File No. 33-64009
CIK #896988
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Van Kampen American Capital Equity Opportunity Trust, Series 23
(Exact Name of Trust)
Van Kampen American Capital Distributors, Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
Van Kampen American Capital Distributors, Inc. Chapman and Cutler
Attention: Don G. Powell Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective
on April 24, 1997 pursuant to paragraph (b) of Rule 485.
PRINCIPAL FINANCIAL SECURITIES, INC. FINANCIAL INSTITUTIONS TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 23
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.Please retain both parts of this Prospectus for future reference.
THE TRUST
Principal Financial Securities, Inc. Financial Institutions Trust, Series 1
(the "Trust") is a unit investment trust which is contained in Van Kampen
American Capital Equity Opportunity Trust, Series 23. The Trust offers
investors the opportunity to purchase Units representing proportionate
interests in a fixed, diversified portfolio primarily consisting of common
stocks issued by financial institutions predominantly based in the Midwest
region of the United States (the "Equity Securities"). Unless terminated
earlier, the Trust will terminate on December 12, 1999 (the "Mandatory
Termination Date") and any Equity Securities then held will, within a
reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Equity Securities liquidated at termination will be sold at the then current
market value for such Equity Securities; therefore, the amount distributable
in cash to a Unitholder upon termination may be more or less than the amount
such Unitholder paid for his or her Units.
PUBLIC OFFERING PRICE
The Public Offering Price of the Units during the secondary market will
include the aggregate underlying value of the Securities, an applicable sales
charge, and cash, if any, in the Income and Capital Accounts held or owned by
the Trust. See "Summary of Essential Financial Information" in this
Part One.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Date of this Prospectus is April 16, 1997
Van Kampen American Capital
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 23
Principal Financial Securities, Inc. Financial Institutions Trust, Series 1
Summary of Essential Financial Information
As of March 5, 1997
Managing Underwriter and Supervisor: Principal Financial Securities, Inc.
Sponsor: Van Kampen American Capital Distributors,
Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the
Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
Principal
Financial
Services
Inc.,
Financial
Institutions
Trust
----------------
<S> <C>
General Information
Number of Units..................................................................................... 609,719
Fractional Undivided Interest in Trust per Unit..................................................... 1/609,719
Public Offering Price:
Aggregate Value of Securities in Portfolio <F1>.................................................... $ 7,161,073
Aggregate Value Securities per Unit (including accumulated dividends).............................. $ 11.78
Sales charge 4.4% (4.603% of Aggregate Value of Securities excluding principal cash per Unit)<F3>... $ .55
Public Offering Price per Unit <F2><F3>............................................................ $ 12.33
Redemption Price per Unit........................................................................... $ 11.78
Secondary Market Repurchase Price per Unit.......................................................... $ 11.78
Excess of Public Offering Price per Unit over Redemption Price per Unit............................. $ .55
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee...Maximum of $.0025 per Unit
Evaluator's Annual Fee ...............Maximum of $.0025 per Unit
Evaluations for purpose of sale,
purchase or redemption of Units
are made as of 4:00 P.M. Eastern
time on days of trading on the New
York Stock Exchange next following
receipt of an order for a sale or
purchase of Units or receipt by The
Bank of New York of Units tendered
for redemption.
Date of Deposit.......................December 12, 1995
Mandatory Termination Date............December 12, 1999
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Special Information......................................
Calculation of Estimated Net Annual Dividends per Unit...
Estimated Gross Annual Dividends per Unit............... $ .17526
Less: Estimated Expenses per Unit....................... $ .02228
Estimated Net Annual Dividends per Unit................. $ .15298
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee............................$.008 per Unit
Estimated Annual Organizational Expenses <F4>...$.005 per Unit
Income Distribution Record Date.................TENTH day of June and December.
Income Distribution Date........................TWENTY-FIFTH day of June and December.
Capital Account Record Date.....................TENTH day of December.
Capital Account Distribution Date <F5>..........TWENTY-FIFTH day of December.
- ----------
<FN>
<F1>Equity Securities listed on a national securities exchange are valued at the
closing sale price or if the Equity Securities are not so listed, at the bid
price thereof.
<F2>Anyone ordering Units will have added to the Public Offering Price a pro rata
share of any cash in the Income and Capital Accounts.
<F3>Effective on each December 12, commencing December 12, 1996, the secondary
sales charge will decrease by .5 of 1% to a minimum sales charge of 3.9%. See
"Public Offering-Offering Price" in Part Two.
<F4>The Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration statement,
the trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of the Trust
portfolio and the initial fees and expenses of the Trustee but not including
the expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for mutual
funds. Total organizational expenses will be amortized over the life of the
Trust. See "Expenses of the Trust" in Part Two and "Statement of
Condition." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts.
<F5>If the amount available for distribution in the Capital Account equals at
least $0.01 per unit, a distribution from the Capital Account will be made
monthly on the twenty-fifth day of the month to Unitholders of record on the
tenth day of such month.
</TABLE>
PORTFOLIO
The Trust consists of the following 14 issues of Equity Securities primarily
issued by financial institutions predominantly based in the Midwest region of
the United States: Advantage Bancorp, Inc., Avondale Financial Corp., Brenton
Banks, Inc., CitFed Bancorp, Inc., Commercial Federal Corporation, First Palm
Beach Bancorp, Inc., Merchantile Bancorp, Mid Continent Bancshares, Inc.,
National City Bancorporation, Security Capital Corporation, St. Francis
Capital Corporation, Standard Financial, Inc., UMB Financial Corporation and
USBANCORP, Inc. All of the Equity Securities are listed on a national
securities exchange, the NASDAQ National Market System or traded in the
over-the-counter market.
PER UNIT INFORMATION
<TABLE>
<CAPTION>
1996<F1>
-----------
<S> <C>
Net asset value per Unit at beginning of period........................................................................ $ 9.67
===========
Net asset value per Unit at end of period.............................................................................. $ 10.76
===========
Distributions to Unitholders of investment income including accumulated dividends paid on Units redeemed (average
Units outstanding for entire period)................................................................................... $ 0.13
===========
Distributions to Unitholders from Security redemption proceeds (average Units outstanding for entire period)........... $ 1.02
===========
Unrealized appreciation (depreciation) of Security (per Unit outstanding at end of period)............................. $ 1.77
===========
Units outstanding at end of period..................................................................................... 648,415
</TABLE>
- ----------
For the period from December 12, 1995 (date of deposit) through December 31,
1996.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Principal Financial Securities, Inc. Financial
Institutions Trust, Series 1 (Van Kampen American Capital Equity Opportunity
Trust, Series 23_:
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of Principal Financial
Securities, Inc. Financial Institutions Trust, Series 1 (Van Kampen American
Capital Equity Opportunity Trust, Series 23) as of December 31, 1996 and the
related statements of operations and changes in net assets for the period from
December 12, 1995 (date of deposit) through December 31, 1996. These
statements are the responsibility of the Trustee and the Sponsor. Our
responsibility is to express an opinion on such statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1996 by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee and
the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Principal Financial
Securities, Inc. Financial Institutions Trust, Series 1 (Van Kampen American
Capital Equity Opportunity Trust, Series 23) as of December 31, 1996, and the
related statements of operations and changes in net assets for the period from
December 12, 1995 (date of deposit) through December 31, 1996, in conformity
with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
March 14, 1997
<TABLE>
PRINCIPAL FINANCIAL SECURITIES, INC. FINANCIAL INSTITITUIONS TRUST, SERIES 1
Statements of Condition
December 31, 1996
<CAPTION>
Principal
Financial
Securities,
Inc.
Financial
Institutions
Trust
<S> <C>
Trust property
Securities at market value, (cost $5,778,262) (note 1)................................ $ 6,929,120
Accumulated dividends................................................................. 30,314
Receivable for securities sold........................................................ 319,533
Organizational Cost................................................................... 26,930
$ 7,305,897
=================
Liabilities and interest to Unitholders
Cash overdraft........................................................................ $ 331,672
Accrued Liabilities................................................................... --
Interest to Unitholders............................................................... 6,974,225
$ 7,305,897
=================
Analyses of Net Assets
Interest of Unitholders (648,415 Units of fractional undivided interest outstanding)
Cost to original investors of 850,000 Units (note 1).................................. $ 8,724,500
Less initial underwriting commission (note 3)......................................... 430,521
-----------------
8,293,979
Less redemption of 201,585 Units...................................................... 1,993,773
-----------------
6,300,206
Undistributed net investment income
Net investment income................................................................. 130,344
Less distributions to Unitholders..................................................... 101,018
-----------------
29,326
Realized gain (loss) on Security sale or redemption................................... 299,783
Unrealized appreciation (depreciation) of Securities (note 2)......................... 1,150,858
Distributions to Unitholders of Security sale or redemption proceeds.................. (805,948)
Net asset value to Unitholders........................................................ $ 6,974,225
=================
Net asset value per Unit (648,415 Units outstanding)................................... $ 10.76
=================
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
PRINCIPAL FINANCIAL SECURITIES, INC. FINANCIAL INSTITUTIONS TRUST, SERIES 1
Statements of Operations
Period from December 12, 1995 (date of deposit) through
December 31, 1996
<CAPTION>
1996
-------------
<S> <C>
Investment income
Dividend income..................................................... $ 150,313
Expenses
Trustee fees and expenses........................................... 8,942
Evaluator fees...................................................... 2,051
Organizational Costs................................................ 8,976
-------------
Total expenses...................................................... 19,969
-------------
Net investment income............................................... 130,344
Realized gain (loss) from Securities sale or redemption
Proceeds............................................................ 2,815,500
Cost................................................................ 2,515,717
-------------
Realized gain (loss)................................................ 299,783
Net change in unrealized appreciation (depreciation) of Securities... 1,150,858
-------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......$ 1,580,985
=============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
Period from December 12, 1995 (date of deposit) through
December 31, 1996
<CAPTION>
1996
---------------
<S> <C>
Increase (decrease) in net assets
Operations:
Net investment income...................................................... $ 130,344
Realized gain (loss) on Securities sale or redemption...................... 299,783
Net change in unrealized appreciation (depreciation) of Securities......... 1,150,858
---------------
Net increase (decrease) in net assets resulting from operations............ 1,580,985
Distributions to Unitholders from:
Net investment income...................................................... (101,018)
Securities sale or redemption proceeds..................................... (805,948)
Redemption of Units (1,993,773)
---------------
Total increase (decrease).................................................. (1,319,754)
Net asset value to Unitholders
Beginning of period........................................................ 3,867,170
Additional Securities purchased from proceeds of Unit Sales................ 4,426,809
---------------
End of period (including undistributed net investment income of $29,326)... $ 6,974,225
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
PRINCIPAL FINANCIAL SECURITIES, INC. FINANCIAL INSTITUTIONS TRUST, SERIES 1
PORTFOLIO as of
December 31, 1996
<CAPTION>
Valuation of Securities
at
Number December 31,
of Market Value Per 1996
Shares Name of Issuer Share (Note 1)
- ---------- ----------------------------------------- --------------------- ----------------------------
<S> <C> <C> <C>
14,124 Advantage Bancorp, Incorporated $ 31.750 $ 448,437
- -------------------------------------------------------------------------------------------------------
27,476 Avondale Financial Corporation 16.625 456,789
- -------------------------------------------------------------------------------------------------------
20,870 Brenton Banks, Incorporated 27.625 576,534
- -------------------------------------------------------------------------------------------------------
18,413 CitFed Bancorp, Incorporated 33.000 607,629
- -------------------------------------------------------------------------------------------------------
11,355 Commercial Federal Corporation 48.000 545,040
- -------------------------------------------------------------------------------------------------------
18,854 First Palm Beach Bancorp, Incorporated 23.375 440,712
- -------------------------------------------------------------------------------------------------------
7,640 Merchantile Bancorp 51.375 392,505
- -------------------------------------------------------------------------------------------------------
23,134 Mid Continent Bancshares, Incorporated 23.375 540,757
- -------------------------------------------------------------------------------------------------------
20,406 National City Bancorporation 20.000 408,120
- -------------------------------------------------------------------------------------------------------
6,867 Security Capital Corporation 73.250 503,008
- -------------------------------------------------------------------------------------------------------
17,267 St. Francis Capital Corporation 26.000 448,942
- -------------------------------------------------------------------------------------------------------
29,455 Standard Financial, Incorporated 19.625 578,054
- -------------------------------------------------------------------------------------------------------
10,716 UMB Financial Corporation 40.500 433,998
- -------------------------------------------------------------------------------------------------------
13,140 USBANCORP, Incorporated 41.750 548,595
- -------------------------------------------------------------------------------------------------------
239,717 $ 6,929,120
========== ============================
</TABLE>
The accompanying notes are an integral part of these statements.
PRINCIPAL FINANCIAL SECURITIES, INC. FINANCIAL INSTITUTIONS TRUST, SERIES 1
Notes to Financial Statements
December 31, 1996
- --------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national securities exchange are
valued at the last closing sales price or, if not so listed, at the bid price.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national securities exchange on the closing sale
prices on the exchange, or if not so listed, at the ask price. The cost was
determined on the day of the various Dates of Deposit.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in the Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value as
described in Note 1 and (3) accumulated dividends thereon, less accrued
expenses of the Trust, if any.
Federal Income Taxes - Each Unitholder is considered to be the owner of a pro
rata portion of the Trust and, accordingly, no provision has been made for
Federal Income Taxes.
Distributions to Unitholders of the Trust's taxable income will be taxable as
ordinary or capital gain income to Unitholders.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an average cost basis.
Organizational Costs - The Trust will bear all or a portion of its
organizational costs, which will be deferred and amortized over the life of
the Trust.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Principal
Financial
Securities,
Inc.
Financial
Institutions
Trust
----------------
<S> <C>
Unrealized Appreciation $ 1,176,302
Unrealized Depreciation (25,444)
----------------
$ 1,150,858
================
</TABLE>
NOTE 3 - OTHER
Marketability - Although it is not obligated to do so, the Sponsor intends to
maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the value of the Securities
in the portfolio of the Trust valued as described in Note 1, plus accumulated
dividends to the date of settlement. If the supply of Units exceeds demand, or
for other business reasons, the Sponsor may discontinue purchases of Units at
such prices. In the event that a market is not maintained for the Units, a
Unitholder desiring to dispose of his Units may be able to do so only by
tendering such Units to the Trustee for redemption at the redemption price.
Cost to Investors - The cost to original investors was based on the underlying
value of the Securities per Unit on the date of an investor's purchase, plus a
sales charge of 4.9% of the public offering price which is equivalent to
5.152% of the aggregate underlying value price of the Securities. The
secondary market cost to investors is based on the determination of the
underlying value of the Securities per Unit on the date of an investor's
purchase plus a sales charge of 4.9% of the public offering price which is
5.152% of the underlying value of the Securities. Effective on each December
12, commencing December 12, 1996, the secondary sales charge will decrease by
.5 of 1% to a minimum sales charge of 3.9%.
Compensation of Evaluator and Supervisor - the Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.0025 per Unit, not
to exceed the aggregate cost of the Supervisor for providing such services to
all applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases
under the category "All Services Less Rent of Shelter" in the Consumer
Price Index.
NOTE 4 - REDEMPTION OF UNITS
During the period ended December 31, 1996, 201,585 Units, were presented for
redemption.
Principal Financial Securities, Inc.
Financial Institutions Trust, Series 1
Prospectus Part Two
The Trust. Principal Financial Securities, Inc. Financial Institutions Trust,
Series 1 (the "Trust" ) is a unit investment trust which is contained
in Van Kampen American Capital Equity Opportunity Trust, Series 23. The Trust
offers investors the opportunity to purchase Units representing proportionate
interests in a fixed, diversified portfolio primarily consisting of common
stocks issued by financial institutions predominantly based in the Midwest
region of the United States (the "Equity Securities" ). Unless
terminated earlier, the Trust will terminate on December 12, 1999 (the "
Mandatory Termination Date" ) and any Equity Securities then held will,
within a reasonable time thereafter, be liquidated or distributed by the
Trustee. Any Equity Securities liquidated at termination will be sold at the
then current market value for such Equity Securities; therefore, the amount
distributable in cash to a Unitholder upon termination may be more or less
than the amount such Unitholder paid for his or her Units.
Objectives of the Trust. The objectives of the Trust are to provide the
potential for capital appreciation and income by investing in a portfolio
primarily consisting of common stocks issued by financial institutions
predominantly based in the Midwest region of the United States. See "
Portfolio" in Prospectus Part One. Each Unit of the Trust represents an
undivided fractional interest in all the Equity Securities deposited in the
Trust. 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 aggregate underlying value of the Equity Securities plus or minus
cash, if any, in the Capital and Income Accounts, divided by the number of
Units outstanding, plus the applicable sales charge described in the "
Summary of Essential Financial Information" in Prospectus Part One. The
minimum purchase is 200 Units (100 Units for a tax-sheltered retirement plan).
See "Public Offering."
Dividend and Capital Distributions. Distributions of dividends and capital, if
any, received by the Trust will be paid in cash on the applicable distribution
date to Unitholders of record on the record date as set forth in the "
Summary of Essential Financial Information" in Prospectus Part One. Any
distribution of income and/or capital will be net of the expenses of the
Trust. See "Tax Status." Additionally, upon termination of the Trust,
the Trustee will distribute 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. Although not obligated to do so, the Managing
Underwriter intends to maintain a market for Units of the Trust and offer to
repurchase such Units at prices which are based on the aggregate underlying
value of Equity Securities in the Trust (generally determined by the closing
sale prices of the listed Equity Securities and the bid prices of the
over-the-counter traded Equity Securities), plus or minus a pro rata share of
cash, if any, in the Capital and Income Accounts of the Trust. If a secondary
market is not maintained, a Unitholder may redeem Units through redemption at
prices based upon the aggregate underlying value of the Equity Securities in
the Trust (generally determined by the closing sale prices of the listed
Equity Securities and the bid prices of the over-the-counter traded Equity
Securities), plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of the Trust. See "Rights of Unitholders--Redemption
of Units."
Termination. Commencing on the Mandatory Termination Date, Equity Securities
will begin to be sold in connection with the termination of the Trust. The
Sponsor will determine the manner, timing and execution of the sale of the
Equity Securities. At least 60 days prior to the Mandatory Termination Date
the Trustee will provide written notice thereof to all Unitholders and will
include with such notice a form to enable Unitholders to elect a distribution
of shares of Equity Securities if such Unitholder owns at least 2,500 Units of
the Trust rather than to receive payment in cash for such Unitholder's pro
rata share of the amounts realized upon the disposition by the Trustee of
Equity Securities. All Unitholders will receive cash in lieu of any fractional
shares. To be effective, the election form, and other documentation required
by the Trustee, must be returned to the Trustee at least ten business days
prior to the Mandatory Termination Date. Unitholders not electing a
distribution of shares of Equity Securities will receive a cash distribution
from the sale of the remaining Securities within a reasonable time after the
Trust is terminated. See "Trust Administration--Amendment or
Termination."
This Prospectus may be used only when accompanied by Part One.
Both parts of this Prospectus should be retained for future reference.
This Prospectus is dated as of the date of the Prospectus Part One
accompanying this Prospectus Part Two.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including, among other factors, the
possible deterioration of either the financial condition of the issuers or the
general condition of the stock market, volatile interest rates, economic
recession and potential increased regulation on banks and thrifts. The Trust
is not actively managed and Equity 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."
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 23 is comprised
of one unit investment trust, Principal Financial Securities, Inc. Financial
Institutions Trust, Series 1 (the "Trust" ). The Trust was created
under the laws of the State of New York pursuant to a Trust Indenture and
Agreement (the "Trust Agreement" ), Initial Date of Deposit among Van
Kampen American Capital Distributors, Inc., as Sponsor, American Portfolio
Evaluation Services, a division of Van Kampen American Capital Investment
Advisory Corp., as Evaluator, Principal Financial Securities, Inc., as
Supervisor and The Bank of New York, as Trustee.
The Trust may be an appropriate medium for investors who desire to participate
in a diversified portfolio of equity securities issued by financial
institutions predominantly based in the Midwest region of the United States.
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" and "Portfolio" in Prospectus
Part One.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee Equity
Securities including delivery statements relating to contracts for the
purchase of certain such Equity Securities and an irrevocable letter of credit
issued by a financial institution in the amount required for such purchases.
Thereafter, the Trustee, in exchange for such Equity Securities (and
contracts) so deposited, delivered to the Sponsor documentation evidencing the
ownership of Units of the Trust. Unless otherwise terminated as provided in
the Trust Agreement, the Trust will terminate on the Mandatory Termination
Date and Equity Securities then held will within a reasonable time thereafter
be liquidated or distributed by the Trustee.
Each Unit of the Trust initially offered represents an undivided interest in
the Trust. To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest in the Trust represented by each unredeemed Unit
will increase, although the actual interest in the Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Unitholders, which may include the Managing
Underwriter, or until the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objectives of the Trust are to provide investors with the potential for
capital appreciation and income. The portfolio is described under "Trust
Portfolio" herein and "Portfolio" in Prospectus Part One. The
Equity Securities were selected by Principal Financial Securities, Inc., the
Managing Underwriter. In selecting the Equity Securities, Principal Financial
Securities considered the following factors, among others: merger or
acquisition potential of the issuer; maintaining portfolio diversification
within the Midwest regional bank and thrift industries; attractive market
fundamentals; and potential for above-average dividend increases. The Managing
Underwriter believes that financial stocks have performed well in terms of
dividend growth and price appreciation over the years. Additionally, merger
and acquisition activity, which may provide the opportunity for capital
appreciation, appears to be growing. Based upon these factors, as well as
strong industry fundamentals, Principal Financial Securities believes the
stock prices of many financial institutions do not adequately reflect their
potential.
The banking and thrift industries have continued to undergo significant
consolidation. Principal Financial Securities believes that there has existed
for many years an inefficient overcapacity within these fragmented industries
which has stemmed from a restrictive regulatory and legislative structure.
Principal Financial Securities believes that, until recently, it was
difficult, if not impossible to operate a financial institution on an
interstate basis and that it has only been in the last few years that many
states allowed full intrastate branching. The history of the financial
services industry, therefore, has been one of many companies operating in a
narrow geographic range. As states have adopted legislation regarding
intrastate and regional interstate banking, the last several years have
witnessed increasing geographic expansion by large banking companies. In 1994,
Congress passed legislation which many expect to clear the way for full
interstate banking over the next few years. While there was growing concern in
past years over the health of the financial services industry as financial
institutions suffered with recession and asset quality problems, Principal
Financial Services believes that after a period of dynamic change, many
institutions are reporting solid results suggesting that the industry appears
to be in its best financial health in at least a decade--displaying stronger
fundamentals and an increased potential for growth.
Principal Financial Securities expects the consolidation wave to continue over
the next several years. Principal Financial Securities considers the number of
companies operating in this huge sector to be too large for maximum
efficiency. While the number of commercial banks has been reduced from
approximately 14,000 to about 10,000 over the last few years, Principal
Financial Securities is of the opinion that this number needs to continue to
decline for optimal returns and that much of the consolidation will occur in
the regional bank category, especially in the more desirable banking markets.
To capitalize on this expectation, Principal Financial Securities has selected
a pool of publicly traded bank and thrift stocks for the Trust's portfolio.
Principal Financial Securities thinks that the selected stocks are among those
that fit the profile of companies likely to be acquired during the next few
years, although there can be no certainty of the takeover, or the timing of
any potential takeover, of any such companies. The companies are based
predominantly in the Midwest, where Principal Financial Securities believes
that significant consolidation is yet forthcoming and where Principal
Financial Securities is most familiar with the markets and the participants in
those markets. Most of the portfolio companies are regional institutions with
total assets between $500 million and $3 billion which Principal Financial
Securities believes to be the most sought after size category available.
Furthermore, all of the companies are in sound financial condition which
offers limited downside risk in the absence of takeover.
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 "
Tax Status" ). Investors should be aware that there is not any guarantee
that the objectives of the Trust will be achieved because they are subject to
the continuing ability of the respective Equity Security issuers to continue
to declare and pay dividends and because the market value of the Equity
Securities can be affected by a variety of factors. Common stocks may be
especially susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of
the issuers change. Investors should be aware that there can be no assurance
that the value of the underlying Equity Securities will increase or that the
issuers of the Equity Securities will pay dividends on outstanding common
shares. Any distributions of income will generally depend upon the declaration
of dividends by the issuers of the Equity Securities and the declaration of
any dividends depends upon several factors including the financial condition
of the issuers and general economic conditions.
Investors should be aware that the Trust is not a "managed" fund and
as a result the adverse financial condition of a company will not result in
its elimination from the portfolio except under extraordinary circumstances
(see "Trust Administration--Portfolio Administration" ). In addition,
Equity Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the Equity Securities were selected by the Managing
Underwriter prior to the Initial Date of Deposit. The Trust may continue to
hold Equity Securities originally selected through this process even though
the evaluation of the attractiveness of the Equity Securities may have changed
and, if the evaluation were performed again at that time, the Equity
Securities would not be selected for the Trust.
TRUST PORTFOLIO
The Trust consists of issues of Equity Securities issued by
financial institutions predominantly based in the Midwest region of the United
States. All of the Equity Securities are listed on a national securities
exchange, the NASDAQ National Market System or traded in the over-the-counter
market. Each of the companies whose Equity Securities are included in the
portfolio were selected by the Managing Underwriter based upon those factors
referred to under "Objectives and Securities Selection" above.
General. The Trust consists of such of the Equity Securities as may continue
to be held from time to time in the Trust and any additional Equity 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 Equity Securities.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will be distributed to Unitholders and will not be reinvested, no
assurance can be given that 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 Equity Securities under certain
limited circumstances. Pursuant to the Trust Agreement and with limited
exceptions, the Trustee may sell any securities or other property acquired in
exchange for Equity Securities such as those acquired in connection with a
merger or other transaction. If offered such new or exchanged securities or
property, the Trustee shall reject the offer. However, in the event such
securities or property are nonetheless acquired by the Trust, they may be
accepted for deposit in the Trust and either sold by the Trustee or held in
the Trust pursuant to the direction of the Sponsor (who may rely on the advice
of the Supervisor). See "Trust Administration--Portfolio
Administration." Equity Securities, however, will not be sold by 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 Equity Securities as such
and will not be able to vote the Equity Securities. As the holder of the
Equity Securities, the Trustee will have the right to vote all of the voting
stocks in the Trust and will vote such stocks in accordance with the
instructions of the Sponsor. In the absence of any such instructions by the
Sponsor, the Trustee will vote such stocks so as to insure that the stocks are
voted as closely as possible in the same manner and the same general
proportion as are shares held by owners other than the Trust.
The Managing Underwriter may acquire the Equity Securities for the Sponsor.
The Managing Underwriter in its general securities business acts as agent or
principal in connection with the purchase and sale of equity securities,
including the Equity Securities in the Trust, and may act as a market maker in
certain of the Equity Securities. The Managing Underwriter may also, from time
to time, issue reports on and make recommendations relating to equity
securities, which may include the Equity Securities. From time to time the
Managing Underwriter may act as investment banker or an employee or affiliate
may be a director of a company whose shares are included among the Equity
Securities; nonpublic information concerning such a company would not be
disclosed to the Managing Underwriter or for the benefit of the Trust under
such circumstances.
RISK FACTORS
An investment in Units of the Trust should be made with an understanding of
the problems and risks inherent in the financial institutions industry in
general. Banks, thrifts and their holding companies are especially subject to
the adverse effects of economic recession, volatile interest rates, portfolio
concentrations in geographic markets and in commercial and residential real
estate loans, and competition from new entrants in their fields of business.
Banks and thrifts are highly dependent on net interest income. Recently, bank
net interest margins have contracted, but volume gains have been strong in
both commercial and consumer products and profits have benefited. There is no
certainty that these conditions will continue. Bank and thrift institutions
had received significant consumer mortgage fee income as a result of activity
in the mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic conditions in
the real estate markets, which have been weak in the past, can have a
substantial effect upon banks and thrifts because they generally have a
portion of their assets invested in loans secured by real estate. Banks,
thrifts and their holding companies are subject to extensive federal
regulation and, when such institutions are state-chartered, to state
regulation as well. Such regulations impose strict capital requirements and
limitations on the nature and extent of business activities that banks and
thrifts may pursue. Furthermore, bank regulators have a wide range of
discretion in connection with their supervisory and enforcement authority and
may substantially restrict the permissible activities of a particular
institution if deemed to pose significant risks to the soundness of such
institution or the safety of the federal deposit insurance funds. Regulatory
actions, such as increases in the minimum capital requirements applicable to
banks and one-time assessments in deposit insurance premiums required to be
paid by companies to the Federal Deposit Insurance Corporation ("FDIC"
), can negatively impact earnings and the ability of a company to pay
dividends. Neither federal insurance of deposits nor governmental regulations,
however, ensure the solvency or profitability of banks or their holding
companies or insure against any risk of investment in the securities issued by
such institutions.
The statutory requirements applicable to and regulatory supervision of banks,
thrifts and their holding companies have increased significantly and have
undergone substantial changes in recent years. To a great extent, these
changes are embodied in the Financial Institutions Reform, Recovery and
Enforcement Act, enacted in August 1989, the Federal Deposit Insurance
Corporation Improvement Act of 1991, the Resolution Trust Corporation
Refinancing, Restructuring, and Improvement Act of 1991 and the regulations
promulgated under these laws. Many of the regulations promulgated pursuant to
these laws have only recently been finalized and their impact on the business,
financial condition and prospects of the Equity Securities in the Trust's
portfolio cannot be predicted with certainty. Periodic efforts by recent
Administrations to introduce legislation broadening the ability of banks and
thrifts to compete with new products have not been successful, but if enacted
could lead to more failures as a result of increased competition and added
risks. Failure to enact such legislation, on the other hand, may lead to
declining earnings and an inability to compete with unregulated financial
institutions. Efforts to expand the ability of federal thrifts to branch on an
interstate basis have been initially successful through promulgation of
regulations, and legislation to liberalize interstate banking has recently
been signed into law. Under the legislation, banks will be able to purchase or
establish subsidiary banks in any state, one year after the legislation's
enactment. Starting in mid-1997, banks would be allowed to turn existing banks
into branches, though states could pass laws to permit interstate branch
banking before then. Consolidation is likely to continue in both cases. The
Securities and Exchange Commission and the Financial Accounting Standards
Board require the expanded use of market value accounting by banks and have
imposed rules requiring market accounting for investment securities held in
trading accounts or available for sale. Adoption of additional such rules may
result in increased volatility in the reported health of the industry and
mandated regulatory intervention to correct such problems. In late 1993 the
United States Treasury Department proposed a restructuring of the bank
regulatory agencies which, if implemented, may adversely affect certain of the
Equity Securities in the Trust's portfolio. Additional legislative and
regulatory changes may be forthcoming. For example, the bank regulatory
authorities have proposed substantial changes to the Community Reinvestment
Act and fair lending laws, rules and regulations, and there can be no
certainty as to the effect, if any, that such changes would have on the Equity
Securities in the Trust's portfolio. In addition, from time to time the
deposit insurance system is reviewed by Congress and federal regulators, and
proposed reforms of that system could, among other things, further restrict
the ways in which deposited moneys can be used by banks or reduce the dollar
amount or number of deposits insured for any depositor. Such reforms could
reduce profitability as investment opportunities available to bank
institutions become more limited and as consumers look for savings vehicles
other than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions, mortgage
banking companies and insurance companies, and increased competition may
result from legislative broadening of regional and national interstate banking
powers as has been recently proposed. Among other benefits, proposed
legislation would allow banks and bank holding companies to acquire across
previously prohibited state lines and to consolidate their various bank
subsidiaries into one unit. The Sponsor makes no prediction as to what, if
any, manner of thrift regulatory reform might ultimately be adopted or what
ultimate effect such reform might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5% of
the outstanding shares of any class of voting securities of a bank or bank
holding company, (2) acquiring control of a bank or another bank holding
company, (3) acquiring all or substantially all the assets of a bank, or (4)
merging or consolidating with another bank holding company, without first
obtaining Federal Reserve Board ("FRB" ) approval. In considering an
application with respect to any such transaction, the FRB is required to
consider a variety of factors, including the potential anti-competitive
effects of the transaction, the financial condition and future prospects of
the combining and resulting institutions, the managerial resources of the
resulting institution, the convenience and needs of the communities the
combined organization would serve, the record of performance of each combining
organization under the Community Reinvestment Act and the Equal Credit
Opportunity Act, and the prospective availability to the FRB of information
appropriate to determine ongoing regulatory compliance with applicable banking
laws. In addition, the federal Change In Bank Control Act and various state
laws impose limitations on the availability of one or more individuals or
other entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends by bank
holding companies. In the policy statement, the FRB expressed its view that a
bank holding company experiencing earnings weaknesses should not pay cash
dividends which exceed its net income or which could only be funded in ways
that would weaken its financial health, such as by borrowing. The FRB also may
impose limitations on the payment of dividends as a condition to its approval
of certain applications, including applications for approval of mergers and
acquisitions. The Sponsor makes no prediction as to the effect, if any, such
laws will have on the Equity Securities or whether such approvals, if
necessary, will be obtained.
The principal trading market for certain of the Equity Securities may be in
the over-the-counter market. As a result, the existence of a liquid trading
market for the Equity Securities may depend on whether dealers will make a
market in the Equity Securities. There can be no assurance that a market will
be made for any of the Equity Securities, that any market for the Equity
Securities will be maintained or of the liquidity of the Equity Securities in
any markets made. In addition, the Trust may be restricted under the
Investment Company Act of 1940 from selling Equity Securities to the Managing
Underwriter or the Sponsor. The price at which the Equity Securities may be
sold to meet redemptions, and the value of the Trust, will be adversely
affected if trading markets for the Equity Securities are limited or absent.
In the opinion of the Managing Underwriter, certain of the Equity Securities
included in the Trust which may have the highest potential for capital
appreciation also from time to time may experience limited purchase or sale
availability in the market place. In anticipation of this possibility, the
Managing Underwriter intends to make a market in said Equity Securities to
facilitate the creation of subsequent deposits for this Trust which may have
an impact on the price at which Units are valued during the initial offering
period. In addition, upon termination of the Trust, this potential limited
daily trading volume may result in negative market price consequences for the
Trust stemming from the liquidation of a significant amount of these Equity
Securities. The Sponsor will attempt to mitigate these consequences with a
longer liquidation period (not to exceed 30 days) for these Equity Securities
at the Trust's termination than might be required for the other Equity
Securities included in the Trust. However, these procedures may be
insufficient or unsuccessful in avoiding such negative price consequences.
An investment in Units should be made with an understanding of the risks which
an investment in common stocks entail, including the risk that the financial
condition of the issuers of the Equity Securities or the general condition of
the common stock market may worsen and the value of the Equity Securities and
therefore the value of the Units may decline. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases of value as market confidence in and perceptions of the issuers
change. The perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Shareholders of common stocks
have rights to receive payments from the issuers of those common stocks that
are generally subordinate to those of creditors of, or holders of debt
obligations or preferred stocks of, such issuers. Shareholders of common
stocks of the type held by the Trust have a right to receive dividends only
when and if, and in the amounts, declared by the issuer's board of directors
and have a right to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or
the rights of holders of common stock with respect to assets of the issuer
upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities may be expected to fluctuate over the
life of the Trust to values higher or lower than those prevailing on the
Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity,
generally have inferior rights to receive payments from the issuer in
comparison with the rights of creditors of, or holders of debt obligations or
preferred stocks issued by, the issuer. Cumulative preferred stock dividends
must be paid before common stock dividends and any cumulative preferred stock
dividend omitted is added to future dividends payable to the holders of
cumulative preferred stock. Preferred stockholders are also generally entitled
to rights of liquidation which are senior to those of common stockholders.
TAX STATUS
The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221
of the Internal Revenue Code of 1986 ("the Code" ). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust. For purposes of the following discussion and opinion, it is assumed
that each Equity Security is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal income
tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of
the Trust will be treated as income of the Unitholders thereof under the Code.
Each Unitholder will be considered to have received his pro rata share of
income derived from each Trust asset when such income is considered to be
received by the Trust.
2. Each Unitholder will have a taxable event when the Trust disposes of an
Equity Security (whether by sale, exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unitholder (except
to the extent an in kind distribution of stock is available and received by
such Unitholder from the Trust, as described below). The price a Unitholder
pays for his Units, generally including sales charges, is allocated among his
pro rata portion of each Equity Security held by the Trust (in proportion to
the fair market values thereof on the valuation date closest to the date the
Unitholder purchase his Units) in order to determine his initial tax basis for
his pro rata portion of each Equity Security held by the trust. It should be
noted that certain legislative proposals have been made which could affect the
calculation of basis for Unitholders holding securities that are substantially
identical to the Equity Securities. Unitholders should consult their own tax
advisors with regard to calculation of basis.
A Unitholder will be considered to have received all of the dividends paid on
his pro rata portion of each Equity Security when such dividends are received
by the Trust. Unitholders will be taxed in this manner regardless of whether
distributions from the Trust are actually received by the Unitholder or are
automatically reinvested. For federal income tax purposes, a Unitholder's pro
rata portion of dividends as defined by Section 316 of the Code paid with
respect to an Equity Security held by the trust are taxable as ordinary income
to the extent of such corporation's current and accumulated "earnings and
profits" . A Unitholder's pro rata portion of dividends paid on such Equity
Security which exceed such current and accumulated earnings and profits will
first reduce a Unitholder's tax basis in such Equity Security, and to the
extent that such dividends exceed a Unitholder's tax basis in such Equity
Security shall generally be treated as capital gain. In general, any such
capital gain will be short-term unless a Unitholder has held his Units for
more than one year.
3. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Equity Securities held by the trust will generally
be considered a capital gain (except in the case of a dealer or a financial
institution) and, in general, will be long-term if the Unitholder has held his
Units for more than one year (the date on which the Units are acquired (i.e.,
the "trade date" ) is excluded for purposes of determining whether the
Units have been held for more than one year). A Unitholder's portion of loss,
if any, upon the sale or redemption of Units or the disposition of Equity
Securities held by the trust will generally be considered a capital loss
(except in the case of a dealer or a financial institution) and, in general,
will be long-term if the Unitholder has held his Units for more than one year.
Unitholders should consult their tax advisers regarding the recognition of
such capital gains and losses for federal income tax purposes.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by the trust (to the
extent such dividends are taxable as ordinary income, as discussed above and
are attributable to domestic corporations) in the same manner as if such
corporation directly owned the Equity Securities paying such dividends (other
than corporate Unitholders, such as "S" corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and
the personal holding corporation tax). However, a corporation owning Units
should be aware that Sections 246 and 246A of the Code impose additional
limitations on the eligibility of dividends for the 70% dividends received
deduction. The limitations include a requirement that stock (and therefore
Units) must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been issued which address special
rules that must be considered in determining whether the 46 day holding period
requirement is met. Moreover, the allowable percentage of the deduction will
be reduced from 70% if a corporate Unitholder owns certain stock (or Units)
the financing of which is directly attributable to indebtedness incurred by
such corporation. It should be noted that various legislative proposals that
would affect the dividends received deduction have been introduced.
Unitholders should consult with their tax advisers with respect to the
limitations on and possible modifications to the dividends received deduction.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that own Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as through the expense had been paid
directly by him. It should be noted that as a result of the Tax Reform Act of
1986, certain miscellaneous itemized deductions, such as investment expenses,
tax return preparation fees and employee business expenses will be deductible
by an individual only to the extend they exceed 2% of such individual's
adjusted gross income. Unitholders may be required to treat some or all of the
expenses of the Trust as miscellaneous itemized deductions subject to this
limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Equity Securities by
the Trust or Disposition of Units. As discussed above, a Unitholder may
recognize taxable gain (or loss) when an Equity Security is disposed of by the
Trust or if the Unitholder disposes of a Unit. For taxpayers other than
corporations, net capital gains (which are defined as net long-term capital
gain over net short-term capital loss for a taxable year) are subject to a
maximum marginal stated tax rate of 28%. However, it should be noted that
legislative proposals are introduced from time to time that could affect tax
rates and could affect relative differences at which ordinary income and
capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "Act" ) raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate for taxpayers other than corporations Because some or all capital gains
are taxed at a comparatively lower rate under the Act, the Act includes a
provision that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993. Unitholders and
prospective investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the trust involved including his
pro rata portion of all the Equity Securities represented by the Unit.
Legislative proposals have been made that would treat certain transactions
designed to reduce or eliminate risk of loss and opportunities for gain as
constructive sales for purposes of recognition of gain (but not loss).
Unitholders should consult their own tax advisors with regard to any such
constructive sale rules.
Special Tax Consequences of In Kind Distributions Upon Redemption or
Termination of the Trust. Under certain circumstances a Unitholder tendering
Units for redemption may be able to request an In Kind Distribution. A
Unitholder may also under certain circumstances be able to request an In Kind
Distribution upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units." As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust assets for
federal income tax purposes. The receipt of an In Kind Distribution will
result in a Unitholder receiving an undivided interest in whole shares of
stock plus, possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution
will depend on whether or not a Unitholder receives cash in addition to Equity
Securities. An "Equity Security" for this purpose is a particular
class of stock issued by a particular corporation. A Unitholder will not
recognize gain or loss if a Unitholder only receives Equity Securities in
exchange for his or her pro rata portion in the Equity Securities held by the
trust. However, if a Unitholder also receives cash in exchange for a
fractional share of an Equity Security held by the trust, such Unitholder will
generally recognize gain or loss based upon the difference between the amount
of cash received by the Unitholder and his tax basis in such fractional share
of an Equity Security held by the Trust.
Because the Trust will own many Equity Securities, a Unitholder who requests
an In Kind Distribution will have to analyze the tax consequences with respect
to each Equity Security owned by the Trust. The amount of taxable gain (or
loss) recognized upon such exchange will generally equal the sum of the gain
(or loss) recognized under the rules described above by such Unitholder with
respect to each Equity Security owned by the Trust. Unitholders who request
and In Kind Distribution are advised to consult their tax advisers in this
regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax basis
in his Units will generally equal the price paid by such Unitholder for his
Units. the cost of the Units is allocated among the Equity Securities held in
the Trust in accordance with the proportion of the fair market values of such
Equity Securities on the valuation date closest to the date the Units are
purchased in order to determine such Unitholder's tax basis for his pro rata
portion of each Equity Security.
A Unitholder's tax basis in his Units and his pro rata portion of an Equity
Security held by the trust will be reduced to the extent dividends paid with
respect to such Equity Security are received by the Trust which are not
taxable as ordinary income as described above.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the trustee and to certify that the
Unitholder has not been notified that payments to the Unitholder are subject
to back-up withholding. If the proper taxpayer identification number nd
appropriate certification are not provided when requested, distributions by
the trust to such Unitholder (including amounts received upon the redemption
of Units) will be subject to back-up withholding. Distributions by the Trust
(other than those that are not treated as United States source income, if any)
will generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign corporations
or other non-United States person. Such persons should consult their tax
advisers.
In general, income that is not effectively connected to the conduct of a trade
or business within the United States that is earned by non-U.S. Unitholders
and derived from dividends of foreign corporations will not be subject to U.S.
withholding tax provided that less than 25 percent of the gross income of the
foreign corporation for a three-year period ending with the close of its
taxable year preceding payment was not effectively connected to the conduct of
a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the
United States and a foreign country. Non-U.S. Unitholders should consult their
own tax advisers regarding the imposition of U.S. withholding on distributions
from the Trust.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trust. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unitholders. Because, under the
grantor trust rules, an investor is deemed to have paid directly his share of
foreign taxes that have been paid or accrued, if any, an investor may be
entitled to a foreign tax credit or deduction for United States tax purposes
with respect to such taxes. Investors should consult their tax advisers with
respect to foreign withholding taxes and foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of such Trust a statement containing information relating to the dividends
received by the Trust on the Equity Securities, the gross proceeds received by
the Trust from the disposition of any Equity Security (resulting from
redemption or the sale of any Equity Security), and the fees and expenses paid
by the Trust. The Trustee will also furnish annual information returns to
Unitholders and to the Internal Revenue Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the
trust will be treated as the income of the Unitholders under the existing come
tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
("U.S. Unitholders" ) with regard to federal and certain aspects of New
York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers
in this regard. As used herein, the term "U.S. Unitholder" means an
owner of a Unit in the Trust that (a) is (i) for United States federal income
tax purposes a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unitholder in
paragraph (a) but whose income from a Unit is effectively connected with such
Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable.
TRUST OPERATING EXPENSES
Compensation of Sponsor, Evaluator and Managing Underwriter. The Sponsor will
not receive any fees in connection with its activities relating to the Trust.
The Evaluator shall receive that evaluation fee, payable in any month
incurred, set forth under "Summary of Essential Financial Information"
(which is based on the number of Units outstanding on January 1 of each year
for which such compensation relates) for regularly evaluating the Trust
portfolio. Such fee may exceed the actual cost of providing such evaluation
services for this Trust, but at no time will the total amount paid to the
Evaluator for providing evaluation services to unit investment trusts of which
Van Kampen American Capital Distributors, Inc. acts as Sponsor in any calendar
year exceed the aggregate cost to the Evaluator of supplying such services in
such year. As Supervisor for the Trust, the Managing Underwriter will receive
an annual supervisory fee, payable in monthly installments, which is not to
exceed the amount set forth under "Summary of Essential Financial
Information" (which is based on the number of Units outstanding on January
1 of each year for which such compensation relates) for providing portfolio
supervisory services for the Trust. Such fee may exceed the actual cost of
providing such supervision services for this Trust, but at no time will the
total amount paid to the Managing Underwriter for providing portfolio
supervision services to unit investment trusts for which Principal Financial
Securities, Inc. is the principal underwriter in any calendar year exceed the
aggregate cost to the Supervisor of supplying such services in such year. Both
of the foregoing fees may be increased without approval of the Unitholders by
amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. The Sponsor and the Managing Underwriter
will receive sales commissions and may realize other profits (or losses) in
connection with the sale of Units and the deposit of the Equity Securities as
described under "Public Offering--Sponsor and Managing Underwriter
Compensation."
Trustee's Fee. For its services the Trustee will receive an annual fee from
the Trust as 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). The Trustee's
fees are payable in monthly installments on or before the twenty-fifth day of
each month from the Income Account to the extent funds are available and then
from the Capital Account. The Trustee benefits to the extent there are funds
for future distributions, payment of expenses and redemptions in the Capital
and Income Accounts since these accounts are non-interest bearing and the
amounts earned by the Trustee are retained by the Trustee. Part of the
Trustee's compensation for its services to the Trust is expected to result
from the use of these funds. Such fees may be increased without approval of
the Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. For a discussion of the
services rendered by the Trustee pursuant to its obligations under the Trust
Agreement, see "Rights of Unitholders--Reports Provided" and "
Trust Administration."
Miscellaneous Expenses. Expenses incurred in establishing the Trust, including
the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and certificates), federal and
state registration fees, the initial fees and expenses of the Trustee, legal
and accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over the life of the Trust.
Such costs will be paid out of funds in the Capital Account or from the sale
of Securities. 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 Equity Securities are all common
stocks, and the income stream produced by dividend payments is unpredictable,
the Sponsor cannot provide any assurance that dividends will be sufficient to
meet any or all expenses of 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 Equity Securities to pay such amounts. These
sales may result in capital gains or losses to Unitholders. See "Tax
Status."
PUBLIC OFFERING
General. Units are offered at the Public Offering Price (which is based on the
aggregate underlying value of the Equity Securities and includes a sales
charge initially equal to 4.9% of the Public Offering Price which is
equivalent to 5.152% of the aggregate underlying value of the Equity
Securities and is subject to reduction annually). Such underlying value shall
include the proportionate share of any undistributed cash held in the Capital
and Income Accounts of the Trust.
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 Equity 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 Equity Securities an
amount initially equal to 5.152% of such value and dividing the sum so
obtained by the number of Units in the Trust outstanding. Such underlying
value shall include the proportionate share of any cash held in the Income and
Capital Accounts. This computation produced a gross underwriting profit
initially equal to 4.9% of the Public Offering Price. Such price determination
as of the close of business on the day before the Initial Date of Deposit was
made on the basis of an evaluation of the Equity Securities in the Trust
prepared by Interactive Data Corporation, a firm regularly engaged in the
business of evaluating, quoting or appraising comparable securities.
Thereafter, the Evaluator on each business day will appraise or cause to be
appraised the value of the underlying Equity Securities as of the Evaluation
Time on days the New York Stock Exchange is open and will adjust the Public
Offering Price of the Units commensurate with such valuation. Such Public
Offering Price will be effective for all orders received prior to the
Evaluation Time on each such day. Orders received by the Trustee or Managing
Underwriter for purchases, sales or redemptions after that time, or on a day
when the New York Stock Exchange is closed, will be held until the next
determination of price. Effective on each December 12, commencing December 12,
1996 such sales charge is reduced by .5 of 1% to a minimum sales charge of
3.9%.
The value of the Equity Securities is determined on each business day by the
Evaluator in the following manner: if the Equity Securities are listed on a
national securities exchange, this evaluation is generally based on the
closing sale prices on that exchange (unless it is determined that these
prices are inappropriate as a basis for valuation) or, if there is no closing
sale price on that exchange, at the closing bid prices. If the Equity
Securities are not so listed or, if so listed and the principal market
therefor is other than on the exchange, the evaluation shall generally be
based on the current bid prices on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for evaluation). If
current bid prices are unavailable, the evaluation is generally determined (a)
on the basis of current bid prices for comparable securities, (b) by
appraising the value of the Equity Securities on the bid side of the market or
(c) by any combination of the above.
In offering the Units to the public, neither the Sponsor, the Managing
Underwriter nor any broker-dealers are recommending any of the individual
Equity Securities in the Trust but rather the entire pool of Equity
Securities, taken as a whole, which are represented by the Units.
Unit Distribution. Units will be distributed to the public by the Managing
Underwriter at the Public Offering Price. The Sponsor intends to qualify the
Units for sale in a number of states.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 200 Units (100 Units for a
tax-sheltered retirement plan). The Managing Underwriter reserves the right to
reject, in whole or in part, any order for the purchase of Units and to change
the amount of any concession to registered representatives from time to time.
Sponsor and Managing Underwriter Compensation. The Managing Underwriter will
receive a gross sales commission initially equal to 4.9% of the Public
Offering Price of the Units subject to reduction as described above.
In addition, the Managing Underwriter realized a profit or sustained a loss,
as the case may be, as a result of the difference between the price paid for
the Equity Securities by the Managing Underwriter and the cost of such Equity
Securities to the Trust on the Initial Date of Deposit as well as on
subsequent deposits. The Sponsor has not participated as sole underwriter or
as manager or as a member of the underwriting syndicates or as an agent in a
private placement for any of the Equity Securities in the Trust portfolio. The
Sponsor and the Managing Underwriter may further realize additional profit or
loss as a result of the possible fluctuations in the market value of the
Equity Securities in the Trust after a date of deposit, since all proceeds
received from the sale of Units (excluding dealer concessions and agency
commissions allowed, if any) will be retained by the Sponsor or Managing
Underwriter.
A person will become the owner of the Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor or
Managing Underwriter prior to the date of settlement for the purchase of Units
may be used in the Sponsor's or Managing Underwriter's business and may be
deemed to be a benefit to the Sponsor or Managing Underwriter, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Managing Underwriter
intends to maintain a secondary market for Units of the Trust for the period
indicated. In so maintaining a market, the Managing Underwriter will also
realize profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are resold
(which price includes the applicable sales charge). In addition, the Managing
Underwriter will also realize profits or sustain losses resulting from a
redemption of such repurchased Units at a price above or below the purchase
price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Managing Underwriter
intends to maintain a secondary market for the Units offered hereby and offer
continuously to purchase Units at prices subject to change at any time, based
upon the aggregate underlying value of the Equity Securities in the Trust
(computed as indicated under "Offering Price" above and "Rights of
Unitholders--Redemption of Units" ). If the supply of Units exceeds demand
or if some other business reason warrants it, the Managing Underwriter may
either discontinue all purchases of Units or discontinue purchases of Units at
such prices. In the event that a market is not maintained for the Units and
the Unitholder cannot find another purchaser, a Unitholder desiring to dispose
of his Units will be able to dispose of such Units by tendering them to the
Trustee for redemption at the Redemption Price. It is the current intention of
the Managing Underwriter not to maintain a secondary market after December 12,
1998. A Unitholder who wishes to dispose of his Units should inquire of his
broker as to current market prices in order to determine whether there is in
existence any price in excess of the Redemption Price and, if so, the amount
thereof.
Tax-Sheltered Retirement Plans. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for 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 for tax-sheltered
retirement plans is 100 Units.
RIGHTS OF UNITHOLDERS
General. The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee. Ownership
of Units of the Trust will be evidenced by book entry unless a Unitholder
makes a written request to the Managing Underwriter that ownership be
evidenced by certificates. Units are transferable by making a written request
to the Trustee and, in the case of Units evidenced by a certificate, by
presentation and surrender of such certificate to the Trustee properly
endorsed or accompanied by a written instrument or instruments of transfer. A
Unitholder must sign such written request, and such certificate or transfer
instrument, exactly as his name appears on the records of the Trustee and on
the face of any certificate representing the Units to be transferred with the
signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP" ) or such other signature guarantee program
in addition to, or in substitution for, STAMP as may be accepted by the
Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer of interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Income and Capital. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Equity Securities, etc.) are credited to the Capital Account.
The Trustee will distribute any net income with respect to any of the Equity
Securities in the Trust on or about the Income Distribution Dates to
Unitholders of record on the preceding Income Record Dates. See "Summary
of Essential Financial Information" in Prospectus Part One. Proceeds
received on the sale of any Equity Securities in the Trust, to the extent not
used to meet redemptions of Units or pay expenses, will (except as hereinafter
provided) be distributed annually on the Capital Account Distribution Date to
Unitholders of record on the preceding Capital Account Record Date. Proceeds
received from the disposition of any of the Equity Securities after a record
date and prior to the following distribution date will be held in the Capital
Account of the Trust and not distributed until the next distribution date
applicable to such Capital Account. Proceeds received on the sale of any
Equity Securities in the Trust, to the extent not used to meet redemptions of
Units or pay expenses, will, however, be distributed on the last day of each
month to holders of record on the fifteenth day of such month if the amount
available for distribution equals at least $0.01 per Unit. The Trustee is not
required to pay interest on funds held in the Capital or Income Accounts (but
may itself earn interest thereon and therefore benefits from the use of such
funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account after deducting
estimated expenses. Because dividends are not received by the Trust at a
constant rate throughout the year, such distributions to Unitholders are
expected to fluctuate from distribution to distribution. Persons who purchase
Units will commence receiving distributions only after such person becomes a
record owner. Notification to the Trustee of the transfer of Units is the
responsibility of the purchaser, but in the normal course of business such
notice is provided by the selling broker-dealer.
As of the twenty-fifth day of each month, the Trustee will deduct from the
Income Account and, to the extent funds are not sufficient therein, from the
Capital Account, amounts necessary to pay the expenses of the Trust (as
determined on the basis set forth under "Trust Operating Expenses" ).
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any governmental charges payable
out of the Trust. Amounts so withdrawn shall not be considered a part of the
Trust's assets until such time as the Trustee shall return all or any part of
such amounts to the accounts. In addition, the Trustee may withdraw from the
Income and Capital Accounts such amounts as may be necessary to cover
redemptions of Units.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder of the Trust a
statement (i) as to the Income Account: income received, deductions for
applicable taxes and for fees and expenses of the Trust, for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Capital Account: the
dates of disposition of any Equity Securities and the net proceeds received
therefrom, deductions for payment of applicable taxes, fees and expenses of
the Trust held for distribution to Unitholders of record as of a date prior to
the determination and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Equity Securities held by the
Trust and the number of Units outstanding on the last business day of such
calendar year; (iv) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; and (v) amounts actually
distributed during such calendar year from the Income and Capital Accounts,
separately stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his or her
Units by tender to the Trustee at its Unit Investment Trust Division, 101
Barclay Street, 20th Floor, New York, New York 10286 of a request for
redemption duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed as described above and by payment of applicable
governmental charges, if any. No redemption fee will be charged. On the third
business day following such tender the Unitholder will be entitled to receive
in cash (unless the redeeming Unitholder elects an "In Kind
Distribution" as described below) an amount for each Unit equal to the
Redemption Price per Unit next computed after receipt by the Trustee of such
tender of Units as of the Evaluation Time set forth under "Summary of
Essential Financial Information." The "date of tender" is deemed
to be the date on which Units are received by the Trustee, except that with
respect to Units received after the applicable Evaluation Time the date of
tender is the next day on which the New York Stock Exchange is open for
trading and such Units will be deemed to have been tendered to the Trustee on
such day for redemption at the redemption price computed on that day.
The Trustee is empowered to sell Equity Securities of the Trust in order to
make funds available for redemption if funds are not otherwise available in
the Capital and Income Accounts to meet redemptions. The Equity Securities to
be sold will be selected by the Trustee from those designated on a current
list provided by the Supervisor for this purpose. Units so redeemed shall be
cancelled.
Unitholders in the Trust tendering 2,500 or more Units for redemption may
request from the Trustee in lieu of a cash redemption a distribution in kind
("In Kind Distribution" ) of an amount and value of Equity Securities
per Unit equal to the Redemption Price per Unit as determined as of the next
evaluation following the tender. An In Kind Distribution on redemption of
Units will be made by the Trustee through the distribution of each of the
Equity Securities in book-entry form to the account of the Unitholder's
broker-dealer at Depository Trust Company. The tendering Unitholder will
receive his pro rata number of whole shares of each of the Equity Securities
comprising the Trust portfolio and cash from the Capital Account equal to the
fractional shares to which the tendering Unitholder is entitled. The Trustee
may adjust the number of shares of any issue of Equity Securities included in
a Unitholder's In Kind Distribution to facilitate the distribution of whole
shares, such adjustment to be made on the basis of the value of the Equity
Securities on the date of tender. If funds in the Capital Account are
insufficient to cover the required cash distribution to the tendering
Unitholder, the Trustee may sell Equity Securities according to the criteria
discussed above.
To the extent that Equity Securities are redeemed in kind or sold, the size of
the Trust will be, and the diversity of the Trust may be, reduced. Sales may
be required at a time when the Equity Securities would not otherwise be sold
and may result in lower prices than might otherwise be realized. The price
received upon redemption may be more or less than the amount paid by the
Unitholder depending on the value of the Equity Securities in the portfolio at
the time of redemption. Special federal income tax consequences will result if
a Unitholder requests an In Kind Distribution. See "Tax Status."
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the aggregate underlying value of
the Equity Securities in the Trust, plus or minus cash, if any, in the Income
and Capital Accounts of the Trust. 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, (ii) the value of the Equity Securities and (iii) dividends
receivable on the Equity Securities 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. The
Evaluator may determine the value of the Equity Securities in the Trust in the
following manner: if the Equity Securities are listed on a national securities
exchange, this evaluation is generally based on the closing sale prices on
that exchange (unless it is determined that these prices are inappropriate as
a basis for valuation) or, if there is no closing sale price on that exchange,
at the closing bid prices. If the Equity Securities of the Trust are not so
listed or, if so listed and the principal market therefore is other than on
the exchange, the evaluation shall generally be based on the current bid price
on the over-the-counter market (unless these prices are inappropriate as a
basis for evaluation). If current bid prices are unavailable or inappropriate
as a basis for valuation, the evaluations generally determined (a) on the
basis of current bid prices for comparable securities, (b) by appraising the
value of the Equity Securities on the bid side of the market or (c) by any
combination of the above.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
Managing Underwriter Purchases of Units. The Trustee shall notify the Managing
Underwriter of any Units tendered for redemption. If the Managing
Underwriter's bid in the secondary market at that time equals or exceeds the
Redemption Price per Unit, it may purchase such Units by notifying the Trustee
before the close of business on the next succeeding business day and by making
payment therefor to the Unitholder not later than the day on which the Units
would otherwise have been redeemed by the Trustee. Units held by the Managing
Underwriter may be tendered to the Trustee for redemption as any other Units.
The offering price of any Units acquired by the Managing Underwriter will be
in accord with the Public Offering Price described in the then currently
effective prospectus describing such Units. Any profit resulting from the
resale of such Units will belong to the Managing Underwriter which likewise
will bear any loss resulting from a lower offering or redemption price
subsequent to its acquisition of such Units.
Portfolio Administration. The 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 typically involve frequent
changes in a portfolio of securities on the basis of economic, financial and
market analyses. While the Trust will not be managed, the Trust Agreement does
provide that the Sponsor may (but need not) direct the Trustee to dispose of
an Equity Security in certain events such as the issuer having defaulted on
the payment on any of its outstanding obligations or the price of an Equity
Security has declined to such an extent or other such credit factors exist so
that in the opinion of the Sponsor the retention of such Equity Securities
would be detrimental to the Trust. Pursuant to the Trust Agreement and with
limited exceptions, the Trustee may sell any securities or other properties
acquired in exchange for Equity Securities such as those acquired in
connection with a merger or other transaction. If offered such new or
exchanged securities or property, the Trustee shall reject the offer. However,
in the event such securities or property are nonetheless acquired by the
Trust, they may be accepted for deposit in the Trust and either sold by the
Trustee or held in such Trust pursuant to the direction of the Sponsor (who
may rely on the advice of the Supervisor). Proceeds from the sale of Equity
Securities (or any securities or other property received by the Trust in
exchange for Equity Securities) are credited to the Capital Account for
distribution to Unitholders or to meet redemptions. Except as stated under
"Trust Portfolio--General" and as provided in this paragraph, the
acquisition by the Trust of any securities other than the Equity Securities is
prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Equity Securities designated by the Supervisor, or
if no such designation has been made, in its own discretion, for the purpose
of redeeming Units of the Trust tendered for redemption and the payment of
expenses.
The Supervisor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the individual issues of
Equity Securities in the Trust. To the extent this is not practicable, the
composition and diversity of the Equity Securities in such Trust may be
altered. In order to obtain the best price for the Trust, it may be necessary
for the Supervisor to specify minimum amounts (generally 100 shares) in which
blocks of Equity Securities are to be sold.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor
and the Trustee), provided, however, that the Trust Agreement may not be
amended to increase the number of Units (except as provided in the Trust
Agreement). The Trust Agreement may also be amended in any respect by the
Trustee and Sponsor, or any of the provisions thereof may be waived, with the
consent of the holders representing 51% of the Units of the Trust 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.
The Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units of the Trust then outstanding or by the Trustee when the
value of the Equity Securities owned by the Trust, as shown by any evaluation,
is less than that amount set forth under Minimum Termination Value in the "
Summary of Essential Financial Information" in Prospectus Part One. 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 Managing Underwriter
or the Sponsor, so that the net worth of the Trust would be reduced to less
than 40% of the value of the Equity Securities at the time they were deposited
in the Trust. If the Trust is liquidated because of the redemption of unsold
Units by the Sponsor and/or the Managing Underwriter, 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
Equity Security held thereunder, but in no event will it continue beyond the
Mandatory Termination Date.
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trust. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. At least 60 days before the Mandatory Termination Date the Trustee
will provide written notice of any termination to all Unitholders of the Trust
and will include with such notice a form to enable Unitholders owning 2,500 or
more Units to request an In Kind Distribution rather than payment in cash upon
the termination of the Trust. To be effective, this request must be returned
to the Trustee at least five business days prior to the Mandatory Termination
Date. On the Mandatory Termination Date (or on the next business day
thereafter if a holiday) the Trustee will deliver each requesting Unitholder's
pro rata number of whole shares of each of the Equity Securities in the Trust
to the account of the broker-dealer or bank designated by the Unitholder at
Depository Trust Company. The value of the Unitholder's fractional shares of
the Equity Securities will be paid in cash. Unitholders with less than 2,500
Units and Unitholders not requesting an In Kind Distribution will receive a
cash distribution from the sale of the remaining Equity Securities within a
reasonable time following the Mandatory Termination Date. Regardless of the
distribution involved, the Trustee will deduct from the funds of the Trust any
accrued costs, expenses, advances or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee, costs of
liquidation and any amounts required as a reserve to provide for payment of
any applicable taxes or other governmental charges. Any sale of Equity
Securities in the Trust upon termination may result in a lower amount than
might otherwise be realized if such sale were not required at such time. The
Trustee will then distribute to each Unitholder of the Trust his pro rata
share of the balance of the Income and Capital Accounts.
The Sponsor will attempt to sell Securities as quickly as possible commencing
on the Mandatory Termination Date without in the judgment of the Sponsor
materially adversely affecting the market price of the Securities. The Sponsor
does not anticipate that the period will be longer than one month, and it
could be as short as one day, depending on the liquidity of the Securities
being sold. The liquidity of any Security depends on the daily trading volume
of the Security and the amount that the Sponsor has available on any
particular day.
It is expected (but not required) that the Sponsor will generally follow the
following guidelines in selling the Securities; for highly liquid Securities,
the Securities will generally be sold on the Mandatory Termination Date; for
less liquid Securities, on each of the first two days subsequent to the
Mandatory Termination Date, the amount of any underlying Securities will
generally be sold at a price no less than 1/2 of one point under the closing
sale price of those Securities on the preceding day. Thereafter, the Sponsor
intends to sell without any price restrictions at least a portion of the
remaining underlying Securities, the numerator of which is one and the
denominator of which is the total number of days remaining (including that
day) in the one month period following the Mandatory Termination Date.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason of
the sale by the Trustee of any of the Equity Securities. In the event of the
failure of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and shall not be liable for any action taken by it in good faith
under the Trust Agreement. The Trustee shall not be liable for any taxes or
other governmental charges imposed upon or in respect of the Equity Securities
or upon the interest thereon or upon it as Trustee under the Trust Agreement
or upon or in respect of the Trust which the Trustee may be required to pay
under any present or future law of the United States of America or of any
other taxing authority having jurisdiction. In addition, the Trust Agreement
contains other customary provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor, Supervisor or Unitholders for errors in judgment. This
provision shall not protect the Evaluator in any case of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and
duties.
Managing Underwriter. Principal Financial Securities, Inc. based in Dallas,
Texas is a member of The Principal Financial Group, a diversified family of
financial services companies. The group's largest member, Principal Mutual
Life Insurance Company, was founded in 1879 and ranks among the 10 largest
U.S. life insurers based on assets. The Principal(R)offers a full range of
financial products and services for business, groups and individuals. Founded
in 1952 as Eppler, Guerin & Turner, Inc., Principal Financial Securities has
grown to be one of the largest regional investment banking and brokerage
firms. Principal Financial Securities is a member of the New York and American
stock exchanges and the National Association of Securities Dealers.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. Prior to October 31, 1996, VK/AC Holding,
Inc. was controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity IV Limited Partnership.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings
II, Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged
with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition" ).
As a result of the Acquisition, VK/AC Holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser (MSAM" ), Morgan Stanley & Co.
Incorporated, a registered broker-dealer and investment adviser, and Morgan
Stanley International, are engaged in a wide range of financial services.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring and other corporate finance
advisory activities; merchant banking; stock brokerage and research services;
asset management; trading of futures, options, foreign exchange commodities
and swaps (involving foreign exchange, commodities, indices and interest
rates); real estate advice, financing and investing; and global custody,
securities clearance services and securities lending. As of September 30,
1996, MSAM, together with its affiliated investment advisory companies, had
approximately $103.5 billion of assets under management and fiduciary advice.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Subject to certain conditions
being met, it is currently anticipated that the transaction will close in
mid-1997. Thereafter, Van Kampen American Capital Distributors, Inc. will be
an indirect subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.
Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of November 30, 1996, the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trust or to any other Series thereof. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (i) appoint
a successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its Unit Investment Trust
Division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of
Governors of the Federal Reserve System, and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Equity Securities for the Trust 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 Trust. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute,
rule or regulation (see "Rights of Unitholders--Reports Provided" ).
The Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Equity Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Kroll & Tract LLP has acted as counsel for the
Trustee.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio at 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.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trust, the Sponsor or the Managing Underwriter. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, securities
in any state to any person to whom it is not lawful to make such offer in such
state
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Title Page
<S> <C>
The Trust 2
Objectives and Securities Selection 2
Trust Portfolio 3
Risk Factors 4
Tax Status 5
Trust Operating Expenses 7
Public Offering 8
Rights of Unitholders 9
Trust Administration 10
Other Matters 12
</TABLE>
This Prospectus contains information concerning the Trust and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Trust has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
PROSPECTUS
Part Two
PRINCIPAL FINANCIAL SECURITIES, INC.
FINANCIAL INSTITUTIONS TRUST, SERIES 1
Van Kampen American Capital
Equity Opportunity Trust,Series 23
Principal Financial Securities, Inc.
Fountain Place
1445 Ross Avenue, Suite 2300
Dallas, Texas 75201
Please retain both parts of this Prospectus for future reference.
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
23, certifies that it meets all of the requirements for effectiveness of
this Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Chicago and State of Illinois on the 24th
day of April, 1997.
Van Kampen American Capital Equity Opportunity
Trust, Series 23
(Registrant)
By Van Kampen American Capital Distributors,
Inc.
(Depositor)
By: Sandra A. Waterworth
Vice President
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on
April 24, 1997 by the following persons who constitute a majority of the
Board of Directors of Van Kampen American Capital Distributors, Inc.:
Signature Title
Don G. Powell Chairman and Chief )
Executive Officer )
William R. Molinari President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Sandra A. Waterworth ) (Attorney in Fact)*
____________________
* An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income
Trust and Investors' Quality Tax-Exempt Trust, Multi-Series 203
(File No. 33-65744) and with the Registration Statement on Form S-6
of Insured Municipals Income Trust, 170th Insured Multi-Series (File
No. 33-55891) and the same are hereby incorporated herein by this
reference.
Consent of Independent Certified Public Accountants
We have issued our report dated March 21, 1997 accompanying the
financial statements of Van Kampen American Capital Equity Opportunity
Trust, Series 23 as of December 31, 1996, and for the period then ended,
contained in this Post-Effective Amendment No. 1 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton LLP
Chicago, Illinois
April 24, 1997
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
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<INVESTMENTS-AT-COST> 5778262
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<DISTRIBUTIONS-OF-INCOME> (101018)
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