and accumulated earnings and profits will first reduce
a Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Security shall generally be treated as
capital gain. In general, the holding period for such capital gain will be
determined by the period of time a Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unitholders should consult their tax advisers regarding
the recognition of gains and losses for federal income tax purposes. Unitholders
should consult their tax advisers regarding the recognition of gains and losses
for federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trust is deferred. The income (or proceeds from redemption) a
Unitholder must take into account for federal income tax purposes is not reduced
by amounts deducted to pay the deferred sales charge. Unitholders should consult
their own tax advisers as to the income tax consequences of any deferred sales
charge imposed.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. 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 a
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the
Trust or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. The Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Tax Act") provides that for 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) realized from property
(with certain exclusions) is subject to a maximum marginal stated tax rate of
20% (10% in the case of certain taxpayers in the lowest tax bracket). Capital
gain or loss is long-term if the holding period for the asset is more than one
year, and is short-term if the holding period for the asset is one year or less.
The date on which a Unit is acquired (i.e., the "trade date") is excluded for
purposes for determining the holding period of the Unit. The legislation is
generally effective retroactively for amounts properly taken into account on or
after January 1, 1998. Capital gains realized from assets held for one year or
less are taxed at the same rates as ordinary income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust involved including his
pro rata portion of all Securities represented by a Unit. The Taxpayer Relief
Act of 1997 (the "1997 Tax Act") includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and opportunities for
gain (e.g., short sales, offsetting notional principal contracts, futures or
forward contracts, or similar transactions) as constructive sales for purposes
of recognition of gain (but not loss) and for purposes of determining the
holding period. Unitholders should consult their own tax advisers with regard to
any such constructive sales rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of Unitholders--Redemption of
Units," under certain circumstances a Unitholder tendering Units for redemption
may request an In Kind Distribution of the Securities in the Trust. A Unitholder
may also under certain circumstances request an In Kind Distribution of the
Securities in the Trust upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units". The Unitholder requesting an In Kind
Distribution will be liable for expenses related thereto (the "Distribution
Expenses") and the amount of such In Kind Distribution will be reduced by the
amount of the Distribution Expenses. See "Rights of Unitholders--Redemption of
Units". As previously discussed, prior to the redemption of Units or the
termination of the Trust, a Unitholder is considered as owning a pro rata
portion of each of the Trust's assets for federal income tax purposes. The
receipt of an In Kind Distribution will result in a Unitholder receiving an
undivided interest in whole shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution
with respect to each Security owned by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion in the Securities held by
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will generally
recognize gain or loss based upon the difference between the amount of cash
received by the Unitholder and his tax basis in such fractional share of a
Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an In
Kind Distribution will have to analyze the tax consequences with respect to each
Security owned by the Trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by the Trust. Unitholders who request an In Kind Distribution are advised
to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder for
his Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
as described above.
Other Matters. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust (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 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 Securities, the gross proceeds received by the
Trust from the disposition of any Security (resulting from redemption or the
sale of any Security), and the fees and expenses paid by the Trust. The Trustee
will also furnish annual information returns to Unitholders and to the Internal
Revenue Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel for New York tax matters, the Trust is not
an association taxable as a corporation and the income of the Trust will be
treated as the income of the Unitholders under the existing income tax laws of
the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal and certain aspects of
New York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit
in the Trust that (a) is (i) for United States federal income tax purposes a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unitholder in paragraph (a) but whose
income from a Unit is effectively connected with such Unitholder's conduct of a
United States trade or business. The term also includes certain former citizens
of the United States whose income and gain on the Units will be taxable.
Unitholders should consult their tax advisers regarding potential foreign, state
or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
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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.
However, the Supervisor and Evaluator, which are affiliates of the Sponsor, will
receive the annual fee for portfolio supervisory and evaluation services set
forth in the "Fee Table". These fees may exceed the actual costs of providing
these services to the Trust but at no time will the total amount received for
supervisory and evaluation services rendered to all Van Kampen unit investment
trusts in any calendar year exceed the aggregate cost of providing these
services in that year.
Trustee's Fee. For its services the Trustee will receive the fee from the
Trust set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Trust expenses). The Trustee benefits to the extent there are
funds 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.
Miscellaneous Expenses. 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) foreign custodial and transaction
fees, (h) costs associated with liquidating the securities held in the Trust
portfolio and (i) expenditures incurred in contacting Unitholders upon
termination of the Trust.
General. During the initial offering period, all of the fees and expenses of
the Trust will accrue on a daily basis and will be charged to the Trust at the
end of the initial offering period. After the initial offering period, all of
the fees and expenses of the Trust will accrue on a daily basis and will be
charged to the Trust on a monthly basis.
The deferred sales charges, fees and expenses are paid out of the Capital
Account. When these amounts are paid by or owing to the Trustee, they are
secured by a lien on the Trust's portfolio. It is expected that Securities will
be sold to pay these amounts which will result in capital gains or losses to
Unitholders. See "Taxation". The Supervisor's, Evaluator's and Trustee's 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 or, if this category is not published, in a
comparable category.
OTHER MATTERS
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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 to the Trustee
and as special counsel for New York tax matters.
Independent Certified Public Accountants. The statement of condition and the
related portfolio 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.
ADDITIONAL INFORMATION
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This Prospectus does not contain all the information set forth in the
Registration Statement filed by the Trust with the SEC. The Information
Supplement, which has been filed with the SEC, includes more detailed
information concerning the Securities, investment risks and general information
about the Trust. The Information Supplement may be obtained by contacting the
Trustee at (800) 856-8487 or is available along with other related materials at
the SEC's internet site (http://www.sec.gov).
TABLE OF CONTENTS
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TITLE PAGE
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Summary of Essential Financial Information.. 2
Fee Table................................... 3
Global Transport Growth Trust............... 4
Notes to Portfolio.......................... 6
The Securities.............................. 7
Report of Independent Certified
Public Accountants....................... 8
Statement of Condition ..................... 9
The Trust................................... A-1
Objectives and Securities Selection......... A-1
Risk Factors................................ A-2
Public Offering............................. A-3
Rights of Unitholders....................... A-6
Trust Administration........................ A-8
Taxation.................................... A-10
Trust Operating Expenses.................... A-14
Other Matters............................... A-15
Additional Information...................... A-15
PROSPECTUS
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July 28, 1998
Global Transport Growth Trust, Series 1
Gruntal &Co.
L.L.C.
ESTABLISHED 1880
Member New York Stock Exchange
14 Wall Street, 20th Floor
New York, NY 10005
(800) 223-7634
Please retain this prospectus for future reference.
Information Supplement
Van Kampen Equity Opportunity Trust, Series 107
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This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the Prospectus. This
Information Supplement should be read in conjunction with the Prospectus. This
Information Supplement is not a prospectus, does not include all of the
information that an investor should consider before investing in the Trust and
may not be used to offer or sell Units without the Prospectus. Copies of the
Prospectus can be obtained by contacting the Sponsor at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 or by contacting your broker. This Information
Supplement is dated as of the date of the Prospectus and all capitalized terms
have been defined in the Prospectus.
Table of Contents
Page
Risk Factors 2
Sponsor Information 5
Trustee Information 5
Trust Termination 6
RISK FACTORS
Price Volatility. Because the Trust invests in common stocks, you should
understand the risks of investing in common stocks before purchasing Units.
These risks include the risk that the financial condition of the company or the
general condition of the stock market may worsen and the value of the stocks
(and therefore Units) will fall. Common stocks are especially susceptible to
general stock market movements. The value of common stocks often rises or falls
rapidly and unpredictably as market confidence and perceptions of companies
change. These perceptions are based on factors including expectations regarding
government economic policies, inflation, interest rates, economic expansion or
contraction, political climates and economic or banking crises. The value of
Units will fluctuate with the value of the stocks in the Trust and may be more
or less than the price you originally paid for your Units. As with any
investment, we cannot guarantee that the performance of the Trust will be
positive over any period of time. Because the Trust is unmanaged, the Trustee
will not sell stocks in response to market fluctuations as is common in managed
investments.
Dividends. Common stocks represent ownership interests in a company and are
not obligations of the company. Accordingly, common stockholders have a right to
receive payments from the company that is subordinate to the rights of
creditors, bondholders or preferred stockholders of the company. This means that
common stockholders have a right to receive dividends only if a company's board
of directors declares a dividend and the company has provided for payment of all
of its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if the
company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.
Transportation Companies. Transportation companies are affected by changes
in the price and availability of fuel. In order to provide a measure of control
over price and supply, many companies trade and ship fuel and maintain fuel
storage facilities to support their operations. These companies may also manage
the price risk of fuel costs by utilizing fuel swap and fuel option contracts.
The price of fuel is impacted by political conditions in oil producing regions,
the actions of the Organization of Petroleum Exporting Countries, supply of oil,
the price and availability of alternative fuels, government regulation and
consumer demand. Any substantial increase in the price of fuel could have a
significant negative impact on the Securities.
The Department of Transportation ("DOT") and the Federal Aviation
Administration ("FAA") exercise regulatory authority over air operations of
transportation companies in the United States. The DOT's jurisdiction extends to
aviation route authority and to other regulatory matters, including the transfer
of route authority between carriers. The DOT regulates international routes and
practices and is authorized to investigate and take action against
discriminatory treatment of United States air carriers abroad. The right of a
United States carrier to serve foreign points is subject to the DOT's approval
and generally requires a bilateral agreement between the United States and the
foreign government. The carrier must then be granted the permission of such
foreign government to provide specific flights and services. The regulatory
environment for global aviation rights may from time to time impair the ability
of a company to operate in the most efficient manner. The FAA's regulatory
authority relates primarily to safety and operational aspects of air
transportation, including aircraft standards and maintenance, personnel and
ground facilities, which may from time to time affect a company's operations.
The enactment of the Federal Aviation Administration Authorization Act of 1994
("the 1994 Act") abrogated the authority of states to regulate the rates, routes
or services of intermodal all-cargo air carriers and most motor carriers. States
may now only exercise jurisdiction over safety and insurance.
The U.S. Congress passed two pieces of legislation in 1994 that affected
the trucking industry. The Trucking Industry Regulatory Reform Act ("TIRRA")
reduced the Interstate Commerce Commission's authority over motor carriers by
eliminating the tariff-filing requirement for motor common carriers using
individually determined rates, classifications, rules or practices. Under TIRRA,
motor carriers are still required to provide shippers, if requested, with a copy
of the rate, classification, rules or practices of the carrier. Also, the 1994
Act effectively prohibited state economic regulation of all trucking operations
for motor carriers. In late 1995, the Interstate Commerce Commission Termination
Act of 1995 ("ICCTA") abolished the ICC as of January 1, 1996 and transferred
its residual functions to the Federal Highway Administration and a newly created
Surface Transportation Board within the U. S. Department of Transportation.
Congress has prescribed a transition period during which regulations
implementing the ICCTA including insurance and safety issues must be promulgated
by the Secretary of Transportation. The trucking industry remains subject to the
possibility of regulatory and legislative changes that can influence operating
practices and the demands for and the costs of providing services to shippers.
Transportation companies are subject to various domestic and foreign laws
regulating the discharge of materials into the environment or otherwise for the
protection of the environment and for the management of hazardous waste. These
regulations identify a wide range of industrial by-products and residues as
hazardous waste, and specify requirements for "cradle-to-grave" management of
such waste from the time of generation through the time of disposal and beyond.
Many governments are becoming increasingly sensitive to environmental issues,
and we cannot predict what impact future environmental regulations may have on
its business. Certain regulations require responsible parties to clean up
facilities at which hazardous waste or other subtances have created actual or
potential environmental hazards. Compliance with environmental regulations or
clean-up of hazardous sites can be very costly.
Historically, the operating results of many transportation companies have
been subject to seasonal trends when measured on a quarterly basis. This pattern
is the result of, or is influenced by, numerous factors including climate,
national holidays, consumer demand, economic conditions and a myriad of other
similar and subtle forces. We cannot accurately forecast many of these factors
and, as a result, there can be no assurance that historical patterns, if any,
will continue in future periods.
Transportation companies can face significant liabilities arising from
accidents which injure passengers or damage cargo or other property. Companies
generally maintain insurance covering these liabilities or self-insure to
protect against any liabilities that arise, however, there is no assurance that
any insurance will be sufficient to satisfy all claims arising from any accident
if one occurs. Any accident that involves significant loss of life or property
can also result in substantial negative publicity which can negatively impact a
company, the demand for its products or services and the value of its
securities.
Certain transportation companies do a substantial amount of their business
with the United States government. Companies engaged in United States government
contracting are subject to certain unique business risks, including dependence
on Congressional appropriations and administrative allotment of funds, changes
in Government policies that may reflect military and political developments,
time required for design and development, significant changes in contract
scheduling, complexity of designs and the rapidity with which they become
obsolete, necessity of design improvements, difficulty in forecasting costs and
schedules when bidding on developmental and highly sophisticated technical work
and other factors characteristic of the industry. The United States Department
of Defense and other federal agencies have the authority, under certain
circumstances, to suspend or debar a contractor or organizational parts of a
contractor from further Government contracting for a certain period "to protect
the Government's interest." Any suspension or debarment could have a material
adverse impact on a company's operations.
Foreign Stocks. Because the Trust invests in foreign common stocks, it
involves additional risks that differ from an investment in domestic stocks.
Investments in foreign securities may involve a greater degree of risk than
those in domestic securities. There is generally less publicly available
information about foreign companies in the form of reports and ratings similar
to those that are published about issuers in the United States. Also, foreign
issuers are generally not subject to uniform accounting, auditing and financial
reporting requirements comparable to those applicable to United States issuers.
With respect to certain foreign countries, there is the possibility of adverse
changes in investment or exchange control regulations, expropriation,
nationalization or confiscatory taxation, limitations on the removal of funds or
other assets of the Trust, political or social instability, or diplomatic
developments which could affect United States investments in those countries.
Moreover, industrial foreign economies may differ favorably or unfavorably from
the United States' economy in terms of growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. Foreign securities markets are generally not as developed or
efficient as those in the United States. While growing in volume, they usually
have substantially less volume than the New York Stock Exchange, and securities
of some foreign issuers are less liquid and more volatile than securities of
comparable United States issuers. Fixed commissions on foreign exchanges are
generally higher than negotiated commissions on United States exchanges. There
is generally less government supervision and regulation of securities exchanges,
brokers and listed issuers than in the United States.
Foreign Currencies. The Trust also involves the risk that fluctuations in
exchange rates between the U.S. dollar and foreign currencies may negatively
affect the value of the stocks. For example, if a foreign stock rose 10% in
price but the U.S. dollar gained 5% against the related foreign currency, a U.S.
investor's return would be reduced to about 5%. This is because the foreign
currency would "buy" fewer dollars or, conversely, a dollar would buy more of
the foreign currency. Many foreign currencies have fluctuated widely against the
U.S. dollar for a variety of reasons such as supply and demand of the currency,
investor perceptions of world or country economies, political instability,
currency speculation by institutional investors, changes in government policies,
buying and selling of currencies by central banks of countries, trade balances
and changes in interest rates. The Trust's foreign currency transactions will be
conducted with foreign exchange dealers acting as principals on a spot (i.e.,
cash) buying basis. These dealers realize a profit based on the difference
between the price at which they buy the currency (bid price) and the price at
which they sell the currency (offer price). The Evaluator will estimate the
currency exchange rates based on current activity in the related currency
exchange markets, however, due to the volatility of the markets and other
factors, the estimated rates may not be indicative of the rate the Trust might
obtain had the Trustee sold the currency in the market at that time.
Liquidity. Whether or not the stocks in the Trust are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
Additional Units. The Sponsor may create additional Units of the Trust by
depositing into the Trust additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Trust will pay brokerage fees.
Voting. Only the Trustee may sell or vote the stocks in the Trust. While
you may sell or redeem your Units, you may not sell or vote the stocks in the
Trust. The Sponsor will instruct the Trustee how to vote the stocks. The Trustee
will vote the stocks in the same general proportion as shares held by other
shareholders if the Sponsor fails to provide instructions.
Year 2000. The Trust could be negatively impacted if computer systems used
by the Sponsor, Evaluator, Supervisor or Trustee or other service providers to
the Trusts do not properly process date-related information after January 1,
2000. This is commonly known as the "Year 2000 Problem". The Sponsor, Evaluator,
Supervisor and Trustee are taking steps to address this problem and to obtain
reasonable assurances that other service providers to the Trust are taking
comparable steps. We cannot guarantee that these steps will be sufficient to
avoid any adverse impact on the Trust. This problem is expected to impact
corporations to varying degrees based on factors such as industry sector and
degree of technological sophistication. We cannot predict what impact, if any,
this problem will have on the issuers of stocks in the Trust.
SPONSOR INFORMATION
Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the Trust.
The Sponsor is an indirect subsidiary of Van Kampen Investments Inc. Van Kampen
Investments Inc. is a wholly owned subsidiary of MSAM Holdings II, Inc., which
in turn is a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.
("MSDW").
MSDW, together with various of its directly and indirectly owned
subsidiaries, is engaged in a wide range of financial services through three
primary businesses: securities, asset management and credit services. These
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; asset
management; trading of futures, options, foreign exchange commodities and swaps
(involving foreign exchange, commodities, indices and interest rates); real
estate advice, financing and investing; global custody, securities clearance
services and securities lending; and credit card services.
Van Kampen Funds Inc. specializes in the underwriting and distribution of
unit investment trusts and mutual funds with roots in money management dating
back to 1926. The Sponsor is a member of the National Association of Securities
Dealers, Inc. and has offices at One Parkview Plaza, Oakbrook Terrace, Illinois
60181, (630) 684-6000 and 2800 Post Oak Boulevard, Houston, Texas 77056, (713)
993-0500. As of November 30, 1997, the total stockholders' equity of Van Kampen
Funds Inc. was $132,381,000 (audited). (This paragraph relates only to the
Sponsor and not to the Trust or to any other Series thereof. The information is
included herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
As of September 30, 1997, the Sponsor and its Van Kampen 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 affiliates managed $54 billion of assets, consisting of $34.3 billion for
55 open-end mutual funds (of which 45 are distributed by Van Kampen Funds 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'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 INFORMATION
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. 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. 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.
TRUST TERMINATION
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Trust then outstanding or by the
Trustee when the value of the Securities owned by the Trust, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of the Trust has
exceeded $15,000,000). The Trust will be liquidated by the Trustee in the event
that a sufficient number of Units of the Trust not yet sold are tendered for
redemption by the Sponsor, so that the net worth of such Trust would be reduced
to less than 40% of the value of the Securities at the time they were deposited
in the Trust. If the Trust is liquidated because of the redemption of unsold
Units by the Sponsor, the Sponsor will refund to each purchaser of Units the
entire sales charge paid by such purchaser. The Trust Agreement will terminate
upon the sale or other disposition of the last Security held thereunder, but in
no event will it continue beyond the Mandatory Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities may 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 Securities. The Sponsor shall
direct the liquidation of the Securities in such manner as to effectuate orderly
sales and a minimal market impact. In the event the Sponsor does not so direct,
the Securities shall be sold within a reasonable period and in such manner as
the Trustee, in its sole discretion, shall determine. At least 30 days before
the Mandatory Termination Date the Trustee will provide written notice of any
termination to all Unitholders of the appropriate Trust and in the case of a
Trust will include with such notice a form to enable Unitholders owning the
minimum number of Units described in the Prospectus to request an in kind
distribution of the Securities. 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 the Securities in the Trust to the account of the
broker-dealer or bank designated by the Unitholder at Depository Trust Company.
The value of the Unitholder's fractional shares of the Securities will be paid
in cash. Unitholders not requesting an in kind distribution will receive a cash
distribution from the sale of the remaining Securities within a reasonable time
following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the Trust any accrued costs,
expenses, advances or indemnities provided by the Trust Agreement, including
estimated compensation of the Trustee, costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or other
governmental charges. Any sale of Securities in the Trust upon termination may
result in a lower amount than might otherwise be realized if such sale were not
required at such time. The Trustee will then distribute to each Unitholder of
each Trust 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 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.
CONTENTS OF REGISTRATION STATEMENT
This Amendment of Registration Statement comprises the following papers
and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to the Federal Income tax status of securities being
registered.
3.3 Opinion and consent of counsel as to New York tax status of securities being
registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Accountants.
EX-27 Financial Data Schedule.
SIGNATURES
The Registrant, Van Kampen Equity Opportunity Trust, Series 107, hereby
identifies Van Kampen Merritt Equity Opportunity Trust, Series 1, Series 2,
Series 4 and Series 7 and Van Kampen American Capital Equity Opportunity Trust,
Series 13, Series 14, Series 57 and Series 89 for purposes of the
representations required by Rule 487 and represents the following: (1) that the
portfolio securities deposited in the series as to the securities of which this
Registration Statement is being filed do not differ materially in type or
quality from those deposited in such previous series; (2) that, except to the
extent necessary to identify the specific portfolio securities deposited in, and
to provide essential financial information for, the series with respect to the
securities of which this Registration Statement is being filed, this
Registration Statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such previous
series as to which the effective date was determined by the Commission or the
staff; and (3) that it has complied with Rule 460 under the Securities Act of
1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen Equity Opportunity Trust, Series 107 has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago and State of
Illinois on the 28th day of July, 1998.
Van Kampen Equity Opportunity Trust, Series 107
By Van Kampen Funds Inc.
By GINA M. COSTELLO
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on July 28, 1998
by the following persons who constitute a majority of the Board of Directors of
Van Kampen Funds Inc.
SIGNATURE TITLE
Don G. Powell Chairman and Chief Executive )
Officer )
John H. Zimmerman President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
GINA M. COSTELLO
(Attorney-in-fact*)
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*An executed copy of each of the related powers of attorney is filed
herewith or was filed with the Securities and Exchange Commission in connection
with the Registration Statement on Form S-6 of Van Kampen American Capital
Equity Opportunity Trust, Series 64 (File No. 333-33087) and Van Kampen American
Capital Equity Opportunity Trust, Series 87 (File No. 333-44581) and the same
are hereby incorporated herein by this reference.
EXHIBIT 1.1
VAN KAMPEN EQUITY OPPORTUNITY TRUST
SERIES 107
TRUST AGREEMENT
Dated: July 28, 1998
This Trust Agreement among Van Kampen Funds Inc., as Depositor,
American Portfolio Evaluation Services, a division of Van Kampen Investment
Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp., as
Supervisory Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Van Kampen Equity Opportunity Trust, Series 87 and Subsequent
Series, Standard Terms and Conditions of Trust, Effective January 27, 1998"
(herein called the "Standard Terms and Conditions of Trust") and such provisions
as are set forth in full and such provisions as are incorporated by reference
constitute a single instrument. All references herein to Articles and Sections
are to Articles and Sections of the Standard Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(24), listed in the
Schedule hereto, have been deposited in trust under this Trust
Agreement.
2. The fractional undivided interest in and ownership of
each Trust represented by each Unit is an amount the numerator of which
is one and the denominator of which is the amount set forth under
"Summary of Essential Financial Information - Initial Number of Units"
in the Prospectus. Such fractional undivided interest may be (a)
increased by the number of any additional Units issued pursuant to
Section 2.03, (b) increased or decreased in connection with an
adjustment to the number of Units pursuant to Section 2.03, or (c)
decreased by the number of Units redeemed pursuant to Section 5.02.
3. The terms "Capital Account Record Date" and "Income Account
Record Date" shall mean the "Record Dates" set forth under "Summary of Essential
Financial Information" in the Prospectus.
4. The terms "Capital Account Distribution Date" and "Income Account
Distribution Date" shall mean the "Distribution Dates" set forth under "Summary
of Essential Financial Information" in the Prospectus.
5. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" set forth under "Summary of Essential Financial Information"
in the Prospectus.
6. Section 6.04(e) shall be replaced in its entirety by the
following:
(e) (1) Subject to the provisions of subparagraph (2) of this
paragraph, the Trustee may employ agents, sub-custodians, attorneys,
accountants and auditors and shall not be answerable for the default or
misconduct of any such agents, sub-custodians, attorneys, accountants
or auditors if such agents, sub-custodians, attorneys, accountants or
auditors shall have been selected with reasonable care. The Trustee
shall be fully protected in respect of any action under this Indenture
taken or suffered in good faith by the Trustee in accordance with the
opinion of counsel, which may be counsel to the Depositor acceptable to
me Trustee, provided, however that this disclaimer of liability shall
not excuse the Trustee from the responsibilities specified in
subparagraph (w) below. The fees and expenses charged by such agents,
sub-custodians, attorneys, accountants or auditors shall constitute an
expense of the Trust reimbursable from the Income and Capital Accounts
of the affected Trust as set forth in section 6.04 hereof.
(2) The Trustee may place and maintain in the care of an
Eligible Foreign Custodian (which is employed by the Trustee as a
sub-custodian as contemplated by subpargraph (1) of this paragraph (e)
and which may be an affiliate or subsidiary of the Trustee or any other
entity in which the Trustee may have an ownership interest) any
investments (including foreign currencies) for which the primary market
is outside the united States, and such case and cash equivalents in
amounts reasonably necessary to effect the Trust's transactions in such
investments, provided that:
(a) The Trustee shall perform all duties assigned to
the Foreign Custody Manager by Rule 17f-5 under the Investment Company
Act of 1940 (17 CFR ss. 270.17f-5) ("Rule 17f-5"), as now in effect or
as such rule may be amended in the future. The Trustee shall not
delegate such duties.
(b) The Trustee shall exercise reasonable carte,
prudence and diligence such as a person having responsibility for the
safekeeping of Trust assets would exercise, and shall be liable to the
Trust for any loss occurring as a result of its failure to do so.
(c) The Trustee shall maintain and keep current
written records regarding the basis for the choice or continued use of
a particular Eligible Foreign Custodian pursuant to this subparagraph
for a period of not less than six years from the end of the fiscal year
in which the Trust was terminated, the first two years in an easily
accessible place. Such records shall be available for inspection by
Unitholders and the Securities and Exchange Commission at the Trustee's
offices at all reasonable times during its usual business hours.
(3) "Eligible Foreign Custodian" shall have the meaning
assigned to it in rule 17f-5.
(4) "Foreign Custody Manager" shall have the meaning assigned
to it in Rule 17f-5.
7. Section 1.01 (1), (3) and (4) shall be replaced in their entirety by
the following:
(1) "Depositor" shall mean Van Kampen Funds Inc. and its
successors in interest, or any successor depositor appointed as
hereinafter provided.
(3) "Evaluator" shall mean American Portfolio Evaluation
Services (a division of a Van Kampen Investment Advisory Corp.) and its
successors in interest, or any successor evaluator appointed as
hereinafter provided.
(4) "Supervisory Servicer" shall mean Van Kampen Investment
Advisory Corp. and its successors in interest, or any successor
portfolio supervisor appointed as hereinafter provided.
8. Notwithstanding anything to the contrary in the Standard Terms
and Conditions of Trust and subject to the requirements set forth in this
paragraph, unless the Prospectus otherwise requires, the Sponsor may, on any
Business Day (the "Trade Date"), subscribe for additional Units as follows:
IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to
be executed and their corporate seals to be hereto affixed and attested; all as
of the day, month and year first above written.
Van Kampen Funds Inc.
By JAMES J. BOYNE
Vice President
Attest:
By NICHOLAS DALMASO
Assistant Secretary
American Portfolio Evaluation Services,
a division of Van Kampen Investment
Advisory Corp.
By JAMES J. BOYNE
Vice President
Attest
By NICHOLAS DALMASO
Assistant Secretary
Van Kampen Investment Advisory Corp.
By JAMES J. BOYNE
Vice President
Attest
By NICHOLAS DALMASO
Assistant Secretary
The Bank of New York
By JEFFREY COHEN
Vice President
Attest
By ROBERT WEIR
Assistant Treasurer
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
VAN KAMPEN EQUITY OPPORTUNITY TRUST, SERIES 107
(Note: Incorporated herein and made a part hereof is each "Portfolio"
as set forth in the Prospectus.)
EXHIBIT 3.1
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
July 28, 1998
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: VAN KAMPEN EQUITY OPPORTUNITY TRUST, SERIES 107
-----------------------------------------------
Gentlemen:
We have served as counsel for Van Kampen Funds Inc. as Sponsor and
Depositor of Van Kampen Equity Opportunity Trust, Series 107 (hereinafter
referred to as the "Trust"), in connection with the preparation, execution and
delivery of a Trust Agreement dated July 28, 1998, among Van Kampen Funds Inc.,
as Depositor, American Portfolio Evaluation Services, a division of Van Kampen
Investment Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp.,
as Supervisory Servicer, and The Bank of New York, as Trustee, pursuant to which
the Depositor has delivered to and deposited the Securities listed in the
Schedule to the Trust Agreement with the Trustee and pursuant to which the
Trustee has provided to or on the order of the Depositor documentation
evidencing ownership of Units of fractional undivided interest in and ownership
of the Trust (hereinafter referred to as the "Units"), created under said Trust
Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the execution
and issuance of certificates evidencing the Units in the Trust have been duly
authorized; and
2. The certificates evidencing the Units in the Trust, when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will constitute
valid and binding obligations of such Trust and the Depositor in
accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-57401) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EXHIBIT 3.2
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
July 28, 1998
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: VAN KAMPEN EQUITY OPPORTUNITY TRUST, SERIES 107
-----------------------------------------------
Gentlemen:
We have acted as counsel for Van Kampen Funds Inc., Depositor of Van
Kampen Equity Opportunity Trust, Series 107 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a Trust
Agreement dated July 28, 1998 (the "Indenture") among Van Kampen Funds Inc., as
Depositor, American Portfolio Evaluation Services, a division of Van Kampen
Investment Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp.,
as Supervisory Servicer, and The Bank of New York, as Trustee. The Fund is
comprised of unit investment trust, Global Transport Growth Trust, Series 1 (a
"Trust").
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we have
deemed pertinent.
The assets of the Trust will consist of a portfolio of equity
securities (the "Securities") as set forth in the Prospectus. For purposes of
this opinion, it is assumed that each Security is equity for federal income tax
purposes.
Based upon the foregoing and upon an investigation of such matters of
law as we consider to be applicable, we are of the opinion that, under existing
United States Federal income tax law:
(i) The Trust is not an association taxable as a corporation
for Federal income tax purposes but will be governed by the provisions
of subchapter J (relating to Trusts) of chapter 1, Internal Revenue
Code of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata
share of each asset of the Trust in the proportion that the number of
Units held by him bears to the total number of Units outstanding. Under
subpart E, subchapter J of chapter 1 of the Code, income of the Trust
will be treated as income of each Unitholder in the proportion
described, and an item of Trust income will have the same character in
the hands of a Unitholder as it would have in the hands of the Trustee.
Each Unitholder will be considered to have received his pro rata share
of income derived from each Trust asset when such income is considered
to be received by the Trust. A Unitholder's pro rata portion of
distributions of cash or property by a corporation with respect to a
Security ("dividends" as defined by Section 316 of the Code ) are
taxable as ordinary income to the extent of such corporation's current
and accumulated "earnings and profits." A Unitholder's pro rata portion
of dividends which exceed such current and accumulated earnings and
profits will first reduce the Unitholder's tax basis in such Security,
and to the extent that such dividends exceed a Unitholder's tax basis
in such Security, shall be treated as gain from the sale or exchange of
property.
(iii) The price a Unitholder pays for his Units, generally
including sales charges, is allocated among his pro rata portion of
each Security held by Trust (in proportion to the fair market values
thereof on the valuation date closest to the date the Unitholder
purchases his Units), in order to determine his tax basis for his pro
rata portion of each Security held by the Trust.
(iv) Gain or loss will be recognized to a Unitholder (subject
to various nonrecognition provisions under the Code) upon redemption or
sale of his Units, except to the extent an in kind distribution of
stock is received by such Unitholder from the Trust as discussed below.
Such gain or loss is measured by comparing the proceeds of such
redemption or sale with the adjusted basis of his Units. Before
adjustment, such basis would normally be cost if the Unitholder had
acquired his Units by purchase. Such basis will be reduced, but not
below zero, by the Unitholder's pro rata portion of dividends with
respect to each Security which are not taxable as ordinary income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unitholder (subject
to various nonrecognition provisions under the Code) and the amount
thereof will be measured by comparing the Unitholder's aliquot share of
the total proceeds from the transaction with his basis for his
fractional interest in the asset disposed of. Such basis is ascertained
by apportioning the tax basis for his Units (as of the date on which
his Units were acquired) among each of the Trust assets (as of the date
on which his Units were acquired) ratably according to their values as
of the valuation date nearest the date on which he purchased such
Units. A Unitholder's basis in his Units and of his fractional interest
in each Trust asset must be reduced, but not below zero, by the
Unitholder's pro rata portion of dividends with respect to the Security
which is not taxable as ordinary income.
(vi) Under the Indenture, under certain circumstances, a
Unitholder tendering Units for redemption may request an in kind
distribution of Securities upon the redemption of Units or upon the
termination of the Trust. As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust's assets.
The receipt of an in kind distribution will result in a Unitholder
receiving an undivided interest in whole shares of stock and possibly
cash. The potential federal income tax consequences which may occur
under an in kind distribution with respect to each Security owned by
the Trust will depend upon whether or not a Unitholder receives cash in
addition to Securities. A "Security" for this purpose is a particular
class of stock issued by a particular corporation. A Unitholder will
not recognize gain or loss if a Unitholder only receives Securities in
exchange for his or her pro rata portion in the Securities held by the
Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will
generally recognize gain or loss based upon the difference between the
amount of cash received by the Unitholder and his tax basis in such
fractional share of a Security held by the Trust. The total amount of
taxable gains (or losses) recognized upon such redemption will
generally equal the sum of the gain (or loss) recognized under the
rules described above by the redeeming Unitholder with respect to each
Security owned by the Trust.
A domestic corporation owning Units in the Trust may be eligible for
the 70% dividends received deduction pursuant to Section 243(a) of the Code with
respect to such Unitholder's pro rata portion of dividends received by the Trust
(to the extent such dividends are taxable as ordinary income and are
attributable to domestic corporations), subject to the limitations imposed by
Sections 246 and 246A of the Code.
To the extent dividends received by the Trust are attributable to
foreign corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Section 67 of the Code provides that certain itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by individuals only to the extent they exceed 2% of
such individual's adjusted gross income. Unitholders may be required to treat
some or all of the expenses of the Trust as miscellaneous itemized deductions
subject to this limitation.
A Unitholder will recognize taxable gain (or loss) when all or part of
his pro rata interest in a Security is either sold by the Trust or redeemed or
when a Unitholder disposes of his Units in a taxable transaction, in each case
for an amount greater (or less) than his tax basis therefor, subject to various
non-recognition provisions of the Code.
It should be noted that payments to the Trust of dividends on
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trust. Any dividends withheld as a result thereof will
nevertheless be treated as income to the Unitholders. Because under the grantor
trust rules, an investor is deemed to have paid directly his share of foreign
taxes that have been paid or accrued, if any, an investor may be entitled to a
foreign tax credit or deduction for United States tax purposes with respect to
such taxes. A required holding period is imposed for such credits.
Any gain or loss recognized on a sale or exchange will, under current
law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including foreign, state or local taxes or
collateral tax consequences with respect to the purchase, ownership and
disposition of Units.
Very truly yours
CHAPMAN AND CUTLER
EXHIBIT 3.3
July 27, 1998
WINSTON & STRAWN
200 Park Avenue
New York, New York 10166-4193
July 28, 1998
Van Kampen Equity Opportunity Trust, Series 107
c/o The Bank of New York, As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen Equity Opportunity
Trust, Series 107 (the "Fund") consisting of Global Transport Growth Trust,
Series 1 (the "Trust") for purposes of determining the applicability of certain
New York taxes under the circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the "Indenture"),
dated as of today (the "Date of Deposit") among Van Kampen Funds Inc. (the
"Depositor"), American Portfolio Evaluation Services, a division of an affiliate
of the Depositor, as Evaluator, Van Kampen Investment Advisory Corp., an
affiliate of the Depositor, as Supervisory Servicer (the "Supervisory
Servicer"), and The Bank of New York, as trustee (the "Trustee"). As described
in the prospectus relating to the Fund dated today to be filed as an amendment
to a registration statement heretofore filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Prospectus") (File
Number 333-57401), the objectives of the Fund are to provide the potential for
dividend income and capital appreciation through investment in a fixed portfolio
of actively traded equity securities of companies engaged in, providing services
to companies in, the industry identified in Trust's name, or are the type of
securities identified in the name of the Trust. It is noted that no opinion is
expressed herein with regard to the Federal tax aspects of the securities, the
Trusts, units of the Trusts (the "Units"), or any income, gains or losses in
respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to the Trust the securities and/or contracts and cash for the
purchase thereof together with an irrevocable letter of credit in the amount
required for the purchase price of the securities comprising the corpus of the
Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities to
be deposited in the Trust, and, upon the receipt thereof, will deliver to the
Depositor a registered certificate for the number of Units representing the
entire capital of the Trusts as more fully set forth in the Prospectus. The
Units, which are represented by certificates ("Certificates"), will be offered
to the public upon the effectiveness of the registration statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash dividends
received by the Fund and with the proceeds from the disposition of securities
held in the Fund and the proceeds of the treasury obligation on maturity and the
distribution of such cash dividends and proceeds to the Unit holders. The
Trustee will also maintain records of the registered holders of Certificates
representing an interest in the Fund and administer the redemption of Units by
such Certificate holders and may perform certain administrative functions with
respect to an automatic reinvestment option.
Generally, equity securities held in the Trust may be removed therefrom
by the Trustee at the direction of the Depositor upon the occurrence of certain
specified events which adversely affect the sound investment character of the
Fund, such as default by the issuer in payment of declared dividends or of
interest or principal on one or more of its debt obligations.
Prior to the termination of the Fund, the Trustee is empowered to sell
equity securities designated by the Supervisory Servicer only for the purpose of
redeeming Units tendered to it and of paying expenses for which funds are not
available. The Trustee does not have the power to vary the investment of any
Unit holder in the Fund, and under no circumstances may the proceeds of sale of
any equity securities held by the Fund be used to purchase new equity securities
to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on business
corporations, and, for purposes of that Article, Section 208(l) defines the term
"corporation" to include, among other things, "any business conducted by a
trustee or trustees wherein interest or ownership is evidenced by certificate or
other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in which
interest or ownership is evidenced by certificate or other
written instrument includes, but is not limited to, an
association commonly referred to as a "business trust" or
"Massachusetts trust". In determining whether a trustee or
trustees are conducting a business, the form of the agreement
is of significance but is not controlling. The actual
activities of the trustee or trustees, not their purposes and
powers, will be regarded as decisive factors in determining
whether a trust is subject to tax under Article 9-A. The mere
investment of funds and the collection of income therefrom,
with incidental replacement of securities and reinvestment of
funds, does not constitute the conduct of a business in the
case of a business conducted by a trustee or trustees. 20
NYCRR 1-2.5(b)(2) (July 11, 1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that where a
trustee merely invests funds and collects and distributes the income therefrom,
the trust is not engaged in business and is not subject to the franchise tax.
BURRELL V. LYNCH, 274 A.D. 347, 84 N.Y.S.2d 171 (3rd Dept. 1948), ORDER
RESETTLED, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd Dept. 1949).
In an Opinion of the Attorney General of the State of New York, 47 N.Y.
Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee of an
unincorporated investment trust was without authority to reinvest amounts
received upon the sales of securities and could dispose of securities making up
the trust only upon the happening of certain specified events or the existence
of certain specified conditions, the trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to, and we
assume will not, sell equity securities contained in the corpus of the Fund and
reinvest the proceeds therefrom. Further, the power to sell such equity
securities is limited to circumstances in which the credit-worthiness or
soundness of the issuer of such equity security is in question or in which cash
is needed to pay redeeming Unit holders or to pay expenses, or where the Fund is
liquidated subsequent to the termination of the Indenture. In substance, the
Trustee will merely collect and distribute income and will not reinvest any
income or proceeds, and the Trustee has no power to vary the investment of any
Unit holder in the Fund.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust will be
deemed to be the owner of the trust under certain circumstances, and therefore
taxable on his proportionate interest in the income thereof. Where this Federal
tax rule applies, the income attributed to the grantor will also be income to
him for New York income tax purposes. See TSB-M-78(9)(c), New York Department of
Taxation and Finance, June 23, 1978.
By letter dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be considered as
owning a share of each asset of the Trust in the proportion that the number of
Units held by such holder bears to the total number of Units outstanding and the
income of a Trust will be treated as the income of each Unit holder in said
proportion pursuant to Subpart E of Part I, Subchapter J of Chapter 1 of the
Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we specifically rely,
we are of the opinion that under existing laws, rulings, and court decisions
interpreting the laws of the State and City of New York:
1. Each of the Trusts will not constitute an association
taxable as a corporation under New York law, and, accordingly, will not
be subject to tax on its income under the New York State franchise tax
or the New York City general corporation tax.
2. The income of the Trusts will be treated as the income of the Unit
holders under the income tax laws of the State and City of New York.
3. Unit holders who are not residents of the State of New
York are not subject to the income tax laws thereof with respect to any
interest or gain derived from the Fund or any gain from the sale or
other disposition of the Units, except to the extent that such interest
or gain is from property employed in a business, trade, profession or
occupation carried on in the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name and the
reference to our firm in the Registration Statement and in the Prospectus.
Very truly yours,
WINSTON & STRAWN
EXHIBIT 4.1
Interactive Data
14 Wall Street, 11th Floor
New York, NY 10005
July 27, 1998
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen
Global Transport Growth Trust, Series 1
(A Unit Investment Trust) Registered Under the Securities Act of 1933,
File No. 333-57401
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund, a copy of which is attached hereto.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Corporation, as the
Evaluator, and to the use of the Obligations prepared by us which are referred
to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Independent Certified Public Accountants Consent
We have issued our report dated July 28, 1998 on the statement of
condition and related securities portfolio of Van Kampen Equity Opportunity
Trust, Series 107 as of July 28, 1998 contained in the Registration Statement on
Form S-6 and Prospectus. We consent to the use of our report in the Registration
Statement and Prospectus and to the use of our name as it appears under the
caption Other Matters-Independent Certified Public Accountants.
Grant Thornton LLP
Chicago, Illinois
July 28, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on July 28, 1998
It is unaudited
</LEGEND>
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<NUMBER> 1
<NAME> tran
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<PERIOD-START> JUL-28-1998
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