File No. 33-57933
CIK #896971
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 3
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 American Capital Equity Opportunity Trust, Series 11
(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, 1997 pursuant to paragraph (b) of Rule 485.
FIRST OF MICHIGAN FINANCIAL INSTITUTIONS TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 11
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 First of Michigan Financial Institutions Trust, Series 1 (the "
Trust" or "First of Michigan Financial Institutions Trust" ), is
one unit investment trust in the Van Kampen American Capital Equity
Opportunity Fund, Series 11 (the "Fund" ). The First of Michigan
Financial Institutions Trust offers investors the opportunity to purchase
Units representing proportionate interests in a fixed, diversified portfolio
of Securities. Unless terminated earlier, the Trust will terminate on March
15, 1999 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 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 the applicable
sales charge. See "Summary of Essential Financial Information" .
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 16, 1997
FIRST OF MICHIGAN FINANCIAL INSTITUTIONS TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 11
Summary of Essential Financial Information
As of March 5, 1997
Managing Underwriter & Supervisor: First of Michigan Corporation
Sponsor: Van Kampen American Capital Distributors,
Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
First of
Michigan
Financial
Institutions
Trust
----------------
<S> <C>
General Information
Number of Units....................................................................................... 1,182,000
Fractional Undivided Interest in the Trust per Unit .................................................. 1/1,182,000
Public Offering Price: ...............................................................................
Aggregate Value of Securities in Portfolio <F1>...................................................... $ 19,625,557
Aggregate Value of Securities per Unit (including accumulated dividends)............................. $ 16.70
Sales Charge 4.0% (4.167% of Aggregate Value of Securities excluding principal cash) per Unit <F3>... $ .69
Public Offering Price per Unit <F2><F3>.............................................................. $ 17.39
Redemption Price per Unit............................................................................. $ 16.70
Secondary Market Repurchase Price per Unit............................................................ $ 16.70
Excess of Public Offering Price per Unit Over Redemption Price per Unit............................... $ .69
</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.......................March 15, 1995
Mandatory Termination Date............March 15, 1999
The Trust may be terminated if the net asset value of such Trust is less than 40% of the
Minimum Termination Value.............total value of Equity Securities deposited in the Trust during the primary offering period.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Special Information......................................
Calculation of Estimated Net Annual Dividends per Unit...
Estimated Gross Annual Dividends per Unit............... $ .37879
Less: Estimated Expenses per Unit....................... $ .01706
Estimated Net Annual Dividends per Unit................. $ .36173
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee.....................$.008 per Unit
Income Distribution Record Date..........TENTH day of June and December.
Income Distribution Date.................TWENTY-FIFTH day of June and December.
Capital Account Record Date..............TENTH day of December.
Capital Account Distribution Date <F4>...TWENTY-FIFTH day of December.
- ----------
<FN>
<F1>Equity Securities listed on a national securities exchange are valued at the
last available closing sale price, or if no such price exists, or if the
Equity Securities are not so listed, at the closing bid price thereof.
<F2>Anyone ordering Units will have added to the Public Offering Price a pro rata
share of any cash in the Income and Capital Accounts.
<F3>Effective on each March 22, commencing March 22, 1996, the secondary sales
charge will decrease by .5 of 1% to a minimum sales charge of 3.5%. See "
Public Offering-Offering Price" in Part Two.
<F4>Distributions from the Capital Account will be made monthly on the
twenty-fifth day of the month to Unitholders of record on the tenth day of
such month if the amount available for distributions equals at least $0.01 per
Unit.
</TABLE>
PORTFOLIO
The First of Michigan Financial Institutions Trust consists of 24 different
issues of Equity Securities, issued primarily by financial institutions
headquartered in the states of Michigan, Indiana, and Ohio (the "Great
Lakes Region" ) and listed on a national securities exchange, the NASDAQ
National Market System or traded in the Over-the-Counter market.
PER UNIT INFORMATION
<TABLE>
<CAPTION>
1995<F1> 1996
------------- -------------
<S> <C> <C>
Net asset value per Unit at beginning of period........................................................ $ 9.62 $ 12.43
============= =============
Net asset value per Unit at end of period.............................................................. $ 12.43 $ 15.25
============= =============
Distributions to Unitholders of investment income including accumulated dividends paid on Units
redeemed (average Units outstanding for entire period)................................................. $ 0.21 $ 0.33
============= =============
Distributions to Unitholders from Equity Security redemption proceeds (average Units outstanding for
entire period)......................................................................................... $ -- $ 0.04
============= =============
Unrealized appreciation (depreciation) of Equity Securities (per Unit outstanding at end of period).... $ 2.70 $ 1.89
============= =============
Units outstanding at end of period..................................................................... 1,560,000 1,226,000
</TABLE>
- ----------
For the period from March 15, 1995 (date of deposit) through December 31, 1995.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of First of Michigan Financial Institutions Trust, Series
1 (Van Kampen American Capital Equity Opportunity Trust, Series 11):
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of the First of Michigan
Financial Institutions Trust, Series 1 (Van Kampen American Capital Equity
Opportunity Trust, Series 11) as of December 31, 1996, and the related
statements of operations and changes in net assets for the period from March
15, 1995 (date of deposit) through December 31, 1995 and the year ended
December 31, 1996. 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, 1996 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 the First of Michigan
Financial Institutions Trust, Series 1 (Van Kampen American Capital Equity
Opportunity Trust, Series11) as of December 31, 1996, and the results of
operations and changes in net assets for the period from March 15, 1995 (date
of deposit) through December 31, 1995 and the year ended December 31, 1996, in
conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
March 14, 1997
<TABLE>
FIRST OF MICHIGAN FINANCIAL INSTITUTIONS TRUST
SERIES 1
Statements of Condition
December 31, 1996
<CAPTION>
First of
Michigan
Financial
Institutions
Trust
<S> <C>
Trust property
Cash.................................................................................... $ 23,722
Securities at market value, (cost $12,106,641) (note 1)................................. 18,629,346
Accumulated dividends................................................................... 46,880
$ 18,699,948
=================
Liabilities and interest to Unitholders
Interest to Unitholders................................................................. $ 18,699,948
$ 18,699,948
=================
Analyses of Net Assets
Interest of Unitholders (1,226,000 Units of fractional undivided interest outstanding)
Cost to original investors of 1,650,000 Units (note 1).................................. $ 16,669,622
Less initial underwriting commission (note 3)........................................... 717,831
-----------------
15,951,791
Less redemption of 424,000 Units........................................................ 5,412,275
-----------------
10,539,516
Undistributed net investment income
Net investment income................................................................... 844,962
Less distributions to Unitholders....................................................... 772,856
-----------------
72,106
Realized gain (loss) on Security sale or redemption..................................... 1,618,017
Unrealized appreciation (depreciation) of Securities (note 2)........................... 6,522,705
Distributions to Unitholders of Security sale or redemption proceeds.................... (52,396)
Net asset value to Unitholders.......................................................... $ 18,699,948
=================
Net asset value per Unit (1,226,000 Units outstanding)................................... $ 15.25
=================
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
FIRST OF MICHIGAN FINANCIAL INSTITUTIONS TRUST, SERIES 1
Statements of Operations
Period from March 15, 1995 (date of deposit) through December 31, 1995
and the year ended December 31, 1996
<CAPTION>
1995 1996
------------- -------------
<S> <C> <C>
Investment income
Dividend income..................................................... $ 395,562 $ 487,823
Expenses.............................................................
Trustee fees and expenses........................................... 10,701 14,819
Evaluator fees...................................................... 2,795 4,059
Supervisory fees.................................................... -- 6,049
------------- -------------
Total expenses...................................................... 13,496 24,927
------------- -------------
Net investment income............................................... 382,066 462,896
Realized gain (loss) from Securities sale or redemption
Proceeds............................................................ 1,098,088 4,365,078
Cost................................................................ 825,039 3,020,110
------------- -------------
Realized gain (loss)................................................ 273,049 1,344,968
Net change in unrealized appreciation (depreciation) of Securities 4,206,149 2,316,556
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......$ 4,861,264 $ 4,124,420
============= =============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
Period from March 15, 1995 (date of deposit) through December 31, 1995
and the year ended December 31, 1996
<CAPTION>
1995 1996
--------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income............................................................................. $ 382,066 $ 462,896
Realized gain (loss) on Securities sale or redemption............................................. 273,049 1,344,968
Net change in unrealized appreciation (depreciation) of Securities................................ 4,206,149 2,316,556
--------------- ---------------
Net increase (decrease) in net assets resulting from operations................................... 4,861,264 4,124,420
Distributions to Unitholders from:
Net investment income............................................................................. (315,052) (457,804)
Securities sale or redemption proceeds............................................................ -- (52,396)
Redemption of Units................................................................................ (1,102,200) (4,310,075)
--------------- ---------------
Total increase (decrease)......................................................................... 3,444,012 (695,855)
Net asset value to Unitholders
Beginning of period............................................................................... 15,951,791 19,395,803
Additional Securities purchased from proceeds of Unit Sales....................................... -- --
--------------- ---------------
End of period (including undistributed net investment income of $67,014 and $72,106, respectively) $ 19,395,803 $ 18,699,948
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
FIRST OF MICHIGAN FINANCIAL INSTITUTIONS TRUST, SERIES 1
PORTFOLIO as of December 31,
1996
<CAPTION>
Valuation of Securities
Number at December 31,
of Market Value Per 1996
Shares Name of Issuer Share (Note 1)
- ---------- -------------------------------------- --------------------- ----------------------------
<S> <C> <C> <C>
9,163 CB Financial Corporation $ 36.2500 $ 332,159
- ----------------------------------------------------------------------------------------------------
40,664 CFSB Bancorp, Incorporated 19.0000 772,616
- ----------------------------------------------------------------------------------------------------
39,187 Charter One Financial, Incorporated 42.0000 1,645,854
- ----------------------------------------------------------------------------------------------------
13,763 Chemical Financial Corporation 39.5000 543,639
- ----------------------------------------------------------------------------------------------------
20,290 CitFed Bancorp, Incorporated 33.0000 669,570
- ----------------------------------------------------------------------------------------------------
26,638 Citizens Banking Corporation 31.5000 839,097
- ----------------------------------------------------------------------------------------------------
12,984 Comerica, Incorporated 52.3750 680,037
- ----------------------------------------------------------------------------------------------------
49,763 D&N Financial Corporation 16.7500 833,530
- ----------------------------------------------------------------------------------------------------
15,424 First Chicago NBD 53.7500 829,040
- ----------------------------------------------------------------------------------------------------
20,261 First Indiana Corporation 26.7500 541,982
- ----------------------------------------------------------------------------------------------------
36,854 First Michigan Bank Corporation 29.5000 1,087,193
- ----------------------------------------------------------------------------------------------------
17,852 First of America Bank Corporation 60.1250 1,073,351
- ----------------------------------------------------------------------------------------------------
21,747 FirstMerit Corporation 35.2500 766,582
- ----------------------------------------------------------------------------------------------------
21,509 Fort Wayne National Corporation 38.0000 817,342
- ----------------------------------------------------------------------------------------------------
68,683 Franklin Bank, N.A. 11.5000 789,855
- ----------------------------------------------------------------------------------------------------
33,565 Huntington Bancshares, Incorporated 26.3750 885,277
- ----------------------------------------------------------------------------------------------------
16,999 Independent Bank Corporation 33.7500 573,716
- ----------------------------------------------------------------------------------------------------
21,232 Indiana Federal Corporation 22.0000 467,104
- ----------------------------------------------------------------------------------------------------
64,833 Mutual Savings Bank, F.S.B. 5.5000 356,581
- ----------------------------------------------------------------------------------------------------
24,215 Old Kent Financial Corporation 47.6250 1,153,239
- ----------------------------------------------------------------------------------------------------
36,649 Ottawa Financial Corporation 16.7500 613,871
- ----------------------------------------------------------------------------------------------------
87,633 Republic Bancorp, Incorporated 11.6250 1,018,734
- ----------------------------------------------------------------------------------------------------
19,112 Standard Federal Bank 56.8750 1,086,995
- ----------------------------------------------------------------------------------------------------
11,858 Strongsville Savings Bank 21.2500 251,982
---------------------------
730,878 $ 18,629,346
========== ============================
</TABLE>
The accompanying notes are an integral part of these statements.
FIRST OF MICHIGAN FINANCIAL INSTITUTIONS TRUST SERIES 1
Notes to Financial Statements
December 31, 1995 and 1996
- --------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national securities exchange are
valued at the last closing sales price or, if not so listed, at the closing
bid price.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national securities exchange, on the closing sale
prices on the exchange or, if not so listed, at the closing asked price. The
cost was 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 - Each Unitholder is considered to be the owner of a pro
rata portion of the Trust and, accordingly, no provision has been made for
Federal Income Taxes.
Distributions to Unitholders of the Trust's taxable income will be taxable as
ordinary or capital gain income 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, 1996 is as follows:
<TABLE>
<CAPTION>
First of
Michigan
Financial
Institutions
Trust
----------------
<S> <C>
Unrealized Appreciation $ 6,522,705
Unrealized Depreciation --
----------------
$ 6,522,705
================
</TABLE>
NOTE 3 - OTHER
Marketability - Although it is not obligated to do so, the Managing
Underwriter 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 Managing Underwriter
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 4.5% of the public offering price which is equivalent to
4.712% 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 4.5% of the public offering price which is 4.712% of the underlying value
of the Securities. Effective on each March 22, commencing March 22, 1996, the
secondary sales charge will decrease by .5 of 1% to a minimum sales charge of
3.5%.
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 period ended December 31, 1995 and the year ended December 31,
1996, 90,000 Units and 334,000 Units, respectively, were presented for
redemption.
First of Michigan Financial Institutions Trust
Prospectus Part Two
The Trust. First of Michigan Financial Institutions Trust, Series 1 and Series
2 (the "Trusts" ) are separate unit investment trusts which are
contained in Series 11 and Series 17, respectively, of the Van Kampen American
Capital Equity Opportunity Trust. Each Trust offers investors the opportunity
to purchase Units representing proportionate interests in a fixed, diversified
portfolio of common stocks issued by financial institutions headquartered in
the states of Michigan, Illinois, Indiana and Ohio (the "Equity
Securities" ). Unless terminated earlier, each Trust will terminate on the
Mandatory Termination Date set forth under "Summary of Essential Financial
Information" in Part One and any Equity Securities then held will, within
a reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Equity Securities liquidated at termination will be sold at the then current
market value for such Equity 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 or her Units.
Objectives of the Trust. The objectives of the Trusts are to provide the
potential for capital appreciation and income by investing in a portfolio of
common stocks issued by financial institutions incorporated or headquartered
in the states of Michigan, Illinois, Indiana and Ohio. See "Portfolio"
in Part One. Each Unit of a Trust represents an undivided fractional interest
in all the Equity Securities deposited in such Trust. There is, of course, no
guarantee that the objectives of a Trust will be achieved.
Public Offering Price. The secondary market Public Offering Price of each
Trust will include the aggregate underlying value of the Securities in such
Trust, the applicable sales charge as described herein, and cash, if any, in
the Income and Capital Accounts held or owned by such Trust. The minimum
purchase is 200 Units (100 Units for a tax-sheltered retirement plan). See
"Public Offering."
Dividend and Capital Distributions. Distributions of dividends and capital, if
any, received by a 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. Any distribution
of income and/or capital will be net of the expenses of the Trusts. See "
Tax Status." Additionally, upon termination of a Trust, the Trustee will
distribute, upon surrender of Units for redemption, to each Unitholder his pro
rata share of such Trust's assets, less expenses, in the manner set forth
under "Rights of Unitholders--Distributions of Income and Capital."
Secondary Market for Units. Although not obligated to do so, the Managing
Underwriter intends to maintain a market for Units of a Trust and offer to
repurchase such Units at prices which are based on the aggregate underlying
value of Equity Securities in the Trust (generally determined by the closing
sale or bid prices of the Equity Securities), plus or minus a pro rata share
of cash, if any, in the Capital and Income Accounts of the Trust. If a
secondary market is not maintained, a Unitholder may redeem Units through
redemption at prices based upon the aggregate underlying value of the Equity
Securities in a Trust (generally determined by the closing sale or bid prices
of the Equity Securities), plus or minus a pro rata share of cash, if any, in
the Capital and Income Accounts of the Trust. See "Rights of
Unitholders--Redemption of Units."
Termination. Commencing on the Mandatory Termination Date, Equity Securities
will begin to be sold in connection with the termination of a Trust. The
Sponsor will determine the manner, timing and execution of the sale of the
Equity Securities. At least 60 days prior to the Mandatory Termination Date
the Trustee will provide written notice thereof to all Unitholders and will
include with such notice a form to enable Unitholders to elect a distribution
of shares of Equity Securities if such Unitholder owns at least 2,500 Units of
the Trust rather than to receive payment in cash for such Unitholder's pro
rata share of the amounts realized upon the disposition by the Trustee of
Equity Securities. All Unitholders will receive cash in lieu of any fractional
shares. To be effective, the election form, and other documentation required
by the Trustee, must be returned to the Trustee at least five business days
prior to the Mandatory Termination Date. Unitholders not electing a
distribution of shares of Equity Securities will receive a cash distribution
from the sale of the remaining Securities within a reasonable time after a
Trust is terminated. See "Trust Administration--Amendment or
Termination."
Reinvestment Option. Unitholders have the opportunity to have their
distributions reinvested into an open-end, management investment company as
described herein. See "Rights of Unitholders--Reinvestment 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 One
accompanying the Prospectus 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.
Risk Factors. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including, among other factors, the
possible deterioration of either the financial condition of the issuers or the
general condition of the stock market, volatile interest rates, economic
recession, the limited liquidity of certain Securities and potential increased
regulation on banks and thrifts. The Trusts are not actively managed and
Equity Securities will not be sold by a Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Units of the
Trusts are not deposits or obligations of, or 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. See
"Risk Factors."
THE TRUST
Each Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Agreement (the "Trust Agreement" ), dated the
Initial Date of Deposit, among Van Kampen American Capital Distributors, Inc.,
as Sponsor, American Portfolio Evaluation Services, a division of Van Kampen
American Capital Investment Advisory Corp., as Evaluator, First of Michigan
Corporation, as Supervisor and The Bank of New York, as Trustee.
The Trusts may be appropriate mediums for investors who desire to participate
in a diversified portfolio of equity securities issued by financial
institutions headquartered in the states of Michigan, Illinois, Indiana and
Ohio. Diversification of assets in a Trust will not eliminate the risk of loss
always inherent in the ownership of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Equity Securities including delivery statements relating to contracts for the
purchase of certain such Equity Securities and an irrevocable letter of credit
issued by a financial institution in the amount required for such purchases.
Thereafter, the Trustee, in exchange for such Equity Securities (and
contracts) so deposited, delivered to the Sponsor documentation evidencing the
ownership of Units of the related Trust. Unless otherwise terminated as
provided in the Trust Agreement, each Trust will terminate on the Mandatory
Termination Date and Equity Securities then held will within a reasonable time
thereafter be liquidated or distributed by the Trustee.
Each Unit of a Trust initially offered represents an undivided interest in
such 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 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 Managing
Underwriter, or until the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objectives of the Trusts are to provide investors with the potential for
capital appreciation and income. The portfolio is described under "Trust
Portfolio" herein and "Portfolio" in Part One. An investor will be
subjected to taxation on the dividend income received from a Trust and on
gains from the sale or liquidation of Securities (see "Tax Status" ).
Investors should be aware that there is not any guarantee that the objectives
of the Trusts will be achieved because they are subject to the continuing
ability of the respective Equity Security issuers to continue to declare and
pay dividends and because the market value of the Equity 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 Equity 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 Equity Securities and the declaration of any dividends depends
upon several factors including the financial condition of the issuers and
general economic conditions.
In the opinion of the Managing Underwriter, banks and thrifts are generally in
their best financial shape in at least a decade. As a result of recent
improvements in loan demand and an increase in fee-based income, the Managing
Underwriter believes that bank and thrift stocks currently offer investors the
potential for growth and income. In selecting Securities for the Trusts the
following factors, among others, may have been considered: asset quality,
earnings momentum, management expertise, the financial institution's earnings
outlook, the relative stability and diversity of the Great Lakes Region and
the potential for continued consolidation in the industry. There is, however,
no assurance that the above mentioned factors will result in increases in the
stock prices of the Securities included in the Trust. While past performance
of many of the Equity Securities selected for the Trust has been excellent and
dividend payments have been consistent there is no assurance that such
performance or consistent dividend payments will continue in the future.
Investors should be aware that the Trust is not a "managed" fund and
as a result the adverse financial condition of a company will not result in
its elimination from the portfolio except under extraordinary circumstances
(see "Trust Administration--Portfolio Administration" ). In addition,
Equity 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 Equity Securities were selected by the Managing
Underwriter prior to the Initial Date of Deposit. The Trust may continue to
purchase or hold Equity Securities originally selected through this process
even though the evaluation of the attractiveness of the Equity Securities may
have changed and, if the evaluation were performed again at that time, the
Equity Securities would not be selected for the Trust.
TRUST PORTFOLIO
The First of Michigan Financial Institutions Trust, Series 1 and Series 2
consist of Equity Securities issued by financial institutions headquartered in
the states of Michigan, Illinois, Indiana and Ohio (the "Great Lakes
Region" ) and listed on a national securities exchange, the NASDAQ National
Market System or traded in the over-the-counter market. Each of the companies
whose Equity Securities are included in the portfolios was selected based upon
those factors referred to under "Objectives and Securities Selection"
above.
General. Each Trust consists of such of the Equity Securities listed under
"Portfolio" in Part One as may continue to be held from time to time
in the related Trust and any additional Equity Securities acquired and held by
such Trust pursuant to the provisions of the Trust Agreement 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 Equity
Securities. However, should any contract for the purchase of any of the Equity
Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the related Trust to cover such
purchase are reinvested in substitute Equity Securities in accordance with the
Trust Agreement, refund the cash and sales charge attributable to such failed
contract to all Unitholders on the next distribution date.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will 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 each portfolio is not managed, the
Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. Pursuant to the Trust Agreement and with limited
exceptions, the Trustee may sell any securities or other property acquired in
exchange for Equity Securities such as those acquired in connection with a
merger or other transaction. If offered such new or exchanged securities or
property, the Trustee shall reject the offer. However, in the event such
securities or property are nonetheless acquired by a Trust, they may be
accepted for deposit in the Trust and either sold by the Trustee or held in
the Trust pursuant to the direction of the Sponsor (who may rely on the advice
of the Supervisor). See "Trust Administration--Portfolio
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.
The Managing Underwriter may have acquired the Equity Securities for the
Sponsor. The Managing Underwriter in its general securities business acts as
agent or principal in connection with the purchase and sale of equity
securities, including the Equity Securities in a Trust, and may act as a
market maker in certain of the Equity Securities. The Managing Underwriter may
also, from time to time, issue reports on and make recommendations relating to
equity securities, which may include the Equity Securities. From time to time
the Managing Underwriter may act as investment banker or an employee or
affiliate may be a director of a company whose shares are included among the
Equity Securities; nonpublic information concerning such a company would not
be disclosed to the Managing Underwriter or for the benefit of a Trust under
such circumstances.
RISK FACTORS
An investment in Units of the Trusts should be made with an understanding of
the problems and risks inherent in the financial institutions industry in
general. Banks, thrifts and their holding companies are especially subject to
the adverse effects of economic recession, volatile interest rates, portfolio
concentrations in geographic markets and in commercial and residential real
estate loans, and competition from new entrants in their fields of business.
Banks and thrifts are highly dependent on net interest margin. Bank profits
have benefited from the yield spread on earning assets in relation to their
cost of funds. There is no certainty that such conditions will continue.
Commercial loan demand for banks has been weak and an increasing number of
commercial loans have been securitized, which could have a potential adverse
effect on the market share of the commercial banking system. Bank and thrift
institutions have received significant consumer mortgage fee income as a
result of recent activity in the mortgage and refinance markets. As initial
home purchasing and refinancing activity subsides, this income is being
diminished. Economic conditions in the real estate markets, which have been
weak in the recent past, can have a substantial effect upon banks and thrifts
because they generally have a portion of their assets invested in loans
secured by real estate, as has recently been the case for a number of banks
and thrifts with respect to commercial real estate in the northeastern and
southwestern regions of the United States. Banks, thrifts and their holding
companies are subject to extensive federal regulation and, when such
institutions are state-chartered, to state regulation as well. Such
regulations impose strict capital requirements and limitations on the nature
and extent of business activities that banks and thrifts may pursue.
Furthermore, bank regulators have a wide range of discretion in connection
with their supervisory and enforcement authority and may substantially
restrict the permissible activities of a particular institution if deemed to
pose significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as increases in
the minimum capital requirements applicable to banks and increases in deposit
insurance premiums required to be paid by banks to the Federal Deposit
Insurance Corporation ("FDIC" ), can negatively impact earnings and the
ability of a company to pay dividends. Neither federal insurance of deposits
nor governmental regulations, however, ensure the solvency or profitability of
banks or their holding companies or insure against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of banks,
thrifts and their holding companies have increased significantly and have
undergone substantial changes in recent years. To a great extent, these
changes are embodied in the Financial Institutions Reform, Recovery and
Enforcement Act, enacted in August 1989, the Federal Deposit Insurance
Corporation Improvement Act of 1991, the Resolution Trust Corporation
Refinancing, Restructuring, and Improvement Act of 1991 and the regulations
promulgated under these laws. Many of the regulations promulgated pursuant to
these laws have only recently been finalized and their impact on the business,
financial condition and prospects of the Equity Securities in the Trust's
portfolio cannot be predicted with certainty. Periodically, legislation is
introduced which seeks to broaden the ability of banks and thrifts to compete
with new products, and if enacted could lead to more failures as a result of
increased competition and added risks. Failure to enact such legislation, on
the other hand, may lead to declining earnings and an inability to compete
with unregulated financial institutions. Efforts to expand the ability of
federal thrifts to branch on an interstate basis have been initially
successful through promulgation of regulations, and legislation to liberalize
interstate banking has been signed into law. Under the legislation, banks will
be able to purchase or establish subsidiary banks in any state, one year after
the legislation's enactment. Starting in mid-1997, banks would be allowed to
turn existing banks into branches, though states could pass laws to permit
interstate branch banking before then. Consolidation is likely to continue in
both cases. The Securities and Exchange Commission and the Financial
Accounting Standards Board require the expanded use of market value accounting
by banks and have imposed rules requiring market accounting for investment
securities held in trading accounts or available for sale. Adoption of
additional such rules may result in increased volatility in the reported
health of the industry and mandated regulatory intervention to correct such
problems. Additional legislative and regulatory changes may be forthcoming.
For example, the bank regulatory authorities have proposed substantial changes
to the Community Reinvestment Act and fair lending laws, rules and
regulations, and there can be no certainty as to the effect, if any, that such
changes would have on the Equity Securities in the Trust's portfolio. In
addition, from time to time the deposit insurance system is reviewed by
Congress and federal regulators, and proposed reforms of that system could,
among other things, further restrict the ways in which deposited moneys can be
used by banks or reduce the dollar amount or number of deposits insured for
any depositor. Such reforms could reduce profitability as investment
opportunities available to bank institutions become more limited and as
consumers look for savings vehicles other than bank deposits. Banks and
thrifts face significant competition from other financial institutions such as
mutual funds, credit unions, mortgage banking companies and insurance
companies, and increased competition may result from legislative broadening of
regional and national interstate banking powers as has been recently proposed.
Among other benefits, proposed legislation would allow banks and bank holding
companies to acquire across previously prohibited state lines and to
consolidate their various bank subsidiaries into one unit. The Sponsor makes
no prediction as to what, if any, manner of thrift regulatory reform might
ultimately be adopted or what ultimate effect such reform might have on a
Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5% of
the outstanding shares of any class of voting securities of a bank or bank
holding company, (2) acquiring control of a bank or another bank holding
company, (3) acquiring all or substantially all the assets of a bank, or (4)
merging or consolidating with another bank holding company, without first
obtaining Federal Reserve Board ("FRB" ) approval. In considering an
application with respect to any such transaction, the FRB is required to
consider a variety of factors, including the potential anti-competitive
effects of the transaction, the financial condition and future prospects of
the combining and resulting institutions, the managerial resources of the
resulting institution, the convenience and needs of the communities the
combined organization would serve, the record of performance of each combining
organization under the Community Reinvestment Act and the Equal Credit
Opportunity Act, and the prospective availability to the FRB of information
appropriate to determine ongoing regulatory compliance with applicable banking
laws. In addition, the federal Change In Bank Control Act and various state
laws impose limitations on the availability of one or more individuals or
other entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends by bank
holding companies. In the policy statement, the FRB expressed its view that a
bank holding company experiencing earnings weaknesses should not pay cash
dividends which exceed its net income or which could only be funded in ways
that would weaken its financial health, such as by borrowing. The FRB also may
impose limitations on the payment of dividends as a condition to its approval
of certain applications, including applications for approval of mergers and
acquisitions. The Sponsor makes no prediction as to the effect, if any, such
laws will have on the Equity Securities or whether such approvals, if
necessary, will be obtained.
The principal trading market for certain of the Equity Securities may be in
the over-the-counter market. As a result, the existence of a liquid trading
market for the Equity Securities may depend on whether dealers will make a
market in the Equity Securities. There can be no assurance that a market will
be made for any of the Equity Securities, that any market for the Equity
Securities will be maintained or of the liquidity of the Equity Securities in
any markets made. In addition, the Trusts may be restricted under the
Investment Company Act of 1940 from selling Equity Securities to the Managing
Underwriter or the Sponsor. The price at which the Equity Securities may be
sold to meet redemptions, and the value of a Trust, will be adversely affected
if trading markets for the Equity Securities are limited or absent.
In the opinion of the Managing Underwriter, certain of the Equity Securities
included in the Trust which may have the highest potential for capital
appreciation also from time to time may experience limited purchase or sale
availability in the market place. Upon termination of a Trust, this potential
limited daily trading volume may result in negative market price consequences
for the Trust stemming from the liquidation of a significant amount of these
Equity Securities. The Sponsor will attempt to mitigate these consequences
with a longer liquidation period (not to exceed 30 days) for these Equity
Securities at a Trust's termination than might be required for the other
Equity Securities included in the Trust. However, these procedures may be
insufficient or unsuccessful in avoiding such negative price consequences.
An investment in Units should be made with an understanding of the risks which
an investment in common stocks entail, 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. The 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 Trust have a right to receive dividends only
when and if, and in the amounts, declared by the issuer's board of directors
and have a right to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or
the rights of holders of common stock with respect to assets of the issuer
upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities may be expected to fluctuate over the
life of the Trust to values higher or lower than those prevailing on the
Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity,
generally have 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 of liquidation which are senior to those of common stockholders.
TAX STATUS
Federal Taxation. The following is a general discussion of certain of the
federal income tax consequences of the purchase, ownership and disposition of
the Units. The summary limited to investors who hold the Units as "capital
assets" (generally, property held for investment) within the meaning of
Section 1221 of the Internal Revenue Code of 1986 ("the Code" ).
Unitholders should consult their tax advisers in determining the federal,
state, local and any other tax consequences of the purchase, ownership and
disposition of Units in the Trust. For purposes of the following discussion
and opinion, it is assumed that each Equity Security is equity for federal
income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal income
tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of
the Trust will be treated as income of the Unitholders thereof under the Code.
Each Unitholder will be considered to have received his pro rata share of
income derived from each Trust asset when such income is considered to be
received by the Trust.
2. Each Unitholder will have a taxable event when the Trust disposes of an
Equity Security (whether by sale, exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unitholder (except
to the extent an in kind distribution of stock is available and received by
such Unitholder from the Trust, as described below). The price a Unitholder
pays for his Units, generally including sales charges, is allocated among his
pro rata portion of each Equity Security held by the Trust (in proportion to
the fair market values thereof on the valuation date closest to the date the
Unitholder purchase his Units) in order to determine his initial tax basis for
his pro rata portion of each Equity Security held by the trust. It should be
noted that certain legislative proposals have been made which could affect the
calculation of basis for Unitholders holding securities that are substantially
identical to the Equity Securities. Unitholders should consult their own tax
advisors with regard to calculation of basis.
A Unitholder will be considered to have received all of the dividends paid on
his pro rata portion of each Equity Security when such dividends are received
by the Trust. Unitholders will be taxed in this manner regardless of whether
distributions from the Trust are actually received by the Unitholder or are
automatically reinvested. For federal income tax purposes, a Unitholder's pro
rata portion of dividends as defined by Section 316 of the Code paid with
respect to an Equity Security held by the trust are taxable as ordinary income
to the extent of such corporation's current and accumulated "earnings and
profits" . A Unitholder's pro rata portion of dividends paid on such Equity
Security which exceed such current and accumulated earnings and profits will
first reduce a Unitholder's tax basis in such Equity Security, and to the
extent that such dividends exceed a Unitholder's tax basis in such Equity
Security shall generally be treated as capital gain. In general, any such
capital gain will be short-term unless a Unitholder has held his Units for
more than one year.
3. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Equity Securities held by the trust will generally
be considered a capital gain (except in the case of a dealer or a financial
institution) and, in general, will be long-term if the Unitholder has held his
Units for more than one year (the date on which the Units are acquired (i.e.,
the "trade date" ) is excluded for purposes of determining whether the
Units have been held for more than one year). A Unitholder's portion of loss,
if any, upon the sale or redemption of Units or the disposition of Equity
Securities held by the trust will generally be considered a capital loss
(except in the case of a dealer or a financial institution) and, in general,
will be long-term if the Unitholder has held his Units for more than one year.
Unitholders should consult their tax advisers regarding the recognition of
such capital gains and losses for federal income tax purposes.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by the trust (to the
extent such dividends are taxable as ordinary income, as discussed above and
are attributable to domestic corporations) in the same manner as if such
corporation directly owned the Equity Securities paying such dividends (other
than corporate Unitholders, such as "S" corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and
the personal holding corporation tax). However, a corporation owning Units
should be aware that Sections 246 and 246A of the Code impose additional
limitations on the eligibility of dividends for the 70% dividends received
deduction. The limitations include a requirement that stock (and therefore
Units) must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been issued which address special
rules that must be considered in determining whether the 46 day holding period
requirement is met. Moreover, the allowable percentage of the deduction will
be reduced from 70% if a corporate Unitholder owns certain stock (or Units)
the financing of which is directly attributable to indebtedness incurred by
such corporation. It should be noted that various legislative proposals that
would affect the dividends received deduction have been introduced.
Unitholders should consult with their tax advisers with respect to the
limitations on and possible modifications to the dividends received deduction.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that own Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as through the expense had been paid
directly by him. It should be noted that as a result of the Tax Reform Act of
1986, certain miscellaneous itemized deductions, such as investment expenses,
tax return preparation fees and employee business expenses will be deductible
by an individual only to the extend they exceed 2% of such individual's
adjusted gross income. Unitholders may be required to treat some or all of the
expenses of the Trust as miscellaneous itemized deductions subject to this
limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Equity Securities by
the Trust or Disposition of Units. As discussed above, a Unitholder may
recognize taxable gain (or loss) when an Equity Security is disposed of by the
Trust or if the Unitholder disposes of a Unit. For taxpayers other than
corporations, net capital gains (which are defined as net long-term capital
gain over net short-term capital loss for a taxable year) are subject to a
maximum marginal stated tax rate of 28%. However, it should be noted that
legislative proposals are introduced from time to time that could affect tax
rates and could affect relative differences at which ordinary income and
capital gains are taxed.
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.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the trust involved including his
pro rata portion of all the Equity Securities represented by the Unit.
Legislative proposals have been made that would treat certain transactions
designed to reduce or eliminate risk of loss and opportunities for gain as
constructive sales for purposes of recognition of gain (but not loss).
Unitholders should consult their own tax advisors with regard to any such
constructive sale rules.
Special Tax Consequences of In Kind Distributions Upon Redemption or
Termination of the Trust. Under certain circumstances a Unitholder tendering
Units for redemption may be able to request an In Kind Distribution. A
Unitholder may also under certain circumstances be able to request an In Kind
Distribution upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units." As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust assets for
federal income tax purposes. The receipt of an In Kind Distribution will
result in a Unitholder receiving an undivided interest in whole shares of
stock plus, possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution
will depend on whether or not a Unitholder receives cash in addition to Equity
Securities. An "Equity Security" for this purpose is a particular
class of stock issued by a particular corporation. A Unitholder will not
recognize gain or loss if a Unitholder only receives Equity Securities in
exchange for his or her pro rata portion in the Equity Securities held by the
trust. However, if a Unitholder also receives cash in exchange for a
fractional share of an Equity Security held by the trust, such Unitholder will
generally recognize gain or loss based upon the difference between the amount
of cash received by the Unitholder and his tax basis in such fractional share
of an Equity Security held by the Trust.
Because the Trust will own many Equity Securities, a Unitholder who requests
an In Kind Distribution will have to analyze the tax consequences with respect
to each Equity Security owned by the Trust. The amount of taxable gain (or
loss) recognized upon such exchange will generally equal the sum of the gain
(or loss) recognized under the rules described above by such Unitholder with
respect to each Equity Security owned by the Trust. Unitholders who request
and In Kind Distribution are advised to consult their tax advisers in this
regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax basis
in his Units will generally equal the price paid by such Unitholder for his
Units. the cost of the Units is allocated among the Equity Securities held in
the Trust in accordance with the proportion of the fair market values of such
Equity Securities on the valuation date closest to the date the Units are
purchased in order to determine such Unitholder's tax basis for his pro rata
portion of each Equity Security.
A Unitholder's tax basis in his Units and his pro rata portion of an Equity
Security held by the trust will be reduced to the extent dividends paid with
respect to such Equity Security are received by the Trust which are not
taxable as ordinary income as described above.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the trustee and to certify that the
Unitholder has not been notified that payments to the Unitholder are subject
to back-up withholding. If the proper taxpayer identification number nd
appropriate certification are not provided when requested, distributions by
the trust to such Unitholder (including amounts received upon the redemption
of Units) will be subject to back-up withholding. Distributions by the Trust
(other than those that are not treated as United States source income, if any)
will generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign corporations
or other non-United States person. Such persons should consult their tax
advisers.
In general, income that is not effectively connected to the conduct of a trade
or business within the United States that is earned by non-U.S. Unitholders
and derived from dividends of foreign corporations will not be subject to U.S.
withholding tax provided that less than 25 percent of the gross income of the
foreign corporation for a three-year period ending with the close of its
taxable year preceding payment was not effectively connected to the conduct of
a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the
United States and a foreign country. Non-U.S. Unitholders should consult their
own tax advisers regarding the imposition of U.S. withholding on distributions
from the Trust.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trust. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unitholders. Because, under the
grantor trust rules, an investor is deemed to have paid directly his share of
foreign taxes that have been paid or accrued, if any, an investor may be
entitled to a foreign tax credit or deduction for United States tax purposes
with respect to such taxes. Investors should consult their tax advisers with
respect to foreign withholding taxes and foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of such Trust a statement containing information relating to the dividends
received by the Trust on the Equity Securities, the gross proceeds received by
the Trust from the disposition of any Equity Security (resulting from
redemption or the sale of any Equity Security), and the fees and expenses paid
by the Trust. The Trustee will also furnish annual information returns to
Unitholders and to the Internal Revenue Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the
trust will be treated as the income of the Unitholders under the existing come
tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
("U.S. Unitholders" ) with regard to federal and certain aspects of New
York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers
in this regard. As used herein, the term "U.S. Unitholder" means an
owner of a Unit in the Trust that (a) is (i) for United States federal income
tax purposes a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unitholder in
paragraph (a) but whose income from a Unit is effectively connected with such
Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable.
Michigan Taxation. In the opinion of special counsel to the Trust for Michigan
tax matters, under existing Michigan law:
The Trust and the owners of Units will be treated for purposes of the Michigan
income tax laws and the Single Business Tax in substantially the same manner
as they are for purposes of the federal income tax laws, as currently enacted.
Accordingly, we have relied upon the opinion of Messrs. Chapman and Cutler as
to the applicability of federal income tax under the Internal Revenue Code of
1986 to the Trust and the Unitholders.
Under the income tax laws of the State of Michigan, the Trust is not an
association taxable as a corporation; the income of the Trust will be treated
as the income of the Unitholders and be deemed to have been received by them
when received by the Trust.
For purposes of the foregoing Michigan tax laws, each Unitholder will be
considered to have received his pro rata share of dividends when they are
received by the Trust, and each Unitholder will have a taxable event when the
Trust disposes of an Equity Security (whether by sale, exchange or redemption)
or when the Unitholder redeems or sells his Units to the extent the
transaction constitutes a taxable event for federal income tax purposes. The
tax cost of each Unit to a Unitholder will be established and allocated for
purposes of these Michigan tax laws in the same manner as such cost is
established and allocated for federal income tax purposes.
While under the Michigan Intangibles Tax, the Trust is not taxable, the pro
rata ownership of the underlying Equity Securities, as well as the dividends
thereon, will be taxable to the Unitholders. To the extent the Trust consists
of Equity Securities that represent shares of stock solely in banks, trust
companies, and national banking associations, as opposed to stock in holding
companies that, in turn, own financial institutions, the Trust is not taxable
and the pro rata ownership of said underlying non-holding company Equity
Securities of banks, trust companies and national banking associations, as
well as the dividends thereon, will be exempt to the Unitholders. While that
exemption exists, rarely are such financial institutions not held by holding
companies and thus rarely is the exemption available. The Intangibles Tax is
being phased out, with reductions of twenty-five percent (25%) in 1994 and
1995, fifty percent (50%) in 1996, and seventy-five percent (75%) in 1997,
with total repeal effective January 1, 1998.
The Michigan Single Business Tax replaced the tax on corporate and financial
institution income under the Michigan Income Tax and the Intangible Tax with
respect to those intangibles of persons subject to the Single Business Tax the
income from which would be considered in computing the Single Business Tax.
Persons are subject to the Single Business Tax only if they are engaged in
"business activity" , as defined in the Act. Under the Single Business
Tax, dividends received by the Trust on the underlying Equity Securities, to
the extent included in taxable income for federal income tax purposes, are not
included in the adjusted tax base upon which the Single Business Tax is
computed, of either the Trust or the Unitholders. If the Trust or the
Unitholders have a taxable event for federal income tax purposes when the
Trust disposes of an Equity Security (whether by sale, exchange or redemption)
or the Unitholder redeems or sells his Units, an amount equal to any gain
realized from such taxable event which was included in the computation of
taxable income for federal income tax purposes (plus an amount equal to any
capital gain of an individual realized in connection with such event but
excluded in computing that individual's federal taxable income) will be
included in the tax base against which, after allocation, apportionment and
other adjustments, the Single Business Tax is computed. The tax base will be
reduced by an amount equal to any capital loss realized from such a taxable
event, whether or not the capital loss was deducted in computing federal
taxable income in the year the loss occurred. Unitholders should consult their
tax advisers as to their status under Michigan law.
Federal adjusted gross income, the computation base for the Michigan Income
Tax, of a Unitholder includes net capital gains or losses realized when the
Trust disposes of an Equity Security or when the Unitholder redeems or sells a
Unit, to the extent such transaction constitutes a taxable event for federal
income tax purposes.
TRUST OPERATING EXPENSES
Compensation of Sponsor, Evaluator and Managing Underwriter. The Sponsor will
not receive any fees in connection with its activities relating to the Trusts.
The Evaluator shall receive that evaluation fee, payable in any month
incurred, set forth under "Summary of Essential Financial Information"
in Part One (which is based on the number of Units of the related Trust
outstanding on January 1 of each year for which such compensation relates) for
regularly evaluating such Trust portfolio. Such fee may exceed the actual cost
of providing such evaluation services for a Trust, but at no time will the
total amount paid to the Evaluator for providing evaluation services to unit
investment trusts of which Van Kampen American Capital Distributors, Inc. acts
as Sponsor in any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year. The Managing Underwriter 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 (which is based on the number of Units
outstanding on January 1 of each year for which such compensation relates) for
providing portfolio supervisory services for such Trust. Such fee may exceed
the actual cost of providing such supervision services for a Trust, but at no
time will the total amount paid to the Managing Underwriter for providing
portfolio supervision services to unit investment trusts for which First of
Michigan Corporation is the principal underwriter in any calendar year exceed
the aggregate cost to the Supervisor of supplying such services in such 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 the Managing
Underwriter will receive sales commissions and may realize other profits (or
losses) in connection with the sale of Units and the deposit of the Equity
Securities as described under "Public Offering--Sponsor and Managing
Underwriter Compensation."
Trustee's Fee. For its services the Trustee will receive an annual fee from
each Trust as set forth under "Summary of Essential Financial
Information" in Part One (which amount is based on the number of Units
outstanding on January 1 of each year for which such compensation relates).
The Trustee's fees are payable in monthly installments on or before the tenth
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 Unitholders--Reports Provided" and "
Trust Administration."
Miscellaneous Expenses. All costs and expenses incurred in creating and
establishing the First of Michigan FInancial Institutions Trust, Series 1,
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 fees of an
evaluator and other out-of-pocket expenses, including brokerage fees incurred
in acquiring Securities for the Trust, have been borne by the Sponsor at no
cost to the Trust. Expenses incurred in establishing the First of Michigan
Financial Institutions Trust, Series 2, including the cost of the initial
preparation of documents relating to the Trust (including the Prospectus,
Trust Agreement and certificates), federal and state registration fees, the
initial fees and expenses of the Trustee, legal and accounting expenses,
payment of closing fees and any other out-of-pocket expenses, will be paid by
the Trust and amortized over the life of the Trust. The following additional
charges are or may be incurred by each Trust: (a) normal expenses (including
the cost of mailing reports to Unitholders) incurred in connection with the
operation of the Trust, (b) fees of the Trustee for extraordinary services,
(c) expenses of the Trustee (including legal and auditing expenses) and of
counsel designated by the Sponsor, (d) various governmental charges, (e)
expenses and costs of any action taken by the Trustee to protect the Trust and
the rights and interests of Unitholders, (f) indemnification of the Trustee
for any loss, liability or expenses incurred in the administration of the
Trust without negligence, bad faith or wilful misconduct on its part and (g)
expenditures incurred in contacting Unitholders upon termination of the Trust.
The fees and expenses set forth herein are payable out of the applicable
Trust. When such fees and expenses are paid by or owing to the Trustee, they
are secured by a lien on the applicable Trust's portfolio. Since the Equity
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 a Trust. If the
balances in the Income and Capital Accounts are insufficient to provide for
amounts payable by a Trust, the Trustee has the power to sell Equity
Securities to pay such amounts. These sales may result in capital gains or
losses to Unitholders. See "Tax Status."
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 a Trust, a sales charge initially equal to 4.5% of the Public
Offering Price (which will be reduced annually by .5 of 1% to a minimum sales
charge of 3.5%), and cash, if any, in the Income and Capital Accounts held or
owned by such Trust.
Any sales charge reduction will primarily be the responsibility of the selling
Managing Underwriter, broker, dealer or agent. Registered representatives of
the Managing Underwriter may purchase Units of a Trust at the current Public
Offering Price less the dealer's concession for secondary market transactions.
Registered representatives of selling brokers, dealers, or agents may purchase
Units of a Trust at the current Public Offering Price less the dealer's
concession for secondary market transactions.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
Part One in accordance with fluctuations in the prices of the underlying
Equity Securities in a Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Equity Securities an
amount initially equal to 4.712% 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 Income and Capital
Accounts. This computation produced a gross underwriting profit initially
equal to 4.5% of the Public Offering Price. Such price determination as of the
close of business on the day before the Initial Date of Deposit was made on
the basis of an evaluation of the Equity Securities in each Trust prepared by
Interactive Data Corporation, a firm regularly engaged in the business of
evaluating, quoting or appraising comparable securities. Thereafter, the
Evaluator on each business day will appraise or cause to be appraised the
value of the underlying Equity Securities as of the Evaluation Time on days
the New York Stock Exchange is open and will adjust the Public Offering Price
of the Units commensurate with such valuation. Such Public Offering Price will
be effective for all orders received prior to the Evaluation Time on each such
day. Orders received by the Trustee or Managing Underwriter for purchases,
sales or redemptions after that time, or on a day when the New York Stock
Exchange is closed, will be held until the next determination of price.
The value of the Equity Securities during the secondary market is determined
by the Evaluator as described under "Rights of Unitholders--Redemption of
Units."
In offering the Units to the public, neither the Sponsor, the Managing
Underwriter nor any broker-dealers are recommending any of the individual
Equity Securities in a Trust but rather the entire pool of Equity Securities,
taken as a whole, which are represented by the Units.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by the Managing Underwriter, broker-dealers and
others at the Public Offering Price. Upon the completion of the initial
offering period, Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary market Public Offering Price in
the manner described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Certain commercial banks may be making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge (equal to the
agency commission referred to above) is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law. Any quantity discount provided to
investors will be borne by the selling dealer, agent, Managing Underwriter or
the Sponsor as indicated under "General" above. For secondary market
transactions, the broker concession or agency commission will amount to 70% of
the sales charge applicable to the transaction.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 200 Units (100 Units for a
tax-sheltered retirement plan). The Managing Underwriter 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. Brokers and dealers of a Trust, banks and/or others are eligible
to participate in a program in which such firms receive from the Managing
Underwriter a nominal award for each of their registered representatives who
have sold a minimum number of units of unit investment trusts created by the
Managing Underwriter during a specified time period. In addition, at various
times the Managing Underwriter may implement other programs under which the
sales forces of brokers, dealers, banks and/or others may be eligible to win
other nominal awards for certain sales efforts, or under which the Managing
Underwriter will reallow to any such brokers, dealers, banks and/or others
that sponsor sales contests or recognition programs conforming to criteria
established by the Managing Underwriter, or participate in sales programs
sponsored by the Managing Underwriter, an amount not exceeding the total
applicable sales charges on the sales generated by such person at the public
offering price during such programs. Also, the Managing Underwriter in its
discretion may from time to time pursuant to objective criteria established by
the Managing Underwriter pay fees to qualifying brokers, dealers, banks and/or
others for certain services or activities which are primarily intended to
result in sales of Units of the Trusts. Such payments are made by the Managing
Underwriter out of its own assets and not out of the assets of the Trusts.
These programs will not change the price Unitholders pay for their Units or
the amount that the Trusts will receive from the Units sold.
Sponsor and Managing Underwriter Compensation. The Managing Underwriter will
receive a gross sales commission initially equal to 4.5% of the Public
Offering Price of the Units, less any reduced sales charge for quantity
purchases as described under "General" above. Any such quantity
discounts provided to investors will be borne by the selling dealer or agent.
The Sponsor will receive from the Managing Underwriter the excess of such
gross sales commission over the Managing Underwriter's discount.
In addition, the Managing Underwriter realized a profit or sustained a loss,
as the case may be, as a result of the difference between the price paid for
the Equity Securities by the Managing Underwriter and the cost of such Equity
Securities to a Trust on the Initial Date of Deposit as well as on subsequent
deposits. The Sponsor has not participated as sole underwriter or as manager
or as a member of the underwriting syndicates or as an agent in a private
placement for any of the Equity Securities in a Trust portfolio. The Sponsor
and the Managing Underwriter may have further realized additional profit or
loss during the initial offering period as a result of the possible
fluctuations in the market value of the Equity Securities in a Trust after a
date of deposit, since all proceeds received from the sale of Units (excluding
dealer concessions and agency commissions allowed, if any) will be retained by
the Sponsor or Managing Underwriter.
A person will become the owner of the Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor or
Managing Underwriter prior to the date of settlement for the purchase of Units
may be used in the Sponsor's or Managing Underwriter's business and may be
deemed to be a benefit to the Sponsor or Managing Underwriter, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Managing Underwriter
intends to maintain a secondary market for Units of the Trust for the period
indicated. In so maintaining a market, the Managing Underwriter will also
realize profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are resold
(which price includes the applicable sales charge). In addition, the Managing
Underwriter or the Sponsor will also realize profits or sustain losses
resulting from a redemption of such repurchased Units at a price above or
below the purchase price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Managing Underwriter
intends to maintain a secondary 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 a Trust
(computed as indicated under "Offering Price" above and "Rights of
Unitholders--Redemption of Units" ). If the supply of Units exceeds demand
or if some other business reason warrants it, the Managing Underwriter may
either discontinue all purchases of Units or discontinue purchases of Units at
such prices. In the event that a market is not maintained for the Units and
the Unitholder cannot find another purchaser, a Unitholder desiring to dispose
of his Units will be able to dispose of such Units by tendering them to the
Trustee for redemption at the Redemption Price. It is the current intention of
the Managing Underwriter not to maintain a secondary market in a Trust's final
year of existence. 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 Trusts are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for the individuals, Simplified Employee
Pension Plans for employees, qualified plans for self-employed individuals,
and qualified corporate pension and profit sharing plans for employees. The
purchase of Units of the Trusts may be limited by the plans' provisions and
does not itself establish such plans. The minimum purchase in connection with
a tax-shelter retirement plan is 100 Units.
RIGHTS OF UNITHOLDERS
General. The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee. Ownership
of Units will be evidenced by book entry unless a Unitholder or the
Unitholder's registered broker-dealer makes a written request to the Trustee
that ownership be evidenced by certificates. Units are transferable by making
a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred
with the signature guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP" ) or such other signature guarantee
program in addition to, or in substitution for, STAMP as may be accepted by
the Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer of 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 a 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
Equity Securities, etc.) are credited to the Capital Account.
The Trustee will distribute any net income with respect to any of the Equity
Securities in a 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. Proceeds received on the sale of any
Equity Securities in a Trust, to the extent not used to meet redemptions of
Units or pay expenses, will (except as hereinafter provided) 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 Equity Securities after a record date and prior to
the following distribution date will be held in the Capital Account of the
Trust and not distributed until the next distribution date applicable to such
Capital Account. Proceeds received on the sale of any Equity Securities in a
Trust, to the extent not used to meet redemptions of Units or pay expenses,
will, however, be distributed on the twenty-fifth day of each month to holders
of record on the tenth day of such month if the amount available for
distribution equals at least $0.01 per Unit. The Trustee is not required to
pay interest on funds held in the Capital or Income Accounts (but may itself
earn interest thereon and therefore benefits from the use of such funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account after deducting
estimated expenses. Because dividends are not received by the Trusts at a
constant rate throughout the year, such distributions to Unitholders are
expected to fluctuate from distribution to distribution. Persons who purchase
Units will commence receiving distributions only after such person becomes a
record owner. Notification to the Trustee of the transfer of Units is the
responsibility of the purchaser, but in the normal course of business such
notice is provided by the selling broker-dealer.
As of the tenth 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 related 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 related Trust. Amounts so withdrawn shall not be considered a part
of the related Trust's assets until such time as the Trustee shall return all
or any part of such amounts to the 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.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder of each Trust a
statement (i) as to the Income Account: income received, deductions for
applicable taxes and for fees and expenses of the Trust, for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Capital Account: the
dates of disposition of any Equity Securities and the net proceeds received
therefrom, deductions for payment of applicable taxes, fees and expenses of
the Trust held for distribution to Unitholders of record as of a date prior to
the determination and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Equity Securities held by the
Trust and the number of Units outstanding on the last business day of such
calendar year; (iv) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; and (v) amounts actually
distributed during such calendar year from the Income and Capital Accounts,
separately stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his or her
Units by tender to the Trustee at its unit investment trust division office at
101 Barclay Street, 20th Floor, New York, New York 10296 of a request for
redemption duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed as described above 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 receive in cash (unless
the redeeming Unitholder elects an "In Kind Distribution" as described
below) an amount for each Unit equal to the Redemption Price per Unit next
computed after receipt by the Trustee of such tender of Units as of the
Evaluation Time set forth under "Summary of Essential Financial
Information" in Part One.The "date of tender" is deemed to be the
date on which Units are received by the Trustee, except that with respect to
Units received after the applicable Evaluation Time the date of tender is the
next 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 Equity Securities of a Trust in order to make
funds available for redemption if funds are not otherwise available in the
Capital and Income Accounts to meet redemptions. The Equity Securities to be
sold will be selected by the Trustee from those designated on a current list
provided by the Supervisor for this purpose. Units so redeemed shall be
cancelled.
Unitholders in a Trust tendering 2,500 or more Units 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 Equity Securities
per Unit equal to the Redemption Price per Unit as determined as of the next
evaluation following the tender. An In Kind Distribution on redemption of
Units will be made by the Trustee through the distribution of each of the
Equity Securities in book-entry form to the account of the Unitholder's
broker-dealer at Depository Trust Company. The tendering Unitholder will
receive his pro rata number of whole shares of each of the Equity Securities
comprising the Trust portfolio and cash from the Capital Account equal to the
fractional shares to which the tendering Unitholder is entitled. The Trustee
may adjust the number of shares of any issue of Equity Securities included in
a Unitholder's In Kind Distribution to facilitate the distribution of whole
shares, such adjustment to be made on the basis of the value of the Equity
Securities on the date of tender. If funds in the Capital Account are
insufficient to cover the required cash distribution to the tendering
Unitholder, the Trustee may sell Equity Securities according to the criteria
discussed above.
To the extent that Equity Securities are redeemed in kind or sold, the size of
a Trust will be, and the diversity of such Trust may be, reduced. Sales may be
required at a time when the Equity 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 Equity 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 "Tax Status."
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the aggregate underlying value of
the Equity Securities in a Trust, plus or minus cash, if any, in the Income
and Capital Accounts of such Trust. The Redemption Price per Unit is the pro
rata share of each Unit in a Trust determined on the basis of (i) the cash on
hand in such Trust, (ii) the value of the Equity Securities in such Trust and
(iii) dividends receivable on the Equity Securities of such Trust trading
ex-dividend as of the date of computation, less (a) amounts representing taxes
or other governmental charges payable out of such Trust and (b) the accrued
expenses of such Trust. The Evaluator may determine the value of the Equity
Securities in the Trust in the following manner: if the Equity Securities are
listed on a national securities exchange, this evaluation is generally based
on the closing sale prices on that exchange (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if there is no
closing sale price on that exchange, at the closing bid prices. If the Equity
Securities of the Trust are not so listed or, if so listed and the principal
market therefore is other than on the exchange, the evaluation shall generally
be based on the current bid price on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If current bid prices are
unavailable or inappropriate as a basis for valuation, the evaluations
generally determined (a) on the basis of current bid prices for comparable
securities, (b) by appraising the value of the Equity Securities of such Trust
on the bid side of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in a Trust is not reasonably practicable, or for such other periods
as the Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
Managing Underwriter Purchases of Units. The Trustee shall notify the Managing
Underwriter of any Units tendered for redemption. If the Managing
Underwriter'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 Managing
Underwriter may be tendered to the Trustee for redemption as any other Units.
The offering price of any Units acquired by the Managing Underwriter 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 Managing Underwriter which likewise
will bear any loss resulting from a lower offering or redemption price
subsequent to its acquisition of such Units.
Portfolio Administration. The portfolios of the Trusts are not "
managed" by the Sponsor, Supervisor or the Trustee; their activities
described herein are governed solely by the provisions of the Trust Agreement.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. While the Trusts will not be managed,
the Trust Agreement does provide that the Sponsor may (but need not) direct
the Trustee to dispose of an Equity Security in certain events such as the
issuer having defaulted on the payment on any of its outstanding obligations
or the price of an Equity Security has declined to such an extent or other
such credit factors exist so that in the opinion of the Sponsor the retention
of such Equity Securities would be detrimental to a Trust. Pursuant to the
Trust Agreement and with limited exceptions, the Trustee may sell any
securities or other properties acquired in exchange for Equity Securities such
as those acquired in connection with a merger or other transaction. If offered
such new or exchanged securities or property, the Trustee shall reject the
offer. However, in the event such securities or property are nonetheless
acquired by a Trust, they may be accepted for deposit in such Trust and either
sold by the Trustee or held in such Trust pursuant to the direction of the
Sponsor (who may rely on the advice of the Supervisor). Proceeds from the sale
of Equity Securities (or any securities or other property received by a Trust
in exchange for Equity Securities) are credited to the Capital Account for
distribution to Unitholders or to meet redemptions. Except as stated under
"Trust Portfolio" as provided in this paragraph, the acquisition by
the Trust of any securities other than the Equity Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Equity Securities designated by the Supervisor, or
if no such designation has been made, in its own discretion, for the purpose
of redeeming Units of the 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 in the Trust. To the extent this is not
practicable, the composition and diversity of the Equity Securities in such
Trust may be altered. In order to obtain the best price for a Trust, it may be
necessary for the Supervisor to specify minimum amounts (generally 100 shares)
in which blocks of Equity Securities are to be sold.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor
and the Trustee), provided, however, that the Trust Agreement may not be
amended to increase the number of Units (except as provided in the Trust
Agreement). The Trust Agreement may also be amended in any respect by the
Trustee and Sponsor, or any of the provisions thereof may be waived, with the
consent of the holders representing 51% of the Units of a Trust then
outstanding, provided that no such amendment or waiver will reduce the
interest in such Trust of any Unitholder without the consent of such
Unitholder or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of all Unitholders. The Trustee shall
advise the Unitholders of any amendment promptly after execution thereof.
Each Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Trust then outstanding or by the
Trustee when the value of the Equity Securities owned by the Trust, as shown
by any evaluation, is less than that amount set forth under Minimum
Termination Value in the "Summary of Essential Financial Information"
in Part One. The Trust Agreement will terminate upon the sale or other
disposition of the last Equity 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.
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the related Trust. The Sponsor
will determine the manner, timing and execution of the sales of the Equity
Securities. At least 60 days before the Mandatory Termination Date the Trustee
will provide written notice of any termination to all Unitholders of the
related Trust and will include with such notice a form to enable Unitholders
owning 2,500 or more Units to request an In Kind Distribution rather than
payment in cash upon the termination of the Trust. To be effective, this
request must be returned to the Trustee at least five business days prior to
the Mandatory Termination Date. On the Mandatory Termination Date (or on the
next business day thereafter if a holiday) the Trustee will deliver each
requesting Unitholder's pro rata number of whole shares of each of the Equity
Securities 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 Unitholders not requesting an In Kind
Distribution will receive a cash distribution from the sale of the remaining
Equity Securities within a reasonable time following the Mandatory Termination
Date. Regardless of the distribution involved, the Trustee will deduct from
the funds of a 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 upon termination may result in a lower amount than might
otherwise be realized if such sale were not required at such time. The Trustee
will then distribute to each Unitholder of the related Trust his pro rata
share of the balance of the Income and Capital Accounts.
The Sponsor will attempt to sell Securities as quickly as possible commencing
on the Mandatory Termination Date without in the judgment of the Sponsor
materially adversely affecting the market price of the Securities. The Sponsor
does not anticipate that the period will be longer than one month, and it
could be as short as one day, depending on the liquidity of the Securities
being sold. The liquidity of any Security depends on the daily trading volume
of the Security and the amount that the Sponsor has available on any
particular day.
It is expected (but not required) that the Sponsor will generally follow the
following guidelines in selling the Securities; for highly liquid Securities,
the Securities will generally be sold on the Mandatory Termination Date; for
less liquid Securities, on each of the first two days subsequent to the
Mandatory Termination Date, the amount of any underlying Securities will
generally be sold at a price no less than 1/2 of one point under the closing
sale price of those Securities on the preceding day. Thereafter, the Sponsor
intends to sell without any price restrictions at least a portion of the
remaining underlying Securities, the numerator of which is one and the
denominator of which is the total number of days remaining (including that
day) in the one month period following the Mandatory Termination Date.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason of
the sale by the Trustee of any of the Equity 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 Equity 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, Supervisor 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.
Managing Underwriter. First of Michigan Corporation, a member of the New York
Stock Exchange, is Michigan's largest full-service securities firm. Founded in
1933, First of Michigan Corporation specializes in a wide range of financial
services that include investment banking; investment products such as stocks,
bonds, unit trusts and mutual funds; and investment services such as
retirement plans, money management, underwriting and trading. First of
Michigan offers these services through its 550 employees located in 31 offices
throughout Michigan, as well as an office at 100 Wall Street, New York, New
York.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. Prior to October 31, 1996, VK/AC Holding,
Inc. was controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity IV Limited Partnership.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings
II, Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged
with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition" ).
As a result of the Acquisition, VK/AC Holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser (MSAM" ), Morgan Stanley & Co.
Incorporated, a registered broker-dealer and investment adviser, and Morgan
Stanley International, are engaged in a wide range of financial services.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring and other corporate finance
advisory activities; merchant banking; stock brokerage and research services;
asset management; trading of futures, options, foreign exchange commodities
and swaps (involving foreign exchange, commodities, indices and interest
rates); real estate advice, financing and investing; and global custody,
securities clearance services and securities lending. As of September 30,
1996, MSAM, together with its affiliated investment advisory companies, had
approximately $103.5 billion of assets under management and fiduciary advice.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Subject to certain conditions
being met, it is currently anticipated that the transaction will close in
mid-1997. Thereafter, Van Kampen American Capital Distributors, Inc. will be
an indirect subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.
Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. 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 November 30, 1996, the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trust or to any other Series thereof. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
As of December 31, 1996, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $59 billion of investment
products, of which over $11.88 billion is invested in municipal securities.
The Sponsor and its Van Kampen American Capital affiliates managed $48 billion
of assets, consisting of $29.9 billion for 59 open end mutual funds (of which
46 are distributed by Van Kampen American Capital Distributors, Inc.), $13.1
billion for 38 closed-end funds and $4.99 billion for 106 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen American Capital's open-end funds,
closed-end funds and unit investment trusts are professionally distributed by
leading financial firms nationwide. Based on cumulative assets deposited, the
Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R)trust. The Sponsor also provides
surveillance and evaluation services at cost for approximately $13 billion of
unit investment trust assets outstanding. Since 1976, the Sponsor has serviced
over two million investor accounts, opened through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (i) appoint
a successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of
Governors of the Federal Reserve System, and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Equity Securities for the Trust portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trusts. Such
records shall include the name and address of, and the number of Units of a
Trust held by, every Unitholder of the 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 Unitholders--Reports Provided" ).
The Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Equity Securities held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Kroll & Tract LLP has acted as counsel for the
Trustee.
Independent Certified Public Accountants. The statements of condition and the
related securities portfolios included in this Prospectus have been audited by
Grant Thornton LLP, independent certified public accountants, as set forth in
their report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
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
Trust, the Sponsor or the Managing Underwriter. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, securities
in any state to any person to whom it is not lawful to make such offer in such
state.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
<S> <C>
The Trust 2
Objective and Securities Selection 2
Trust Portfolio 2
Risk Factors 3
Tax Status 4
Trust Operating Expenses 6
Public Offering 7
Rights of Unitholders 8
Trust Administration 10
Other Matters 12
</TABLE>
This Prospectus contains information concerning the Trust and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Trust has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
PROSPECTUS
Part Two
FIRST OF MICHIGAN FINANCIAL INSTITUTIONS TRUST
Van Kampen American Capital Equity Opportunity Trust
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 One accompanying this Prospectus
Part Two.
First of Michigan Corporation
100 Renaissance Center, 26th Floor
Detroit, Michigan 48243
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 American Capital Equity Opportunity Trust, Series
11, 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, 1997.
Van Kampen American Capital Equity Opportunity
Trust, Series 11
(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
Amendment to the Registration Statement has been signed below on
April 24, 1997 by the following persons who constitute a majority of the
Board of Directors of Van Kampen American Capital Distributors, Inc.:
Signature Title
Don G. Powell Chairman and Chief )
Executive Officer )
William R. Molinari President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Senior 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 21, 1997 accompanying the
financial statements of Van Kampen American Capital Equity Opportunity
Trust, Series 11 as of December 31, 1996, and for the period then ended,
contained in this Post-Effective Amendment No. 3 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, 1997
<TABLE> <S> <C>
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<NUMBER> 1
<NAME> MFIT
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 12106641
<INVESTMENTS-AT-VALUE> 18629346
<RECEIVABLES> 0
<ASSETS-OTHER> 46880
<OTHER-ITEMS-ASSETS> 23722
<TOTAL-ASSETS> 18699948
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18699948
<SHARES-COMMON-STOCK> 1226000
<SHARES-COMMON-PRIOR> 1560000
<ACCUMULATED-NII-CURRENT> 72106
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<ACCUMULATED-NET-GAINS> 1565621
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6522705
<NET-ASSETS> 18699948
<DIVIDEND-INCOME> 487823
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 24927
<NET-INVESTMENT-INCOME> 462896
<REALIZED-GAINS-CURRENT> 1344968
<APPREC-INCREASE-CURRENT> 2316556
<NET-CHANGE-FROM-OPS> 4124420
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (457804)
<DISTRIBUTIONS-OF-GAINS> (52396)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 334000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (695855)
<ACCUMULATED-NII-PRIOR> 67014
<ACCUMULATED-GAINS-PRIOR> 273049
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6049
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 24927
<AVERAGE-NET-ASSETS> 19047876
<PER-SHARE-NAV-BEGIN> 12.43
<PER-SHARE-NII> 0.378
<PER-SHARE-GAIN-APPREC> 2.987
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.043
<RETURNS-OF-CAPITAL> 0
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<EXPENSE-RATIO> 0.001
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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