File No: 33-
CIK #896976
Securities and Exchange Commission
Washington, D.C. 20549-1004
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust: Van Kampen American Capital Equity
Opportunity Trust, Series 14
B. Name of Depositor: Van Kampen American Capital
Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace Illinois 60181
D. Name and complete address of agents for service:
Van Kampen American Capital
Chapman And Cutler Distributors, Inc.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: Units of undivided
fractional beneficial interests
F. Proposed maximum offering price to the public of the securities being
registered: Indefinite
G. Amount of registration fee: $500.00
H. Approximate date of proposed sale to the public:
As Soon As Practicable After The Effective Date Of The Registration
Statement
______________________________________________________________________
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a) may determine.
Van Kampen American Capital Equity Opportunity Trust
Series 14
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) Underwriting
underwriter
5. Organization of trust ) The Trust
6. Execution and termination of ) The Trust
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and
Securities of the Trust
10. General information regarding ) The Trust
trust's securities and ) Federal Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
) Risk Factors
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trust
) Trust Portfolio
) Risk Factors
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses Prospectus Front Cover
Page
) Summary of Essential Financial
) Information
) Trust Portfolio
)
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or) Trust Operating
Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received) Public Offering
by depositor, principal ) Underwriting
underwriter, trustee or any ) Trust Portfolio
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trust
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special funds ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolio
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's )
securities ) *
52. (a) Provisions of trust agreement)
with respect to replacemen ) Trust Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying) Trust Administration
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Federal Taxation
VII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions) Report of Independent
Certified
1(c) to Form S-6) ) Public Accountants
) Statement of Conditions
______________________________________________
* Inapplicable, omitted, answer negative or not required
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any State.
May --, 1995
Preliminary Prospectus Dated April 21, 1995
Subject to Completion
Van Kampen American Capital
Van Kampen American Capital Equity Opportunity Trust, Series 14
Govett Smaller Companies Fund and Treasury Trust, Series 1
The Fund. Van Kampen American Capital Equity Opportunity Trust, Series 14 is
comprised of one unit investment trust, Govett Smaller Companies Fund and
Treasury Trust, Series 1 (the "Smaller Companies Fund and Treasury
Trust" or "Trust"). The Smaller Companies Fund and Treasury Trust
offers investors the opportunity to purchase Units representing proportionate
interests in "zero coupon" U.S. Treasury obligations and shares of
Govett Smaller Companies Fund (the "Fund" or "Fund Shares").
The Fund is an open-end management investment company, commonly known as a
mutual fund. Unless terminated earlier, the Trust will terminate on August 15,
2007 (the "Mandatory Termination Date") 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 or her Units.
Objectives of the Trust. The objectives of the Smaller Companies Fund and
Treasury Trust are to provide the potential for long-term capital appreciation
by investing in shares of Govett Smaller Companies Fund and to protect
Unitholders' capital by investing a portion of its portfolio in "zero
coupon" U.S. Treasury obligations ("Treasury Obligations").
Collectively, the Treasury Obligations and the Fund Shares are referred to
herein as the "Securities." See "Portfolio." The Treasury
Obligations in the Smaller Companies Fund and Treasury Trust evidence the
right to receive a fixed payment at a future date from the U.S. Government and
are backed by the full faith and credit of the U.S. Government. The guarantee
of the U.S. Government does not apply to the market value of the Treasury
Obligations or the Units of the Smaller Companies Fund and Treasury Trust,
whose net asset value will fluctuate and may be worth more or less than a
purchaser's acquisition cost. It is anticipated that upon maturity the
Treasury Obligations will represent an amount of at least $11.00 per Unit. The
Fund seeks to achieve its long-term capital appreciation objective by
investing primarily in equity securities of smaller domestic and foreign
companies. There is, of course, no guarantee that the objectives of the Trust
will be achieved.
Public Offering Price. The Public Offering Price per Unit of the Trust is
equal to the net asset value of the Fund Shares plus the aggregate offering
price of the Treasury Obligations in the initial offering and the net asset
value of the Fund Shares and the aggregate bid price of the Treasury
Obligations in the secondary market plus or minus cash, if any, in the Capital
and Income Accounts, divided by the number of Units outstanding, plus a sales
charge equal to 4.9% of the Public Offering Price which is equivalent to
5.152% of the aggregate value of the Securities. During the offering period,
the sales charge is reduced on a graduated scale for sales involving at least
10,000 Units. If Units were available for purchase at the opening of business
on the Initial Date of Deposit, the Public Offering Price per Unit would have
been XXX. The minimum purchase is 500 Units (100 Units for a tax-sheltered
retirement plan). See "Public Offering."
Principal Protection. The Smaller Companies Fund and Treasury Trust has been
organized so that purchasers of Units should receive, at the termination of
the Smaller Companies Fund and Treasury Trust, an amount per Unit at least
equal to $11.00 (which is equal to the per Unit value upon maturity of the
Treasury Obligations), even if the Smaller Companies Fund and Treasury Trust
never paid a dividend and the value of the Fund Shares were to decrease to
zero, which the Sponsor considers highly unlikely. This feature of the Smaller
Companies Fund and Treasury Trust provides Unitholders who purchase Units at
the price of $11.00 or less per Unit and who hold such Units until the
termination of the Trust with total principal protection, including any sales
charges paid, although they might forego any earnings on the amount invested.
To the extent that Units are purchased at a price less than $11.00 per Unit,
this feature may also provide a potential for capital appreciation. As a
result of the volatile nature of the market for "zero coupon" U.S.
Treasury Obligations, Units sold or redeemed prior to maturity will fluctuate
in price, and the underlying Treasury Obligations may be valued at a price
greater or less than their value as of the Initial Date of Deposit.
Unitholders disposing of their Units prior to the maturity of the Trust may
receive more or less than $11.00 per Unit, depending on market conditions on
the date Units are sold or redeemed.
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 Treasury Obligations deposited in the Smaller Companies Fund and Treasury
Trust will mature on August 15, 2007. The Treasury Obligations have a maturity
value greater than the aggregate Public Offering Price (which includes the
sales charge) of the Units of the Smaller Companies Fund and Treasury Trust on
the Initial Date of Deposit; however, the value of the Treasury Obligations
may fluctuate before maturity due to fluctuations in interest rates. The Fund
Shares deposited in the Trust's portfolio have no fixed maturity date and the
value of these underlying Fund Shares will fluctuate with changes in the
values of stocks in general and with changes in the conditions and performance
of the specific Securities owned by the Fund. See "Trust Portfolio."
Additional Deposits. The Sponsor may, from time to time, deposit additional
Securities in the Trust, provided it maintains the same percentage
relationship of the Treasury Obligations and Fund Shares in the Trust that
existed immediately prior to any such subsequent deposit. See "The
Trust."
Dividend and Capital Gains Distributions. Distributions of net income, if any,
other than amortized discount, will be made at least annually. Distributions
of realized capital gains, if any, received by the Trust, will be made
whenever the Fund makes such a distribution. Income with respect to the
amortization of original issue discount on the Treasury Obligations in the
Smaller Companies Fund and Treasury Trust will not be distributed currently,
although Unitholders will be subject to income tax at ordinary income rates as
if a distribution had occurred. Any distribution of income and/or capital
gains will be net of the expenses of the Trust. See "Federal Taxation."
Additionally, upon termination of the Trust, the Trustee will distribute,
upon surrender of Units for redemption, to each Unitholder his pro rata share
of the Trust's assets, less expenses, in the manner set forth under
"Rights of Unitholders--Distributions of Income and Capital."
Secondary Market for Units. After the initial offering period, although not
obligated to do so, the Sponsor intends to, and certain of the other
Underwriters may, maintain a market for Units of the Trust and offer to
repurchase such Units at prices which are based on the aggregate net asset
value of the Fund Shares plus the aggregate bid side evaluation of the
Treasury Obligations, plus or minus cash, if any, in the Capital and Income
Accounts of the Trust. If a secondary market is maintained during the initial
offering period, the prices at which Units will be repurchased will be based
upon the aggregate net asset value of the Fund Shares in the Trust plus the
aggregate offer side evaluation of the Treasury Obligations, plus or minus
cash, if any, in the Capital and Income Accounts of the Trust. If a secondary
market is not maintained, a Unitholder may redeem Units through redemption at
prices based upon the aggregate net asset value of the Fund Shares in the
Trust plus the aggregate bid price of the Treasury Obligations, 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, Fund Shares will
begin to be sold in connection with the termination of the Trust. The Sponsor
will determine the manner, timing and execution of the sale of the Fund
Shares. Written notice of any termination of the Trust specifying the time or
times at which Unitholders may surrender their certificates for cancellation
shall be given by the Trustee to each Unitholder at his or her address
appearing on the registration books of the Trust maintained by the Trustee. At
least 30 days prior to the Mandatory Termination Date the Trustee will provide
written notice thereof to all Unitholders and will include with such notice a
form to enable Unitholders to elect a distribution of Fund Shares if the
termination value of such Unitholder's Units is at least $500, 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 the Fund Shares. Unitholders
eligible for such a distribution may also elect to have their pro rata portion
of the proceeds received upon the maturity of the Treasury Obligations
reinvested without a sales charge into Fund Shares. All Unitholders not
electing such option will receive cash representing their pro rata portion of
the Treasury Obligations. To be effective, the election form, together with
surrendered certificates, if issued, and other documentation required by the
Trustee, must be returned to the Trustee at least five business days prior to
the Mandatory Termination Date. Unitholders not electing a distribution of
Fund Shares will receive a cash distribution from the sale of the remaining
Securities within a reasonable time after the Trust is terminated. See
"Trust Administration--Amendment or Termination."
Reinvestment Option. Unitholders have the opportunity to have their
distributions reinvested into an open-end, management investment company as
described herein. See "Rights of Unitholders--Reinvestment Option."
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including, among other factors, the
possible deterioration of either the Securities which make up the Trust or the
general condition of the stock market, volatile interest rates, economic
recession, currency exchange fluctuations, foreign withholding, and
differences between domestic and foreign legal, auditing, brokerage and
economic standards. The Trust is not actively managed and Securities will not
be sold by the Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Units of the Trust 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."
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 14
Summary of Essential Financial Information
As of the Opening of Business on the Initial Date of Deposit: May --, 1995
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
GENERAL INFORMATION
<S> <C>
Aggregate Maturity Value of Treasury Obligations Initially Deposited <F1> ............. $
Aggregate Number of Shares of Govett Smaller Companies Fund Initially Deposited........
Number of Units .......................................................................
Fractional Undivided Interest in the Trust per Unit ...................................
Public Offering Price:
Aggregate Value of Securities in Portfolio <F1>....................................... $
Aggregate Value of Securities per Unit................................................ $
Sales Charge 4.9% (5.152% of the Aggregate Value of Securities per Unit).............. $
Public Offering Price per Unit <F2>................................................... $
Redemption Price per Unit.............................................................. $
Secondary Market Repurchase Price per Unit............................................. $
Excess of Public Offering Price per Unit over Redemption Price per Unit................ $
Excess of Sponsor's Initial Repurchase Price per Unit over Redemption Price per Unit... $
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Evaluation Time..............4:00 P.M. New York time
Mandatory Termination Date...August 15, 2007
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Estimated Govett Smaller Companies Fund Expenses <F3>...$XXXX per Unit
Trustee's Annual Fee....................................$.0050 per Unit
Record Date.............................................As soon as practicable after the Fund's ex-dividend date
Distribution Date.......................................As soon as practicable after the Fund's distribution date
<FN>
<F1>The shares of the Fund are valued at their net asset value. The Treasury
Obligations are valued at their aggregate offering side evaluation. Because
the Fund Shares may from time to time under certain circumstances be sold or
Trust Units may be redeemed, there is no guarantee that the value of each Unit
over the life of the Trust or at the Trust's termination will be equal to the
Aggregate Value of Securities per Unit as stated above. However, due to the
inclusion of the Treasury Obligations in the Trust's portfolio, Unitholders
who hold their Units until maturity will receive at least $11.00 per Unit
(which is the value upon maturity of the Treasury Obligations.)
<F2>On the Initial Date of Deposit there will be no cash in the Income or Capital
Accounts. Anyone ordering Units after such date will have included in the
Public Offering Price a pro rata share of any cash in such Accounts.
<F3>Estimated Govett Smaller Companies Fund Expenses represent the intrinsic cost
to each Unit due to the underlying costs associated with the Govett Smaller
Companies Fund and are based upon the net asset value of that number of Govett
Smaller Companies Fund Shares per Unit multiplied by the Fund's Annual
Operating Expenses less rebated 12b-1 fees. See "Trust Portfolio--Fund
Expenses."
</TABLE>
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 14 is comprised
of one unit investment trust, Govett Smaller Companies Fund and Treasury
Trust, Series 1. The Trust was created under the laws of the State of New York
pursuant to a Trust Indenture and Agreement (the "Trust Agreement"),
among Van Kampen American Capital Distributors, Inc., as Sponsor, American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., as Evaluator, and The Bank of New York, as Trustee.
The Govett Smaller Companies Fund and Treasury Trust may be an appropriate
medium for investors who desire to participate in a portfolio of mutual fund
shares and zero-coupon U.S. Treasury obligations. Diversification of assets in
the Trust will not eliminate the risk of loss always inherent in the ownership
of securities. For a breakdown of the portfolio see "Trust Portfolio."
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolio"herein, including delivery
statements relating to contracts for the purchase of certain such Securities
and an irrevocable letter of credit issued by a financial institution in the
amount required for such purchases. Thereafter, the Trustee, in exchange for
such Securities (and contracts) so deposited, delivered to the Sponsor
documentation evidencing the ownership of that number of Units of the Govett
Smaller Companies Fund and Treasury Trust indicated in "Summary of
Essential Financial Information."Unless otherwise terminated as provided
in the Trust Agreement, the Trust will terminate on the Mandatory Termination
Date, and Securities then held will within a reasonable time thereafter be
liquidated or distributed by the Trustee.
Additional Units of the Trust may be issued at any time by depositing in the
Trust additional Securities or contracts to purchase securities together with
irrevocable letters of credit or cash. As additional Units are issued by the
Trust as a result of the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits of Securities
into the Trust following the Initial Date of Deposit, provided that such
additional deposits will be in amounts which will maintain the same percentage
relationship among the Fund Shares and the Treasury Obligations that existed
immediately prior to any such subsequent deposit. Such deposits of additional
Securities will, therefore, be done in such a manner that the maturity value
of the Treasury Obligations represented by each Unit should always be an
amount at least equal to $11.00. Thus, although additional Units will be
issued, each Unit will continue to represent approximately the same number of
Fund Shares and the same pro rata share of the percentage amount of the
Treasury Obligations, and the percentage relationship among each Security in
the Trust will remain the same. On a cost basis to the Smaller Companies Fund
and Treasury Trust, the original percentage relationship on the Initial Date
of Deposit was approximately XXXX% Treasury Obligations and approximately
XXXX% Fund Shares. Since the prices of the underlying Treasury Obligations and
Fund Shares will fluctuate daily, the ratio, on a market value basis, will
also change daily. The maturity value of the Treasury Obligations and the Fund
Shares represented by each Unit will not change as a result of the deposit of
additional Securities in the Trust.
Each Unit of the Trust represents an undivided interest in the Trust. To the
extent that any Units are redeemed by the Trustee or additional Units are
issued as a result of additional Securities being deposited by the Sponsor,
the fractional undivided interest in the Trust represented by each unredeemed
Unit will increase or decrease accordingly, although the actual interest in
the Trust represented by such fraction will remain unchanged. Units will
remain outstanding until redeemed upon tender to the Trustee by Unitholders,
which may include the Sponsor or the Underwriters, or until the termination of
the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objectives of the Smaller Companies Fund and Treasury Trust are to protect
Unitholders' capital and provide investors with the potential for long-term
capital appreciation. The portfolio is described under "Trust
Portfolio" and "Portfolio" herein. An investor will be subjected
to taxation on the dividend income received from the Trust and on gains from
the sale or liquidation of Securities (see "Federal Taxation").
Investors should be aware that there is not any guarantee that the objectives
of the Trust will be achieved because the market value of the Securities can
be affected by a variety of factors. Fund Shares 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 underlying issuers
change. Investors should be aware that there can be no assurance that the
value of the underlying Securities will increase or that the issuers of the
Fund Shares will make distributions. The Trust, however, has been organized so
that investors would receive, at termination, an amount per Unit at least
equal to $11.00 (which is equal to the per Unit value upon maturity of the
Treasury Obligations), even if the Trust never paid a distribution and the
value of the Fund Shares were to decrease to zero, which the Sponsor considers
highly unlikely. Any distributions of income will generally depend upon the
declaration of dividends by the Fund and the declaration of any dividends
depends upon several factors including the financial condition of the Fund and
general economic conditions.
In selecting Securities for the Smaller Companies Fund and Treasury Trust, the
following factors, among others, were considered: (a) for the portion of the
Securities that are Fund Shares, the Sponsor selected shares of Govett Smaller
Companies Fund, a mutual fund which seeks long-term capital appreciation by
investing primarily in equity securities of smaller companies located
throughout the world, and (b) for the portion of the Securities that are
Treasury Obligations, the evidence of the right to receive a fixed payment at
a future date from the U.S. Government, backed by the full faith and credit of
the U.S. Government.
Investors should be aware that the Trust is not a "managed" fund and
as a result the adverse financial condition of the Fund will not result in its
elimination from the portfolio except under extraordinary circumstances (see
"Trust Administration--Portfolio Administration"). In addition,
Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the Securities were selected by the Sponsor as of the
date the Securities were purchased by the Trust. The Trust may continue to
purchase or hold Securities originally selected through this process even
though the evaluation of the attractiveness of the Securities may have changed
and, if the evaluation were performed again at that time, the Securities would
not be selected for the Trust.
TRUST PORTFOLIO
The Smaller Companies Fund and Treasury Trust consists of (a) shares of Govett
Smaller Companies Fund and (b) zero-coupon U.S. Treasury Obligations.
Fund Shares. The portfolio of the Trust contains shares of Govett Smaller
Companies Fund.
Govett Smaller Companies Fund is one of seven portfolios included in The
Govett Funds, Inc. (the "Company"), an open-end management investment
company. Govett Smaller Companies Fund seeks long-term capital appreciation by
investing primarily in equity securities of smaller companies located
throughout the world.
The Fund is authorized to issue three distinct classes of shares ("Class A
shares", "Class B shares" and "Class C shares"). Each
class of shares may be purchased by investors at a price equal to the net
asset value of the Fund per share, plus the respective sales charge. The Trust
has purchased Class A shares for deposit herein and any reference to Fund
Shares in this prospectus shall refer to Class A shares.
The Fund's investment manager is John Govett & Co. Limited ("John
Govett" or the "Manager"), a United Kingdom corporation and an
affiliate of Govett & Company Limited (together with its subsidiaries, the
"Govett Group").
Additional information concerning Govett Smaller Companies Fund appears in
"Trust Portfolio--Govett Smaller Companies Fund Summary." This
Prospectus sets forth concisely information about the Fund that a prospective
investor should know before investing. A Fund Prospectus and a Statement of
Additional Information about the Fund have been filed with the Securities and
Exchange Commission (the "Commission") and are available, upon request
and without charge, by writing to Van Kampen American Capital Distributors,
Inc. (the Fund's "Distributor"), 2800 Post Oak Blvd., 44th Floor,
Houston, Texas 77056, or by calling (800) 634-6838. The Fund's Statement of
Additional Information, which is incorporated in its entirety by reference in
the Fund's prospectus, contains more detailed information about the Fund and
its management, including more complete information as to certain risk factors.
Treasury Obligations. The Treasury Obligations deposited in the Smaller
Companies Fund and Treasury Trust consist of U.S. Treasury bonds which have
been stripped of their unmatured interest coupons. The Treasury Obligations
evidence the right to receive a fixed payment at a future date from the U.S.
Government and are backed by the full faith and credit of the U.S. Government.
Treasury Obligations are purchased at a deep discount because the buyer
obtains only the right to a fixed payment at a fixed date in the future and
does not receive any periodic interest payments. The effect of owning deep
discount bonds which do not make current interest payments (such as the
Treasury Obligations) is that a fixed yield is earned not only on the original
investment, but also, in effect, on all earnings during the life of the
discount obligation. This implicit reinvestment of earnings at the same rate
eliminates the risk of being unable to reinvest the income on such obligations
at a rate as high as the implicit yield on the discount obligation, but at the
same time eliminates the holder's ability to reinvest at higher rates in the
future. For this reason, the Treasury Obligations are subject to substantially
greater price fluctuations during periods of changing interest rates than are
securities of comparable quality which make regular interest payments. The
effect of being able to acquire the Treasury Obligations at a lower price is
to permit more of the Trust's portfolio to be invested in Fund Shares.
General. The Trust consists of the Securities listed under "Portfolio"
as may continue to be held from time to time in the Trust and any additional
Securities acquired and held by the 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 Securities. However, should any contract for the purchase of any
of the Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the Trust to cover such purchase are
reinvested in substitute Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract to all
Unitholders on the next distribution date.
Because certain of the Fund Shares from time to time may be sold under certain
circumstances described herein, and because the proceeds from such events will
be distributed to Unitholders and will not be reinvested, no assurance can be
given that the Trust will retain for any length of time its present size and
composition. Although the portfolio is not managed, the Sponsor may instruct
the Trustee to sell Fund Shares under certain limited circumstances. See
"Trust Administration--Portfolio Administration."Fund Shares, however,
will not be sold by the 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 Fund Shares as such and
will not be able to vote the Fund Shares. As the holder of the Fund Shares,
the Trustee will have the right to vote all of the voting stocks in the Trust
and will vote such stocks in accordance with the instructions of the Sponsor.
Actions required to be taken with respect to the Treasury Obligations will be
in accordance with the instructions of the Sponsor.
The following section provides a brief description of the Govett Smaller
Companies Fund, specifically its relationship with the Trust. More specific
information regarding Govett Smaller Companies Fund can be obtained from the
Prospectus and Statement of Additional Information prepared therefor as
described above.
Govett Smaller Companies Fund Summary
The operating expenses and maximum transaction expenses expected to be
associated with an investment in the Fund are reflected in the following
tables:
<TABLE>
<CAPTION>
Govett Smaller Companies Fund
Class A
Shares
<S> <C>
SHAREHOLDER
TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases (as a percentage of
offering price)*................................................... 4.95%
Sales Charge Imposed on Dividend Reinvestments...................... None
Maximum Contingent Deferred Sales Charge (as a percentage of None
original purchase price or redemption proceeds, as applicable)....... 1
Redemption Fees..................................................... None
Exchange Fees1...................................................... None
ANNUAL OPERATING
EXPENSES:
(as a percentage of average net assets)
Management Fee...................................................... 1.00%
12b-1 Distribution and Service Fees**............................... 0.50%
Other Expenses (after reduction of expenses)........................ 0.45%
Total Fund Operating Expenses (after fee waiver and reduction of
expenses)2......................................................... 1.95%
The Fund's Manager has agreed to reduce its management fees, and the Fund's
Distributor has agreed to pay certain Fund operating expenses, through at
least December 31, 1995 to the extent necessary to limit total annual Fund
Operating Expenses to the lesser of the percentages listed above under
"Total Fund Operating Expenses,"or the maximum allowed by the most
stringent state expense limitations. Long-term Fund shareholders may pay more
than the economic equivalent of the maximum front-end sales charge otherwise
permitted by the NASD.
<FN>
<F1>Investors in Fund Shares may make up to four exchanges per year without
charge; for each exchange in excess of four, a $7.50 processing charge will be
payable to the Fund's Shareholder Services Agent. This exchange privilege does
not apply to Fund Shares held by the Trust.
<F2>The percentage in "Other Expenses" for the Class A shares of the
Smaller Companies Fund is based on expenses incurred by the Fund during the
fiscal year ended December 31, 1994 after fee waivers and expense
reimbursements by the Manager and the former distributor to such Fund. Absent
such waivers and reimbursements, "Total Fund Operating Expenses" as a
percentage of net assets for the Class A shares of the Smaller Companies Fund
would have been 2.40% for the fiscal year ended December 31, 1994. See
"Summary of Essential Information"for a description of estimated fees and
expenses charged per Unit.
*There is no sales charge payable upon the purchase of the Fund Shares
deposited in the Trust. However, the maximum sales charge on the Units, and
therefore indirectly on the Fund Shares is 4.9% during both the initial
offering period and in the secondary market.
**Effectively, there are no 12b-1 fees on Fund Shares held in the Trust.
However, Unitholders who acquire shares of the Fund through an In Kind
Distribution upon redemption or at the Trust's termination will begin to incur
12b-1 fees at such time as shares are acquired.
</TABLE>
Examples:
Assuming the current fee waivers and expenses limitations remain in effect, an
investor would pay the following expenses on a $1,000 investment in Fund
Shares assuming (1) 5% annual return3 and (2) redemption at the end of each
time period:
<TABLE>
<CAPTION>
Govett Smaller
Companies Fund
Class A
Shares
<S> <C>
1 year..... $ 68
3 years.... 108
5 years.... 150
10 years... 266
</TABLE>
An investor would pay the following expenses on the same investment assuming
no redemption:
<TABLE>
<CAPTION>
Govett Smaller
Companies Fund
Class A
Shares
<S> <C>
1 year..... $ 68
3 years.... 108
5 years.... 150
10 years... 266
<FN>
<F1>The 5% annual return assumption in this example is required by SEC regulations
applicable to all mutual funds; it does not represent a projection of the
Fund's actual performance. For a detailed discussion of these matters,
investors should refer to the relevant sections of this Prospectus.
<F2>The above tables are not intended to reflect precisely the fees and expenses
associated with a particular person's investment in Class A shares of the
Fund. The tables should not be considered a representation of past or future
Fund expenses and actual Fund expenses may be greater or lesser than those
shown in the tables. Rather, the tables have been provided only to assist
investors in understanding the various costs and expenses that a Fund
shareholder will bear, directly or indirectly, in connection with an
investment in the Fund.
</TABLE>
FINANCIAL HIGHLIGHTS
The table below provides condensed information concerning income and capital
changes for one Class A share of the Govett Smaller Companies Fund for the
year ended December 31, 1993 and the year ended December 31, 1994. The
information has been audited by the Fund's independent accountants, whose
unqualified report thereon appears in the Annual Report to Shareholders of the
Fund for the fiscal year ended December 31, 1994. The financial statements and
related notes of the Govett Smaller Companies Fund contained in such Annual
Report (and no other portion of such Report) are incorporated by reference
into the Fund's Prospectus.
<TABLE>
<CAPTION>
Govett Smaller Companies Fund
Year ended Year ended
December 31, December 31,
1994 1993 (a)
<S> <C> <C>
Net asset value, beginning of period...........$15.85 $10.00
Income from investment operations:
Net investment income (loss)...................(0.10)+ (0.06)
Net realized and unrealized gain (loss) on
investments...................................4.47 5.91
Total from investment operations...............4.37 5.85
Less distributions to shareholders:
From net investment income.....................-- --
From net realized gains........................(1.16) --
Total distributions............................(1.16) --
Net asset value, end of period.................$19.06 $15.85
Total Return *.................................28.74% 58.50%
Ratios/Supplemental Data:
Net assets, end of period (000's)..............$76,873 $39,681
Net expenses to average daily net assets
(Note A)......................................1.95% 1.95%
Net investment income (loss) to average
daily net assets..............................(1.13)% (0.93)%
Portfolio turnover rate........................519% 483%
<FN>
<F1>Note A: John Govett & Co. Limited waived a portion of its management fees and
Govett Financial Services Limited, the Fund's former distributor, reimbursed a
portion of the other operating expenses of the Fund during the periods
indicated. Without the waiver and reimbursement of expenses, the expense
ratios as a percentage of average net assets for the periods indicated would
have been:
Expenses 2.40% 2.44%
<F2>(a) Commencement of Operations was January 1, 1993.
<F3>*Total return calculations exclude front-end sales load.
<F4>+Per share net investment income (loss) does not reflect the current
period's reclassification of permanent differences between book and tax
basis net investment income (loss).
</TABLE>
INVESTMENT OBJECTIVES, POLICIES AND RISK CONSIDERATIONS OF THE FUND
Govett Smaller Companies Fund is a diversified series of The Govett Funds,
Inc. which seeks long-term capital appreciation by investing primarily in
equity securities of smaller companies located throughout the world.
While no single Fund is intended to provide a complete or balanced investment
program, the Fund can serve as a component of an investor's overall program to
meet long-term objectives. There can be no assurance that the Fund will
achieve its investment objective. The Fund's net asset value fluctuates based
upon changes in the value of its portfolio securities. The Fund's investment
objective and certain investment limitations (as described in the Fund's
Statement of Additional Information) are fundamental and may not be changed
without shareholder approval. All other investment limitations or policies may
be changed by the Fund's Board of Directors without shareholder approval.
Whenever an investment policy or limitation states a maximum percentage of the
Fund's assets that may be invested in any security or other asset, or sets
forth a policy regarding quality standards, such standard or percentage
limitation shall be determined immediately after and as a result of the Fund's
acquisition of such security or other asset. Accordingly, any later increase
or decrease resulting from a change in values, net assets or other
circumstances will not be considered when determining whether the investment
complies with the Fund's investment policies and limitations.
Investment Techniques Followed by the Fund. The Fund seeks long-term capital
appreciation by investing primarily in equity securities of those smaller
companies that the Manager believes may be the industry leaders of tomorrow.
The Fund will select its portfolio investments primarily from among U.S. and
foreign companies with individual market capitalizations which would, at the
time of purchase, place them in the same size range as companies included in
the NASDAQ Composite Index, excluding its top 75 companies. Based on this
policy and recent U.S. share prices, the companies in which the Fund invests
typically will have individual market capitalizations of less than $1.0
billion ("smaller companies"). Under normal market conditions, the
Fund will invest at least 65% of its total assets in smaller companies.
Under normal market conditions, it is expected that at least 80% of the Fund's
total assets will be invested in common stocks. The Fund may also invest up to
20% of its total assets in other types of securities with equity
characteristics such as preferred stocks, convertible securities, warrants,
units, and rights. Under normal market conditions, the Fund will not invest
more than 35% of its total assets in the securities of issuers located in any
one country (other than the U.S.). The Fund may invest in both exchange-listed
and over-the-counter ("OTC") securities. Although the Fund may receive
current income from dividends, interest and other sources, income is only an
incidental consideration in the selection of the Fund's investments. Subject
to prevailing market conditions, not more than 5% of the Fund's total assets
will be invested in the securities of any one issuer (excluding the U.S.
government and its agencies), and not more than 25% of the Fund's total assets
will be invested in any one industrial classification.
GENERAL POLICIES
ADRs and EDRs. The Fund may also invest in both sponsored and unsponsored
American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs") and other similar global instruments. The issuance of ADRs is
typically administered by a U.S. bank or trust company, and they evidence
ownership of underlying securities issued by a foreign corporation. EDRs,
which are sometimes referred to as Continental Depositary Receipts, are
receipts issued in Europe, typically through arrangements with foreign banks
and trust companies, that evidence ownership of either foreign or U.S.
underlying securities. Unsponsored ADR and EDR programs are organized
independently and without the cooperation of the issuer of the underlying
securities. As a result, available information concerning the issuer may not
be as current as for sponsored ADRs and EDRs, and the prices of unsponsored
ADRs and EDRs may be more volatile than if they were sponsored by the issuers
of the underlying securities.
Temporary Strategies. Pending investment of proceeds from new sales of Fund
Shares, to meet ordinary daily cash needs, and to retain the flexibility to
respond promptly to changes in market and economic conditions, Govett Asset
Management Company ("Govett Asset Management" or the
"Subadvisor"), the Fund's Subadvisor, may employ a temporary defensive
investment strategy for the Fund if the Subadvisor determines such a strategy
to be warranted. It is impossible to predict when or for how long the
Subadvisor may employ such strategies. Under such a strategy, the Fund may
hold cash (U.S. dollars, foreign currencies or multinational currency units)
and/or invest any portion or all of their respective assets in short-term high
quality money market instruments. For debt obligations other than commercial
paper, this includes securities rated, at the time of purchase, at least AA by
Standard & Poor's or Aa by Moody's, or if unrated, determined to be of
comparable quality by the Subadvisor. For commercial paper, this includes
securities rated, at the time of purchase, at least A-2 by Standard & Poor's
or Prime-2 by Moody's, or if unrated, determined to be a comparable quality by
the Subadvisor.
Hedging Strategies. The Fund may use certain hedging strategies to attempt to
reduce the overall level of investment and currency risk normally associated
with the Fund's present and planned investments. There can be no assurance
that such efforts will succeed. It is currently intended that the Fund will
place at risk no more than 5% of its net assets in any one of the following
categories of transactions or securities: forward currency contracts, writing
of covered put and call options, purchase of put and call options on
currencies and equity and debt securities, stock index futures and options
thereon, interest rate futures and options thereon. Participation in the
options or futures markets and in currency exchange transactions involves
investment risks and transactions costs to which the Fund would not be subject
absent the use of these strategies. If the Subadvisor's prediction of
movements in the direction of interest rates, securities prices, or currency
markets are inaccurate, the adverse consequences to the Fund may leave the
Fund in a worse position than if such strategies were not used. Risks inherent
in the use of options, foreign currency and futures contracts and options
thereon include: (1) dependence on the Subadvisor's ability to predict
correctly movements in the direction of interest rates, securities prices and
currency markets; (2) the imperfect correlation between the price of options
and futures contracts and options thereon and movements in the prices of the
securities or currencies being hedged; (3) the fact that the skills needed to
use these strategies are different from those needed to select portfolio
securities; (4) the possible absence of a liquid secondary market for a
particular instrument at any time; and (5) the possible need to defer closing
out certain hedged positions to avoid adverse tax consequences. The Fund's
ability to enter into futures contracts and options thereon is limited by the
requirements of the Internal Revenue Code for qualification as a regulated
investment company. These hedging techniques are described in the Fund's
Statement of Additional Information.
Repurchase Agreements. The Fund may enter into repurchase agreements in which
the Fund acquires a high grade liquid debt security from a U.S. bank,
broker-dealer or other financial institution that simultaneously agrees to
repurchase the security at a specified time and price. Under the 1940 Act,
repurchase agreements are considered to be loans collateralized by the
underlying security and therefore will be collateralized in an amount at least
equal to the current market value of the loaned securities, plus any accrued
interest, by cash, letters of credit, U.S. government securities or other high
grade liquid debt securities the Fund's custodian, or a designated
sub-custodian, segregated from other Fund assets. In segregating such assets,
the Fund's custodian either places them in a segregated account or separately
identifies them and renders them unavailable for investment by the Fund.
Principal Risk Factors. The investment approach required to invest in foreign
markets, particularly emerging markets, is quite specialized. The quality and
quantity of historic economic and securities market data is, in many of those
markets, limited, and many foreign markets are inherently more volatile than
the U.S. securities markets. As a result, the Subadvisor has developed an
investment management process over several decades using in-house and outside
research services. The Subadvisor's in-house analysis includes a three-part
monitoring process including review and analysis of overall market information
(including both political and economic factors); investigation of companies
which are candidates for investment; and use of on-site representatives
providing investment information, where deemed appropriate by the Subadvisor.
The Fund's portfolio is subject to market risk (i.e., the possibility that
stock prices will decline over short, or even extended, periods). Equity and
bond markets outside of the U.S. have, in fact, significantly outperformed
U.S. markets from time to time, and the Subadvisor believes that investments
in securities of companies based outside of the U.S. may provide greater
long-term investment returns than would be available from investing solely in
U.S. securities. It is important, however, to recognize that investments in
securities of foreign issuers involve greater risks than investments in U.S.
companies. There may be less information publicly available about foreign
companies, and less government regulation and supervision of foreign stock
exchanges, securities dealers and listed companies. Foreign companies are not
subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to U.S. companies.
Securities of some foreign companies are less liquid, and their prices more
volatile, than securities of comparable U.S. companies. Settlement of
transactions in some foreign markets may be delayed or may be less frequent
than in the U.S., which could affect the liquidity of the Fund's portfolios.
Security trading practices abroad may offer less protection to investors such
as the Fund. Additionally, in some foreign countries, there exists the
possibility of expropriation, nationalization of issuers or confiscatory
taxation, limitations on the removal of securities, property or other assets,
political or social instability, including war or other armed conflict, or
diplomatic developments which could affect U.S. investments in those
countries. The performance of individual foreign economies may also compare
unfavorably to that of the U.S. economy, and the U.S. dollar value of
securities denominated in currencies other than the U.S. dollar may be
affected unfavorably by exchange rate movements. Each of these factors could
adversely affect the value of the Fund's shares, as well as the value of
dividends and interest earned by the Fund and gains which may be realized.
Foreign governments may withhold taxes (typically at a rate between 10% and
35% of the gross amount paid) from dividends or interest paid with respect to
securities held by the Fund, decreasing the net asset value of the Fund. Some
foreign securities are subject to brokerage taxes levied by foreign
governments, increasing the cost of such securities and reducing the realized
gain, or increasing the realized loss, on such securities at the time of sale.
The Fund invests in companies located within emerging or developing countries,
which involves exposure to economic structures that are generally less diverse
and mature, and to political systems which can be expected to have less
stability, than those of more developed countries. Such countries may have
relatively unstable governments, economies based on only a few industries, and
securities markets which trade only a small number of securities. Historical
experience indicates that emerging markets have been more volatile than the
markets of more mature economies; such markets have also from time to time
provided higher rates of return and greater risks to investors. The Subadvisor
believes that these characteristics of emerging markets can be expected to
continue in the future. In addition, throughout the countries commonly
referred to as the Eastern Bloc, the lack of a capital market structure or
market-oriented economy and the possible reversal of recent favorable
economic, political and social events in some of those countries present
greater risks than those associated with more developed, market-oriented
Western European countries and markets.
In addition, investments in securities issued by Mexican companies involve
special considerations and risks not typically associated with investments in
securities of U.S. companies, including the risks associated with high rates
of inflation and interest rates with respect to the Mexican economy, the
limited liquidity and relatively small market capitalization of the Mexican
securities market, relatively higher price volatility, restrictions on foreign
investment, political and social uncertainties, governmental involvement in
the economy and significant foreign currency devaluations and fluctuations.
The special risks of investment in foreign exchange contracts, interest rate
and forward currency futures contracts, options on foreign currencies, and
stock index futures contracts (and options on such futures contracts) are
described in the Statement of Additional Information.
Shares of the Fund are an appropriate investment for prospective investors who
are willing and able to assume the risks associated with the types of
investments made by the Fund. The smaller companies in which the Fund
primarily invests often have rates of sales, earnings, growth and share price
appreciation that exceed those of larger companies. However, such companies
also often have limited product lines, markets or financial resources, and
investors should note that stocks of smaller companies may have limited
marketability and typically experience more market price volatility than
stocks of larger companies, and the Funds' net asset value may reflect this
volatility.
Investment Restrictions. The Fund is a diversified series of The Govett Funds,
Inc. A diversified series of shares of an investment company is required under
the 1940 Act to follow certain guidelines in managing its investments which
may help to reduce risk.
As a non-fundamental policy, the Fund may not invest more than 5% of its net
assets in securities restricted as to resale or in illiquid securities. The
Fund may not invest 25% or more of its total assets in any one industry (other
than U.S. Government and agency obligations). In addition, the Fund may not
borrow money or mortgage or pledge any of its assets (except that the Fund may
borrow from banks, for temporary or emergency purposes, up to 331/3% of its
total assets in connection therewith). Any borrowings that come to exceed the
331/3% limitation will be reduced within three days. The Fund may not purchase
securities when its borrowings exceed 5% of its assets. The Fund may not make
loans if, as a result, more than 331/3% of the Fund's total assets would be
lent to other parties except (i) through the purchase of a portion of an issue
of debt securities in accordance with its investment objectives, policies, and
limitations, or (ii) by engaging in repurchase agreements with respect to
portfolio securities. Portfolio securities may be loaned only if continuously
collateralized at least 100% by "marking-to-market"daily.
See the Fund's Statement of Additional Information for the full text of these
restrictions and the Fund's other investment policies. Except for those
investment restrictions designated as fundamental in the Fund's Statement of
Additional Information, the investment policies described in the Fund's
prospectus and in its Statement of Additional Information are not fundamental
policies. The Company's Board of Directors may change a non-fundamental
investment policy without shareholder approval.
MANAGEMENT OF THE FUND
The Company's Board of Directors is responsible for overseeing the conduct of
the Company's business and the activities of the Fund. Pursuant to an
investment management contract, and subject to such policies as the Board of
Directors may establish, John Govett oversees the Fund's operations. For these
investment management and administrative services, the Fund pays fees monthly
to John Govett based upon the average net assets of the Company, as determined
at the close of each business day during the month, at an annual rate of 1%
over the average daily net assets of the Fund. Due to the added complexities
involved in managing international and smaller company investments, the
Manager's fee is higher than that paid by most other investment companies. The
management fees will be reduced, if necessary, to comply with the most
stringent total expense limits prescribed by the states in which the Fund's
shares are offered for sale. The Fund pays all expenses not assumed by John
Govett or other persons, such as the Distributor, as defined below, including
but not limited to the Manager's fees, outside directors' fees; taxes, if any;
auditing, legal, custodial, transfer agent and certain investor servicing and
shareholder reporting expenses; brokerage and commission expenses, if any;
interest charges on any borrowings; costs and expenses of accounting,
bookkeeping and recordkeeping; insurance premiums; trade association dues;
fees and expenses of registering and maintaining registration of their shares
for sale under federal and applicable state securities laws; costs associated
with shareholders' meetings and the preparation and distribution of proxy
materials; printing and mailing prospectuses and statements of additional
information and reports to shareholders; and other expenses relating to the
Fund's operations plus any extraordinary and non-recurring expenses. The
Manager, Distributor, and certain of their respective affiliates have agreed
to share management fees, distribution and service fees, excess Fund expenses,
and sales charges related to the sale of Fund shares.
John Govett has entered into a Subadvisory Agreement with Govett Asset
Management, an affiliate of John Govett, whereby Govett Asset Management
provides day-to-day investment advisory services to the Fund. Under the
subadvisory arrangements, Govett Asset Management furnishes an investment
program and makes investment decisions for the Fund, subject to the
supervision of John Govett and the Board of Directors. For the services
provided under the subadvisory agreements, John Govett pays to Govett Asset
Management, out of the investment advisory fee received by John Govett from
the Company with respect to the Fund, an annual fee, computed daily and paid
monthly, equal to 0.50% of the Fund's average daily net assets. The Fund does
not compensate Govett Asset Management directly for its subadvisory services.
The subadvisory fee payable to Govett Asset Management will be reduced
proportionately if the advisory fee paid to John Govett by the Company with
respect to the Fund is reduced as a result of applicable state expense
limitations or fee waivers.
During the fiscal year ended December 31, 1994, the total operating expenses
paid by the Class A Shares of the Fund, (including management and
administrative and distribution fees, but after fee reductions and expense
reimbursements) was 1.95% of the Fund's average daily net assets.
John Govett & Co. Limited. John Govett is a United Kingdom-based investment
management company whose investment management activities originated in the
1920s and was incorporated in 1955 to provide a corporate structure for a
management group. Located at 4 Battle Bridge Lane, London SE1 2HR, England,
John Govett is a wholly-owned subsidiary of Govett & Company Limited, and a
corporation listed on the London Stock Exchange with a current market
valuation of approximately $440 million. The Govett Group, which manages or
administers investment funds valued at approximately $8.6 billion, maintains
offices in London, Singapore, Jersey (Channel Islands), Sacramento, Raleigh,
and San Francisco. In March 1995 a proposed merger of John Govett & Co. and
Govett Asset Management Co. with Duff & Phelps Corp. was terminated. Govett
& Company Limited currently continues its plans to sell these businesses.
Govett Asset Management Company. Govett Asset Management is a registered
investment adviser whose principal office is located at 650 California Street,
28th Floor, San Francisco, California 94108. Govett Asset Management is an
affiliate of John Govett. Govett Asset Management has been engaged in the
investment management business since 1972, and currently manages approximately
$1.1 billion in assets for both individual and institutional clients. Its
investment management activities include investment in equities (ranging from
small capitalization to large capitalization companies), a full range of fixed
income securities, and asset allocation strategies.
The portfolio manager for the Fund is Garett R. Van Wagoner. Since the Fund's
inception, he has been primarily responsible for the day-to-day management of
the Fund's portfolio and has been a portfolio manager with Govett Asset
Management since 1993. Mr. Van Wagoner graduated from Bucknell University with
a B.S. in Business Administration. He was responsible for income research for
First American Bank, N.A., before joining Flagship National Bank. In 1982, he
joined Bessemer, where he was responsible for the Emerging Growth Stock
Investment Program.
Allocation of Portfolio Transactions. Neither the Manager nor the Subadvisor
has any agreement or commitment to place orders with any particular securities
dealer or dealers with respect to the Fund. In placing orders for the Fund's
portfolio transactions, the Manager and the Subadvisor seek the best net
results, analyzing such factors as price, size of order, difficulty of
execution and the operational capabilities of the firm involved. Prior to
making an investment, the Manager and the Subadvisor perform considerable
research on the specified company and country. In underwritten offerings,
securities are usually purchased at a fixed price which includes an amount of
compensation to the underwriter. On occasion, securities may be purchased
directly from an issuer, in which case there are no commissions or discounts.
Dealers may receive commissions on futures, currency and options transactions.
Commissions on trades made through foreign securities exchanges or
over-the-counter markets typically are fixed and generally are higher than
those made through United States securities exchanges or over-the-counter
markets.
Consistent with their obligations to obtain the best net results, the Manager
and the Subadvisor may consider a securities broker-dealer's sale of Fund
Shares, or research and brokerage services provided by the securities
broker-dealer, as factors in considering through whom portfolio transactions
will be effected. The Fund may pay to those securities broker-dealers who
provide brokerage and research services to the Manager or Subadvisor a higher
commission than that charged by other securities broker-dealers if the Manager
or Subadvisor determines in good faith that the amount of the commission is
reasonable in relation to the value of those services in terms of the overall
responsibility of the Manager or Subadvisor to the Fund and to any other
accounts over which the Manager or Subadvisor exercises investment discretion.
The frequency of portfolio transactions, the Fund's turnover rate, will vary
from year to year depending on market conditions. The portfolio turnover rates
of the Fund for the period from January 1, 1994 through December 31, 1994 was
519%. Because a high annual turnover rate (over 100%) increases transaction
costs and may increase the incidence of federal taxation on the Fund's
capital, the Manager and Subadvisor will carefully weigh the anticipated
benefits of a portfolio transaction against expected transaction costs and tax
consequences. Neither the Manager nor the Subadvisor will engage in short-term
trading other than what is necessary for the prudent management of the Funds'
portfolios.
Distribution Arrangements. Van Kampen American Capital Distributors, Inc. (the
"Distributor") is the distributor, or principal underwriter, of the
Fund's shares and Sponsor of the Trust. The Distributor currently also acts as
principal underwriter for the Van Kampen American Capital Family of Mutual
Funds, which consists of 104 mutual funds with aggregate net assets, on a
proforma basis, of approximately $32.4 billion as of September 30, 1994. The
Distributor's office is located in Houston, Texas. The Distributor is a wholly
owned subsidiary of Van Kampen American Capital, Inc. ("VKAC"), a
wholly owned subsidiary of VKAC Holding, Inc. VKAC Holding, Inc. is
controlled, through the ownership of a substantial majority of its common
stock, by The Clayton & Dubilier Private Equity Fund IV Limited Partnership
("CDLP"), a Connecticut limited partnership. CDLP is managed by
Clayton Dubilier & Rice, Inc., a New York based private investment firm. The
general partner of CDLP is Clayton & Dubilier Associates IV Limited
Partnership ("CD Associates"). The general partners of CD Associates
are Joseph L. Rice, III, B. Charles Ames, Albert Cribiore, Donald J. Gogel and
Hubbard C. Howe, each of whom is a principal of Clayton, Dubilier & Rice, Inc.
In addition, certain officers, directors and employees of VKAC own, in the
aggregate, not more than 8% of the common stock of VKAC Holding Inc. and have
the right to acquire, upon the exercise of options, approximately an
additional 10% of the common stock of VKAC Holding, Inc. VKAC has been active
in the mutual fund business since the 1920s. The Distributor collects the
sales charges imposed on purchases and redemptions of Fund shares, and
reallows a portion (in accordance with the schedule set forth under "How
To Purchase Shares"in the Fund's prospectus and as described below in
"Distribution Plans") of such charges to securities dealers who have
sold such shares.
From time to time, the Distributor may provide promotional and/or cash
incentives, including reallowances of up to the entire sales charge, to
certain securities dealers who have sold or are expected to sell significant
amounts of shares of the Fund. The Distributor may from time to time implement
programs under which a broker, dealer or financial intermediary's sales force
may be eligible to win nominal awards for certain sales efforts or under which
the Distributor will reallow to any broker, dealer or financial intermediary
that sponsor sales contests or recognition programs conforming to criteria
established by the Distributor, or participates in sales programs sponsored by
the Distributor, an amount not exceeding the total applicable sales charges on
sales generated by the broker or dealer during such programs. Also, the
Distributor in its discretion may from time to time, pursuant to objective
criteria established by it, pay fees to, and sponsor business seminars for,
qualifying brokers, dealers or financial intermediaries for certain services
or activities which are primarily intended to result in sales of shares of the
Fund. Such fees paid for such services and activities with respect to the Fund
will not exceed in the aggregate 1.25% of the average total daily net assets
of the Fund on an annual basis. The Distributor may also provide written
information to securities dealers in its selling group which relates to sales
incentive campaigns conducted by such securities dealers for their
representatives, as well as financial assistance in connection with
pre-approved seminars, conferences and advertising. No such programs or
additional compensation will be offered to the extent that they are prohibited
by the laws of any state or any self-regulatory agency with jurisdiction over
the Distributor, such as the National Association of Securities Dealers.
Distribution Plans. Rule 12b-1 adopted by the SEC under the 1940 Act permits
an investment company to directly or indirectly pay expenses associated with
the distribution of its shares ("distribution expenses") in accordance
with a plan adopted by the Company's Board of Directors and approved by its
shareholders. Pursuant to Rule 12b-1, the Company's Board of Directors and the
shareholders of each class of the Fund have adopted three Distribution Plans
hereinafter referred to as the "Class A Plan," the "Class B
Plan," and the "Class C Plan." Each Distribution Plan is in
compliance with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. ("NASD Rules") applicable to mutual fund
sales charges. Only the Class A Plan is applicable to the Trust. The NASD
Rules limit the annual distribution charges that the Fund may impose on a
class of shares. The NASD Rules also limit the aggregate amount which the Fund
may pay for such distribution charges. Under the Class A Plan, the Fund pays
an ongoing distribution fee to the Distributor at an annual rate of 0.50% of
the Fund's aggregate average daily net assets attributable to its Class A
shares.
The Class A Plan allows the Fund to compensate the Distributor for services
provided and expenses incurred in the distribution of Class A shares,
including advertising expenses and printing costs (e.g., sales materials used
to offer Class A shares to the public). The Distributor may reallow all or a
portion of the payments received under the Plan to third parties, including
banks.
The Class A Plan provides for quarterly payments by the Fund to the
Distributor at the annual rate of 0.50% of the respective average daily net
assets of the Fund attributable to the Fund's Class A shares. If the Class A
Plan should be terminated as provided therein, the Distributor would not be
compensated for costs incurred but not yet recovered. Payments under the Class
A Plan of the Fund may not be increased to more than 0.50% of the Fund's
average daily net assets attributable to Class A shares without prior approval
of the Class A shareholders.
At present, the Company's Board of Directors has approved payments under the
Class A Plan for the purpose of reimbursing the Distributor for payments of
commissions to the Fund's dealers as well as for certain additional expenses
related to shareholder services and the distribution of Class A shares
(including payments for travel, telephone, and overhead expenses of the
Distributor), subject to the overall percentage limitations described above.
The Rule 12b-1 fees imposed on Fund Shares held in the Trust are rebated to
the Trust and are used to reduce expenses of the Trust resulting in increased
distributions to Unitholders. Unitholders who acquire shares of the Fund
through an In Kind Distribution pursuant to a redemption request or at the
Trust's termination will begin to incur Rule 12b-1 fees at such time as shares
are acquired.
Shareholder Services Agent. Van Kampen American Capital Shareholder Services,
Inc., an affiliate of the Distributor ("ACCESS" or the
"Shareholder Services Agent"), provides the Company and the Fund with
certain services, including the following: (1) preparation and maintenance of
accounts and records for the Fund and performance of certain related
functions; and (2) provision of transfer agency services to the Fund. ACCESS
provides such services at cost plus a profit.
Accounting and Administration Services. Investors Bank & Trust Company
("IBT" or the "Fund Administrator") provides the Company and the
Fund with administration and accounting services.
How the Fund Values Its Shares. The Fund calculates the net asset value per
share of each class by dividing the total value of the assets (the securities
held by the Fund, plus any cash or other assets, including interest and
dividends accrued but not yet received) attributable to the class, less the
total liabilities attributable to the class, by the total number of shares of
the class outstanding. Shares are valued as of the close of trading on the New
York Stock Exchange (usually considered 4:00 p.m. Eastern Time) each day the
Exchange is open. All securities traded on an exchange are valued at the last
sale quotation on the exchange prior to the time of valuation. Portfolio
securities for which market quotations are readily available are stated at
market value. Short-term investments that will mature in 60 days or less are
valued using amortized cost, which the Company's Board of Directors has
determined approximates market value. Amortized cost valuation means that a
debt security with a maturity at purchase of 60 days or less is valued at its
acquisition cost and a debt security originally purchased with a maturity in
excess of 60 days, which currently has a maturity of 60 days or less, is
valued at the market or fair value of the security on the 61st day prior to
maturity (each as adjusted for amortization of premium or discount) rather
than at current market value. All other securities and assets are valued at
their fair value following procedures approved by the Company's Board of
Directors. The Fund's Statement of Additional Information provides a
description of the special valuation procedures for options and futures
contracts.
The Fund's portfolio is expected to include foreign securities listed on
foreign stock exchanges or debt securities of the United States and foreign
governments and corporations. Some of these securities trade on days other
than Business Days, as defined below. Foreign securities quoted in foreign
currencies are translated into United States dollars at the exchange rates at
1:00 pm. Eastern Time or at such other rates as the Manager or Subadvisor may
determine to be appropriate in computing net asset value. As a result,
fluctuations in the value of such currencies in relation to the United States
dollar will affect the net asset value of the Fund's shares even though there
has not been any change in the market values of such securities.
Because of the time zone differences, foreign exchanges and securities markets
will usually be closed prior to the time of the closing of the New York Stock
Exchange and values of foreign options and foreign securities will be
determined as of the earlier closing of such exchanges and securities markets.
However, events affecting the values of such foreign securities may
occasionally occur between the earlier closing of such exchanges and
securities markets and the closing of the New York Stock Exchange which will
not be reflected in the computation of the net asset value of the Fund. If an
event materially affecting the value of such foreign securities occurs during
such period of which the Manager or Subadvisor becomes aware, then such
securities will be valued at fair value as determined in good faith, or in
accordance with procedures adopted, by the Company's Board of Directors.
Shareholder Inquiries. Any questions or communications regarding the Fund
should be directed to: The Govett Funds, Inc. at P.O. Box 419434, Kansas City,
MO 64141. Unitholders may also obtain information regarding the Fund by
calling (800) 421-5666.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL INCOME TAXATION
The Fund will annually distribute substantially all of its net investment
income and net realized capital gains. The annual distribution and/or
dividend, if any, will be declared in November or December of each year.
Distributions from net investment income, if any, are expected to be small.
Distributions from capital gains are made after applying any available loss
carryovers.
The Fund may make additional dividend or capital gain distributions to comply
with certain distribution requirements under the Code.
United States Federal Taxation of the Fund. The Fund intends to qualify as a
"regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended, for federal income tax purposes and to meet
all other requirements that are necessary for it (but not its shareholders) to
be exempt from federal taxes on income and gains paid to shareholders in the
form of dividends. In order to accomplish this goal, the Fund must, amongst
other things, distribute substantially all of its ordinary income and net
capital gains on a current basis and maintain a portfolio of investments which
satisfies certain diversification criteria.
United States Federal Taxation of Shareholders. For federal income tax
purposes, any income dividends which the shareholder receives from the Fund,
as well as any distributions derived from the excess of net short-term capital
gains over net long-term capital losses, are treated as ordinary income
whether the shareholder has elected to receive them in cash or in additional
shares. Distributions derived from the excess of net long-term capital gains
over net short-term capital losses are treated as long-term capital gains
regardless of the length of time the shareholder has owned the shares of the
Fund and regardless of whether the shareholder receives such distributions in
cash or in additional shares.
Certain distributions which are declared in October, November, or December but
which, for operational reasons, may not be paid to the shareholder until the
following January, may be treated for federal tax purposes as if received by
the shareholder on December 31 of the calendar year in which the distributions
are declared.
Redemptions and exchanges of Fund shares are taxable events on which a
shareholder may realize a gain or loss. All or a portion of a loss realized
upon a redemption of shares will be disallowed to the extent other shares of a
Fund are purchased (through reinvestment of dividends or otherwise) within 30
days before or after such redemption. If a shareholder receives a long-term
capital gain distribution on shares of the Fund and such shares are held for
less than six months and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term capital loss for tax purposes.
All or a portion of the sales charge incurred in purchasing shares of the Fund
will not be included in the federal tax basis of any such shares sold within
90 days or their purchase (for the purpose of determining gain or loss upon
the sale of such shares) if the sales proceeds are reinvested in the Fund and
a sales charge that would otherwise apply to the reinvestment is reduced or
eliminated because the sales proceeds were reinvested in the Fund. The portion
of the sales charge so excluded from the tax basis of the shares sold will
equal the amount by which the sales charge that would otherwise be applicable
upon the reinvestment is reduced. Of course, any portion of such sales charge
excluded from the tax basis of the shares sold will be added to the tax basis
of the shares acquired in the reinvestment.
The Fund will inform shareholders (which includes the Trust) of the source of
dividends and distributions paid by the Fund at the time they are paid, and
will promptly after the close of each calendar year advise shareholders of the
tax status for federal income tax purposes of such dividends and
distributions. Income received by the Fund may give rise to withholding and
other taxes imposed by foreign countries. If more than 50% of the value of the
Fund's assets at the close of a taxable year consists of securities of foreign
corporations, the Fund may make an election that will permit shareholders to
take a credit (or, if more advantageous, a deduction) for foreign income taxes
paid by the Fund, subject to limitations contained in the Internal Revenue
Code of 1986, as amended. Shareholders would then include in gross income both
dividends paid to them by the Fund and the foreign taxes paid by the Fund on
their foreign investments. The Fund cannot assure shareholders that they will
be eligible for the foreign tax credit. The Fund will advise shareholders
annually of their share of any creditable foreign taxes paid by the Fund.
The Fund will be required to report to the Internal Revenue Service
("IRS") any taxable dividend or other reportable payment (including share
redemption proceeds). The Fund will also be required to withhold 31% of any
such payments made to individuals and other non-exempt shareholders who have
not provided a correct taxpayer identification number and made certain
required certifications that appear in the account application provided with
the Fund's prospectus. A shareholder may also be subject to backup withholding
if the IRS or a securities dealer notifies the Fund that the taxpayer
identification number furnished by the shareholder is incorrect or that the
shareholder is subject to backup withholding for previous under-reporting of
interest or dividend income.
It is recommended that shareholders consult their own tax advisors with
respect to the foregoing and the applicability of state and local income taxes
to distributions and redemption proceeds received from the Fund. Shareholders
who are not United States persons for purposes of federal income taxation
should consult with their financial or tax advisors regarding the
applicability of United States withholding taxes to distributions received by
them from the Fund. More detailed information regarding taxation of
shareholders and taxation of the Fund can be found in the Fund's Statement of
Additional Information.
The foregoing discussion has been prepared by the management of the Company
and does not purport to be a complete description of all tax implications of
an investment in the Fund. Shareholders are advised to consult with their own
tax advisors concerning the application of foreign, federal, state and local
taxes to an investment in the Fund. The foregoing discussion of federal income
taxation relates only to the Fund. For a discussion of tax implications
relating to the Trust see "Federal Taxation."
OTHER INFORMATION
Organization. The Company is a Maryland corporation and is registered with the
SEC as an open-end management investment company. In the future, from time to
time, the Company's Board of Directors may, in its discretion, establish
additional funds and issue shares of additional series of the Company's
shares. Shares of the Fund are entitled to one vote per share (with
proportional voting for fractional shares) and are freely transferable subject
to applicable federal and state securities laws. Shareholders have no
preemptive or conversion rights.
The Fund normally will not hold meetings of shareholders except as required
under the 1940 Act and Maryland law. On any matter submitted to a vote of
shareholders, shares of the Fund will be voted by that Fund's shareholders
individually when the matter affects the specific interest of that Fund only,
such as approval of that Fund's investment management arrangements. The shares
of all the Funds will be voted in the aggregate on other matters, such as the
election of directors and ratification of the Board of Directors' selection of
the Fund's independent accountants. Fund Shares held in the Trust will be
voted by the Trustee. A Director may be removed upon a majority vote of the
shareholders qualified to vote in the election. Shareholders holding 10% of
the Company's outstanding shares may call a meeting of shareholders. The
Company's Bylaws require it to assist shareholders in calling such a meeting.
Pursuant to the Company's Articles of Incorporation, the Fund may issue up to
250 million shares. Each share of the Fund represents an interest in that Fund
only, has a par value of one thousandth of one cent per share, represents an
equal proportionate interest in the Fund with other shares of the Fund and is
entitled to such dividends and distributions out of the income earned and
gains realized on the assets belonging to the Fund as may be declared by the
Board of Directors.
Performance Information. The Fund may from time to time include information on
its investment results and/or comparisons of its investment results to various
managed or unmanaged indices or averages or results of other mutual funds or
groups of mutual funds in advertisements, sales literature or reports
furnished to present or prospective shareholders.
In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return represents the percentage rate
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of a one-year period and at the end of five- and ten-year
periods, reduced by the maximum applicable front-end sales charge imposed on
sales of Fund shares (Class A shares only). Performance information with
respect to a Fund will also reflect that any applicable contingent deferred
sales charge has been paid. If a one-, five- and/or ten-year period has not
yet elapsed, data will be provided as of the end of a shorter period
corresponding to the life of the Fund. The total return computation assumes
the reinvestment of all dividends and capital gain distributions at net asset
value.
Standardized Returns quoted in advertising will reflect all aspects of the
Fund's return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the Fund's net asset value per share over the
period. Average annual returns are calculated by determining the growth or
decline in value of a hypothetical investment in the Fund over a stated
period, and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant over the period. For example, a cumulative return of 100%
over ten years would produce an average annual return of 7.18%, which is the
steady annual rate that would equal 100% growth on a compounded basis in ten
years. While average annual returns are a convenient means of comparing
investment alternatives, investors should realize that the Fund's performance
will not be constant over time, but will change from year to year, and that
average annual returns represent averaged figures as opposed to the actual
year-to-year performance of the Fund.
In addition, the Fund may also include in advertisements, sales literature and
shareholder reports other than total return performance data
("Non-Standardized Return"). Non-Standardized Return reflects the percentage
rates of return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); and will assume reinvestment of all dividends
and capital gain distributions. Non-Standardized Return may be quoted for the
same or different periods as those for which Standardized Return is quoted; it
may consist of an aggregate or average annual percentage rate of return,
actual year-by-year rates or any combination thereof. It may or may not take
sales charges into account; a Fund's performance calculated without taking the
effect of sales charges into account will be better than such performance
including the effect of such charges.
The Fund's performance data reflects past performance and is not necessarily
indicative of future results. The Fund's investment results will vary from
time to time depending upon market conditions, the composition of its
portfolio and its operating expenses. These factors and possible differences
in calculation methods should be considered when comparing the Fund's
investment results with those published for other mutual funds, other
investment vehicles and unmanaged indices. The Fund's results also should be
considered relative to the risks associated with its investment objectives and
policies. See "Performance" in the Statement of Additional Information.
The Company's Annual Report for the year ended December 31, 1994 contains
additional performance information on the Fund. This Annual Report is
available from the Sponsor without charge upon request.
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 is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221
of the Internal Revenue Code of 1986 (the "Code"). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust.
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 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 the Trust asset when such income is received by the Trust.
2. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, redemption, or payment at maturity) or
upon the sale or redemption of Units by such Unitholder. The price a
Unitholder pays for his or her Units, including sales charges, is allocated
among his pro rata portion of each Security held by the Trust (in proportion
to the fair market values thereof on the date the Unitholder purchases his or
her Units) in order to determine his or her initial cost for his pro rata
portion of each Security held by the Trust. The Treasury Obligations are
treated as stripped bonds and may be treated as bonds issued at an original
issue discount as of the date a Unitholder purchases his or her Units. Because
the Treasury Obligations represent interests in "stripped" U.S.
Treasury bonds, a Unitholder's initial cost for his pro rata portion of each
Treasury Obligation held by the Trust shall be treated as its "purchase
price" by the Unitholder. Original issue discount is effectively treated
as interest for federal income tax purposes and the amount of original issue
discount in this case is generally the difference between the bond's purchase
price and its stated redemption price at maturity. A Unitholder will be
required to include in gross income for each taxable year the sum of his or
her daily portions of original issue discount attributable to the Treasury
Obligations held by the Trust as such original issue discount accrues and will
in general be subject to federal income tax with respect to the total amount
of such original issue discount that accrues for such year even though the
income is not distributed to the Unitholders during such year to the extent it
is not less than a "de minimis" amount as determined under a Treasury
Regulation issued on December 28, 1992 relating to stripped bonds. To the
extent the amount of such discount is less than the respective "de
minimis" amount, such discount shall be treated as zero. In general,
original issue discount accrues daily under a constant interest rate method
which takes into account the semi-annual compounding of accrued interest. In
the case of the Treasury Obligations, this method will generally result in an
increasing amount of income to the Unitholders each year. Unitholders should
consult their tax advisers regarding the federal income tax consequences and
accretion of original issue discount under the stripped bond rules. 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 a Fund Share 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 Fund Share which exceed such current
and accumulated earnings and profits will first reduce a Unitholder's tax
basis in such Fund Share, and to the extent that such dividends exceed a
Unitholder's tax basis in such Fund Share shall generally be treated as
capital gain. In general, any such capital gain will be short-term unless a
Unitholder has held his or her 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 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
or her Units for more than one year. A Unitholder's portion of loss, if any,
upon the sale or redemption of Units or the disposition of Securities held by
the Trust will generally be considered a capital loss except in the case of a
dealer or a financial institution and, in general, will be long-term if the
Unitholder has held his or her 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.
4. The Code provides that "miscellaneous itemized deductions" are
allowable only to the extent that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous itemized deductions subject to
this limitation under present law include a Unitholder's pro rata share of
expenses paid by the Trust, including fees of the Trustee, Supervisor and the
Evaluator.
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) in
the same manner as if such corporation directly owned the Fund Shares paying
such dividends. However, a corporation owning Units should be aware that
Sections 246 and 246A of the Code impose additional limitations on the
eligibility of dividends for the 70% dividends received deduction. These
limitations include a requirement that stock (and therefore Units) must
generally be held at least 46 days (as determined under Section 246(c) of the
Code). Proposed regulations have been issued which address special rules that
must be considered in determining whether the 46 day holding requirement is
met. Moreover, the allowable percentage of the deduction will be reduced from
70% if a corporate Unitholder owns certain stock (or Units) the financing of
which is directly attributable to indebtedness incurred by such corporation.
It should be noted that various legislative proposals that would affect the
dividends received deduction have been introduced. Unitholders should consult
with their tax advisers with respect to the limitations on and possible
modifications to the dividends received deductions.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by a Trust
or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. For taxpayers other than corporations, net
capital gains 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 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. Because some or all capital gains are taxed at a comparatively lower
rate under the Act, the Act includes a provision that would recharacterize
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.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of a Trust. As discussed in "Rights of Unitholders--Redemption
of Units", under certain circumstances a Unitholder tendering Units for
redemption may request an In Kind Distribution. A Unitholder may also under
certain circumstances request an In Kind Distribution upon the termination of
the Trust. See "Rights of Unitholders--Redemption of Units." Treasury
Obligations will not be distributed to a Unitholder as part of an In Kind
Distribution. The tax consequences relating to the sale of Treasury
Obligations are discussed above. 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 would be
deemed an exchange of such Unitholder's pro rata portion of each of the shares
of stock and other assets held by the Trust in exchange for an undivided
interest in whole shares of stock plus, possibly, cash.
There are generally three different potential tax consequences which may occur
under an In Kind Distribution with respect to each Security owned by the
Trust. A "Security" for this purpose is a particular class of stock
issued by a particular corporation (and does not include the Treasury
Obligations). If the Unitholder receives only whole shares of a Security in
exchange for his or her pro rata portion in each share of such Security held
by the Trust, there is no taxable gain or loss recognized upon such deemed
exchange pursuant to Section 1036 of the Code. If the Unitholder receives
whole shares of a particular Security plus cash in lieu of a fractional share
of such Security, and if the fair market value of the Unitholder's pro rata
portion of the shares of such Security exceeds his or her tax basis in his pro
rata portion of such Security, taxable gain would be recognized in an amount
not to exceed the amount of such cash received, pursuant to Section 1031(b) of
the Code. No taxable loss would be recognized upon such an exchange pursuant
to Section 1031(c) of the Code, whether or not cash is received in lieu of a
fractional share. Under either of these circumstances, special rules will be
applied under Section 1031(d) of the Code to determine the Unitholder's tax
basis in the shares of such particular Security which he receives as part of
the In Kind Distribution. Finally, if a Unitholder's pro rata interest in a
Security does not equal a whole share, he may receive entirely cash in
exchange for his pro rata portion of a particular Security. In such case,
taxable gain or loss is measured by comparing the amount of cash received by
the Unitholder with his or her tax basis in such Security. Unitholders who
request an In Kind Distribution are advised to consult their tax advisers in
this regard.
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 and
appropriate certification are not provided when requested, distributions by
the Trust to such Unitholder (including amounts received upon the redemption
of Units) will be subject to back-up withholding. Distributions by the Trust
will generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign corporations
or other non-United States persons (accrual of original issue discount on the
Treasury Obligations may not be subject to taxation or withholding provided
certain requirements are met). Such persons should consult their tax advisers.
Unitholders will be notified annually of the amounts of original issue
discount and income dividends includable in the Unitholder's gross income and
amounts of Trust expenses which may be claimed as itemized deductions.
Dividend income, long-term capital gains and accrual of original issue
discount may also be subject to state and local taxes. Investors should
consult their tax advisers for specific information on the tax consequences of
particular types of distributions.
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 Tanner Propp & Farber, special counsel to the Trust for New
York tax matters, the Trust is not an association taxable as a corporation and
the income of the Trust will be treated as the income of the Unitholders under
the existing income tax laws of the State and City of New York.
TRUST OPERATING EXPENSES
Initial Costs. All costs and expenses incurred in creating and establishing
the Trust, 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.
Compensation of Sponsor and Evaluator. Neither the Sponsor nor the Evaluator
will receive any fees in connection with its activities relating to the Trust.
The Sponsor and the Underwriters will receive sales commissions and may
realize other profits (or losses) in connection with the sale of Units and the
deposit of the Securities as described under "Public Offering--Sponsor and
Underwriter Compensation".
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trust set forth under "Summary of Essential Financial
Information" (which amount is based on the number of Units outstanding on
January 1 of each year for which such compensation relates except during the
initial offering period in which event the calculation is based on the number
of Units outstanding at the end of the month of such calculation). The
Trustee's fees are payable in monthly installments on or before the fifteenth
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. The following additional charges are or may be
incurred by the Trust: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of the
Trust, (b) fees of the Trustee for extraordinary services, (c) expenses of the
Trustee (including legal and auditing expenses) and of counsel designated by
the Sponsor, (d) various governmental charges, (e) expenses and costs of any
action taken by the Trustee to protect the Trust and the rights and interests
of Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of the Trust without negligence, bad
faith or wilful misconduct on its part and (g) expenditures incurred in
contacting Unitholders upon termination of the Trust.
The fees and expenses set forth herein are payable out of the Trust. When such
fees and expenses are paid by or owing to the Trustee, they are secured by a
lien on the Trust's portfolio. Since the Fund Shares consist primarily of
common stock and the income stream produced by dividend payments is
unpredictable, the Sponsor cannot provide any assurance that Fund
distributions will be sufficient to meet any or all expenses of the Trust.
Rule 12b-1 fees imposed on Fund Shares held in the Trust are rebated to the
Trust, deposited in the Income Account and are used to pay expenses of the
Trust. If the balances in the Income and Capital Accounts are insufficient to
provide for amounts payable by the Trust, the Trustee has the power to sell
Fund Shares (but not Treasury Obligations) to pay such amounts. These sales
may result in capital gains or losses to Unitholders. See "Federal
Taxation."
PUBLIC OFFERING
General. Units are offered at the Public Offering Price (which is based on the
net asset value of the Fund Shares and the offering side evaluation of the
Treasury Obligations during the initial offering period and in the secondary
market on the net asset value of the Fund shares and bid side evaluation of
the Treasury Obligations and in each case includes a sales charge of 4.9% of
the Public Offering Price--which charge is equivalent to 5.152% of the
aggregate underlying value of the Securities). Such underlying value shall
include the proportionate share of any undistributed cash held in the Capital
and Income Accounts. The sales charge applicable to quantity purchases is,
during the initial offering period, reduced on a graduated basis to any person
acquiring 10,000 or more Units as follows:
<TABLE>
<CAPTION>
Aggregate Number Dollar Amount of Sales
of Units Purchased Charge Reduction Per Unit
<S> <C>
10,000-24,999 $.05
25,000-49,999 $.10
50,000-99,999 $.15
100,000 or more $.20
</TABLE>
The sales charge reduction will primarily be the responsibility of the selling
Underwriter, broker, dealer or agent. This reduced sales charge structure will
apply on all purchases by the same person from any one Underwriter or dealer
of units of Van Kampen American Capital Distributors, Inc.-sponsored unit
investment trusts which are being offered in the initial offering period (a)
on any one day (the "Initial Purchase Date") or (b) on any day
subsequent to the Initial Purchase Date if (1) the units purchased are of a
unit investment trust purchased on the Initial Purchase Date, and (2) the
person purchasing the units purchased a sufficient amount of units on the
Initial Purchase Date to qualify for a reduced sales charge on such date. To
determine the applicable sales charge for units purchased in accordance with
(b) above, it is necessary to accumulate all purchases made on the Initial
Purchase Date and all purchases made in accordance with (b) above. Units
purchased in the name of the spouse of a purchaser on in the name of a child
of such purchaser under 21 years of age will be deemed for the purposes of
calculating the applicable sales charge to be additional purchases by the
purchaser. The reduced sales charges will also be applicable to a trustee or
other fiduciary purchasing securities for one or more trust estate or
fiduciary accounts.
Employees of Van Kampen American Capital Distributors, Inc. and its
subsidiaries may purchase Units of the Trust at the current Public Offering
Price less the underwriting commission during the initial offering period, and
less the dealer's concession for secondary market transactions. Registered
representatives of selling Underwriters may purchase Units of the Trust at the
current Public Offering Price less the underwriting commission during the
initial offering period, and less the dealer's concession for secondary market
transactions. Registered representatives of selling brokers, dealers, or
agents may purchase Units of the Trust at the current Public Offering Price
less the dealer's concession during the initial offering period and 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
accordance with fluctuations in the prices of the underlying Securities in the
Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to 5.152% of such value and dividing the sum so obtained by the number
of Units outstanding. Such underlying value shall include the proportionate
share of any cash held in the Capital Account. This computation produced a
gross underwriting profit equal to 4.9% of the Public Offering Price. The
Evaluator will appraise or cause to be appraised daily the value of the
underlying Securities as of the 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, Sponsor or any 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. Effective on each
XXX commencing XXX, 1996, such sales charge will be reduced by .3 of 1% to a
minimum sales charge of 1.5%.
The value of the Fund Shares is determined on each business day based on the
last available net asset value calculation on or immediately prior to the
Evaluation Time on the day the valuation is made. During the initial offering
period, the Treasury Obligations will be valued at their net offering prices.
If offering prices are not available for the Treasury Obligations, then such
evaluations will be based on (1) offering prices for comparable securities,
(2) by determining the value of the Treasury Obligations on the offer side of
the market by appraisal or (3) by any combination of the above. After the
completion of the initial offering period, the Treasury Obligations will be
valued on the bid prices thereof. The offering price of the Treasury
Obligations may be expected to be greater than the bid price of the Treasury
Obligations by less than 2%.
In offering the Units to the public, neither the Sponsor, the Underwriters,
nor any broker-dealers are recommending any of the individual Securities in
the Trust but rather the entire pool of Securities, taken as a whole, which
are represented by the Units.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by the Sponsor, Underwriters, broker-dealers and
others (see "Underwriting") 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 has qualified the Units for sale in a number of states.
Broker-dealers or others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period
of 3.20% per Unit. Any quantity discount provided to investors will be borne
by the selling dealer or agent as indicated under "General" above. For
secondary market transactions, such concession or agency commission will
amount to 70% of the sales charge applicable to the transaction.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge (equal to the
agency commission referred to above) is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 500 Units (100 Units for a
tax-sheltered retirement plan). The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units and to change the amount
of the concession or agency commission to dealers and others from time to
time. See "Underwriting."
Sponsor and Underwriter Compensation. The Underwriters, including the Sponsor,
will receive a gross sales commission equal to 4.9% of the Public Offering
Price of the Units (equivalent to 5.152% of the net amount invested), less any
reduced sales charge for quantity purchases (as described under
"General" above). The Sponsor will receive from the Underwriters the excess
of such gross sales commission over the Underwriters' discount. Underwriters
will be allowed a discount in connection with the distribution of Units of
3.70% per Unit on the Units underwritten during the initial offering period.
Any quantity discount provided to investors will be borne by the selling
Underwriter, dealer or agent as indicated under "General" above.
In addition, the Sponsor will realize a profit or will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Treasury Obligations by the Sponsor and the cost of such Treasury Obligations
to the Trust on the Initial Date of Deposit as well as on subsequent deposits.
See "Underwriting"and "Portfolio."The Sponsor has
participated as distributor of Govett Smaller Companies Fund. The Sponsor and
the Underwriters may further realize additional profit or loss during the
initial offering period as a result of the possible fluctuations in the market
value of the Securities in the Trust after a date of deposit, since all
proceeds received from purchasers of Units (excluding dealer concessions and
agency commissions allowed, if any) will be retained by the Underwriters
(including the Sponsor). Underwriters, broker-dealers or others (each "a
distributor") who distribute 1,000,000 or more Units during the initial
offering period will receive additional compensation from the Sponsor, after
the close of the initial offering period, of $0.005 for each Unit it
distributes; or each distributor who distributes 2,000,000 or more Units will
receive additional compensation of $0.01 for each Unit it distributes; or each
distributor who distributes 3,000,000 or more Units will receive additional
compensation of $0.015 for each Unit it distributes; or each distributor of
4,000,000 or more Units will receive additional compensation of $0.02 for each
Unit it distributes. However, if the Trust exceeds 10,000,000 Units at the
close of the initial offering period, in lieu of the additional compensation
referred to in the last clause of the preceding sentence, each distributor of
4,000,000 or more Units will receive additional compensation from the Sponsor
of $0.025 for each Unit it distributes; or each distributor who distributes
5,000,000 or more Units will receive additional compensation of $0.035 for
each Unit it distributes.
A person will become owner of the Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior
to the date of settlement for the purchase of Units may be used in the
Sponsor's business and may be deemed to be a benefit to the Sponsor, subject
to the limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor intends to, and
certain of the other Underwriters may, maintain a secondary market for Units
of the Trust. In so maintaining a market, the Sponsor and any such
Underwriters will also realize profits or sustain losses in the amount of any
difference between the price at which Units are purchased and the price at
which Units are resold (which price includes the applicable sales charge). In
addition, the Sponsor and any such Underwriters will also realize profits or
sustain losses resulting from a redemption of such repurchased Units at a
price above or below the purchase price for such Units, respectively.
Public Market. Although they are not obligated to do so, the Sponsor intends
to, and certain of the other Underwriters may, maintain a market for the Units
offered hereby and offer continuously to purchase Units at prices, subject to
change at any time, based upon the net asset value of the Fund Shares in the
Trust plus the aggregate bid price (offer price during the initial offering
period) of the Treasury Obligations. If the supply of Units exceeds demand or
if some other business reason warrants it, the Sponsor and/or the Underwriters
may either discontinue all purchases of Units or discontinue purchases of
Units at such prices. In the event that a market is not maintained for the
Units and the Unitholder cannot find another purchaser, a Unitholder desiring
to dispose of his or her Units may be able to dispose of such Units only by
tendering them to the Trustee for redemption at the Redemption Price. See "
Rights of Unitholders--Redemption of Units."A Unitholder who wishes to
dispose of his or her Units should inquire of his or her broker as to current
market prices in order to determine whether there is in existence any price in
excess of the Redemption Price and, if so, the amount thereof.
Tax-Sheltered Retirement Plans. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for 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 Trust may be limited by the plans' provisions and
does not itself establish such plans. The minimum purchase in connection with
a tax- sheltered retirement plan is 100 Units.
RIGHTS OF UNITHOLDERS
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust will be evidenced by certificates unless a
Unitholder or the Unitholder's registered broker-dealer makes a written
request to the Trustee that ownership be in book entry. 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 or her name appears on the
face of the certificate with the signature guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other
signature guarantee program in addition to, or in substitution for, STAMP, as
may be accepted by the Trustee. In certain instances the Trustee may require
additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or
certificates of corporate authority. Certificates will be issued in
denominations of one Unit or any whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Income and Capital. Any distributions received by the Trust
with respect to the Fund Shares therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, return of principal, etc.) are credited to the Capital Account of
the Trust.
The Trustee will distribute any net income other than accreted interest
received with respect to any of the Securities in the Trust on or about the
Distribution Dates to Unitholders of record on the preceding Record Dates. See
"Summary of Essential Financial Information." Proceeds received on the
sale of any Securities in the Trust, to the extent not used to meet
redemptions of Units or pay expenses, will be distributed annually on the
Distribution Date to Unitholders of record on the preceding Record Date.
Income with respect to the original issue discount on the Treasury Obligations
will not be distributed currently, although Unitholders in the Trust will be
subject to federal income tax as if a distribution had occurred. See "
Federal Taxation."Proceeds received from the disposition of any of the
Securities after a record date and prior to the following distribution date
will be held in the Capital Account and not distributed until the next
distribution date applicable to such Capital Account. The Trustee is not
required to pay interest on funds held in the Capital or Income Accounts (but
may itself earn interest thereon and therefore benefits from the use of such
funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account after deducting
estimated expenses. Because distributions are not received by the Trust at a
constant rate throughout the year, such distributions to Unitholders, if any,
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.
On a quarterly basis, 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 daily accrued expenses of the Trust (as determined on the
basis set forth under "Trust Operating Expenses"). The Trustee also
may withdraw from said accounts such amounts, if any, as it deems necessary to
establish a reserve for any governmental charges payable out of the Trust.
Amounts so withdrawn shall not be considered a part of the Trust's assets
until such time as the Trustee shall return all or any part of such amounts to
the appropriate accounts. In addition, the Trustee may withdraw from the
Income and Capital Accounts such amounts as may be necessary to cover
redemptions of Units.
Reinvestment Option. Unitholders of the Trust may elect to have each
distribution of income, capital gains and/or capital on their Units
automatically reinvested in shares of any of the mutual funds listed under
"Trust Administration--Sponsor" which are registered in the
Unitholder's state of residence (other than B shares). Such mutual funds are
hereinafter collectively referred to as the "Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trust. The prospectus relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen American
Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois
60181. Texas residents who desire to reinvest may request that a broker-dealer
registered in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
income, capital gains and/or capital on the participant's Units will, on the
applicable distribution date, automatically be applied, as directed by such
person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange (which is
currently 4:00 P.M. New York time) on such date plus a sales charge of $1.00
per $100 of reinvestment, except if the participant selects the Van Kampen
Merritt Money Market Fund or the Van Kampen Merritt Tax Free Money Fund in
which case no sales charge applies. A minimum of one half of such sales charge
would be paid to Van Kampen American Capital Distributors, Inc.
Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
Each Reinvestment Fund, its sponsor and its 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. For as long as the Sponsor deems it to be
in the best interest of the Unitholders, the accounts of the Trust shall be
audited, not less frequently than annually, by independent certified public
accountants, and the report of such accountants shall be furnished by the
Trustee to Unitholders upon request. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder a statement (i)
as to the Income Account: income received (including amortization of original
issue discount with respect to the Treasury Obligations), 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; (I) as to the Capital Account: the
dates of disposition of any Securities (other than pursuant to In Kind
Distributions) and the net proceeds received therefrom, deductions for payment
of applicable taxes, fees and expenses of the Trust held for distribution to
Unitholders of record as of a date prior to the determination and the balance
remaining after such distributions and deductions expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each
Unit outstanding on the last business day of such calendar year; (iii) a list
of the Securities held and the number of Units outstanding on the last
business day of such calendar year; (iv) the Redemption Price per Unit based
upon the last computation thereof made during such calendar year; and (v)
amounts actually distributed during such calendar year from the Income and
Capital Accounts, separately stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his or her
Units by tender to the Trustee at its corporate trust office at 101 Barclay
Street, 20th Floor, New York, New York 10286 and, in the case of Units
evidenced by a certificate, by tendering such certificate to the Trustee, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed (or by providing satisfactory indemnity, as in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. No redemption fee will be charged. On the
seventh calendar day following such tender, or if the seventh calendar day is
not a business day, on the first business day prior thereto, the Unitholder
will be entitled to receive in cash (unless the redeeming Unitholder elects an
In Kind Distribution as indicated below) an amount for each Unit equal to the
Redemption Price per Unit next computed after receipt by the Trustee of such
tender of Units. The "date of tender"is deemed to be the date on
which Units are received by the Trustee, except that as regards Units received
after the 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 Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by
the Trustee from those designated on a current list provided by the Supervisor
for this purpose. Units so redeemed shall be cancelled.
Unitholders tendering Units with a redemption value at least equal to $500 for
redemption may request from the Trustee in lieu of a cash redemption a
distribution in kind ("In Kind Distributions") of an amount and value
of Securities per Unit equal to the Redemption Price per Unit as determined as
of the evaluation next following the tender. An In Kind Distribution on
redemption of Units will be made by the Trustee through the distribution of
the Fund Shares in book-entry form to the account of the Unitholder's bank or
broker-dealer at Depository Trust Company. The tendering Unitholder will
receive his pro rata number of Fund Shares comprising the portfolio.
Unitholders may also elect to have the pro rata portion of the Treasury
Obligations to which such tendering Unitholder is entitled reinvested without
a sales charge into Fund Shares. Unitholders not electing to have their pro
rata portion of the Treasury Obligations reinvested into Fund Shares will
receive cash from the Capital Account equal to the pro rata portion of the
Treasury Obligations to which the tendering Unitholder is entitled. In
implementing these redemption procedures, the Trustee shall make any
adjustments necessary to reflect differences between the Redemption Price of
the Securities distributed in kind as of the date of tender. If funds in the
Capital Account are insufficient to cover the required cash distribution to
the tendering Unitholder, the Trustee may sell Securities according to the
criteria discussed above.
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result
in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the portfolio at the time of
redemption. Special federal income tax consequences will result if a
Unitholder requests an In Kind Distribution. See "Federal Taxation."
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the net asset value of the Fund
Shares in the Trust plus the bid price of the Treasury Obligations, plus or
minus cash, if any, in the Income and Capital Accounts (while the Public
Offering Price per Unit during the initial offering period will be determined
on the basis of the offering price of such Treasury Obligations and the net
asset value of the Fund Shares in the Trust, plus or minus cash, if any, in
the Income and Capital Accounts). On the Initial Date of Deposit, the Public
Offering Price per Unit (which includes the sales charge) exceeded the values
at which Units could have been redeemed by the amounts shown under "
Summary of Essential Financial Information."While the Trustee has the
power to determine the Redemption Price per Unit when Units are tendered for
redemption, such authority has been delegated to the Evaluator which
determines the price per Unit on a daily basis. The Redemption Price per Unit
is the pro rata share of each Unit in the Trust determined on the basis of (i)
the cash on hand in the Trust, (ii) the value of the Securities in the Trust
and (iii) dividends or other distributions receivable on the Fund Shares
trading ex-dividend as of the date of computation, less (a) amounts
representing taxes or other governmental charges payable out of the Trust and
(b) the accrued expenses of the Trust. See "Public Offering--Offering
Price" for a description of the method of evaluating the Fund Shares and
Treasury Obligations.
As stated above, the Trustee may sell Securities to cover redemptions. When
Securities are sold, the size of the Trust will be, and the diversity of the
Trust may be, reduced. Such sales may be required at a time when Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any tender
of Units for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The portfolio of the Trust is not "managed"
by the Sponsor, Supervisor or the Trustee; their activities described herein
are governed solely by the provisions of the Trust Agreement. Traditional
methods of investment management for a managed fund (such as the Fund)
typically involve frequent changes in a portfolio of securities on the basis
of economic, financial and market analysis. While the Trust will not be
managed, the Trust Agreement provides that the Sponsor may (but need not)
direct the Trustee to dispose of Fund Shares in the event that the Fund
defaults in the payment of a distribution that has been declared, that any
action or proceeding has been instituted restraining the payment of
distributions or there exists any legal question or impediment affecting such
Fund, that the Fund has breached a covenant which would affect the payments of
distributions, or otherwise impair the sound investment character of the Fund,
or that the price of the Fund Shares have declined to such an extent or other
such credit factors exist so that in the opinion of the Sponsor, the retention
of the Fund Shares would be detrimental to the Trust. Treasury Obligations may
be sold by the Trustee only pursuant to the liquidation of the Trust or to
meet redemption requests. Proceeds from the sale of Securities (or any
securities or other property received by the Trust in exchange for Fund
Shares) are credited to the Capital Account for distribution to Unitholders or
to meet redemptions.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Securities designated by the Supervisor, or if not
so directed, in its own discretion, for the purpose of redeeming Units of the
Trust tendered for redemption and the payment of expenses; provided, however,
that in the case of Securities sold for such purposes, Treasury Obligations
may only be sold if the Smaller Companies Fund and Treasury Trust is assured
of retaining a sufficient principal amount of Treasury Obligations to provide
funds upon maturity of the Trust at least equal to $11.00 per Unit. Treasury
Obligations may not be sold by the Trustee to meet expenses of the Smaller
Companies Fund and Treasury Trust.
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 (other than as provided in the Trust
Agreement). The Trust Agreement may also be amended in any respect by the
Trustee and Sponsor, or any of the provisions thereof may be waived, with the
consent of the holders of 51% of the Units then outstanding, provided that no
such amendment or waiver will reduce the interest in the Trust of any
Unitholder without the consent of such Unitholder or reduce the percentage of
Units required to consent to any such amendment or waiver without the consent
of all Unitholders. The Trustee shall advise the Unitholders of any amendment
promptly after execution thereof.
A Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units of the Smaller Companies Fund and Treasury Trust then
outstanding. The Trust will be liquidated by the Trustee in the event that a
sufficient number of Units not yet sold are tendered for redemption by the
Underwriters, including the Sponsor, so that the net worth of the Trust would
be reduced to less than 40% of the value of the Securities at the time they
were deposited in the Trust. If the Trust is liquidated because of the
redemption of unsold Units by the Underwriters, the Sponsor will refund to
each purchaser of Units the entire sales charge paid by such purchaser. The
Trust Agreement will terminate upon the sale or other disposition of the last
Security held thereunder, but in no event will it continue beyond the
Mandatory Termination Date stated under "Summary of Essential Financial
Information."
Commencing on the Mandatory Termination Date, Fund Shares will begin to be
sold in connection with the termination of the Trust. The Sponsor will
determine the manner, timing and execution of the sales of the Fund Shares.
Written notice of any termination specifying the time or times at which
Unitholders may surrender their certificates for cancellation, if any are then
issued and outstanding, shall be given by the Trustee to each Unitholder so
holding a certificate at his or her address appearing on the registration
books of the Trust maintained by the Trustee. At least 30 days before the
Mandatory Termination Date the Trustee will provide written notice thereof to
all Unitholders and will include with such notice a form to enable Unitholders
owning Units with a termination value at least equal to $500 to request an In
Kind Distribution rather than payment in cash upon the termination of the
related 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 Fund Shares to the account of the broker-dealer or bank designated by the
Unitholder at Depository Trust Company. Unitholders may also elect to have the
pro rata portion of the proceeds received upon the maturity of the Treasury
Obligations reinvested without a sales charge into Fund Shares. Unitholders
not electing to reinvest the proceeds received from the Treasury Obligations
will be paid their pro rata portion of the Treasury Obligations in cash.
Unitholders owning Units with a termination value of less than $500 and those
not requesting an In Kind Distribution will receive a cash distribution from
the sale of the remaining Securities within a reasonable time following the
Mandatory Termination Date. Regardless of the distribution involved, the
Trustee will deduct from the funds of the Trust any accrued costs, expenses,
advances or indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee, costs of liquidation and any amounts required as
a reserve to provide for payment of any applicable taxes or other governmental
charges. Any sale of Securities in the Trust upon termination may result in a
lower amount than might otherwise be realized if such sale were not required
at such time. The Trustee will then distribute to each Unitholder his pro rata
share of the balance of the Income and Capital Accounts.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement, in substantially the same form as the annual
distribution statement, of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or negligence (gross negligence in the case of
the Sponsor, Evaluator and Supervisor) in the performance of their duties or
by reason of their reckless disregard of their obligations and duties
hereunder. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities. In the event of
the failure of the Sponsor to act under the Trust Agreement, the Trustee may
act thereunder and shall not be liable for any action taken by it in good
faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the
Trust which the Trustee may be required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor, 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.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. Van Kampen American Capital
Distributors, Inc. is primarily owned by Clayton, Dubilier & Rice, Inc., a New
York-based private investment firm. Van Kampen American Capital Distributors,
Inc. management owns a significant minority equity position. Effective
December 20, 1994, the parent of Van Kampen Merritt Inc. acquired American
Capital Management & Research, Inc. As a result, Van Kampen Merritt Inc.
changed its name to Van Kampen American Capital Distributors, Inc. Van Kampen
American Capital Distributors, Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds. The Sponsor is a
member of the National Association of Securities Dealers, Inc. and has offices
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, (708) 684-6000 and
2800 Post Oak Boulevard, Houston, Texas, 77056, (713) 993-0500. It maintains a
branch office in Philadelphia and has regional representatives in Atlanta,
Dallas, Los Angeles, New York, San Francisco, Seattle and Tampa. As of
December 31, 1994 the total stockholders' equity of Van Kampen Merritt Inc.
was $117,357,000 (audited). (This paragraph relates only to the Sponsor and
not to the Insured Municipals Income Trust and Investors' Quality Tax-Exempt
Trust or to any Multi-Series thereof or to any other Underwriter. The
information is included herein only for the purpose of informing investors as
to the financial responsibility of the Sponsor and its ability to carry out
its contractual obligations. More detailed financial information will be made
available by the Sponsor upon request.)
As of December 31, 1994, and without giving effect to the merger, the Sponsor
and its affiliates managed or supervised approximately $33.7 billion of
investment products, of which over $22.8 billion is invested in municipal
securities. The Sponsor and its affiliates managed $21.8 billion of assets,
consisting of $7.3 billion for 20 open end mutual funds, $8.3 billion for 34
closed-end funds and $5.2 billion for 75 institutional accounts. The Sponsor
has also deposited approximately $26 billion of unit investment trusts. 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 one million retail investor accounts,
opened through retail distribution firms. Van Kampen American Capital
Distributors, Inc. is the sponsor of the various series of the trusts listed
below and the distributor of the mutual funds and closed-end funds listed
below. Unitholders may only invest in the trusts, mutual funds and closed-end
funds which are registered for sale in the state of residence of such
Unitholder. In order for a Unitholder to invest in the trusts, mutual funds
and closed-end funds listed below, such Unitholder must obtain a prospectus
relating to the trust or fund involved. A prospectus is the only means by
which an offer can be delivered to investors.
<TABLE>
<CAPTION>
Name of Trust Trust Investment Objective
<S> <C>
Insured Municipals Income Trust..................................... Tax-exempt income by investing in insured municipal securities
Double tax-exemption for California residents by investing in
California Insured Municipals Income Trust.......................... insured California municipal securities
Double and in certain cases triple tax-exemption for New York
residents by investing in insured New York municipal
New York Insured Municipals Income Trust............................ securities
Double and in certain cases triple tax-exemption for
Pennsylvania residents by investing in insured Pennsylvania
Pennsylvania Insured Municipals Income Trust........................ municipal securities
Insured Municipals Income Trust, Insured Multi-Series
(Premium Bond Series, National, Limited Maturity, Intermediate,
Short Intermediate, Discount, Alabama, Arizona, Arkansas,
California, California Intermediate, California Intermediate
Laddered Maturity, California Premium, Colorado, Connecticut,
Florida, Florida Intermediate, Florida Intermediate Laddered
Maturity, Georgia, Louisiana, Massachusetts, Massachusetts
Premium, Michigan, Michigan Intermediate, Michigan
Intermediate Laddered Maturity, Michigan Premium, Minnesota,
Missouri, Missouri Intermediate Laddered Maturity, Missouri
Premium, New Jersey, New Jersey Intermediate Laddered
Maturity, New Mexico, New York, New York Intermediate, New Tax-exempt income by investing in insured municipal
York Intermediate Laddered Maturity, New York Limited securities; all issuers of bonds in a state trust are located
Maturity, Ohio, Ohio Intermediate, Ohio Intermediate Laddered in such state or in territories or possessions of the United
Maturity, Ohio Premium, Oklahoma, Pennsylvania, Pennsylvania States-- providing exemptions from all state income tax for
Intermediate, Pennsylvania Intermediate Laddered Maturity, residents of such state (except for the Oklahoma IM-IT Trust
Pennsylvania Premium, Tennessee, Texas, Texas Intermediate where a portion of the income of the Trust may be subject to
Laddered Maturity, Washington, West Virginia)...................... the Oklahoma state income tax)
Insured Tax Free Bond Trust......................................... Tax-exempt income by investing in insured municipal securities
Tax-exempt income by investing in insured municipal
securities; all issuers of bonds in a state trust are located
Insured Tax Free Bond Trust, Insured Multi-Series in such state--providing exemptions from state income tax for
(National Limited Maturity, New York).............................. residents of such state
Investors' Quality Tax-Exempt Trust................................. Tax-exempt income by investing in municipal securities
Investors' Quality Tax-Exempt Trust, Multi-Series
(National, National AMT, Intermediate, Alabama, Arizona,
Arkansas, California, Colorado, Connecticut, Delaware, Tax-exempt income by investing in municipal securities; all
Florida, Georgia, Hawaii, Kansas, Kentucky, Maine, Maryland, issuers of bonds in a state trust are located in such state
Massachusetts, Michigan, Minnesota, Missouri, Nebraska, or in territories or possessions of the United
New Jersey, New York, North Carolina, Ohio, Oregon, States--providing exemptions from state income tax for
Pennsylvania, South Carolina, Virginia)............................ residents of such state
Tax-exempt income for investors not subject to the
alternative minimum tax by investing in municipal securities,
some or all of which are subject to the Federal alternative
Investors' Quality Municipals Trust, AMT Series......................minimum tax
Investors' Corporate Income Trust....................................Taxable income by investing in corporate bonds
Taxable income by investing in government-backed GNMA
Investors' Governmental Securities--Income Trust.................... securities
High current income through an investment in a diversified
portfolio of foreign currency denominated corporate debt
Van Kampen Merritt International Bond Income Trust...................obligations
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio of
insured, long-term or intermediate-term corporate debt
Van Kampen Merritt Insured Income Trust..............................securities
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio of
insured, long-term or intermediate-term corporate debt
Van Kampen American Capital Insured Income Trust.....................securities
High dividend income and capital appreciation by investing in
Van Kampen Merritt Utility Income Trust..............................common stock of electric utilities
Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of the
Van Kampen Merritt Select Equity Trust...............................Dow Jones Industrial Average*
Protect Unitholders' capital and provide the potential for
capital appreciation and income by investing a portion of its
portfolio in "zero coupon"U.S. Treasury obligations
and the remainder of the trust's portfolio in the identical
Van Kampen Merritt Select Equity and Treasury Trust..................equity securities which comprise the Select Equity Trust
Provide the potential for capital appreciation and income by
investing in a portfolio of actively traded, New York Stock
Exchange listed equity securities which are components of the
Van Kampen Merritt Blue Chip Opportunity Trust.......................Dow Jones Industrial Average*
Protect Unitholders' capital and provide the potential for
capital appreciation and income by investing a portion of its
portfolio in "zero coupon"U.S. Treasury obligations
and the remainder of the trust's portfolio in actively
traded, New York Stock Exchange listed equity securities
Van Kampen Merritt Blue Chip Opportunity and which at the time of the creation of the trust were
Treasury Trust......................................................components of the Dow Jones Industrial Average*
High current income consistent with preservation of capital
through a diversified investment in a fixed portfolio
primarily consisting of Brady Bonds of emerging market
countries that have restructured sovereign debt pursuant to
Van Kampen Merritt Emerging Markets Income Trust.....................the framework of the Brady Plan
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities which provide
Van Kampen Merritt Global Telecommunications Trust...................equipment for or services to the telecommunications industry
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified
Van Kampen Merritt Global Energy Trust...............................within the energy industry
Provide an above average total return through a combination
of potential capital appreciation and dividend income,
consistent with preservation of invested capital, by
investing in a portfolio of common stocks of the ten
Strategic Ten Trust companies in a recognized stock exchange index having the
(United States, United Kingdom, and Hong Kong Portfolios)...........highest dividend yields
Provide the potential for capital appreciation and income
consistent with the preservation of invested capital, by
investing in a portfolio of equity securities diversified
Van Kampen Merritt Brand Name Equity Trust...........................within the non-durable consumer products industry
</TABLE>
*The Dow Jones Industrial Average is the property of Dow Jones & Company, Inc.
Dow Jones & Company, Inc. has not granted to the Trust or the Sponsor a
license to use the Dow Jones Industrial Average.
<TABLE>
<CAPTION>
Name of Mutual Fund Fund Investment Objective
<S> <C>
Van Kampen Merritt U.S. Government Fund....................High current income by investing in U.S. Government securities
High current income exempt from Federal income taxes by investing in
Van Kampen Merritt Insured Tax Free Income Fund............insured municipal securities
High level of current income exempt from Federal income tax, consistent
Van Kampen Merritt Municipal Income Fund...................with preservation of capital
High current income exempt from Federal income taxes by investing in
Van Kampen Merritt Tax Free High Income Fund...............medium and lower grade municipal securities
High current income exempt from Federal and California income taxes by
Van Kampen Merritt California Insured Tax Free Fund........investing in insured California municipal securities
Provide a high level of current income by investing in medium and lower
grade domestic and foreign government and corporate debt securities.
Van Kampen Merritt High Yield Fund.........................The Fund will seek capital appreciation as a secondary objective
Long-term growth of both capital and dividend income by investing in
Van Kampen Merritt Growth and Income Fund..................dividend paying common stocks
High current income exempt from Federal and Pennsylvania state and
local income taxes by investing in medium and lower grade Pennsylvania
Van Kampen Merritt Pennsylvania Tax Free Income Fund.......municipal securities
High current income by investing in a broad range of money market
Van Kampen Merritt Money Market Fund.......................instruments that will mature within twelve months
High current income exempt from Federal income taxes by investing in a
broad range of municipal securities that will mature within twelve
Van Kampen Merritt Tax Free Money Fund.....................months
High current income by investing in a global portfolio of high quality
debt securities denominated in various currencies having remaining
Van Kampen Merritt Short-Term Global Income Fund...........maturities of not more than three years
High level of current income with a relatively stable net asset value
Van Kampen Merritt Adjustable Rate U.S. Government Fund....investing in U.S. Government securities
High level of current income exempt from Federal income tax, consistent
Van Kampen Merritt Limited Term Municipal Income Fund......with preservation of capital
Provide capital appreciation and current income by investing in a
diversified portfolio of common stocks and income securities issued by
Van Kampen Merritt Utility Fund............................companies engaged in the utilities industry
Provide shareholders with high current income. The Fund will seek
Van Kampen Merritt Strategic Income Fund...................capital appreciation as a secondary objective
High level of current income exempt from Federal income tax and Florida
intangible personal property taxes consistent with preservation of
Van Kampen Merritt Florida Insured Tax Free Income Fund....capital
High level of current income exempt from Federal income tax and New
Van Kampen Merritt New Jersey Tax Free Income Fund.........Jersey gross income tax consistent with preservation of capital
High level of current income exempt from Federal as well as New York
State and New York City income taxes, consistent with preservation of
Van Kampen Merritt New York Tax Free Income Fund...........capital
To provide shareholders current income while also seeking to provide
Van Kampen Merritt Balanced Fund...........................capital growth
</TABLE>
<TABLE>
<CAPTION>
Name of Closed-end Fund Fund Investment Objective
<S> <C>
High current income exempt from Federal income taxes with safety of
principal by investing in a diversified portfolio of investment grade
Van Kampen Merritt Municipal Income Trust...................municipal securities
High current income exempt from Federal and California income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt California Municipal Trust...............investment grade California municipal securities
High current income while seeking to preserve shareholders' capital by
investing in a diversified portfolio of high yield fixed income
Van Kampen Merritt Intermediate Term High Income Trust......securities
High current income while seeking to preserve shareholders' capital by
investing in a diversified portfolio of high yield fixed income
Van Kampen Merritt Limited Term High Income Trust...........securities
High current income, consistent with preservation of capital by
Van Kampen Merritt Prime Rate Income Trust..................investing in interests in floating or variable rate senior loans
High current income exempt from Federal income tax, consistent with
Van Kampen Merritt Investment Grade Municipal Trust.........preservation of capital
High level of current income exempt from Federal income tax,
Van Kampen Merritt Municipal Trust..........................consistent with preservation of capital
High current income exempt from Federal and California income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt California Quality Municipal Trust.......investment grade California municipal securities
High current income exempt from Federal income taxes and Florida
intangible personal property taxes with safety of principal by
investing in a diversified portfolio of investment grade Florida
Van Kampen Merritt Florida Quality Municipal Trust..........municipal securities
High current income exempt from Federal as well as New York State and
New York City income taxes with safety of principal by investing in a
Van Kampen Merritt New York Quality Municipal Trust.........diversified portfolio of investment grade New York municipal securities
High current income exempt from Federal and Ohio income taxes with
safety of principal by investing in a diversified portfolio of
Van Kampen Merritt Ohio Quality Municipal Trust.............investment grade Ohio municipal securities
High current income exempt from Federal and Pennsylvania income taxes
with safety of principal by investing in a diversified portfolio of
Van Kampen Merritt Pennsylvania Quality Municipal Trust.....investment grade Pennsylvania municipal securities
High level of current income exempt from Federal income tax,
Van Kampen Merritt Trust for Investment Grade Municipals....consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
portfolio of municipal securities which are covered by insurance with
Van Kampen Merritt Trust for Insured Municipals.............respect to timely payment of principal and interest
High level of current income exempt from Federal and California income
Van Kampen Merritt Trust for Investment Grade CA taxes, consistent with preservation of capital by investing in a
Municipals.................................................diversified portfolio of California municipal securities
High level of current income exempt from Federal income taxes,
consistent with preservation of capital. The Fund also seeks to offer
Van Kampen Merritt Trust for Investment Grade FL its Shareholders the opportunity to own securities exempt from Florida
Municipals.................................................intangible personal property taxes
Van Kampen Merritt Trust for Investment Grade NJ
Municipals High level of current income exempt from Federal income taxes and New
..........................................................Jersey gross income taxes, consistent with preservation of capital
High level of current income exempt from Federal as well as from New
Van Kampen Merritt Trust for Investment Grade NY York State and New York City income taxes, consistent with
Municipals.................................................preservation of capital
High level of current income exempt from Federal and Pennsylvania
Van Kampen Merritt Trust for Investment Grade PA income taxes and, where possible under local law, local income and
Municipals.................................................property taxes, consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
Van Kampen Merritt Municipal Opportunity Trust..............portfolio of municipal securities
High level of current income exempt from Federal income tax,
consistent with preservation of capital by investing in a diversified
Van Kampen Merritt Advantage Municipal Income Trust.........portfolio of municipal securities
High level of current income exempt from Federal and Pennsylvania
Van Kampen Merritt Advantage Pennsylvania Municipal income taxes and, where possible under local law, local income and
Income Trust...............................................property taxes, consistent with preservation of capital
Provide common shareholders with a high level of current income exempt
Van Kampen Merritt Strategic Sector Municipal Trust.........from Federal income taxes, consistent with preservation of capital
High level of current income exempt from Federal income taxes,
Van Kampen Merritt Value Municipal Income Trust.............consistent with preservation of capital
Van Kampen Merritt California Value Municipal High level of current income exempt from Federal and California income
Income Trust...............................................taxes, consistent with preservation of capital
High level of current income exempt from Federal income taxes and
Van Kampen Merritt Massachusetts Value Municipal Massachusetts personal income taxes, consistent with preservation of
Income Trust..............................................capital
Van Kampen Merritt New Jersey Value Municipal High level of current income exempt from Federal income taxes and New
Income Trust...............................................Jersey gross income tax, consistent with preservation of capital
High level of current income exempt from Federal as well as New York
Van Kampen Merritt New York Value Municipal State and New York City income taxes, consistent with preservation of
Income Trust...............................................capital
Van Kampen Merritt Ohio Value Municipal Income High level of current income exempt from Federal and Ohio income
Trust......................................................taxes, consistent with preservation of capital
Van Kampen Merritt Pennsylvania Value Municipal High level of current income exempt from Federal and Pennsylvania
Income Trust..............................................income taxes, consistent with preservation of capital
High level of current income exempt from Federal income tax,
Van Kampen Merritt Municipal Opportunity Trust II...........consistent with preservation of capital
High level of current income exempt from Federal income tax,
consistent with preservation of capital. The Fund seeks to offer its
common shareholders the opportunity to own securities exempt from
Van Kampen Merritt Florida Municipal Opportunity Trust .....Florida intangible personal property taxes
Provide common shareholders with a high level of current income exempt
Van Kampen Merritt Advantage Municipal Income Trust II......from Federal income tax, consistent with preservation of capital
To provide common shareholders with a high level of current income
Van Kampen Merritt Select Sector Municipal Trust............exempt from Federal income tax, consistent with preservation of capital
</TABLE>
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 offices at 101 Barclay
Street, New York, New York 10286 (800) 221-7668. The Bank of New York is
subject to supervision and examination by the Superintendent of Banks of the
State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute,
rule or regulation (see "Rights of Unitholders--Reports Provided").
The Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Equity Opportunity Trust,
Series 14 (Govett Smaller Companies Fund and Treasury Trust, Series 1):
We have audited the accompanying statement of condition (including the
analysis of net assets) and the related portfolio of Van Kampen American
Capital Equity Opportunity Trust, Series 14 (Govett Smaller Companies Fund and
Treasury Trust, Series 1) as of May --, 1995. The statement of condition and
portfolio are the responsibility of the Sponsor. Our responsibility is to
express an opinion on such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of an irrevocable letter of credit deposited
to purchase securities by correspondence with the Trustee. An audit also
includes assessing the accounting principles used and significant estimates
made by the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Van Kampen American Capital
Equity Opportunity Trust, Series 14 (Govett Smaller Companies Fund and
Treasury Trust, Series 1) as of May --,1995, in conformity with generally
accepted accounting principles.
Chicago, Illinois GRANT THORNTON LLP
May --, 1995
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. Tanner Propp & Farber has acted as counsel for the
Trustee.
Independent Certified Public Accounts. The statement of condition and the
related securities portfolio at the opening of business on the Initial Date of
Deposit included in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, as set forth in their report in this
Prospectus, and are included herein in reliance upon the authority of said
firm as experts in accounting and auditing.
Underwriting. The Underwriters named below have severally purchased Units in
the following respective amounts from the Sponsor.
<TABLE>
<CAPTION>
Govett
Smaller
Companies
Fund and
Name Treasury Trust
Address Units
<S> <C> <C>
Van Kampen American Capital Distributors, Inc. One Parkview Plaza, Oakbrook Terrace, IL 60181
</TABLE>
Units may also be sold to broker-dealers and others at prices representing the
per Unit concession or agency commission stated under "Trust
Administration--General--Unit Distribution". However, resales of Units by
such broker-dealers and others to the public will be made at the Public
Offering Price described in the Prospectus. The Sponsor reserves the right to
reject, in whole or in part, any order for the purchase of Units and the right
to change the amount of the concession or agency commission from time to time.
Underwriters and broker-dealers of the Trust, banks and/or others are eligible
to participate in a program in which such firms receive from the Sponsor a
nominal award for each of their representatives who have sold a minimum number
of units of unit investment trusts created by the Sponsor during a specified
time period. In addition, at various times the Sponsor may implement other
programs under which the sales forces of Underwriters, brokers, dealers, banks
and/or others may be eligible to win other nominal awards for certain sales
efforts, or under which the Sponsor will reallow to any such Underwriters,
brokers, dealers, banks and/or others that sponsor sales contests or
recognition programs conforming to criteria established by the Sponsor, or
participate in sales programs sponsored by the Sponsor, an amount not
exceeding the total applicable sales charges on the sales generated by such
persons at the public offering price during such programs. Also, the Sponsor
in its discretion may from time to time pursuant to objective criteria
established by the Sponsor pay fees to qualifying underwriters, brokers,
dealers, banks or others for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments are
made by the Sponsor out of its own assets, and not out of the assets of the
Trust. These programs will not change the price Unitholders pay for their
Units or the amount that the Trust will receive from the Units sold.
Approximately every eighteen months the Sponsor holds a business seminar which
is open to Underwriters that sell units of trusts it sponsors. The Sponsor
pays substantially all costs associated with the seminar, excluding
Underwriter travel costs. Each Underwriter is invited to send a certain number
of representatives based on the gross number of units such firm underwrites
during a designated time period.
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST
SERIES 14
Statement of Condition
As of May --, 1995
<S> <C>
Investment in Securities
Securities deposited................................ $
Contracts to purchase securities <F1>............... $
Interest of Unitholders
Interest of Unitholders--
Units of fractional undivided interest outstanding:
Cost to investors <F2> ............................... $
Less: Gross underwriting commission <F2> .............
Net interest to Unitholders <F2>...................... $
<FN>
<F1>The aggregate value of the Securities listed under "Portfolio" and
their cost to the Trust are the same. The value of the Securities is
determined by Interactive Data Services, Inc. on the bases set forth under
"Public Offering--Offering Price". The contracts to purchase
Securities are collateralized by an irrevocable letter of credit of $XXXX
which has been deposited with the Trustee.
<F2>The aggregate public offering price and the aggregate sales charge of 4.9% are
computed on the bases set forth under "Public Offering--Offering Price"
and "Public Offering--Sponsor and Underwriter Profits" and assume all
single transactions involve less than 10,000 Units. For single transactions
involving 10,000 or more Units, the sales charge is reduced (see "Public
Offering--General") resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
</TABLE>
<TABLE>
GOVETT SMALLER COMPANIES FUND AND TREASURY TRUST SERIES 1
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 14)
as of the Initial Date of Deposit: May --, 1995
<CAPTION>
Cost of
Number of Market Value Securities
Shares Name of Issuer <F1> per Share to Trust <F2>
<S> <C> <C> <C>
Govett Smaller Companies Fund $
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Maturity
Value Name of Issuer and Title of Security<F1><F3>
$ "Zero coupon"U.S. Treasury bonds maturing August 15, 2007 $
</TABLE>
NOTES TO PORTFOLIO
(1)All Securities are represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited with
the Trustee. At the Initial Date of Deposit, Securities may have been
delivered to the Sponsor pursuant to certain of these contracts; the Sponsor
has assigned to the Trustee all of its right, title and interest in and to
such Securities. Contracts to acquire Securities were entered into on XXXXXX
XX, 1995 and XXXX XX, 1995 and are expected to settle on XXXX XX, 1995 and
XXXX XX, 1995 (see "The Trust").
(2)The market value of each of the Fund Shares is based on the net asset value
as of the Evaluation Time on the day prior to the Initial Date of Deposit. The
cost of the Treasury Obligations represents the offering side evaluation as
determined by Interactive Data Services, Inc. The offering side evaluation of
the Treasury Obligations is greater than the bid side evaluation of the
Treasury Obligations which is the basis on which the Redemption Price per Unit
will be determined. The aggregate value of the Smaller Companies Fund and
Treasury Trust, based on the bid side evaluation of the Treasury Obligations
and the net asset value of the Fund Shares therein as of the Evaluation Time
on the day prior to the Initial Date of Deposit, was $XXXXX. Other information
regarding the Securities in the Trust, as of the Initial Date of Deposit, is
as follows:
<TABLE>
<CAPTION>
Profit
(Loss) to
Cost to Sponsor Sponsor
<S> <C>
$ $
</TABLE>
(3)The Treasury Obligations are being purchased at a discount from their par
value because there is no stated interest income thereon (such securities are
often referred to as zero coupon bonds). Over the life of the Treasury
Obligations the value increases, so that upon maturity the holders will
receive 100% of the principal amount thereof.
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 Underwriters. 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>
Summary of Essential Financial
Information 3
The Trust 4
Objectives and Securities Selection 4
Trust Portfolio 5
Federal Taxation 19
Trust Operating Expenses 22
Public Offering 23
Rights of Unitholders 25
Trust Administration 28
Other Matters 35
Report of Independent Certified Public
Accountants 37
Statement of Condition 38
Portfolio 39
Notes to Portfolio 40
</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
May --, 1995
Van Kampen American Capital Equity Opportunity Trust, Series 14
Govett Smaller Companies Fund
and Treasury Trust, Series 1
A Wealth of Knowledge A Knowledge of Wealth (sm)
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
Contents Of Registration Statement
This Registration Statement comprises the following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants, rating services
and legal counsel
The following exhibits:
1.1 Proposed form of Trust Agreement between Van Kampen American
Capital Distributors, Inc., Depositor, American Portfolio Advisory
Service, a division of Van Kampen American Capital Investment
Advisory Corp., as Evaluator, and The Bank of New York, as Trustee
(to be supplied by amendment).
1.5 Form of Agreement Among Underwriters (to be supplied by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be supplied by amendment).
3.2 Opinion and consent of counsel as to New York tax status of
securities being registered (to be supplied by amendment).
4.1 Consent of Interactive Data Services, Inc. (to be supplied by
amendment).
4.2 Financial Data Schedule (to be supplied by amendment).
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
14 has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of Chicago and
State of Illinois on the 21st day of April, 1995.
Van Kampen American Capital Equity
Opportunity Trust, Series 14
(Registrant)
By Van Kampen American Capital
Distributors, Inc.
(Depositor)
Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on April 21, 1995.
Signature Title
Don G. Powell Chairman, Chief Executive )
Officer )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Ronald A. Nyberg Director )
William R. Molinari Director )
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 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.
