File No: 333-
CIK #1025253
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A Exact name of Trust: VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 107
B. Name of Depositor: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace Illinois 60181
D. Name and complete address of agents for service:
CHAPMAN AND CUTLER VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title of securities being registered: Units of undivided fractional
beneficial interests
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>
VAN KAMPEN AMERICAN CAPITAL 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 ) Trust Administration
underwriter
5. Organization of trust ) The Trust
6. Execution and termination of ) The Trust
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
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
) Risk Factors
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trust
)
) Risk Factors
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and
expenses ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Fee Table
) Trust Portfolio
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information
regarding periodic
payment plan certificates)
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Public Offering
) Rights of Unitholders
(d) Certain other fees,
expenses or ) Trust Operating Expenses
charges payable by
holders ) Rights of Unitholders
(e) Certain profits to be
received ) Public Offering
by depositor, principal ) Trust Portfolio
underwriter, trustee or
any affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of Trust's securities ) Rights of Unitholders
15. Receipt and handling of payments) *
from purchasers )
16. Acquisition and disposition of ) The Trust
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Public Offering
18. (a) Receipt and disposition )
of income ) Rights of Unitholders
(b) Reinvestment of
distributions ) Rights of Unitholders
(c) Reserves or special funds ) Trust Operating Expenses
)
(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 by states ) Public Offering
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 ) Trust Administration
underwriter )
(b) N.A.S.D. membership by ) Trust Administration
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
Fee Table
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's )
securities ) *
52. (a) Provisions of trust )
agreement with respect to)
replacement or )
elimination portfolio )
securities )
)
(b) Transactions involving )
elimination of underlying)
securities )
(c) Policy regarding
substitution or )
elimination of underlying) Trust Administration
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) 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 1(c) to ) Report of Independent Certified
Form S-6) ) Public Accountants
) Statement of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
PRELIMINARY PROSPECTUS DATED JUNE 22, 1998
SUBJECT TO COMPLETION
GRUNTAL &CO.
L.L.C.
ETABLISHED1880
Member New York Stock Exchange
GLOBAL TRANSPORT GROWTH TRUST, SERIES 1
- --------------------------------------------------------------------------------
Van Kampen American Capital 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.
<TABLE>
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
JULY 28, 1998
<CAPTION>
PUBLIC OFFERING PRICE
<S> <C> <C>
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)
Aggregate value of securities (1) $
Estimated initial distribution per Unit (4) $
Estimated annual dividends per Unit (4) $
Redemption price per Unit (5) $ 9.55
GENERAL INFORMATION
Initial Date of Deposit July 28, 1998
Mandatory Termination Date July 18, 2002
Record Dates December 10 and June 10
Distribution Dates December 25 and June 25
</TABLE>
- --------------------------------------------------------------------------------
(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.
(2)The Public Offering Price will include any accumulated dividends or cash in
the Income or Capital Accounts.
(3)At the Evaluation Time on the Initial Date of Deposit, the number of Units
may be adjusted so that the Public Offering Price per Unit equals $10. The
number of Units and fractional interest of each Unit will increase or
decrease to the extent of any adjustment.
(4)This estimate is based on the most recently declared quarterly dividends or
interim and final dividends accounting for any foreign withholding taxes.
Actual dividends may vary due to a variety of factors. See "Risk Factors".
(5)The redemption price is reduced by any remaining deferred sales charge. See
"Rights of Unitholders--Redemption of Units".
FEE TABLE
TRANSACTION FEES (AS % OF OFFERING PRICE)
Initial sales charge (1)............................................. 1.00%
Deferred sales charge (2)............................................ 3.50%
----------
Maximum sales charge ................................................ 4.50%
==========
Maximum sales charge on reinvested dividends......................... 3.50%
==========
ESTIMATED ANNUAL EXPENSES PER UNIT
Trustee's fee and operating expenses.................................$
Evaluation fees......................................................$
Supervisory fees.....................................................$
Offering costs (3)...................................................$
----------
Estimated annual expenses per Unit...................................$
==========
ESTIMATED COSTS OVER TIME
One year............................................................$
Three years.........................................................$
Five years..........................................................$
Ten years........................................................... N/A
This fee table is intended to assist investors in understanding the costs
that an investor 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 all distributions are reinvested at the end of each
year. Of course, this example should not be considered a representation of
actual past or future expenses or annual rate of return which may differ from
those assumed for purposes of 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 ------- , 1998 through ------- , 1999.
(3)The Trust will pay all or a portion of its offering costs which will be
amortized over the life of the Trust. See "Statement of Condition" and "Trust
Operating Expenses".
GLOBAL TRANSPORTATION 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
- --------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1)* PER SHARE (2) YIELD (3) TO TRUST (2)
- ---------- ----------------------------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
American Airlines $ $ $
United Airlines
Southwest Airlines
British Airways
Burlington Northern Santa Fe Corp.
Union Pacific Corporation
Norfolk Southern
CSX Corporation
Canadian National Railway
Rollins Truck Leasing Corporation
Yellow Corp.
United States Freightways
Federal Express Corporation
Expeditors International
Circle International Group
Airborne Freight
CNF Transportation
Boeing Co.
Lockheed Martin Corporation
Raytheon
Orbital Sciences Corporation
TRW Inc.
Hughes Electronics Corp.
BE Aerospace, Inc.
General Electric Co.
United Technologies Corp.
General Motors
- ---------- -------------
$
========== =============
</TABLE>
See "Notes to Portfolio".
*NOTE: The securities listed above are currently anticipated to be included in
the Trust portfolio. The actual portfolio is subject to change at the Initial
Date of Deposit.
NOTES TO PORTFOLIO
(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 __, 1998
and have a settlement date of July __, 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
-------------- --------------
$ $
$ $
(3)Current Dividend Yield for each Security was calculated by dividing the
estimated annual dividends per share by the Security's market value as of the
close of trading on the day prior to the Initial Date of Deposit. Estimated
annual dividends per share are calculated by annualizing the most recently
declared dividends or by adding the most recent interim and final dividends
declared and reflect any foreign withholding taxes.
THE SECURITIES. A brief description of each of the issuers of the Securities
is listed below.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Equity Opportunity Trust,
Series 107:
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen American Capital 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 American Capital 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) $
Offering costs (2)
-----------
Total $
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued offering costs (2) $
Deferred sales charge liability (3)
Interest of Unitholders--
Cost to investors (4)
Less: Gross underwriting commission (4)(5)
-----------
Net interest to Unitholders (4)
-----------
Total $
===========
- --------------------------------------------------------------------------------
(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)The Trust will bear all or a portion of its offering costs, which will be
deferred and amortized over one year. Offering costs have been estimated
based on a projected Trust size of $___________. To the extent the Trust is
larger or smaller, the estimate will vary.
(3)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
- --------------------------------------------------------------------------------
The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the date of
this Prospectus (the "Initial Date of Deposit"), among Van Kampen American
Capital Distributors, Inc., as Sponsor, Gruntal & Co., L.L.C., as Supervisor,
The Bank of New York, as Trustee, and American Portfolio Evaluation Services, a
division of Van Kampen American Capital Investment Advisory Corp., as Evaluator.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in portfolios 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
- --------------------------------------------------------------------------------
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. There is no assurance 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 transaction 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. Securities may not be
removed from the Trust and additional Units may be created even if the
Underwriter no longer believes some or all of the Securities have the potential
to provide capital appreciation or issues a sell recommendation on any of the
Securities.
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 will not as a result thereof be
removed from the Trust portfolio.
RISK FACTORS
- --------------------------------------------------------------------------------
PRICE VOLATILITY. The Trust invests in common stocks of U.S. and foreign
companies. 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.
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.
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. An investor may aggregate purchases of Units of the Trusts for
purposes of qualifying for volume purchase discounts listed above. The reduced
sales charge structure will also apply on all purchases by the same person from
any one dealer of units of Van Kampen American Capital-sponsored unit investment
trusts which are being offered in the initial offering period (a) on any one day
(the "Initial Purchase Date") or (b) on any day subsequent to the Initial
Purchase Date if (1) the units purchased are of a unit investment trust
purchased on the Initial Purchase Date, and (2) the person purchasing the units
purchased a sufficient amount of units on the Initial Purchase Date to qualify
for a reduced sales charge on such date. In the event units of more than one
trust are purchased on the Initial Purchase Date, the aggregate dollar amount of
such purchases will be used to determine whether purchasers are eligible for a
reduced sales charge. Such aggregate dollar amount will be divided by the public
offering price per unit of each respective trust purchased to determine the
total number of units which such amount could have purchased of each individual
trust. Purchasers must then consult the applicable trust's prospectus to
determine whether the total number of units which could have been purchased of a
specific trust would have qualified for a reduced sales charge and the amount of
such reduction. To determine the applicable sales charge reduction it is
necessary to accumulate all purchases made on the Initial Purchase Date and all
purchases made in accordance with (b) above. Units purchased in the name of the
spouse of a purchaser or in the name of a child of such purchaser ("immediate
family members") will be deemed to be additional purchases by the purchaser for
the purposes of calculating the applicable sales charge. The reduced sales
charges will also be applicable to a trustee or other fiduciary purchasing
securities for one or more trust estate or fiduciary accounts.
Units may be purchased in the primary or secondary market at the Public
Offering Price 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 immediate family members (as
described above) and (4) officers and directors of bank holding companies that
make Units available directly or through subsidiaries or bank affiliates.
Notwithstanding anything to the contrary in this Prospectus, such investors,
bank trust departments, firm employees and bank holding company officers and
directors who purchase Units through this program will not receive sales charge
reductions for quantity purchases.
A purchaser desiring to purchase during a 13 month period $500,000 or more of
any combination of series of Van Kampen American Capital unit investment trusts
may qualify for a reduced sales charge by signing a nonbinding Letter of Intent
with any single broker-dealer. After signing a Letter of Intent, at the date
total purchases, less redemptions, of units of any combination of series of Van
Kampen American Capital unit investment trusts by a purchaser (including units
purchased in the name of the spouse of a purchaser or in the name of a child of
such purchaser under 21 years of age) exceed $500,000, the selling
broker-dealer, bank or other will credit the unitholder with cash as a
retroactive reduction of the sales charge on such units equal to the amount
which would have been paid for the total aggregated sales amount. If a purchase
does not complete the required purchases under the Letter of Intent within the
13 month period, no such retroactive sales charge reduction shall be made.
During the initial offering period, unitholders of any Van Kampen American
Capital-sponsored unit investment trust may utilize their redemption or
termination proceeds to purchase Units of all Trusts at the Public Offering
Price per Unit less 1%.
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 the Van Kampen American Capital Distributors, Inc.
and its affiliates, dealers and their affiliates and vendors providing services
to the Sponsor may purchase Units at the Public Offering Price less the
applicable dealer concession.
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 offering side 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
____% of the Public Offering Price.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For Rollover transactions the total
concession or agency commission will amount to __% per Unit (or such lesser
amount resulting from discounts). 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 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 ____% of the Public Offering Price per Unit. In addition, the
Underwriter will receive an additional ____% of the Public Offering Price per
Unit on sales of at least $___________. 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.
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
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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. 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. Distributions may
also be reinvested into Van Kampen American Capital or Morgan Stanley mutual
funds. 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. Proceeds received from the disposition of any Securities after a
record date and prior to the following distribution date will be held in the
Capital Account and not distributed until the next distribution date. 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) through two options. Brokers and dealers can use the
Dividend Reinvestment Service through Depository Trust Company or purchase the
Automatic Reinvestment Option CUSIP. Unitholders will be subject to the
remaining deferred sales charge payments due on Units. To participate in this
reinvestment option, a Unitholder must file with the Trustee a written notice of
election, together with any certificate representing Units and other
documentation that the Trustee may then require, at least five days prior to the
related Record Date. 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.
In addition, under the Guaranteed Reinvestment Option Unitholders may elect
to have distributions automatically reinvested in certain Van Kampen American
Capital or Morgan Stanley mutual funds (the "Reinvestment Funds"). Each
Reinvestment Fund has investment objectives which differ from those of the
Trusts. The prospectus relating to each Reinvestment Fund describes its
investment policies and how to begin reinvestment. A Unitholder may obtain a
prospectus for the Reinvestment Funds from the Sponsor. Purchases of shares of a
Reinvestment Fund will be made at a net asset value computed on the Distribution
Date. Unitholders with an existing Guaranteed Reinvestment Option account
(whereby a sales charge is imposed on distribution reinvestments) may transfer
their existing account into a new account which allows purchases of Reinvestment
Fund shares at net asset value.
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, each Reinvestment Fund, and
its investment adviser shall have the right to suspend or terminate these
reinvestment plans 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 1,000 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. 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
(however, Unitholders who terminate their investment on or prior to the first
Special Redemption Date will not be assessed the remaining second year deferred
sales charge). 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. For purposes of redemptions and
secondary market transactions, the value of any foreign securities is based on
the bid side 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 will 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 (unless the Unitholder has elected an in
kind distribution or is a participant in the final Rollover). 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 American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect subsidiary
of Morgan Stanley Dean Witter & Co. Van Kampen American Capital Distributors,
Inc. specializes in the underwriting and distribution of unit investment trusts
and mutual funds with roots in money management dating back to 1926. The Sponsor
is a member of the National Association of Securities Dealers, Inc. and has
offices at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, (630) 684-6000
and 2800 Post Oak Boulevard, Houston, Texas 77056, (713) 993-0500. As of
November 30, 1997, the total stockholders' equity of Van Kampen American Capital
Distributors, 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 Van Kampen American Capital
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 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 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 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 Trusts 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 Taxpayer Relief Act of 1997 (the "1997 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) is subject to a maximum marginal stated tax rate of either 28% or
20%, depending upon the holding periods of the capital assets. Capital gain or
loss is long-term if the holding period for the asset is more than one year, and
is short-term if the holding period for the asset is one year or less. The date
on which a Unit is acquired (i.e., the "trade date") is excluded for purposes of
determining the holding period of the Units. Generally, capital gains realized
from assets held for more than one year but not more than 18 months are taxed at
a maximum marginal stated tax rate of 28% and capital gains realized from assets
(with certain exclusions) held for more than 18 months are taxed at a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Further, capital gains realized from assets held for one
year or less are taxed at the same rates as ordinary income. Legislation is
currently pending that provides the appropriate methodology that should be
applied in netting the realized capital gains and losses. Such legislation is
proposed to be effective retroactively for tax years ending after May 6, 1997.
It should be noted that legislative proposals are introduced from time to time
that affect tax rates and could affect relative differences at which ordinary
income and capital gains are taxed.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust involved including his
pro rata portion of all Securities represented by a Unit. 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
national 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 such 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 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 Evaluator, which is an affiliate of the Sponsor, will receive the
annual fee for evaluation services set forth in the "Fee Table". In addition,
the Supervisor will receive the annual fee for portfolio supervisory 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 unit investment
trusts for which the Evaluator and Supervisor provide these services in any
calendar year exceed the aggregate cost to the Evaluator and Supervisor 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. Expenses incurred in establishing the Trust,
including the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and closing documents), federal and
state registration fees, the initial fees and expenses of the Trustee, legal and
accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over the life of the Trust.
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
----- ----
Summary of Essential Financial Information.. 2
Fee Table................................... 3
Global Transport Growth Trust............... 5
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-11
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 AMERICAN CAPITAL 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
The Trust 2
Sponsor Information 2
Trustee Information 3
Trust Termination 4
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.
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 American Capital Distributors, Inc., a Delaware corporation, is
the Sponsor of the Trust. The Sponsor is an indirect subsidiary of VK/AC
Holding, Inc. VK/AC Holding, Inc. is a wholly owned subsidiary of MSAM Holdings
II, Inc., which in turn is a wholly owned subsidiary of Morgan Stanley Dean
Witter & Co. ("MSDW").
MSDW, together with various of its directly and indirectly owned
subsidiaries, is engaged in a wide range of financial services through three
primary businesses: securities, asset management and credit services. These
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; asset
management; trading of futures, options, foreign exchange commodities and swaps
(involving foreign exchange, commodities, indices and interest rates); real
estate advice, financing and investing; global custody, securities clearance
services and securities lending; and credit card services.
Van Kampen American Capital Distributors, Inc. specializes in the
underwriting and distribution of unit investment trusts and mutual funds with
roots in money management dating back to 1926. The Sponsor is a member of the
National Association of Securities Dealers, Inc. and has offices at One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak
Boulevard, Houston, Texas 77056, (713) 993-0500. As of November 30, 1997, the
total stockholders' equity of Van Kampen American Capital Distributors, 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 American Capital
affiliates managed or supervised approximately $65.3 billion of investment
products, of which over $10.85 billion is invested in municipal securities. The
Sponsor and its Van Kampen American Capital affiliates managed $54 billion of
assets, consisting of $34.3 billion for 55 open-end mutual funds (of which 45
are distributed by Van Kampen American Capital Distributors, Inc.) $14.2 billion
for 37 closed-end funds and $5.5 billion for 106 institutional accounts. The
Sponsor has also deposited approximately $26 billion of unit investment trusts.
All of Van Kampen American Capital's open-end funds, closed-ended funds and unit
investment trusts are professionally distributed by leading financial firms
nationwide. Based on cumulative assets deposited, the Sponsor believes that it
is the largest sponsor of insured municipal unit investment trusts, primarily
through the success of its Insured Municipals Income Trust(R) or the IM-IT(R)
trust. The Sponsor also provides surveillance and evaluation services at cost
for approximately $13 billion of unit investment trust assets outstanding. Since
1976, the Sponsor has serviced over two million investor accounts, opened
through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the 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 will begin to be sold in
connection with the termination of the Trust. The Sponsor will determine the
manner, timing and execution of the sales of the 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 1,000 or
more Units 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 with less than 1,000
Units and Unitholders with 1,000 or more Units 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.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Proposed form of Trust Agreement (to be supplied by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be supplied by amendment).
3.2 Opinion and consent of counsel as to New York tax status of securities
being registered (to be supplied by amendment).
4.1 Consent of Interactive Data Corporation (to be supplied by amendment).
4.2 Consent of Grant Thornton LLP (to be supplied by amendment).
EX-27 Financial Data Schedule (to be supplied by amendment).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Van Kampen American Capital Equity Opportunity Trust, Series 107 has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Chicago and State of Illinois on the
22nd day of June, 1998.
VAN KAMPEN AMERICAN CAPITAL EQUITY
OPPORTUNITY TRUST, SERIES 107
(Registrant)
By: VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
(Depositor)
Gina Costello
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on June 22, 1998 by the following
persons who constitute a majority of the Board of Directors of Van Kampen
American Capital Distributors, Inc.
SIGNATURE TITLE
Don G. Powell Chairman and Chief Executive Officer )
John H. Zimmerman President and Chief Operating Officer)
Ronald A. Nyberg Executive Vice President and General )
Counsel )
William R. Rybak Executive Vice President and Chief )
Financial Officer )
Gina Costello
(Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was filed with
the Securities and Exchange Commission in connection with the Registration
Statement on Form S-6 of Van Kampen American Capital Equity Opportunity Trust,
Series 64 (File No. 333- 33087) and Van Kampen American Capital Equity
Opportunity Trust, Series 87 (File No. 333-44581) and the same are hereby
incorporated herein by this reference.
