Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 2
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Van Kampen Merritt Equity Opportunity Trust, Series 8
(Exact Name of Trust)
Van Kampen American Capital Distributors, Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
Van Kampen American Capital Distributors, Inc. Chapman and Cutler
Attention: Don G. Powell Attention: Mark J.
Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective
on April 24, 1996 pursuant to paragraph (b) of Rule 485.
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 8
Van Kampen Merritt Brand Name Equity Trust, Series 1
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.Please retain both parts of this Prospectus for future reference.
THE TRUST
The aboved-named series of Van Kampen Merritt Equity Opportunity Trust, Series
8 (the "Trust" ) is comprised of one unit investment trust, Van Kampen
Merritt Brand Name Equity Trust, Series 1 (the "Brand Name Equity
Trust" ). The Brand Name Equity Trust offers investors the opportunity to
purchase Units representing proportionate interests in a fixed Portfolio of
equity securities issued by companies diversified within the non-durable
consumer goods industry including common stocks of foreign issuers, all of
which are in American Depository Receipt for ("ADRs" ). Unless
terminated earlier, the Trust will terminate on February 1, 2002 and any
securities then held will, within a reasonable time thereafter, be liquidated
or distributed by the Trustee. Any Securities liquidated at termination will
be sold at the then current market value for such Securities; therefore, the
amount distributable in cash to a Unitholder upon termination may be more or
less than the amount such Unitholder paid for his Units.
PUBLIC OFFERING PRICE
The Public Offering Price per Unit of the Trust is equal to the aggregate
underlying value of the Equity Securities plus or minus cash, if any, in the
Capital and Income Accounts, divided by the number of Units outstanding, plus
a sales charge of 4.9% of the Public Offering Price (excluding any transaction
fees) which is equivalent to 5.152% of the aggregate underlying value of the
Securities. See "Summary of Essential Financial Information" in Part
Two.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Date of this Prospectus is April 17, 1996
Van Kampen American Capital
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 8
Brand Name Equity Trust
Summary of Essential Financial Information
As of March 1, 1996
Sponsor: Van Kampen American Capital Distributors, Inc.
Supervisor: Van Kampen American Capital Investment Advisory Corp.
(An affiliate of the Sponsor)
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
Brand Name
Equity
Trust
<S> <C>
General Information
Number of Units................................................................................... 3,788,630
Fractional Undivided Interest in the Trust per Unit .............................................. 1/3,788,630
Public Offering Price: ...........................................................................
Aggregate Value of Securities in Portfolio <F1>.................................................. $ 55,347,523
Aggregate Value of Securities per Unit (including accumulated dividends)......................... $ 14.64
Sales Charge 4.4% (4.6025% of Aggregate Value of Securities excluding principal cash) per Unit... $ .67
Public Offering Price per Unit <F2>.............................................................. $ 15.31
Redemption Price per Unit......................................................................... $ 14.64
Secondary Market Repurchase Price per Unit........................................................ $ 14.64
Excess of Public Offering Price per Unit Over Redemption Price per Unit........................... $ .67
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee...Maximum of $.0025 per Unit
Evaluator's Annual Fee ...............Maximum of $.0025 per Unit
Evaluations for purpose of sale, purchase or redemption of Units are made as of 4:00 P.M. Eastern time on days of trading on the
New York Stock Exchange next following receipt of an order for a sale or purchase of Units or receipt by The Bank of New York of
Units tendered for redemption.
Date of Deposit.......................July 26, 1994
Mandatory Termination Date............February 1, 2002
Minimum Termination Value.............The Trust may be terminated if the net asset value of such Trust is less than $500,000
unless the net asset value of such Trust deposits has exceeded $15,000,000, then the Trust
Agreement may be terminated if the net asset value of such Trust is less than $3,000,000.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Special Information......................................
Calculation of Estimated Net Annual Dividends per Unit...
Estimated Gross Annual Dividends per Unit............... $ .27490
Less: Estimated Expenses per Unit....................... $ .01706
Estimated Net Annual Dividends per Unit................. $ .25784
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee................$.008 per Unit
Income Distribution Record Date.....TENTH day of March, June, September, and December.
Income Distribution Date............TWENTY-FIFTH day of March, June, September and December.
Capital Account Record Date.........TENTH day of December.
Capital Account Distribution Date...TWENTY-FIFTH day of December.
<FN>
<F1>Equity Securities listed on a national securities exchange are valued at
the closing sale price, or if no such price exists or if the Equity Security
is not listed, at the closing asked price thereof.
<F2>Anyone ordering Units after such date will have included in the Public
Offering Price a pro rata share of any cash in the Income and Capital Accounts.
<F3>Effective on each August 2, commencing August 2, 1995, the secondary sales
charge will decrease by .5 of 1% to a minimum sales charge of 1.5%. See "
Public Offering-Offering Price."
</TABLE>
PORTFOLIO
The Brand Name Equity Trust consists of 30 different issues of Equity
Securities, most of which are issued by companies diversified within the
non-durable consumer goods industry including common stocks of foreign
issuers, all of which are ADRs. All of the Equity Securities are listed on a
National Securities Exchange, the NASDAQ National Market System or are traded
in the over-the counter market.
PER UNIT INFORMATION
<TABLE>
<CAPTION>
1994<F1> 1995
<S> <C> <C>
Net asset value per Unit at beginning of period........................................................ $ 9.57 $ 10.42
Net asset value per Unit at end of period.............................................................. $ 10.42 $ 13.91
Distributions to Unitholders of investment income including accumulated dividends paid on Units
redeemed (average Units outstanding for entire period) .............................................. $ 0.22 $ 0.25
Distributions to Unitholders from Equity Security redemption proceeds (average Units outstanding for
entire period)....................................................................................... $ -- $ 0.06
Unrealized appreciation (depreciation) of Equity Securities (per Unit outstanding at end of period).... $ 0.30 $ 3.23
Units outstanding at end of period..................................................................... 2,699,999 3,914,046
</TABLE>
For the period from July 26, 1994 (initial date of deposit) through December
31, 1994.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen Merritt Equity Opportunity Trust, Series 8
(Brand Name Equity Trust)
We have audited the accompanying statement of condition (including the
analysis of net assets) and the related portfolio of Van Kampen Merritt Equity
Opportunity Trust, Series 8 (Brand Name Equity Trust) as of December 31, 1995,
and the related statements of operations and changes in net assets for the
period from July 26, 1994 (date of deposit) through December 31, 1994 and the
year ended December 31, 1995. These statements are the responsibility of the
Trustee and the Sponsor. Our responsibility is to express an opinion on such
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1995 by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee and
the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Van Kampen Merritt Equity
Opportunity Trust, Series 8 (Brand Name Equity Trust) as of December 31, 1995,
and the results of operations and changes in net assets for the period from
July 26, 1994 (date of deposit) through December 31, 1994 and the year ended
December 31, 1995, in conformity with generally accepted accounting
principles.
Chicago, Illinois GRANT THORNTON LLP
March 15, 1996
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST
SERIES 8
Statements of Condition
December 31, 1995
<TABLE>
<CAPTION>
Brand Name
Equity
Trust
<S> <C>
Trust property
Cash.................................................................................... $ --
Securities at market value, (cost $40,981,271) (note 1)................................. 54,446,414
Accumulated dividends................................................................... 94,962
Receivable for securities sold.......................................................... --
$ 54,541,376
Liabilities and interest to Unitholders
Cash overdraft.......................................................................... $ 90,741
Redemptions payable..................................................................... --
Interest to Unitholders................................................................. 54,450,635
$ 54,541,376
Analysis of Net Assets
Interest of Unitholders (3,914,046 Units of fractional undivided interest outstanding)
Cost to original investors of 4,200,000 Units (note 1).................................. $ 46,171,673
Less initial underwriting commission (note 3)........................................... 2,253,026
43,918,647
Less redemption of Units (285,954 Unit)................................................. 3,807,436
40,111,211
Undistributed net investment income
Net investment income................................................................... 1,174,040
Less distributions to Unitholders....................................................... 1,170,167
3,873
Realized gain (loss) on Security sale or redemption..................................... 1,096,398
Unrealized appreciation (depreciation) of Securities (note 2)........................... 13,465,143
Distributions to Unitholders of Security sale or redemption proceeds.................... (225,990)
Net asset value to Unitholders.......................................................... $ 54,450,635
Net asset value per Unit (3,914,046 Units outstanding)................................... $ 13.91
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
VAN KAMPEN MERRITT BRAND NAME EQUITY TRUST, SERIES 1
Statement of Operations
Period from July 26, 1994 (date of deposit) through
December 31, 1994 and the year ended
December 31, 1995
<CAPTION>
1994 1995
<S> <C> <C>
Investment income
Dividend income..................................................... $ 240,193 $ 995,176
Expenses
Trustee fees and expenses........................................... 6,171 35,816
Evaluator fees...................................................... 1,287 9,588
Supervisory fees.................................................... 1,028 7,439
Total expenses...................................................... 8,486 52,843
Net investment income............................................... 231,707 942,333
Realized gain (loss) from Security sale or redemption
Proceeds............................................................ -- 4,033,773
Cost -- 2,937,375
Realized gain (loss)................................................ -- 1,096,398
Net change in unrealized appreciation (depreciation) of Securities... 821,199 12,643,944
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...... $ 1,052,906 $ 14,682,675
</TABLE>
<TABLE>
Statement of Changes in Net Assets
Period from July 26, 1994 (date of deposit) through
December 31, 1994 and the year ended
December 31, 1995
<CAPTION>
1994 1995
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income................................................................. $ 231,707 $ 942,333
Realized gain (loss) on Security sale or redemption................................... -- 1,096,398
Net change in unrealized appreciation (depreciation) of Securities.................... 821,199 12,643,944
Net increase (decrease) in net assets resulting from operations....................... 1,052,906 14,682,675
Distributions to Unitholders from:
Net investment income................................................................. (197,966) (972,201)
Security sale or redemption proceeds.................................................. -- (225,990)
Redemption of Units.................................................................... <F3> (3,807,433)
Total increase (decrease)............................................................. 854,937 9,677,051
Net asset value to Unitholders
Beginning of period................................................................... 1,913,804 28,143,326
Additional Securities purchased from the proceeds of Unit Sales....................... 25,374,585 16,630,258
End of period (including undistributed net investment income of $33,741 and $3,873)... $ 28,143,326 $ 54,450,635
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
VAN KAMPEN MERRITT BRAND NAME EQUITY TRUST, SERIES 1
PORTFOLIO as of December 31, 1995
<CAPTION>
Valuation of
Securities at
Number December 31,
of Market Value Per 1995
Shares Name of Issuer Share (Note 1)
<S> <C> <C> <C>
22,739 American Home Products Corporation $ 97.000 $ 2,205,683
24,851 Anheuser-Busch Companies, Inc. 66.875 1,661,911
22,389 Avon Products, Inc. 75.375 1,687,571
35,954 Bausch & Lomb 39.625 1,424,677
55,779 Brinker International, Inc. 15.125 843,657
25,264 Bristol-Meyer Squibb Company 85.875 2,169,546
26,277 CPC International, Inc. 68.625 1,803,259
35,467 Campbell Soup Company 60.000 2,128,020
29,726 Coca-Cola Company 74.250 2,207,155
25,371 Colgate-Palmolive Company 70.250 1,782,313
53,358 Fruit of the Loom, Inc. 24.375 1,300,601
37,705 Gillette Company 52.125 1,965,373
28,139 Johnson & Johnson 85.625 2,409,402
24,856 Kellogg Company 77.250 1,920,126
58,024 Mattel, Inc. 30.750 1,784,238
48,428 McDonald's Corporation 45.125 2,185,313
43,798 Merck & Company, Inc. 65.750 2,879,719
30,435 Nestle, S.A. 54.875 1,670,121
57,119 Newell Company 25.875 1,477,954
25,030 Nike, Inc. 69.625 1,742,714
42,538 PepsiCo, Inc. 55.875 2,376,811
23,879 Philip Morris Companies, Inc. 90.500 2,161,050
38,796 Polaroid Corporation 47.375 1,837,960
24,432 Proctor & Gamble Company 83.000 2,027,856
21,146 Reebok International, Ltd. 28.250 597,374
47,387 Rubbermaid, Inc. 25.500 1,208,368
61,219 Sara Lee Corporation 31.875 1,951,356
41,174 Schering-Plough 54.750 2,254,277
14,467 V F Corporation 52.750 763,134
80,755 Warnaco Group, Inc. 25.000 2,018,875
1,106,502 $ 54,446,414
</TABLE>
The accompanying notes are an integral part of this statement.
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST SERIES 8
Notes to Financial Statements
December 31, 1994 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national securities exchange are
valued at the closing sale price, or if no such price exists or if the Equity
Security is not listed, at the closing asked price thereof.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national securities exchange is valued at the
closing sale price, or if no such price exists or if the Equity Security is
not listed, at the closing asked price thereof. In each case, the costs were
determined on the day of the various Dates of Deposit.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in the Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value as
described in Note 1 and (3) accumulated dividends thereon, less accrued
expenses of the Trust, if any.
Federal Income Taxes - The Trust has elected and intends to qualify on a
continuing basis for special federal income tax treatment as a "regulated
investment company" under the Internal Revenue Code (the "Code" ).
If the Trust so qualifies and timely distributes to Unitholders 90% or more of
its taxable income (without regard to its net capital gain, i.e., the excess
of its net long-term capital gain over its net short-term capital loss), it
will not be subject to federal income tax on the portion of its taxable income
(including any net capital gain) that it distributes to Unitholders.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at December 31, 1995 is as follows:
<TABLE>
<CAPTION>
Brand Name
Equity
Trust
<S> <C>
Unrealized Appreciation $ 14,182,010
Unrealized Depreciation (716,867)
$ 13,465,143
</TABLE>
NOTE 3 - OTHER
Marketability - Although it is not obligated to do so, the Sponsor intends to
maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the value of the Securities
in the portfolio of the Trust valued as described in Note 1, plus accumulated
dividends to the date of settlement. If the supply of Units exceeds demand, or
for other business reasons, the Sponsor may discontinue purchases of Units at
such prices. In the event that a market is not maintained for the Units, a
Unitholder desiring to dispose of his Units may be able to do so only by
tendering such Units to the Trustee for redemption at the redemption price.
Cost to Investors - The cost to original investors was based on the underlying
value of the Securities per Unit on the date of an investor's purchase, plus a
sales charge of 4.9% of the public offering price which is equivalent to
5.152% of the aggregate offering price of the Securities. The secondary market
cost to investors is based on the determination of the underlying value of the
Securities per Unit on the date of an investor's purchase plus a sales charge
of 4.9% of the public offering price which is 5.152% of the underlying value
of the Securities. Effective on each August 2, commencing August 2, 1995, the
secondary sales charge will decrease by .5 of 1% to a minimum sales charge of
1.5%.
Compensation of Evaluator and Supervisor - The Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.0025 per Unit, not
to exceed the aggregate cost of the Supervisor for providing such services to
all applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases
under the category "All Services Less Rent of Shelter" in the Consumer
Price Index.
NOTE 4 - REDEMPTION OF UNITS
During the periods ended December 31, 1994 and 1995, 1 Unit and 285,953 Units,
respectively were presented for redemption.
VAN KAMPEN MERRITT
BRAND NAME EQUITY TRUST, SERIES 1
PROSPECTUS PART TWO
The Fund. Van Kampen Merritt Equity Opportunity Trust (the "Fund" ) is
comprised of separate and distinct unit investment trusts, including Van
Kampen Merritt Brand Name Equity Trust, Series 1 (the "Brand Name
Trust" ). The Brand Name Trust offers investors the opportunity to purchase
Units representing proportionate interests in a fixed portfolio of equity
securities issued by companies diversified within the non-durable consumer
goods industry including common stocks of foreign issuers, all of which are in
American Depositary Receipt form ("ADRs" ). Unless terminated earlier,
the Trust will terminate on the Mandatory Termination Date stated under "
Summary of Essential Financial Information" in Part One of this Prospectus
and any securities then held will, within a reasonable time thereafter, be
liquidated or distributed by the Trustee. Any Securities liquidated at
termination will be sold at the then current market value for such Securities;
therefore, the amount distributable in cash to a Unitholder upon termination
may be more or less than the amount such Unitholder paid for his Units.
Objectives of the Trust. The objective of the Brand Name Trust is to provide
the potential for capital appreciation and income, consistent with the
preservation of capital, by investing in a portfolio of equity securities
diversified within the non-durable consumer goods industry ("Equity
Securities" ). See "Portfolio" in Part One of this Prospectus.
There is, of course, no guarantee that the objective of the Trust will be
achieved.
Public Offering Price. The secondary market Public Offering Price of the Trust
will include the aggregate underlying value of the Securities in the Trust,
the applicable sales charge as described herein, and cash, if any, in the
Income and Capital Accounts held or owned by the Trust. The minimum purchase
for an individual Trust is 500 Units and 100 Units for a tax-sheltered
retirement plan. See "Public Offering" .
Estimated Annual Distributions. The estimated annual dividend distributions
per unit will vary with changes in fees and expenses of a Trust, with changes
in dividends received and with the sale or liquidation of Securities;
therefore, there is no assurance that the annual dividend distribution will be
realized in the future.
Distributions. Distributions of dividends received, and realized capital
gains, if any, received by the Trust will be paid in cash on the applicable
Distribution Date to Unitholders of record on the record date as set forth in
the "Summary of Essential Financial Information" in Part One of this
Prospectus. Any distribution of income and/or capital gains will be net of the
expenses of the Trust. See "Federal Taxation." Additionally, upon
termination of each Trust, the Trustee will distribute, upon surrender of
Units for redemption, to each Unitholder his pro rata share of each of the
Trust's assets, less expenses, in the manner set forth under "Rights of
UnitholdersDistributions of Income and Capital" .
Termination. Commencing on the Mandatory Termination Date as specified in Part
One for the Trust, Equity Securities will begin to be sold in connection with
the termination of the Trust. The Sponsor will determine the manner, timing
and execution of the sale of the Equity Securities. Written notice of any
termination of the Trust specifying the time or times at which Unitholders may
surrender their certificates for cancellation shall be given by the Trustee to
each Unitholder at his address appearing on the registration books of the
Trust maintained by the Trustee. At least 30 days prior to the Mandatory
Termination Date for the Trust the Trustee will provide written notice thereof
to all Unitholders and will include with such notice a form to enable
Unitholders to elect a distribution of shares of Equity Securities if such
Unitholder owns at least 2,500 Units of the Trust rather than to receive
payment in cash for such Unitholder's pro rata share of the amounts realized
upon the disposition by the Trustee of Equity Securities. To be effective, the
election form, together with surrendered certificates, if issued, and other
documentation required by the Trustee, must be returned to the Trustee at
least five business days prior to the Mandatory Termination Date. Unitholders
of the Trust electing a distribution of shares of Equity Securities should be
aware that the transaction is subject to taxation and Unitholders will
recognize gain based on any appreciation in value of the Equity Securities.
Unitholders not electing a distribution of shares of Equity Securities will
receive a cash distribution from the sale of the remaining Securities within a
reasonable time after the Trust in terminated. See "Trust
AdministrationReinvestment Option."
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
Both parts of this Prospectus should be retained for future reference.
This Prospectus is dated as of the date of the Prospectus Part I accompanying
this Prospectus Part II.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Van Kampen American Capital
Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales
charge to the extent stated in the related prospectus (which may be deferred
in certain cases). Unitholders of the Trust have the opportunity to have their
distributions reinvested into an open-end, management investment company as
described herein. Unitholders also have the option of having distributions
reinvested into additional Units of the Trust if Units are available at the
time of reinvestment as described herein. See "Rights of
UnitholdersReinvestment Option."
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including the possible deterioration of
either the financial condition of the issuers or the general condition of the
stock market and currency fluctuations, the lack of adequate financial
information concerning an issuer and exchange control restrictions impacting
foreign issuers. See "Risk Factors" . Units of the Fund are not
deposits or obligations of, and are not guaranteed or endorsed by, any bank,
and are not federally insured or otherwise protected by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency, and
involve investment risk, including the possible loss of principal.
THE TRUST
Van Kampen Merritt Equity Opportunity Trust (the "Fund" ) is comprised
of separate and distinct unit investment trusts including Van Kampen Merritt
Brand Name Equity Trust, Series 1. The Fund was created under the laws of the
State of New York pursuant to a Trust Indenture and Agreement (the "Trust
Agreement" ), among Van Kampen American Capital Distributors, Inc., as
Sponsor, American Portfolio Evaluation Services, a division of Van Kampen
American Capital Investment Advisory Corp., as Evaluator, Van Kampen American
Capital Investment Advisory Corp., as Supervisor, and The Bank of New York, as
Trustee.
The Trust may be an appropriate medium for investors who desire to participate
in a portfolio of equity securities with greater diversification than they
might be able to acquire individually. Diversification of assets in the Trust
will not eliminate the risk of loss always inherent in the ownership of
securities. For a breakdown of the portfolio see "Portfolio" in Part
One of this Prospectus.
Each Unit represents a fractional undivided interest in the Trust. To the
extent that any Units are redeemed by the Trustee, the fractional undivided
interest in the Trust represented by each unredeemed Unit will increase
accordingly, although the actual interest in the Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Unitholders, which may include the Sponsor, or
until the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objective of the Brand Name Trust is to provide investors with the
potential for capital appreciation and income. The portfolio of the Trust is
described under "Trust Portfolio" herein and under "Portfolio"
in Part One of this Prospectus. An investor will be subjected to taxation on
the dividend income received from the Fund and on gains from the sale or
liquidation of Securities (see "Federal Taxation" ). Investors should
be aware that there is not any guarantee that the objective of the Trust will
be achieved because it is subject to the continuing ability of the respective
Security issuers to continue to declare and pay dividends and because the
market value of the Securities can be affected by a variety of factors. Common
stocks may be especially susceptible to general stock market movements and to
volatile increases and decreases of value as market confidence in and
perceptions of the issuers change. Investors should be aware that there can be
no assurance that the value of the underlying Securities will increase or that
the issuers of the Equity Securities will pay dividends on outstanding common
shares. Any distributions of income will generally depend upon the declaration
of dividends by the issuers of the Securities and the declaration of any
dividends depends upon several factors including the financial condition of
the issuers and general economic conditions.
In selecting Securities for the Trust, the following factors, among others,
were considered: (a) the issuer's position within the industry, (b) breadth
and stability of the issuer's business base and (c) growth potential.
Investors should note that the above criteria were applied to the Securities
selected for inclusion in the Trust as of the date the Trust was created.
Subsequent thereto, the Equity Securities may no longer meet such criteria.
Should an Equity Security no longer meet such criteria, such Equity Security
will not as a result thereof be removed from the portfolio of the Trust.
Investors should be aware that the Fund is not a "managed" trust and
as a result the adverse financial condition of a company will not result in
its elimination from the portfolio except under extraordinary circumstances
(see "Trust AdministrationPortfolio Administration" ). In addition,
Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the securities were selected by the Sponsor as of the
date the Securities were purchased by the Trust. The Trust may continue to
purchase or hold Securities originally selected through this process even
though the evaluation of the attractiveness of the Securities may have changed
and, if the evaluation were performed again at that time, the Securities would
not be selected for such Trust.
TRUST PORTFOLIO
The Brand Name Trust initially consisted of 30 different issues of Equity
Securities, most of which are issued by companies diversified within the
non-durable consumer goods industry including common stocks of foreign
issuers, all of which are ADRs. The Equity Securities in this portfolio are
listed on a national securities exchange, the NASDAQ National Market System or
are traded in the over-the-counter market.
The Trust consists of such of the Securities listed under "Portfolio"
in Part One of this Prospectus as may continue to be held from time to time in
the Trust together with cash held in the Income and Capital Accounts. Neither
the Sponsor nor the Trustee shall be liable in any way for any failure in any
of the Securities.
Because certain of the Securities from time to time may be sold under certain
circumstances described herein, and because the proceeds from such events will
be distributed to Unitholders and will not be reinvested, no assurance can be
given that the Trust will retain for any length of time its present size and
composition. Although the Portfolio is not managed, the Sponsor may instruct
the Trustee to sell Securities under certain limited circumstances.
Securities, however, will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation or depreciation.
RISK FACTORS
Equity Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the risk
that the financial condition of the issuers of the Equity Securities or the
general condition of the common stock market may worsen and the value of the
Equity Securities and therefore the value of the Units may decline. Common
stocks are especially susceptible to general stock market movements and to
volatile increases and decreases of value as market confidence in and
perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
Shareholders of common stocks have rights to receive payments from the issuers
of those common stocks that are generally subordinate to those of creditors of
or holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by the Fund have a right to
receive dividends only when and if, and in the amounts declared by the
issuer's board of directors and have a right to participate in amounts
available for distribution by the issuer only after all other claims on the
issuer have been paid or provided for. Common stocks do not represent an
obligation of the issuer and, therefore, do not offer any assurance of income
or provide the same degree of protection of capital as do debt securities. The
issuance of additional debt securities or preferred stock will create prior
claims for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay dividends
on its common stock or the rights of holders of common stock with respect to
assets of the issuer upon liquidation or bankruptcy. The value of common
stocks is subject to market fluctuations for as long as the common stocks
remain outstanding, and thus the value of the Equity Securities may be
expected to fluctuate over the life of the Fund to values higher or lower than
those prevailing on the date of purchase by a Unitholder.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison
with the rights of creditors of, or holders of debt obligations or preferred
stocks issued by the issuer. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stockholders are also generally entitled to rights
on liquidation which are senior to those of common stockholders.
Consumer Products, Food and Beverage, and Pharmaceutical Industries. The Brand
Name Trust includes securities issued by companies in the non-durable consumer
products industry. Investment in securities issued by non-durable consumer
products companies should be made with an understanding of the many factors
which may have an adverse impact on the credit quality of the particular
company or industry. These include cyclically of revenues and earnings,
changing consumer demands, regulatory restrictions, products liability
litigation and other litigation resulting from accidents, extensive
competition (including that of low-cost foreign companies), unfunded pension
fund liabilities and employee and retiree benefit costs and financial
deterioration resulting from leveraged buy-outs, takeovers or acquisitions. In
general, expenditures on consumer products will be affected by the economic
health of consumers. Various factors such as the recent recession and the
related tightening of consumer credit and spending may have a continuing
adverse effect on the industry. Other factors of particular relevance to the
profitability of the industry are the effects of increasing environmental
regulation on packaging and on waste disposal, the continuing need to conform
with foreign regulations governing packaging and the environment, the outcome
of trade negotiations and their effect on foreign subsidies and tariffs,
foreign exchange rates, the price of oil and its effect on energy costs,
inventory cutbacks by retailers, transportation and distribution costs, health
concerns relating to the consumption of certain products, the effect of
demographics on consumer demand, the availability and cost of raw materials
and the ongoing need to develop new products and to improve productivity.
Within today's highly competitive non-durable consumer goods marketplace,
there are less expensive alternatives to almost every product made. These are
sold as private and generic label products. The Sponsor believes that the
success of such less expensive alternative products has created the fear that
brand name products may be unable to compete in a cost-conscious environment
and, consequently, such perceptions may have depressed brand name stock prices
well below their market highs. The Sponsor believes many brand name companies
have been able to reduce costs while continuing to produce high quality
products and, therefore, were undervalued by the market at the Initial Date of
Deposit.
Many of the companies behind brand name products are industry leaders in both
domestic and international markets. They are established, well-managed,
financially strong and proven performers. Recently, many have undertaken
restructuring and expansion projects which have increased their profit
potential. As large companies, they are able to provide their brands with a
great deal of support, including large advertising budgets able to produce
sales beyond the life of a campaign, research and development prowess
producing high quality and new products, effective distribution and
promotional efforts creating widespread exposure throughout the retail
industry, and exposure to international markets and expansion of operations to
capitalize on growth opportunities in developing countries worldwide. The
Sponsor believes that as cost differences between brand name and generic
products shrink, consumers will be willing to pay a premium for brand name
products they recognize and believe to be of better quality. However, there
can be no assurance that these expectations will be realized in the future.
The Brand Name Trust also includes securities issued by companies in the food
and beverage industry. The Department of Commerce ranks the food and beverage
industry as the second largest U.S. manufacturing sector. In recent years,
this industry has had consistently positive earnings and has tended to be
recession-resistant. Performance has reflected consumer demand more than
general economic conditions.
Food processing companies include manufacturers of packaged foods such as
canned and frozen foods, baked goods, desserts, jelly, coffee and hot
chocolate, and processors of agricultural products such as fruits, vegetables,
cereals, flour, meat and poultry, including pet food. Distributors include
food wholesalers (companies that distribute food products to retailers,
restaurants and institutions) and retailers, supermarket chains and
restaurants. The beverage companies represented manufacture alcoholic and
non-alcoholic drinks. The issuers in the Brand Name Trust include companies
that have successfully adapted to new consumer demands such as developing low
calorie, low fat and low sodium products for a public increasingly concerned
with health and fitness. The Sponsor anticipates, but cannot guarantee, that
continued adaptation will result in consumer support and lead to continued
growth.
The Brand Name Trust also includes securities issued by companies diversified
within the pharmaceutical industry. The medical sector has historically
provided investors with significant growth opportunities. One of the
industries included in the sector is pharmaceutical companies. Pharmaceutical
companies develop, manufacture and sell prescription and over-the-counter
drugs. In addition, they are well known for the significant amounts of money
they spend on research and development. Pharmaceutical companies have
potential risks unique to their sector of the health care field. Such
companies are subject to governmental regulation of their products and
services, a factor which could have a significant and possibly unfavorable
effect on the price and availability of such products or services.
Furthermore, pharmaceutical companies face the risk of increasing competition
from generic drug sales, the termination of their patent protection for drug
products and the risk that technological advances will render their products
or services obsolete. The research and development costs of bringing a drug to
market are substantial and include lengthy governmental review processes, with
no guarantee that the product will ever come to market. Many of these
pharmaceutical companies may have losses and not offer certain products until
the late 1990s. Pharmaceutical companies may also have persistent losses
during a new product's transition from development to production, and revenue
patterns may be erratic.
As the population of the United States ages, the companies involved in the
pharmaceutical field will continue to search for and develop new drugs through
advanced technologies and diagnostics. On a world-wide basis, pharmaceutical
companies are involved in the development and distribution of drugs and
vaccines. These activities may make the pharmaceutical sector very attractive
for investors seeking the potential for growth in their investment portfolio.
There can be no assurance, however, that research and development projects
will result in new products or technologies that will be approved and brought
to market.
Legislative proposals concerning health care are under consideration by the
Clinton Administration. These proposals span a wide range of topics, including
cost and price controls (which might include a freeze on the prices of
prescription drugs), national health insurance, incentives for competition in
the provision of health care services, tax incentives and penalties related to
health care insurance premiums and promotions of pre-paid health care plans.
The Sponsor is unable to predict the effect of any of these proposals, if
enacted, on the issuers of Equity Securities in the Brand Name Trust.
Foreign Issuers. Since certain of the Equity Securities in certain of the
Trusts are securities of foreign issuers, an investment in these Trusts
involves some investment risks that are different in some respects from an
investment in a trust that invests entirely in securities of domestic issuers.
Those investment risks include future political and governmental restrictions
which might adversely affect the payment or receipt of dividends on the
relevant Equity Securities. In addition, for the foreign issuers that are not
subject to the reporting requirements of the Securities Exchange Act of 1934,
there may be less publicly available information than is available from a
domestic issuer. Also, foreign issuers are not necessarily subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic issuers. However, due
to the nature of the issuers of Equity Securities included in the Trusts, the
Sponsor believes that adequate information will be available to allow the
Supervisor to provide portfolio surveillance.
The securities of the foreign issuers in the Trusts are in ADR form. ADRs
evidence American Depository Receipts which represent common stock deposited
with a custodian in a depositary. American Depositary Shares, and receipts
therefore (ADRs), are issued by an American bank or trust company to evidence
ownership of underlying securities issued by a foreign corporation. These
instruments may not necessarily be denominated in the same currency as the
securities into which they may be converted. For purposes of the discussion
herein, the term ADR generally includes American Depositary Shares. ADRs may
be sponsored or unsponsored. In an unsponsored facility, the depositary
initiates and arranges the facility at the request of market makers and acts
as agent for the ADR holder, while the company itself is not involved in the
transaction. In a sponsored facility, the issuing company initiates the
facility and agrees to pay certain administrative and shareholder-related
expenses. Sponsored facilities use a single depositary and entail a
contractual relationship between the issuer, the shareholder and the
depositary; unsponsored facilities involve several depositaries with no
contractual relationship to the company. The depositary bank that issues an
ADR generally charges a fee, based on the price of the ADR, upon issuance and
cancellation of the ADR. This fee would be in addition to the brokerage
commissions paid upon the acquisition or surrender of the security. In
addition, the depositary bank incurs expenses in connection with the
conversion of dividends or other cash distributions paid in local currency
into U.S. dollars and such expenses are deducted from the amount of the
dividend or distribution paid to holders, resulting in a lower payout per
underlying shares represented by the ADR than would be the case if the
underlying share were held directly. Certain tax considerations, including tax
rate differentials and withholding requirements, arising from applications of
the tax laws of one nation to nationals of another and from certain practices
in the ADR market may also exist with respect to certain ADRs. In varying
degrees, any or all of these factors may affect the value of the ADR compared
with the value of the underlying shares in the local market. In addition, the
rights of holders of ADRs may be different than those of holders of the
underlying shares, and the market for ADRs may be less liquid than that for
the underlying shares. ADRs are registered securities pursuant to the
Securities Act of 1933 and may be subject to the reporting requirements of the
Securities Exchange Act of 1934.
For those Equity Securities that are ADRs, currency fluctuations will affect
the U.S. dollar equivalent of the local currency price of the underlying
domestic share and, as a result, are likely to affect the value of the ADRs
and consequently the value of the Equity Securities. The foreign issuers of
securities that are ADRs may pay dividends in foreign currencies which must be
converted into dollars. Most foreign currencies have fluctuated widely in
value against the United States dollar for many reasons, including supply and
demand of the respective currency, the soundness of the world economy and the
strength of the respective economy as compared to the economies of the United
States and other countries. Therefore, for any securities of issuers (whether
or not they are in ADR form) whose earnings are stated in foreign currencies,
or which pay dividends in foreign currencies or which are traded in foreign
currencies, there is a risk that their United States dollar value will vary
with fluctuations in the United States dollar foreign exchange rates for the
relevant currencies.
On the basis of the best information available to the Sponsor at the Initial
Date of Deposit, none of the Equity Securities are subject to exchange control
restrictions under existing law which would materially interfere with payment
to the Trusts of dividends due on, or proceeds from the sale of, the Equity
Securities. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payment to the Trusts. In addition, the adoption of exchange control
regulations and other legal restrictions could have an adverse impact on the
marketability of international securities in the Trusts and on the ability of
the Trusts to satisfy its obligation to redeem Units tendered to the Trustee
for redemption.
General. The Trust consists of such of the Securities listed under "
Portfolio" as may continue to be held from time to time in such Trust in
Part One of this Prospectus together with cash held in the Income and Capital
Accounts. Neither the Sponsor nor the Trustee shall be liable in any way for
any failure in any of the Securities.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will be distributed to Unitholders and will not be reinvested, no
assurance can be given that a Trust will retain for any length of time its
present size and composition. Although the portfolios are not managed, the
Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. See "Trust Administration." Equity Securities,
however, will not be sold by a Trust to take advantage of market fluctuations
or changes in anticipated rates of appreciation or depreciation.
Unitholders will be unable to dispose of any of the Equity Securities as such,
and will not be able to vote the Equity Securities. As the holder of the
Equity Securities, the Trustee will have the right to vote all of the voting
stocks in a Trust and will vote such stocks in accordance with the
instructions of the Sponsor. Actions required to be taken with respect to the
Treasury Obligations will be in accordance with the instruction of the
Sponsor. Unitholders of the Trusts (other than the Global Telecommunications
and Global Energy Trusts) may, however, be able upon request to receive an
"in kind" distribution of these Securities evidenced by the Units (see
"Rights of UnitholdersRedemption of Units" ).
FEDERAL TAXATION
The Trust has elected and intends to qualify on a continuing basis for special
federal income tax treatment as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Code" ). If the
Trust so qualifies and timely distributes to Unitholders 90% or more of its
taxable income (without regard to its net capital gain, i.e., the excess of
its net long-term capital gain over its net short-term capital loss), it will
not be subject to federal income tax on the portion of its taxable income
(including any net capital gain) that it distributes to Unitholders. In
addition, to the extent the Trust timely distributes to Unitholders at least
98% of its taxable income (including any net capital gain), it will not be
subject to the 4% excise tax on certain undistributed income of "regulated
investment companies." Because the Trust intends to timely distribute its
taxable income (including any net capital gain), it is anticipated that the
Trust will not be subject to federal income tax or the excise tax. Although
all or a portion of the Trust's taxable income (including any net capital
gain) for the taxable year may be distributed to Unitholders shortly after the
end of the calendar year, such a distribution will be treated for federal
income tax purposes as having been received by Unitholders during the calendar
year just ended.
Distributions to Unitholders of the Trust's taxable income (other than its net
capital gain) will be taxable as ordinary income to Unitholders. To the extent
that distributions to a Unitholder in any year exceed the Trust's current and
accumulated earnings and profits, they will be treated as a return of capital
and will reduce the Unitholder's basis in his Units and, to the extent that
they exceed his basis, will be treated as a gain from the sale of his Units as
discussed below.
Distributions of the Trust's net capital gain which are properly designated as
capital gain dividends by the Trust will be taxable to Unitholders as
long-term capital gain, regardless of the length of time the Units have been
held by a Unitholder. A Unitholder may recognize a taxable gain or loss if the
Unitholder sells or redeems his Units. Any gain or loss arising from (or
treated as arising from) the sale or redemption of Units will generally be a
capital gain or loss, except in the case of a dealer or a financial
institution. For taxpayers other than corporations, net capital gains are
presently subject to a maximum stated marginal tax rate of 28%. However, 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. A capital loss is long-term if the asset
is held for more than one year and short-term if held for one year or less. If
a Unitholder holds Units for six months or less and subsequently sells such
Units at a loss, the loss will be treated as a long-term capital loss to the
extent that any long- term capital gain distribution is made with respect to
such Units during the six-month period or less that the Unitholder owns the
Units.
The Revenue Reconciliation Act of 1993 (the "Act" ) raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate for taxpayers other than corporations. Because some or all capital gains
are taxed at a comparatively lower rate under the Act, the Act includes a
provision that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "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.
Distributions which are taxable as ordinary income to Unitholders will
constitute dividends for federal income tax purposes. When Units are held by
corporate Unitholders, Trust distributions may qualify for the 70% dividends
received deduction, subject to limitations otherwise applicable to the
availability of the deduction, to the extent the distribution is attributable
to dividends received by the Trust from United States Corporations (other than
Real Estate Investment Trusts) and is designated by the Trust as being
eligible for such 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. The
Trust will provide each Unitholder with information annually concerning what
part of the Trust distributions are eligible for the dividends received
deduction.
The Trust may elect to pass through to the Unitholders the foreign income and
similar taxes paid by the Trust in order to enable such Unitholders to take a
credit (or deduction) for foreign income taxes paid by the Trust. If such an
election is made, Unitholders of the Trust, because they are deemed to own a
pro rata portion of the ADRs held by the Trust, must include in their gross
income, for federal income tax purposes, both their portion of dividends
received by the Trust and also their portion of the amount which the Trust
deems to be the Unitholders' portion of foreign income taxes paid with respect
to, or withheld from, dividends, interest or other income of the Trust from
its foreign investments. Unitholders may then subtract from their federal
income tax the amount of such taxes withheld, or else treat such foreign taxes
as deductions from gross income; however, as in the case of investors
receiving income directly from foreign sources, the above described tax credit
or deduction is subject to certain limitations. Unitholders should consult
their tax advisers regarding this election and its consequences to them.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Trust so long as the Units
are held by or for 500 or more persons at all times during the taxable year or
another exception is met. In the event the Units are held by fewer than 500
persons, additional taxable income may be realized by the individual (and
other noncorporate) Unitholders in excess of the distributions received from
the Trust.
Distributions reinvested into additional Units of the Trust will be taxed to a
Unitholder in the manner described above (i.e., as ordinary income, long-term
capital gain or as a return of capital).
As discussed in "Rights of Unitholders--Redemption of Units" , under
certain circumstances a Unitholder who owns at least 2,500 Units may request
an In Kind Distribution upon the redemption of Units or the termination of the
Trust. Unitholders electing an In Kind Distribution of shares of Equity
Securities (see "Rights of Unitholders--Redemption of Units" ) should
be aware that the exchange is subject to taxation and Unitholders will
recognize gain or loss based on the value of the Equity Securities received.
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 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.
The federal tax status of each year's distributions will be reported to
Unitholders and to the Internal Revenue Service. The foregoing discussion
relates only to the federal income tax status of the Trust and to the tax
treatment of distributions by the Trust to United States Unitholders.
Distributions by the Trust 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. Units in the Trust and Trust
distributions may also be subject to state and local taxation and Unitholders
should consult their own tax advisers in this regard.
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.
TRUST OPERATING EXPENSES
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trust. However, Van Kampen
American Capital Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive an annual supervisory fee, payable in monthly
installments, which is not to exceed the amount set forth under "Summary
of Essential Financial Information" in Part One of this Prospectus, for
providing portfolio supervisory services for the Trust. Such fee (which is
based on the number of Units outstanding on January 1 of each year) may exceed
the actual costs of providing such supervisory services for this Fund, but at
no time will the total amount received for portfolio supervisory services
rendered to Series 1 and subsequent series of Van Kampen Merritt Equity
Opportunity Trust in any calendar year exceed the aggregate cost to the
Supervisor of supplying such services in such year. In addition, the
Evaluator, which is a division of Van Kampen American Capital Distributors
Inc., shall receive as an annual per Unit evaluation fee, payable in monthly
installments, for regularly evaluating each Trust's portfolio that amount set
forth under "Summary of Essential Financial Information" in Part One
of this Prospectus (which is based on the outstanding number of Units on
January 1 of each year). Both of the foregoing fees may be increased without
approval of the Unitholders by amounts not exceeding proportionate increases
under the category "All Services Less Rent of Shelter" in the Consumer
Price Index published by the United States Department of Labor or, if such
category is no longer published, in a comparable category. The Sponsor and
dealers will receive sales commissions and may realize other profits (or
losses) in connection with the sale of Units as described under "Public
OfferingSponsor and Dealer Compensation" .
Trustee's Fee. For its services the Trustee will receive as an annual per
Unit fee from the Trust that amount set forth under "Summary of Essential
Information" in Part One of this Prospectus (which is based on the
outstanding number of units on January 1 of each year). The Trustee's fees
are payable monthly on or before the twenty-fifth day of each month from the
Income Account to the extent funds are available and then from the Capital
Account. The Trustee benefits to the extent there are funds for future
distributions, payment of expenses and redemptions in the Capital and Income
Accounts since these Accounts are non-interest bearing and the amounts earned
by the Trustee are retained by the Trustee. Part of the Trustee's
compensation for its services to the Trust is expected to result from the use
of these funds. Such fees may be increased without approval of the Unitholders
by amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. For a discussion of the services rendered
by the Trustee pursuant to its obligations under the Trust Agreement, see "
Rights of UnitholdersReports Provided" and "Trust Administration" .
Miscellaneous Expenses. The following additional charges are or may be
incurred by the Trust: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of a 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 a Trust without negligence, bad
faith or wilful misconduct on its part and (g) expenditures incurred in
contacting Unitholders upon termination of the Trust.
The fees and expenses set forth herein are payable out of the Trust. When such
fees and expenses are paid by or owning to the Trustee, they are secured by a
lien on the portfolio of the Trust. Since the Securities are all common
stocks, and the income stream produced by dividend payments is unpredictable,
the Sponsor cannot provide any assurance that dividends will be sufficient to
meet any or all expenses of the Trust. If the balances in the Income and
Capital Accounts are insufficient to provide for amounts payable by the Trust,
the Trustee has the power to sell Securities to pay such amounts. These sales
may result in capital gains or losses to Unitholders. See "Federal
Taxation" .
PUBLIC OFFERING
General. Units are offered at the Public Offering Price. The secondary market
Public Offering Price is based on the aggregate underlying value of the
Securities in the Trust, an applicable sales charge (which will be reduced
annually by .5 of 1% to a minimum sales charge of 1.5%), and cash, if any, in
the Income and Capital Accounts held or owned by the Trust.
Employees of Van Kampen American Capital Distributors, Inc. and its affiliates
may purchase Units of each Trust at the current Public Offering Price less the
dealer's concession described below. Registered representatives of selling
underwriters, brokers, dealers, or agents may purchase Units of the Fund at
the current Public Offering Price less the dealer's concession described
below.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Trust
Administration--General--Unit Distribution" ) by (1) investors who purchase
Units through registered investment advisers, certified financial planners and
registered broker-dealers who in each case either charge periodic fees for
financial planning, investment advisory or asset management services, or
provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed, (2)
bank trust departments investing funds over which they exercise exclusive
discretionary investment authority and that are held in a fiduciary, agency,
custodial or similar capacity, (3) any person who for at least 90 days, has
been an officer, director or bona fide employee of any firm offering Units for
sale to investors or their immediate family members (as described above) and
(4) officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive sales charge reductions for
quantity purchases.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
Part One of this Prospectus in accordance with fluctuations in the prices of
the underlying Securities in the Trust.
The price of the Units as of the opening of business on the date stated in the
"Summary of Essential Financial Information" in Part One of this
Prospectus was established by adding to the determination of the aggregate
underlying value of the Securities an amount initially equal to 5.152% of such
value and dividing the sum so obtained by the number of Units outstanding. The
Public Offering Price shall include the proportionate share of any cash held
in the Capital Account. This computation produced a gross sales commission
initially equal to 4.9% of the Public Offering Price. The Evaluator will
appraise or cause to be appraised daily the value of the underlying Securities
as of the close of trading on the New York Stock Exchange (which is presently
4:00 P.M. New York time) on days the New York Stock Exchange is open and will
adjust the Public Offering Price of the Units commensurate with such
valuation. Such Public Offering Price will be effective for all orders
received at or prior to the close of trading on the New York Stock Exchange on
each such day. Orders received by the Trustee, Sponsor or any dealer for
purchases, sales or redemptions after that time, or on a day when the New York
Stock Exchange is closed, will be held until the next determination of price.
Such sales charge will be reduced annually, as set forth in "Summary of
Essential Financial Information" in Part One of this Prospectus, by .5 of
1% to a minimum sales charge of 1.5%.
The value of the Equity Securities is determined on each business day by the
Evaluator based on the closing sale prices on the day the valuation is made
for Securities listed on a national stock exchange or, if no such price
exists, at the mean between bid and offering prices on the day the valuation
is made.
In offering the Units to the public, neither the Sponsor, the Underwriters,
nor any broker-dealers are recommending any of the individual Securities in
the Trust but rather the entire pool of Securities, taken as a whole, which
are represented by the Units.
Unit Distribution. Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary market Public Offering Price in
the manner described.
Broker-dealers or others will be allowed a concession or agency commission of
70% of the sale charge in connection with the distribution of Units.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge (equal to the
agency commission referred to above) is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units;
however, the Glass-Steagall Act does permit certain agency transactions and
the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 500 Units and 100 Units for a
tax-sheltered retirement plan. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units and to change the amount
of the concession or agency commission to dealers and others from time to time.
Sponsor and Dealer Compensation. The Sponsor and dealers will receive the
gross sales commission as described under "Public OfferingGeneral"
above. Cash, if any, made available to the Sponsor prior to the date of
settlement for the purchase of Units may be used in the Sponsor's business
and may be deemed to be a benefit to the Sponsor, subject to the limitations
of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor intends to, and
certain dealers maintain a secondary market for Units of each Trust. In so
maintaining a market, the Sponsor and any such dealers will also realize
profits or sustain losses in the amount of any difference between the price at
which Units are purchased and the price at which Units are resold. In
addition, the Sponsor and any such dealers will also realize profits or
sustain losses resulting from a redemption of such repurchased Units at a
price above or below the purchase price for such Units, respectively.
Public Market. Although they are not obligated to do so, the Sponsor intends
to, and certain of the other Underwriters may, maintain a market for the Units
offered hereby and offer continuously to purchase Units at prices subject to
change at any time, based upon the aggregate underlying value of the Equity
Securities in the Trust. If the supply of Units exceeds demand or if some
other business reason warrants it, the Sponsor and/or Underwriters may either
discontinue all purchases of Units or discontinue purchases of Units at such
prices. In the event that a market is not maintained for the Units and the
Unitholder cannot find another purchaser, a Unitholder desiring to dispose of
his Units may be able to dispose of such Units only by tendering them to the
Trustee for redemption at the Redemption Price. See "Rights of
UnitholdersRedemption of Units" . A Unitholder who wishes to dispose of his
Units should inquire of his broker as to current market prices in order to
determine whether there is in existence any price in excess of the Redemption
Price and, if so, the amount thereof.
Tax-Sheltered Retirement Plans. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The
purchase of Units of the Trust may be limited by the plans' provisions and
does not itself establish such plans. The minimum purchase in connection with
a tax-sheltered retirement plan is 100 Units of the Trust.
RIGHTS OF UNITHOLDERS
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor. Certificates are
transferable by presentation and surrender to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unitholder
must sign exactly as his name appears on the face of the certificate with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP" ) or such other signature guarantee program
in addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Income and Capital. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, return of principal, etc.) are credited to the Capital Account.
The Trustee will distribute any net income other than accreted interest
received with respect to any of the Securities in the Trust on or about the
Income Distribution Dates to Unitholders of record on the preceding Income
Record Dates. See "Summary of Essential Financial Information" in Part
One of the Prospectus. Proceeds received on the sale of any Securities in the
Trust, to the extent not used to meet redemptions of Units or pay expenses,
will be distributed annually on the Capital Account Distribution Date to
Unitholders of record on the preceding Capital Account Record Date. Proceeds
received from the disposition of any of the Securities after a record date and
prior to the following distribution date will be held in the Capital Account
and not distributed until the next distribution date applicable to such
Capital Account. The Trustee is not required to pay interest on funds held in
the Capital or Income Accounts (but may itself earn interest thereon and
therefore benefits from the use of such funds).
The distribution to the Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of an
amount substantially equal to such portion of the Unitholders' pro rata share
of the cash in the Income Account after deducting estimated expenses. Because
dividends are not received by the Trust at a constant rate throughout the
year, such distributions to Unitholders are expected to fluctuate from
distribution to distribution. Persons who purchase Units will commence
receiving distributions only after such person becomes a record owner. A
person will become the owner of Units, and thereby a Unitholder of record, on
the date of settlement provided payment has been received. Notification to the
Trustee of the transfer of Units is the responsibility of the purchaser, but
in the normal course of business such notice is provided by the selling
broker-dealer.
On or before of the twenty-fifth day of each month, the Trustee will deduct
from the Income Account and, to the extent funds are not sufficient therein,
from the Capital Account amounts necessary to pay the expenses of the Trust
(as determined on the basis set forth under "Trust Operating Expenses"
). The Trustee also may withdraw from said accounts such amounts, if any, as
it deems necessary to establish a reserve for any governmental charges payable
out of the Trust. Amounts so withdrawn shall not be considered a part of a
Trust's assets until such time as the Trustee shall return all or any part of
such amounts to the appropriate accounts. In addition, the Trustee may
withdraw from the Income and Capital Accounts such amounts as may be necessary
to cover redemptions of Units.
Reinvestment Option. Unitholders of all unit investment trusts sponsored by
Van Kampen American Capital Distributors, Inc., may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of any Van Kampen American Capital mutual
funds (except for B shares) which are registered in the Unitholder's state of
residence. Such mutual funds are hereinafter collectively referred to as the
"Reinvestment Funds" .
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181. Texas residents who desire to reinvest may request that a
broker-dealer registered in Texas send the prospectus relating to the
respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date. Unitholders with an existing Guaranteed Reinvestment
Option (GRO) Program account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new GRO
account which allows purchases of Reinvestment Fund shares at net asset value
as described above.
Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund. A participant may
at any time prior to five days preceding the next succeeding distribution
date, by so notifying the Trustee in writing, elect to terminate his or her
reinvestment plan and receive future distributions of his or her Units in
cash. There will be no charge or other penalty for such termination. Each
Reinvestment Fund, its sponsor and investment adviser shall have the right to
terminate at any time the reinvestment plan relating to such fund.
Unitholders may elect to have each distribution of income, capital gains
and/or capital on their Units automatically reinvested in additional Units of
such Trust without a sales charge (to the extent Units may be lawfully offered
for sale in the state in which the Unitholder resides). To participate in the
reinvestment plan, a Unitholder may either contact his or her broker or agent
or file with the Trustee a written notice of election at least ten days prior
to the Record Date for which the first distribution is to apply. A
Unitholder's election to participate in the reinvestment plan will apply to
all Units of the applicable Trust owned by such Unitholder and such election
will remain in effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units of the Trust
already held in inventory by the Sponsor (see "Public OfferingPublic
Market'') or, until such time as additional Units cease to be issued by the
Trust (see "The Trust" ), distributions may be reinvested in such
additional Units. If Units are unavailable in the secondary market,
distributions which would otherwise have been reinvested shall be paid in cash
to the Unitholder on the applicable Distribution Date.
Purchases made pursuant to the reinvestment plan will be made without a sales
charge at the net asset value for Units of the Trust as of the Evaluation Time
on the related Income or Capital Distribution Dates. Under the reinvestment
plan, the Trust will pay the Unitholder's distributions to the Trustee which
in turn will purchase for such Unitholder full and fractional Units of the
Trust and will send such Unitholder a statement reflecting the reinvestment.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
Each Reinvestment Fund, its sponsor and its investment adviser shall have the
right to terminate at any time the reinvestment plan relating to such
Reinvestment Fund and the Sponsor shall have the right to suspend or terminate
the reinvestment plan for reinvestment in additional Units of the Trust at any
time.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. For as long as the Sponsor deems it to be
in the best interest of the Unitholders, the accounts of the Trust shall be
audited, not less frequently than annually, by independent certified public
accountants, and the report of such accountants shall be furnished by the
Trustee to Unitholders upon request. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder a statement (i)
as to the Income Account: income received, deductions for applicable taxes and
for fees and expenses of a Trust, for redemptions of Units, if any, and the
balance remaining after such distributions and deductions, expressed in each
case both as a total dollar amount and as a dollar amount representing the pro
rata share of each Unit outstanding on the last business day of such calendar
year; (ii) as to the Capital Account: the dates of disposition of any
Securities (other than pursuant to In Kind Distributions) and the net proceeds
received therefrom, the results of In Kind Distributions in connection with
redemptions of Units, if any, deductions for payment of applicable taxes and
fees and expenses of the Trust held for distribution to Unitholders of record
as of a date prior to the determination and the balance remaining after such
distributions and deductions expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (iii) a list of the Securities held
and the number of Units outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
during such calendar year from the Income and Capital Accounts, separately
stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its corporate trust office at its Unit Investment
Trust Division, 101 Barclay Street, 20th Floor, New York, New York 10286 of
the certificates representing the Units to be redeemed, duly endorsed or
accompanied by proper instruments of transfer with signature guaranteed (or by
providing satisfactory indemnity, as in connection with lost, stolen or
destroyed certificates) and by payment of applicable governmental charges, if
any. No redemption fee will be charged. On the third business day following
such tender the Unitholder will be entitled to receive in cash (unless the
redeeming Unitholder elects an In Kind Distribution as indicated below) an
amount for each Unit equal to the Redemption Price per Unit next computed
after receipt by the Trustee of such tender of Units. The "date of
tender" is deemed to be the date on which Units are received by the
Trustee, except that as regards Units received after the close of trading on
the New York Stock Exchange (which is currently 4:00 P.M. New York time) the
date of tender is the next day on which such Exchange is open for trading and
such Units will be deemed to have been tendered to the Trustee on such day for
redemption at the redemption price computed on that day.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by
the Trustee from those designated on a current list provided by the portfolio
supervisor for this purpose. Units so redeemed shall be cancelled.
Unitholders tendering 2,500 Units or more for redemption may request from the
Trustee in lieu of a cash redemption a distribution in kind ("In Kind
Distribution" ) of an amount and value of Securities per Unit equal to the
Redemption Price per Unit as determined as of the evaluation next following
the tender. An In Kind Distribution on redemption of Units will be made by the
Trustee through the distribution of each of the Securities in book-entry form
to the account of the Unitholder's bank or broker-dealer at Depository Trust
Company. The tendering Unitholder will receive his pro rata number of whole
shares of each of the Securities comprising the portfolio and cash from the
Capital Account equal to the fractional shares to which the tendering
Unitholder is entitled. In implementing these redemption procedures, the
Trustee shall make any adjustments necessary to reflect differences between
the Redemption Price of the Securities distributed in kind as of the date of
tender. If funds in the Capital Account are insufficient to cover the required
cash distribution to the tendering Unitholder, the Trustee may sell Securities
according to the criteria discussed above.
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be, and the diversity of such Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result
in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the portfolio at the time of
redemption. Special federal income tax consequences will result if a
Unitholder requests an In Kind Distribution. See "Federal Taxation" .
The Redemption Price per Unit will be determined on the basis of the aggregate
underlying value of the Equity Securities in the Trust plus or minus cash, if
any, in the Income and Capital Accounts. While the Trustee has the power to
determine the Redemption Price per Unit when Units are tendered for
redemption, such authority has been delegated to the Evaluator which
determines the price per Unit on a daily basis. The Redemption Price per Unit
is the pro rata share of the Unit in a Trust determined on the basis of (i)
the cash on hand in such Trust or monies in the process of being collected and
(ii) the value of the Securities in such Trust, less (a) amounts representing
taxes or other governmental charges payable out of such Trust, (b) any amount
owing to the Trustee for its advances and (c) the accrued expenses of such
Trust. The Evaluator may determine the value of a Securities in the Trust in
the following manner: if the Securities are listed on a national securities
exchange, the evaluation will generally be based on the last available sale
price on the exchange (unless the Evaluator deems the price inappropriate as a
basis for evaluation) or, if there is no last available sale price on the
exchange, at the mean between the last available bid and offer prices.
As stated above, the Trustee may sell Securities to cover redemptions. When
Securities are sold, the size and the diversity of the Trust will be reduced.
Such sales may be required at a time when Securities would not otherwise be
sold and might result in lower prices than might otherwise be realized.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any tender
of Units for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The portfolio of the Fund is not "managed"
by the Sponsor, Supervisor or the Trustee; their activities described herein
are governed solely by the provisions of the Trust Agreement. The Trust
Agreement provides that the Sponsor may (but need not) direct the Trustee to
dispose of an Equity Security in the event that an issuer defaults in the
payment of a dividend that has been declared, that any action or proceeding
has been instituted restraining the payment of dividends or there exists any
legal question or impediment affecting such Equity Security, that the issuer
of the Equity Security has breached a covenant which would affect the payments
of dividends, the credit standing of the issuer or otherwise impair the sound
investment character of the Equity Security, that the issuer has defaulted on
the payment on any other of its outstanding obligations, that the price of the
Equity Security has declined to such an extent or other such credit factors
exist so that in the opinion of the Sponsor, the retention of such Equity
Securities would be detrimental to a Trust. In addition, the Sponsor will
instruct the Trustee to dispose of certain Securities and to take such further
action as may be needed from time to time to ensure that the Trust continues
to satisfy the qualifications of a regulated investment company, including the
requirements with respect to diversification under Section 851 of the Internal
Revenue Code. Except as stated under "Trust Portfolio--General" for
failed securities, the acquisition by the Fund of any securities other than
the Securities is prohibited. Pursuant to the Trust Agreement and with limited
exceptions, the Trustee must sell any securities or other properties acquired
in exchange for Equity Securities such as those acquired in connection with a
merger or other transaction. Proceeds from the sale of Securities (or any
securities or other property received by the Fund in exchange for Equity
Securities) are credited to the applicable Capital Account for distribution to
Unitholders or to meet redemptions.
As indicated under "Rights of Unitholders" above, the Trustee may also
sell Securities designated by the Supervisor, or if not so directed, in its
own discretion, for the purpose of redeeming Units of a Trust tendered for
redemption and the payment of expenses.
The Supervisor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares of
individual issues of Equity Securities. To the extent this is not practicable,
the composition and diversity of the Equity Securities may be altered. In
order to obtain the best price for the Trust, it may be necessary for the
Supervisor to specify minimum amounts (generally 100 shares) in which blocks
of Equity Securities are to be sold.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders, (as determined in good faith by the Sponsor
and the Trustee) provided, however, that the Trust Agreement may not be
amended to increase the number of Units. The Trust Agreement may also be
amended in any respect by the Trustee and Sponsor, or any of the provisions
thereof may be waived, with the consent of the holders of 51% of the Units
then outstanding, provided that no such amendment or waiver will reduce the
interest in the Trust of any Unitholder without the consent of such Unitholder
or reduce the percentage of Units required to consent to any such amendment or
waiver without the consent of all Unitholders. The Trustee shall advise the
Unitholders of any amendment promptly after execution thereof.
A Trust may be liquidated (1) at any time by consent of Unitholders
representing 66 2/3% of the Units then outstanding, or (2) by the Trustee when
the value of the Trust, as shown by any evaluation, is less than that
indicated under "Summary of Essential Financial Information" in Part
One of the Prospectus. The Trust will be liquidated by the Trustee in the
event that a sufficient number of Units not yet sold are tendered for
redemption by the Underwriters, including the Sponsor, so that the net worth
of the Trust would be reduced to less than 40% of the value of the Securities
at the time they were deposited in the Trust. If the Trust is liquidated
because of the redemption of unsold Units by the Underwriters, the Sponsor
will refund to each purchaser of Units the entire sales charge paid by such
purchaser. The Trust Agreement will terminate upon the sale or other
disposition of the last Security held thereunder, but in no event will it
continue beyond the Mandatory Termination Date stated under "Summary of
Essential Financial Information" in Part One of this Prospectus.
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trust. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. Written notice of any termination specifying the time or times at
which Unitholders may surrender their certificates for cancellation, if any
are then issued and outstanding, shall be given by the Trustee to each
Unitholder so holding a certificate at his address appearing on the
registration books of the Fund maintained by the Trustee. At least 30 days
before the Mandatory Termination Date the Trustee will provide written notice
thereof to all Unitholders and will include with such notice a form to enable
Unitholders owning 2,500 or more Units of the Trust to request an In Kind
Distribution rather than payment in cash upon the termination of the Trust. To
be effective, this request must be returned to the Trustee at least five
business days prior to the Mandatory Termination Date. On the Mandatory
Termination Date (or on the next business day thereafter if a holiday) the
Trustee will deliver each requesting Unitholder's pro rata number of whole
shares of each of the Equity Securities in the related portfolio to the
account of the broker-dealer or bank designated by the Unitholder at
Depository Trust Company. The value of the Unitholder's fractional shares of
the Equity Securities will be paid in cash. Unitholders with less than 2,500
Units and those not requesting an In Kind Distribution will receive a cash
distribution from the sale of the remaining Securities within a reasonable
time following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the Trust any accrued
costs, expenses, advances or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee, costs of liquidation and any
amounts required as a reserve to provide for payment of any applicable taxes
or other governmental charges. Any sale of Equity Securities in the Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder his pro rata share of the balance of the Income and Capital
Accounts.
Within 60 days of the final distribution, Unitholders will be furnished a
final distribution statement, in substantially the same form as the annual
distribution statement, of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or negligence (gross negligence in the case of
the Sponsor) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee
of any of the Securities. In the event of the failure of the Sponsor to act
under the Trust Agreement, the Trustee may act thereunder and shall not be
liable for any action taken by it in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the
Trust which the Trustee may be required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. Van Kampen American Capital
Distributors, Inc. is primarily owned by Clayton, Dubilier & Rice, Inc., a New
York-based private investment firm. Van Kampen American Capital Distributors,
Inc. management owns a significant minority equity position. Van Kampen
American Capital Distributors, Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds. The Sponsor is a
member of the National Association of Securities Dealers, Inc. and has offices
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, (708) 684-6000 and
2800 Post Oak Boulevard, Houston, Texas, 77056, (713) 993-0500. It maintains a
branch office in Philadelphia and has regional representatives in Atlanta,
Dallas, Los Angeles, New York, San Francisco, Seattle and Tampa. As of
December 31, 1995 the total stockholders' equity of Van Kampen American
Capital Distributors, Inc. was $123,165,000 (unaudited). (This paragraph
relates only to the Sponsor and not to the Trust or to any Series thereof or
to any other Underwriter. 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 December 31, 1995, the Sponsor and its affiliates managed or supervised
approximately $56.0 billion of investment products, of which over $24.8
billion is invested in municipal securities. The Sponsor and its affiliates
managed $44.0 billion of assets, consisting of $22.2 billion for 63 open-end
mutual funds (of which 47 are distributed by Van Kampen American Capital
Distributors, Inc.), $11.4 billion for 38 closed-end funds and $5.6 billion
for 84 institutional accounts. The Sponsor has also deposited approximately
$26 billion of unit investment trusts. All of Van Kampen American Capital's
open-end, closed-end 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 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 Fund as provided therein
or (iii) continue to act as Trustee without terminating the Trust Agreement.
All costs and expenses incurred in creating and establishing the Fund,
including the cost of the initial preparation, printing and execution of the
Trust Agreement and the certificates, legal and accounting expenses,
advertising and selling expenses, expenses of the Trustee, initial evaluation
fees and other out-of-pocket expenses have been borne by the Sponsor at no
cost to the Fund.
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 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 the Banks of
the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of such Trust. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute,
rule or regulation (see "Rights of UnitholdersReports Provided" ). The
Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus, and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio included in Part One of this Prospectus have been
audited by Grant Thornton LLP, independent certified public accountants, as
set forth in their report in Part One of this Prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting
and auditing.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trusts, the Sponsor or dealers. This Prospectus does not constitute an offer
to sell, or a solicitation of any offer to buy, securities in any state to any
persons to whom it is not lawful to make such offer in such state.
<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
The Trust............................. 2
Objectives and Securities Selection... 2
Trust Portfolio....................... 2
Risk Factors.......................... 2
Federal Taxation...................... 4
Trust Operating Expenses.............. 5
Public Offering....................... 6
Rights of Unitholders................. 7
Trust Administration.................. 9
Other Matters......................... 11
</TABLE>
This Prospectus does not contain all the information set forth in the
registration statements and exhibits relating thereto, which the Fund has
filed with Securities and Exchange Commission, Washington, D.C. under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
VAN KAMPEN MERRITT BRAND NAME EQUITY TRUST, SERIES 1
PROSPECTUS
PART TWO
Note: This Prospectus May Be Used Only
When Accompanied by Part One. Both
Parts of this Prospectus should be
retained for future reference.
Dated as of the date of the Prospectus Part I accompanying
this Prospectus Part II.
Sponsor:
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
A Wealth of Knowledge A Knowledge of Wealth (sm)
VAN KAMPEN AMERICAN CAPITAL
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen Merritt Equity Opportunity Trust, Series 8,
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Chicago and State of Illinois on the 24th
day of April, 1996.
Van Kampen Merritt Equity Opportunity Trust,
Series 8
(Registrant)
By Van Kampen American Capital Distributors,
Inc.
(Depositor)
By: Sandra A. Waterworth
Vice President
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this
Post Effective Amendment to the Registration Statement has been signed
below by the following persons in the capacities on April 24, 1996:
Signature Title
Don G. Powell Chairman and Chief )
Executive Officer )
)
William R. Molinari President and Chief )
Operating Officer )
)
Ronald A. Nyberg Executive Vice President )
and General Counsel )
)
William R. Rybak Executive Vice President and )
Chief Financial Officer ) Sandra A.
Waterworth
) (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 Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 203
(File No. 33-65744) and with the Registration Statement on Form S-6
of Insured Municipals Income Trust, 170th Insured Multi-Series (File
No. 33-55891) and the same are hereby incorporated herein by this
reference.
Consent of Independent Certified Public Accountants
We have issued our report dated March 17, 1996 accompanying the
financial statements of Van Kampen Merritt Equity Opportunity Trust,
Series 8 as of December 31, 1995, and for the period then ended,
contained in this Post-Effective Amendment No. 2 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton LLP
Chicago, Illinois
April 24, 1996
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<NAME> BNET
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 40981271
<INVESTMENTS-AT-VALUE> 54446414
<RECEIVABLES> 0
<ASSETS-OTHER> 94962
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54541376
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<OTHER-ITEMS-LIABILITIES> 90741
<TOTAL-LIABILITIES> 90741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54450635
<SHARES-COMMON-STOCK> 3914046
<SHARES-COMMON-PRIOR> 4199999
<ACCUMULATED-NII-CURRENT> 3873
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<DIVIDEND-INCOME> 995176
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 52843
<NET-INVESTMENT-INCOME> 942333
<REALIZED-GAINS-CURRENT> 1096398
<APPREC-INCREASE-CURRENT> 12643944
<NET-CHANGE-FROM-OPS> 14682675
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (972201)
<DISTRIBUTIONS-OF-GAINS> (225990)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 285953
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9677051
<ACCUMULATED-NII-PRIOR> 33741
<ACCUMULATED-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 52843
<AVERAGE-NET-ASSETS> 49612110
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> 0.241
<PER-SHARE-GAIN-APPREC> 3.511
<PER-SHARE-DIVIDEND> 0.254
<PER-SHARE-DISTRIBUTIONS> 0.058
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