File No. 333-00585 CIK #896992
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549-1004
POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 27
(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, 1998 pursuant to paragraph (b) of Rule 485.
FIRST OF MICHIGAN REAL ESTATE INCOME AND GROWTH TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 27
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
First of Michigan Real Estate Income and Growth Trust, Series 1 (the "Trust")
is a unit investment trust which is contained in Van Kampen American Capital
Equity Opportunity Trust, Series 27. The Trust offers investors the
opportunity to purchase Units representing proportionate interests in a fixed,
diversified portfolio of common stocks primarily issued by publicly traded
equity real estate investment trusts, known as REITs (the "Securities").
Unless terminated earlier, the Trust will terminate on March 1, 2000 (the
"Mandatory Termination Date") and any Securities then held will, within a
reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Securities liquidated at termination will be sold at the then current market
value for such Securities; therefore, the amount distributable in cash to a
Unitholder upon termination may be more or less than the amount such
Unitholder paid for his or her Units.
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. See "Summary of Essential Financial
Information" in this Part One.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE 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 24, 1998
Van Kampen American Capital
FIRST OF MICHIGAN REAL ESTATE INCOME AND GROWTH TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 27
Summary of Essential Financial Information
As of March 5, 1998
<TABLE>
Managing Underwriter and Supervisor: First of Michigan Corporation
Sponsor: Van Kampen American Capital Distributors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
First of
Michigan
Real Estate
Income and
Growth
Trust
----------------
<S> <C>
General Information
Number of Units..................................................................................... 397,597
Fractional Undivided Interest in Trust per Unit..................................................... 1/397,597
Public Offering Price:
Aggregate Value of Securities in Portfolio <F1>.................................................... $ 4,825,915
Aggregate Value Securities per Unit (including accumulated dividends).............................. $ 12.92
Sales charge 3.5% (3.627% of Aggregate Value of Securities excluding principal cash per Unit)<F3>... $ .46
Public Offering Price per Unit <F2><F3>............................................................ $ 13.38
Redemption Price per Unit........................................................................... $ 12.92
Secondary Market Repurchase Price per Unit.......................................................... $ 12.92
Excess of Public Offering Price per Unit over Redemption Price per Unit............................. $ .46
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee.............Maximum of $.0025 per Unit
Evaluator's Annual Fee..........................Maximum of $.0025 per Unit
Evaluations for purpose of sale, purchase or
redemption of Units are made as of 4:00 P.M. Eastern
time on days of trading on the New York Stock Exchange
next following receipt of an order for a sale or
purchase of Units or receipt by The Bank of New York
of Units tendered for redemption.
Date of Deposit.................................February 22, 1996
Mandatory Termination Date......................March 1, 2000
Trustee's Annual Fee............................$.008 per Unit
Estimated Annual Organizational Expenses <F4>...$.0176 per Unit
Income Distribution Record Date.................TENTH day of March, June, September, and December.
Income Distribution Date........................TWENTY-FIFTH day of March, June, September and December.
Capital Account Record Date.....................TENTH day of December.
Capital Account Distribution Date...............TWENTY-FIFTH day of December.
- ----------
<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 February 27, commencing February 27, 1997, the secondary
sales charge will decrease by .5 of 1% to a minimum sales charge of 3.5%. See
"Public Offering-Offering Price" in Part Two.
<F4>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" and "Statement of Condition". Historically,
the sponsors of unit investment trusts have paid all the costs of establishing
such trusts.
</TABLE>
PORTFOLIO
The First of Michigan Real Estate Income and Growth Trust consists of
several issues of Securities primarily issued by publicly traded equity real
estate investment trusts. The Securities are all 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(1) 1997
----------- -----------
<S> <C> <C>
Net asset value per Unit at beginning of period........................................................$ 9.58 $ 11.77
=========== ===========
Net asset value per Unit at end of period..............................................................$ 11.77 $ 13.44
=========== ===========
Distributions to Unitholders of investment income including accumulated dividends
paid on Units redeemed (average Units outstanding for entire period)..................................$ 0.57 $ 0.75
=========== ===========
Distributions to Unitholders from Security redemption proceeds
(average Units outstanding for entire period)..........................................................$ -- $ --
=========== ===========
Unrealized appreciation (depreciation) of Securities
(per Unit outstanding at end of period)................................................................$ 2.07 $ 1.22
=========== ===========
Units outstanding at end of period..................................................................... 450,000 405,833
</TABLE>
- ----------
(1) For the period from February 22, 1996 (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 First of Michigan Real Estate Income and Growth Trust,
Series 1 (Van Kampen American Capital Equity Opportunity Trust,Series 27):
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of First of Michigan Real
Estate Income and Growth Trust, Series 1 (Van Kampen American Capital Equity
Opportunity Trust, Series 27) as of December 31, 1997 and the related statements
of operations and changes in net assets for the period from February 22, 1996
(date of deposit) through December 31, 1996 and the year. ended December 31,
1997. 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, 1997 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 First of Michigan Real
Estate Income and Growth Trust, Series 1 (Van Kampen American Capital Equity
Opportunity Trust, Series 27) as of December 31, 1997, and the related
statements of operations and changes in net assets for the period from February
22, 1996 (date of deposit) through December 31, 1996 and the year ended December
31, 1997, in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
March 13, 1998
<TABLE>
FIRST OF MICHIGAN REAL ESTATE INCOME AND GROWTH TRUST, SERIES 1
Statements of Condition
December 31, 1997
<CAPTION>
First of
Michigan
Real Estate
Income and
Growth
Trust
----------------
<S> <C>
Trust property
Securities at market value, (cost $3,991,499) (note 1)................................ $ 5,417,063
Accumulated dividends................................................................. 43,131
Organizational costs.................................................................. 17,359
----------------
$ 5,477,553
================
Liabilities and interest to Unitholders
Cash overdraft........................................................................ $ 24,716
Interest to Unitholders............................................................... 5,452,837
----------------
$ 5,477,553
================
Analyses of Net Assets
Interest of Unitholders (405,833 Units of fractional undivided interest outstanding)
Cost to original investors of 450,000 Units (note 1).................................. $ 4,517,500
Less initial underwriting commission (note 3)......................................... 200,587
----------------
4,316,913
Less redemption of 44,167 Units....................................................... 555,097
----------------
3,761,816
Undistributed net investment income
Net investment income................................................................. 613,576
Less distributions to Unitholders..................................................... 574,473
----------------
39,103
Realized gain (loss) on Security sale or redemption................................... 226,354
Unrealized appreciation (depreciation) of Securities (note 2)......................... 1,425,564
Distributions to Unitholders of Security sale or redemption proceeds.................. --
----------------
Net asset value to Unitholders........................................................ $ 5,452,837
================
Net asset value per Unit (405,833 Units outstanding)................................... $ 13.44
================
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
FIRST OF MICHIGAN REAL ESTATE INCOME AND GROWTH TRUST, SERIES 1
Statements of Operations
Period from February 22, 1996 (date of deposit) through
December 31, 1996 and the year ended December 31, 1997
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Investment income
Dividend income..................................................... $ 305,802 $ 339,339
Expenses
Trustee fees and expenses........................................... 4,813 13,674
Evaluator fees...................................................... 813 1,169
Organizational fees................................................. 5,188 4,149
Supervisory fees.................................................... 681 1,138
------------- -------------
Total expenses...................................................... 11,495 20,130
------------- -------------
Net investment income............................................... 294,307 319,269
Realized gain (loss) from Securities sale or redemption
Proceeds............................................................ -- 551,768
Cost................................................................ -- 325,414
------------- -------------
Realized gain (loss)................................................ -- 226,354
Net change in unrealized appreciation (depreciation) of Securities... 932,104 493,460
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..... $ 1,226,411 $ 1,039,083
============= =============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
Period from February 22, 1996 (date of deposit) through
December 31, 1996 and the year ended December 31, 1997
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income...................................................... $ 294,307 $ 319,269
Realized gain (loss) on Securities sale or redemption...................... -- 226,354
Net change in unrealized appreciation (depreciation) of Securities......... 932,104 493,460
------------- -------------
Net increase (decrease) in net assets resulting from operations............ 1,226,411 1,039,083
Distributions to Unitholders from:
Net investment income...................................................... (245,088) (329,385)
Securities sale or redemption proceeds..................................... -- --
Redemption of Units -- (555,097)
------------- -------------
Total increase (decrease).................................................. 981,323 154,601
Net asset value to Unitholders
Beginning of period........................................................ 1,916,984 5,298,236
------------- -------------
Additional Securities purchased from proceeds of Unit Sales................ 2,399,929 --
------------- -------------
End of period (including undistributed net investment income of $49,219)
and $39,103, respectively)................................................ $ 5,298,236 $ 5,452,837
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
FIRST OF MICHIGAN REAL ESTATE INCOME AND GROWTH TRUST, SERIES 1
PORTFOLIO as of December 31, 1997
<CAPTION>
Valuation of Securities
at
Number December 31,
of Market Value Per 1997
Shares Name of Issuer Share (Note 1)
- ---------- ---------------------------------------------- --------------------- ----------------------------
<S> <C> <C> <C>
10,785 Cali Realty Corporation $ 41.0000 $ 442,185
- ------------------------------------------------------------------------------------------------------------
12,264 Camden Property Trust 31.0000 380,184
- ------------------------------------------------------------------------------------------------------------
14,460 CBL & Associates Properties, Incorporated 24.6875 356,981
- ------------------------------------------------------------------------------------------------------------
13,298 Chateau Properties, Incorporated 31.5000 418,887
- ------------------------------------------------------------------------------------------------------------
13,152 Crescent Real Estate Equities, Incorporated 39.3750 517,860
- ------------------------------------------------------------------------------------------------------------
18,702 Duke Realty Investments, Incorporated 24.2500 453,523
- ------------------------------------------------------------------------------------------------------------
12,040 First Industrial Realty Trust, Incorporated 36.1250 434,945
- ------------------------------------------------------------------------------------------------------------
14,174 HGI Realty, Incorporated "Horizon" 10.9375 155,028
- ------------------------------------------------------------------------------------------------------------
17,854 Health and Retirement Properties Trust 20.0000 357,080
- ------------------------------------------------------------------------------------------------------------
11,460 Hospitality Properties Trust 32.8750 376,747
- ------------------------------------------------------------------------------------------------------------
14,312 Liberty Property Trust 28.5625 408,787
- ------------------------------------------------------------------------------------------------------------
12,918 Oasis Residential, Incorporated 22.3125 288,233
- ------------------------------------------------------------------------------------------------------------
16,666 Reckson Associates Realty Corporation 25.3750 422,900
- ------------------------------------------------------------------------------------------------------------
12,351 Simon Property Group, Incorporated 32.6875 403,723
- ------------------------------------------------------------------------------------------------------------
194,436 $ 5,417,063
========== ===========================
</TABLE>
The accompanying notes are an integral part of these statements.
FIRST OF MICHIGAN REAL ESTATE INCOME AND GROWTH TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 27
Notes to Financial Statements
December 31, 1996 and 1997
- --------------------------------------------------------------------------
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 asked price. The cost was
determined on the day of the various Dates of Deposit.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in the Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value as
described in Note 1 and (3) accumulated dividends thereon, less accrued
expenses of the Trust, if any.
Federal Income Taxes - Each Unitholder is considered to be the owner of a pro
rata portion of the Trust and, accordingly, no provision has been made for
Federal Income Taxes.
Distributions to Unitholders of the Trust's taxable income will be taxable as
ordinary or capital gain income to Unitholders.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an 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, 1997 is as follows:
<TABLE>
<CAPTION>
First of
Michigan
Real Estate
Income and
Growth
Trust
----------------
<S> <C>
Unrealized Appreciation $ 1,597,476
Unrealized Depreciation (171,912)
----------------
$ 1,425,564
================
</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 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 February 27, commencing February
27, 1997, the secondary sales charge will decrease by .5 of 1% to a minimum
sales charge of 3.5%.
Compensation of Evaluator and Supervisor - the Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.0025 per Unit, not
to exceed the aggregate cost of the Supervisor for providing such services to
all applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases
under the category "All Services Less Rent of Shelter" in the Consumer
Price Index.
NOTE 4 - REDEMPTION OF UNITS
During the period ended December 31, 1996 and the year ended December 31, 1997,
0 Units and 44,167 Units, respectively, were presented for redemption.
FIRST OF MICHIGAN REAL ESTATE INCOME AND GROWTH TRUST, SERIES 1
PROSPECTUS PART TWO
- --------------------------------------------------------------------------------
THE TRUST. First of Michigan Financial Institutions Trust, Series 1 and
Series 2 (the "Trusts") are separate unit investment trusts which are contained
in Series 11 and Series 17, respectively, of the Van Kampen American Capital
Equity Opportunity Trust. Each Trust offers investors the opportunity to
purchase Units representing proportionate interests in a fixed, diversified
portfolio of common stocks issued by financial institutions headquartered in the
states of Michigan, Illinois, Indiana and Ohio (the "Equity Securities"). Unless
terminated earlier, each Trust will terminate on the Mandatory Termination Date
set forth under "Summary of Essential Financial Information" in Part One and any
Equity Securities then held will, within a reasonable time thereafter, be
liquidated or distributed by the Trustee. Any Equity Securities liquidated at
termination will be sold at the then current market value for such Equity
Securities; therefore, the amount distributable in cash to a Unitholder upon
termination may be more or less than the amount such Unitholder paid for his or
her Units.
OBJECTIVES OF THE TRUST. The objectives of the Trusts are to provide the
potential for capital appreciation and income by investing in a portfolio of
common stocks issued by financial institutions incorporated or headquartered in
the states of Michigan, Illinois, Indiana and Ohio. See "Portfolio" in Part One.
Each Unit of a Trust represents an undivided fractional interest in all the
Equity Securities deposited in such Trust. There is, of course, no guarantee
that the objectives of a Trust will be achieved.
PUBLIC OFFERING PRICE. The secondary market Public Offering Price of each
Trust will include the aggregate underlying value of the Securities in such
Trust, the applicable sales charge as described herein, and cash, if any, in the
Income and Capital Accounts held or owned by such Trust. The minimum purchase is
200 Units (100 Units for a tax-sheltered retirement plan). See "Public
Offering."
DIVIDEND AND CAPITAL DISTRIBUTIONS. Distributions of dividends and capital,
if any, received by a Trust will be paid in cash on the applicable distribution
date to Unitholders of record on the record date as set forth in the "Summary of
Essential Financial Information" in Part One. Any distribution of income and/or
capital will be net of the expenses of the Trusts. See "Tax Status."
Additionally, upon termination of a Trust, the Trustee will distribute, upon
surrender of Units for redemption, to each Unitholder his pro rata share of such
Trust's assets, less expenses, in the manner set forth under "Rights of
Unitholders--Distributions of Income and Capital."
SECONDARY MARKET FOR UNITS. Although not obligated to do so, the Managing
Underwriter intends to maintain a market for Units of a Trust and offer to
repurchase such Units at prices which are based on the aggregate underlying
value of Equity Securities in the Trust (generally determined by the closing
sale or bid prices of the Equity Securities), plus or minus a pro rata share of
cash, if any, in the Capital and Income Accounts of the Trust. If a secondary
market is not maintained, a Unitholder may redeem Units through redemption at
prices based upon the aggregate underlying value of the Equity Securities in a
Trust (generally determined by the closing sale or bid prices of the Equity
Securities), plus or minus a pro rata share of cash, if any, in the Capital and
Income Accounts of the Trust. See "Rights of Unitholders--Redemption of Units."
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
BOTH PARTS OF THIS PROSPECTUS SHOULD
BE RETAINED FOR FUTURE REFERENCE. THIS PROSPECTUS IS
DATED AS OF THE DATE OF THE PROSPECTUS PART I
ACCOMPANYING THIS PROSPECTUS PART II.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
TERMINATION. Commencing on the Mandatory Termination Date, Securities will
begin to be sold in connection with the termination of the Trust. The Sponsor
will determine the manner, timing and execution of the sale of the 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
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 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 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."
REINVESTMENT OPTION. Unitholders have the opportunity to have their
distributions reinvested into an open-end management investment company as
described herein. See "Rights of Unitholders--Reinvestment Option."
RISK FACTORS. An investment in the Trust should be made with an understanding
of the risks associated therewith, including, among other factors, the possible
deterioration of either the financial condition of the issuers or the general
condition of the stock market, volatile interest rates, economic recession and
the condition of the real estate market. The Trust is not actively managed and
Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Units of the Trust
are not deposits or obligations of, or guaranteed or endorsed by, any bank and
are not federally insured or otherwise protected by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency and involve
investment risk, including the possible loss of principal. See "Risk Factors."
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 27 is comprised
of one unit investment trust, First of Michigan Real Estate Income and Growth
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"),
dated the Initial Date of Deposit, among Van Kampen American Capital
Distributors, Inc., as Sponsor, American Portfolio Evaluation Services, a
division of Van Kampen American Capital Investment Advisory Corp., as Evaluator,
First of Michigan Corporation, as Supervisor and The Bank of New York, as
Trustee.
The Trust may be an appropriate medium for investors who desire to
participate in a diversified portfolio of common stocks issued by publicly
traded equity real estate investment trusts. Diversification of assets in the
Trust will not eliminate the risk of loss always inherent in the ownership of
securities. For a breakdown of the portfolio see "Trust Portfolio."
On the Initial Date of Deposit, the Sponsor deposited with the Trustee
Securities including delivery statements relating to contracts for the purchase
of certain such Securities and an irrevocable letter of credit issued by a
financial institution in the amount required for such purchases. Thereafter, the
Trustee, in exchange for such Securities (and contracts) so deposited, delivered
to the Sponsor documentation evidencing the ownership of Units of the Trust.
Unless otherwise terminated as provided in the Trust Agreement, the Trust will
terminate on the Mandatory Termination Date and Securities then held will within
a reasonable time thereafter be liquidated or distributed by the Trustee.
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 accordingly, although the actual interest in the Trust represented
by such fraction will remain unchanged. Units will remain outstanding until
redeemed upon tender to the Trustee by Unitholders, which may include the
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
income and capital appreciation. The portfolio is described under "Trust
Portfolio" herein and "Portfolio" in Prospectus Part One. The Securities were
selected by First of Michigan Corporation, the Managing Underwriter and
Supervisor. In selecting the Securities, the Managing Underwriter considered the
following factors, among others: (1) the degree to which dividends are protected
based on current FFO (funds from operation), FAD (funds available for
distribution) and FFO and FAD growth estimates; (2) diversification of the Trust
portfolio based on real estate sectors; (3) the degree to which the Security
provides diversity and market liquidity without becoming unmanageable or
severely diluting the effect of its performance in relation to the Trust
portfolio; (4) the Security offers an attractive investment based on (a)
valuation factors (such as price/FFO ratio, dividend yield, dividend to FFO and
FAD, and dividend growth potential) and (b) operating fundamentals (such as
vacancy rates, revenue growth, debt levels and debt to equity ratios); and (5)
the position of the issuer within its real estate sector. In selecting the
Securities, the Managing Underwriter considered the degree to which the
portfolio of the Trust provides diversification among the types of underlying
properties owned by the REITs and the geographic location of such properties. In
selecting the Securities, First of Michigan also selected only REITs that have
had dividend increases in the last year (the average of such increases for all
Securities being over 5%). First of Michigan believes that the potential exists
for further increases in dividend levels and that the REITs appear to be well
positioned to experience an increase in FFO (funds from operations) growth.
Based on First of Michigan FFO estimates, the REITs are selling at approximately
eleven times such estimates.
Other than owning a primary residence, individual investors often have few
practical opportunities to invest in the real estate market. The Trust seeks to
offer a more affordable, practical and liquid alternative to owning individual
properties. The Trustportfolio seeks to provide greater diversification in
several respects: each REIT in the portfolio is operated by a different
management team; various regions of the country -- each with its own economic
conditions and cycles -- are represented in the Trust's portfolio; and different
REITs specialize in different sectors, such as apartment complexes, office
buildings, shopping malls, industrial parks and hotels. First of Michigan
believes that income-oriented investors should consider a diversified portfolio
of REITs, such as the Trust, for a variety of reasons: potential for high
current yields are available providing dividend income and a degree of
protection in declining markets; solid dividend growth is possible due to recent
strength in industry earnings (funds from operations); and REIT stock valuations
are currently low relative to the yield on U.S. Treasury securities, providing
the potential for capital appreciation.
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 Security issuers to continue to declare and
pay dividends and because the market value of the Securities can be affected by
a variety of factors. The Securities may be especially susceptible to general
stock market movements and to volatile increases and decreases in value as
market confidence in and perceptions of the issuers change. Investors should be
aware that there can be no assurance that the value of the underlying Securities
will increase or that the issuers of the Securities will pay dividends on
outstanding common shares. Any distributions of income will generally depend
upon the declaration of dividends by the issuers of the Securities and the
declaration of any dividends depends upon several factors including the
financial condition of the issuers and general economic conditions.
Investors should be aware that the Trust is not a "managed" fund and as a
result the adverse financial condition of a company under extraordinary
circumstances may result in its elimination from the portfolio (see "Trust
Administration--Portfolio Administration"). In addition, Securities will not be
sold by the Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in particular that the
Securities were selected by the Managing Underwriter prior to the Initial Date
of Deposit. Neither the Sponsor nor the Trustee have participated in the
selection of the Securities or in establishing the criteria utilized in such
selection. There can be no assurance that the objectives of the Trust, expected
yields, growth in dividends or growth in funds from operations will be achieved.
The Trust may continue to purchase or hold Securities originally selected
through this process even though the evaluation of the attractiveness of the
Securities may have changed and, if the evaluation were performed again at that
time, the Securities would not be selected for the Trust.
TRUST PORTFOLIO
The Trust consists of Securities issued by publicly traded equity real estate
investment trusts. The Securities are all listed on a national securities
exchange, the NASDAQ National Market System or traded in the over-the-counter
market. Each of the Securities included in the portfolio were selected based
upon those factors referred to under "Objectives and Securities Selection"
above.
GENERAL. The Trust consists of such of the Securities listed under
"Portfolio" in Prospectus Part One as may continue to be held from time to time
in the Trust and any additional Securities acquired and held by the Trust
pursuant to the provisions of the Trust Agreement together with cash held in the
Income and Capital Accounts. Neither the Sponsor nor the Trustee shall be liable
in any way for any failure in any of the Securities. However, should any
contract for the purchase of any of the Securities initially deposited hereunder
fail, the Sponsor will, unless substantially all of the moneys held in the Trust
to cover such purchase are reinvested in substitute Securities in accordance
with the Trust Agreement, refund the cash and sales charge attributable to such
failed contract to all Unitholders on the next distribution date.
Because certain of the Securities from time to time may be sold under certain
circumstances described herein, and because the proceeds from such events will
be distributed to Unitholders and will not be reinvested, no assurance can be
given that the Trust will retain for any length of time its present size and
composition. Although the portfolio is not managed, the Sponsor may instruct the
Trustee to sell Securities under certain limited circumstances. Pursuant to the
Trust Agreement and with limited exceptions, the Trustee may sell any securities
or other property acquired in exchange for 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."
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 Securities as such and
will not be able to vote the Securities. As the holder of the 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 have acquired the 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 Securities, including the
Securities in the Trust, and may act as a market maker in certain of the
Securities. The Managing Underwriter may also, from time to time, issue reports
on and make recommendations relating to securities, which may include the
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 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
REAL ESTATE INVESTMENT TRUSTS. An investment in the Trust should be make with
an understanding of the risks inherent in an investment in REITs specifically
and in real estate generally (in addition to securities market risks). REITs are
financial vehicles that have as their objective the pooling of capital from a
number of investors in order to participate directly in real estate ownership or
financing. REITs are generally fully integrated operating companies that have
interests in income-producing real estate. REITs are differentiated by the types
of real estate properties held and the actual geographic location of properties
and fall into two major categories: equity REITs emphasize direct property
investment, holding their invested assets primarily in the ownership of real
estate or other equity interests, while mortgage REITs concentrate on real
estate financing, holding their assets primarily in mortgages secured by real
estate. As of the Initial Date of Deposit, the Trust contains only equity REITs.
REITs obtain capital funds for investment in underlying real estate assets by
selling debt or equity securities on the public or institutional capital markets
or by bank borrowing. Thus, the returns on common equities of the REITs in which
the Trust invests will be significantly affected by changes in costs of capital
and, particularly in the case of highly "leveraged" REITs (i.e., those with
large amounts of borrowings outstanding) by changes in the level of interest
rates. The objective of an equity REIT is to purchase income-producing real
estate properties in order to generate high levels of cash flow from rental
income and a gradual asset appreciation, and they typically invest in properties
such as office, retail, industrial, hotel and apartment buildings and health
care facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from corporate
income taxes provided the REIT satisfies the requirements of Sections 856
through 860 of the Internal Revenue Code. The major tests for tax-qualified
status are that the REIT (i) be managed by one or more trustees or directors,
(ii) issue shares of transferable interest to its owners, (iii) have at least
100 shareholders, (iv) have no more than 50% of the shares held by five or fewer
individuals, (v) invest substantially all of its capital in real estate related
assets and derive substantially all of its gross income from real estate related
assets and (vi) distributed at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail to
qualify for such tax status, the related shareholders (including the Trust)
could be adversely affected by the resulting tax consequences.
The underlying value of the Securities and the Trust's ability to make
distributions to Unitholders may be adversely affected by changes in national
economic conditions, changes in local market conditions due to changes in
general or local economic conditions and neighborhood characteristics, increased
competition from other properties, obsolescence of property, changes in the
availability, cost and terms of mortgage funds, the impact of present or future
environmental legislation and compliance with environmental laws, the ongoing
need for capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
impediments to raising rents, adverse changes in governmental rules and fiscal
policies, dependency on management skill, civil unrest, acts of God, including
earthquakes and other natural disasters (which may result in uninsured losses),
acts of war, adverse changes in zoning laws, and other factors which are beyond
the control of the issuers of the REITs in the Trust.
The value of the REITs may at times be particularly sensitive to devaluation
in the event of rising interest rates. Equity REITs are less likely to be
affected by interest rate fluctuations than mortgage REITs and the nature of the
underlying assets of an equity REIT may be considered more tangible than that of
a mortgage REIT. Equity REITs are more likely to be adversely affected by
changes in the value of the underlying property it owns than mortgage REITs.
REITs may concentrate investments in specific geographic areas or in specific
property types, i.e., hotels, shopping malls, residential complexes, and office
buildings. The impact of economic conditions on REITs can also be expected to
vary with geographic location and property type. Investors should be aware the
REITs may not be diversified and are subject to the risks of financing projects.
REITs are also subject to defaults by borrowers, self-liquidation, the market's
perception of the REIT industry generally, and the possibility of failing to
qualify for pass-through of income under the Internal Revenue Code, and to
maintain exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing its
right as mortgagee or lessor and to incur significant costs related to
protecting its investments. In addition, because real estate generally is
subject to real property taxes the REITs in the Trust may be adversely affected
by increases or decreases in property tax rates and assessments or reassessments
of the properties underlying the REITs by taxing authorities. Futhermore,
because real estate is relatively illiquid, the ability of REITs to vary their
portfolios in response to changes in economic and other conditions may be
limited and may adversely affect the value of the Units. There can be no
assurance that any REIT will be able to dispose of its underlying real estate
assets when advantageous or necessary. In an effort to reduce the impact of the
risks discussed above, the Managing Underwriter has selected REITs that are
diversified among various real estate sectors and geographic locations.
The issuer of REITs generally maintains comprehensive insurance on presently
owned and subsequently acquired real property assets, including liability, fire
and extended coverage. However, certain types of losses may be uninsurable or
not be economically insurable as to which the underlying properties are at risk
in their particular locales. There can be no assurance that insurance coverage
will be sufficient to pay the full current market value or current replacement
cost of any lost investment. Various factors might make it impracticable to use
insurance proceeds to replace a facility after it has been damaged or destroyed.
Under such circumstances, the insurance proceeds received by a REIT might not be
adequate to restore its economic position with respect to such property.
Under various environmental laws, a current or previous owner or operator of
real property may be liable for the costs of removal or remediation of hazardous
or toxic substances on, under or in such property. Such laws often impose
liability whether or not the owner or operator caused or knew of the presence of
such hazardous or toxic substances and whether or not the storage of such
substances was in violation of a tenant's lease. In addition, the presence of
hazardous or toxic substances, or the failure to remediate such property
properly, may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of the REITs
in the Trust may not be presently liable or potentially liable for any such
costs in connection with real estate assets they presently own or subsequently
acquire while such REITs are held in the Trust.
GENERAL. 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 Securities or the general condition of
the common stock market may worsen and the value of the 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 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 is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986 (the "Code"). Unitholders should consult their
tax advisers in determining the federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in the Trust.
For purposes of the following discussion and opinion, it is assumed that each
Security is considered a share of a real estate investment trust as defined in
the Code.
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 a
Security (whether by sale, taxable exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unitholder. The price
a Unitholder pays for his Units is allocated among his pro rata portion of each
Security held by the Trust (in proportion to the fair market values thereof on
the valuation date nearest the date the Unitholder purchase his Units) in order
to determine his tax basis for his pro rata portion of each Security held by the
Trust. Unitholders should consult their own tax advisers with regard to
calculation of basis. For federal income tax purposes, a Unitholder's pro rata
portion of dividends (other than capital gains dividends of a REIT, as described
below) as defined by Section 316 of the Code paid with respect to a Security
held by the Trust is taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits." A Unitholder's pro
rata portion of dividends paid on such Security which exceeds such current and
accumulated earnings and profits will first reduce a Unitholder's tax basis in
such Security, and to the extent that such dividends exceed a Unitholder's tax
basis in such Security shall generally be treated as capital gain. In general,
the holding period for such capital gain will be determined by the period of
time a Unitholder has held his or her Units. The issuers of the Securities
intend to qualify under special Federal income tax rules as "real estate
investment trusts" (each a "REIT," shares of such issuers held by the Trust
shall be referred to collectively as the "REIT Shares"). Because Unitholders are
deemed to directly own a pro rata portion of the REIT Shares as discussed above,
Unitholders are advised to consult their tax advisers for information relating
to the tax consequences owning the REIT Shares. Provided an issuer qualifies as
a REIT, certain distributions by such issuers on the REIT Shares may qualify as
"capital gain dividends," taxable to shareholders (and, accordingly, to the
Unitholders as owners of a pro rata portion of the REIT Shares) as long-term
capital gains, regardless of how long a shareholder has owned such shares. In
addition, distributions of income or capital gains declared on REIT Shares in
October, November or December will be deemed to have been paid to shareholders
(and, accordingly, to the Unitholders as owners of a pro rata portion of the
REIT Shares) on December 31 of the year they are declared, even when paid by a
REIT during the following January and received by shareholders or Unitholders in
such following year.
3. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unitholders should consult their tax advisers regarding
the recognition of gains and losses for federal income tax purposes, as special
rules, described below, apply to a Unitholder's pro rata portion of the REIT
Shares.
DIVIDENDS RECEIVED DEDUCTION. Dividends received on the Securities (so long
as such Securities qualify as REIT shares) are not eligible for the dividends
received deduction.
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 Unitholders to the same extent as if the expense had been paid directly by
such Unitholder. It should be noted that as a result of the Tax Reform Act of
1986, certain miscellaneous itemized deductions, such as investment expenses,
tax return preparation fees and employee business expenses will be deductible by
an individual only to the extent they exceed 2% of such individual's adjusted
gross income. Unitholders may be required to treat some or all of the expenses
of the Trust as miscellaneous itemized deductions subject to this limitation.
RECOGNITION OF TAXABLE GAIN OR LOSS UPON DISPOSITION OF SECURITIES BY THE
TRUST OR DISPOSITION OF UNITS. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. However, any loss realized by a Unitholder with
respect to the disposition of his pro rata portion of the REIT Shares, to the
extent such Unitholder has owned his Units for less than six months or the Trust
has held the REIT Shares for less than six months, will be treated as long-term
capital loss to the extent of such Unitholder's pro rata portion of any capital
gain dividends received (or deemed to have been received) with respect to the
REIT Shares. The Taxpayer Relief Act of 1997 (the "1997 Act") provides that for
taxpayers other than corporations, net capital gain (which is defined as net
long-term capital gain over net short-term capital loss for the taxable year) is
subject to a maximum marginal stated tax rate of either 28% or 20%, depending
upon the holding periods of the capital assets. Capital gain or loss is
long-term if the holding period for the asset is more than one year, and is
short-term if the holding period for the asset is one year or less. The date on
which a Unit is acquired (i.e., the "trade date") is excluded for purposes for
determining the holding period of the Unit. Generally, capital gains realized
from assets held for more than one year but not more than 18 months are taxed at
a maximum marginal stated tax rate of 28% and capital gains realized from assets
(with certain exclusions) held for more than 18 months are taxed at a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Further, capital gains realized from assets held for one
year or less are taxed at the same rates as ordinary income. Legislation is
currently pending that provides the appropriate methodology that should be
applied in netting the realized capital gains and losses. Such legislation is
proposed to be effective retroactively for tax years ending after May 6, 1997.
Note, however, that the 1997 Act provides that the application of the rules
described above in the case of pass-through entities such as the REITs will be
prescribed in future Treasury Regulations. The Internal Revenue Service has
released preliminary guidance which provides that, in general, pass-through
entities such as REITs may designate their capital gains dividends as either a
20% rate gain distribution or a 28% rate gain distribution, depending on the
nature of the gain received by the pass-through entity. Unitholders should
consult their own tax advisrrs as to the tax rate applicable to capital gain
dividends.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If the 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 Securities represented by the Unit. The 1997 Act
includes provisions that treat certain other transactions designed to reduce or
eliminate risk of loss and opportunities for gain (e.g., short sales, offsetting
notional principal contracts, futures or forward contracts or similar
transactions) as constructive sales for purposes of recognition of gain (but not
loss) and for purposes of determining the holding period.
Unitholders should consult their own tax advisers with regard to any such
constructive sales rules.
SPECIAL TAX CONSEQUENCES OF IN KIND DISTRIBUTIONS UPON REDEMPTION OF UNITS OR
TERMINATION OF THE TRUST. As discuss in "Rights of Unitholders-Redemption of
Units," under certain circumstances a Unitholder tendering Units for redemption
may request an In Kind Distribution. A Unitholder may also under certain
circumstances request an In Kind Distribution upon the termination of the Trust.
See "Rights of Unitholders-Redemption of Units". 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 Securities 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
Securities. A "Security" for this purpose is a particular class of stock issued
by a particular REIT. A Unitholder will not recognize gain or loss if a
Unitholder only receives Securities in exchange for his or her pro rata portion
in the Securities held by the Trust. However, if a Unitholder also receives cash
in exchange for a fractional share of a Security held by the Trust, such
Unitholder will generally recognize gain or loss based upon the difference
between the amount of cash received by the Unitholder and his tax basis in such
fractional share of a Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an In
Kind Distribution will have to analyze the tax consequences with respect to each
Security owned by the Trust. If a Unitholder is deemed to recognize gain or loss
on the In-Kind Distribution because cash is received in addition to Securities,
the amount of taxable gain (or loss) recognized upon such exchange will
generally equal the sum of the gain (or loss) recognized under the rules
described above by such Unitholder with respect to each Security owned by the
Trust. Unitholders who request an In Kind Distribution are advised to consult
their tax advisers in this regard.
COMPUTATION OF THE UNITHOLDERS' TAX BASIS. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholders for
his Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
and are not capital gain dividends 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 by the Internal Revenue Service that payments to the
Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
Distributions by the Trust (other than those that are not treated as United
States source income, if any) will generally be subject to United States income
taxation and withholding in the case of Units held by non-resident alien
individuals, foreign corporations or other non-United States persons. Such
persons should consult their tax advisers.
Unitholders will be notified annually of the amount of dividends includable
in the Unitholder's gross income and amounts of Trust expenses which may be
claimed as itemized deductions.
The foregoing discussion relates only to United States federal income
taxation of Unitholders; Unitholders may be subject to foreign, state and local
taxation. Unitholders should consult their tax advisers regarding potential
foreign, state and local taxation with respect to the Units, and foreign
investors should consult their tax advisers with respect to United States tax
consequences of ownership of Units.
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 income tax
laws of the State and City of New York.
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" in Prospectus Part
One (which is based on the number of Units outstanding on January 1 of each year
for which such compensation relates except) 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. The Managing Underwriter, in its capacity as Supervisor, will receive
an annual supervisory fee, payable in monthly installments, which is not to
exceed the amount set forth under "Summary of Essential Financial Information"
in Prospectus Part One (which is based on the number of Units outstanding on
January 1 of each year for which such compensation relates) for providing
portfolio supervisory services for 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 Supervisor for providing portfolio supervision
services to unit investment trusts for which First of Michigan Corporation is
the principal underwriter in any calendar year exceed the aggregate cost to the
Supervisor of supplying such services in such year. Both of the foregoing fees
may be increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index published by the United States Department of Labor
or, if such category is no longer published, in a comparable category. Such fees
will be paid as described under "General" below. 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 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" in
Prospectus Part One (which amount is based on the number of Units outstanding on
January 1 of each year for which such compensation relates). The Trustee's fees
are payable in monthly installments on or before the twenty-fifth day of each
month as described under "General" below. 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.
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 gross negligence, bad faith or wilful
misconduct on its part and (g) expenditures incurred in contacting Unitholders
upon termination of the Trust. Such expenses will be paid as described under
"General"below.
GENERAL. The fees and expenses set forth herein are payable out of the Income
Account of the Trust or, if insufficient, from the Capital Account. 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 Securities are all common stocks, and
the income stream produced by dividend payments is unpredictable, the Sponsor
cannot provide any assurance that dividends will be sufficient to meet any or
all expenses of the Trust. If the balances in the Income and Capital Accounts
are insufficient to provide for amounts payable by the Trust, the Trustee has
the power to sell Securities to pay such amounts. These sales may result in
capital gains or losses to Unitholders. See "Tax Status."
PUBLIC OFFERING
GENERAL. Units are offered at the Public Offering Price. The secondary market
public offering price is based on the aggregate underlying value of the
Securities in the Trust, an applicable sales charge (which will be reduce by .5
of 1% on each February 27 commencing February 27, 1997, to a minimum sales
charge of 3.5%), and cash, if any, in the Income and Capital Accounts held or
owned by the Trust.
Any sales charge reduction will primarily be the responsibility of the
selling Managing Underwriter, broker, dealer or agent. Registered
representatives of the Managing Underwriter may purchase Units of the Trust at
the current Public Offering Price less the dealer's concession for secondary
market transactions. Registered representatives of selling brokers, dealers, or
agents may purchase Units of the Trust at the current Public Offering Price less
the dealer's concession for secondary market transactions.
OFFERING PRICE. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in Prospectus
Part One in accordance with fluctuations in the prices of the underlying
Securities in the Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
initially equal to 4.712% of such value and dividing the sum so obtained by the
number of Units in the Trust outstanding. In addition, the Public Offering Price
per Unit shall include the proportionate share of any cash held in the Income
and Capital Accounts. This computation produced a gross underwriting profit
initially equal to 4.5% of the Public Offering Price. Such price determination
as of the close of business on the day before the Initial Date of Deposit was
made on the basis of an evaluation of the 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 Securities as of the Evaluation Time on days the New York
Stock Exchange is open and will adjust the Public Offering Price of the Units
commensurate with such valuation. Such Public Offering Price will be effective
for all orders received prior to the Evaluation Time on each such day. Orders
received by the Trustee or Managing Underwriter for purchases, sales or
redemptions after that time, or on a day when the New York Stock Exchange is
closed, will be held until the next determination of price.
The aggregate underlying value of the Securities is determined on each
business day by the Evaluator in the following manner: if the 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 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
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
Securities in the Trust but rather the entire pool of Securities, taken as a
whole, which are represented by the Units.
UNIT DISTRIBUTION. Units repurchased in the secondary market, if any, may be
offered by this Prospectus at the secondary market Public Offering Price in the
manner described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge (equal to the agency
commission referred to above) is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions and the banking
regulators have not indicated that these particular agency transactions are not
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law. Any quantity discount provided to investors will be borne by the selling
dealer, agent or Managing Underwriter as indicated under "General" above. For
secondary market transactions, the dealer concession or agency commission will
amount to 70% of the sales charge applicable to the transaction.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 200 Units (100 Units for a
tax-sheltered retirement plan). The Managing Underwriter reserves the right to
reject, in whole or in part, any order for the purchase of Units and to change
the amount of the concession or agency commission to dealers and others from
time to time. Brokers and dealers of the Trust, banks and/or others are eligible
to participate in a program in which such firms receive from the Managing
Underwriter a nominal award for each of their registered representatives who
have sold a minimum number of units of unit investment trusts created by the
Managing Underwriter during a specified time period. In addition, at various
times the Managing Underwriter may implement other programs under which the
sales forces of brokers, dealers, banks and/or others may be eligible to win
other nominal awards for certain sales efforts, or under which the Managing
Underwriter will reallow to any such brokers, dealers, banks and/or others that
sponsor sales contests or recognition programs conforming to criteria
established by the Managing Underwriter, or participate in sales programs
sponsored by the Managing Underwriter, an amount not exceeding the total
applicable sales charges on the sales generated by such person at the public
offering price during such programs. Also, the Managing Underwriter in its
discretion may from time to time pursuant to objective criteria established by
the Managing Underwriter pay fees to qualifying brokers, dealers, banks and/or
others for certain services or activities which are primarily intended to result
in sales of Units of the Trust. Such payments are made by the Managing
Underwriter out of its own assets and not out of the assets of the Trust. These
programs will not change the price Unitholders pay for their Units or the amount
that the Trust will receive from the Units sold.
SPONSOR AND MANAGING UNDERWRITER COMPENSATION. The Managing Underwriter will
receive a gross sales commission equal to the sales charge imposed on the Units,
less any reduced sales charge for quantity purchases as described under
"General" above. Any such quantity discounts provided to investors will be borne
by the selling dealer or agent.
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
Securities by the Managing Underwriter and the cost of such 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
Securities in the Trust portfolio. The Sponsor and the Managing Underwriter may
have further realized additional profit or loss as a result of the possible
fluctuations in the market value of the Securities in the Trust after a date of
deposit, since all proceeds received from 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 or the Sponsor will also
realize profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are resold
(which price includes the applicable sales charge). In addition, the Managing
Underwriter or the Sponsor will also realize profits or sustain losses resulting
from a redemption of such repurchased Units at a price above or below the
purchase price for such Units, respectively.
PUBLIC MARKET. Although it is not obligated to do so, the Managing
Underwriter intends to maintain a secondary market for the Units offered hereby
and offer continuously to purchase Units at prices subject to change at any
time, based upon the aggregate underlying value of the 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 in the Trust's final
year of existence. A Unitholder who wishes to dispose of his Units should
inquire of his broker as to current market prices in order to determine whether
there is in existence any price in excess of the Redemption Price and, if so,
the amount thereof.
TAX-SHELTERED RETIREMENT PLANS. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for the individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The purchase
of Units of the Trust may be limited by the plans' provisions and does not
itself establish such plans. The minimum purchase in connection with a
tax-shelter retirement plan is 100 Units.
RIGHTS OF UNITHOLDERS
GENERAL. The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee. Ownership of
Units of the Trust will be evidenced by book entry unless a Unitholder or the
Unitholder's registered broker-dealer makes a written request to the Trustee
that ownership be evidenced by certificates. Units are transferable by making a
written request to the Trustee and, in the case of Units evidenced by a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred with
the signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guarantee program in
addition to, or in substitution for, STAMP as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Certificates will be
issued in denominations of one Unit or any whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require
a Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in connection
with each such transfer of interchange. Destroyed, stolen, mutilated or lost
certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity, evidence of ownership and payment of expenses incurred. Mutilated
certificates must be surrendered to the Trustee for replacement.
DISTRIBUTIONS OF INCOME AND CAPITAL. Any dividends received by the Trust with
respect to the Securities therein are credited by the Trustee to the Income
Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account.
The Trustee will distribute any net income with respect to any of the
Securities in the Trust on or about the Income Account Distribution Dates to
Unitholders of record on the preceding Income Account Record Dates. See "Summary
of Essential Financial Information" in Prospectus Part One. Proceeds received on
the sale of any Securities in the Trust, to the extent not used to meet
redemptions of Units or pay expenses, will (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 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 Securities in the Trust, to the
extent not used to meet redemptions of Units or pay expenses, will, however, be
distributed on the twenty-fifth day of each month to holders of record on the
tenth day of such month if the amount available for distribution equals at least
$0.01 per Unit. The Trustee is not required to pay interest on funds held in the
Capital or Income Accounts (but may itself earn interest thereon and therefore
benefits from the use of such funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account after deducting
estimated expenses. Because dividends are not received by the 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.
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.
REINVESTMENT OPTION. Unitholders may elect to have each distribution of
interest income, capital gains and/or principal on their Units automatically
reinvested in shares of certain Van Kampen American Capital mutual funds or
Morgan Stanley which are registered in the Unitholder's state of residence. Such
mutual funds are hereinafter collectively referred to as the "Reinvestment
Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospects relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen American
Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois
60181. Texas residents who desire to reinvest may request that a broker-dealer
registered in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units will,
on the applicable distribution date, automatically be applied, as directed by
such person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange on such date.
Unitholders with an existing Guaranteed Reinvestment Option (GRO) Program
account (whereby a sales charge is imposed on distribution reinvestments) may
transfer their existing account into a new GRO account which allows purchases of
Reinvestment Fund shares at net asset value as described above. Confirmations of
all reinvestments by a Unitholder into a Reinvestment Fund will be mailed to the
Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next
succeeding distribution date, by so notifying the Trustee in writing, elect to
terminate his or her reinvestment plan and receive future distributions on his
or her Units in cash. There will be no charge or other penalty for such
termination. The Sponsor, each Reinvestment Fund, and its investment advisor
shall have the right to suspend or terminate the reinvestment plan at any time.
REPORTS PROVIDED. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit outstanding. 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 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 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" in Prospectus Part One.
The "date of tender" is deemed to be the date on which Units are received by the
Trustee, except that with respect to Units received after the applicable
Evaluation Time the date of tender is the next day on which such Exchange is
open for trading and such Units will be deemed to have been tendered to the
Trustee on such day for redemption at the redemption price computed on that day.
The Trustee is empowered to sell 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 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 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 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 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 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 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
Securities according to the criteria discussed above.
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when the Securities would not otherwise be sold and may
result in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder depending
on the value of the Securities in the portfolio at the time of redemption.
Special federal income tax consequences will result if a Unitholder requests an
In Kind Distribution. See "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 Securities in the Trust, plus or minus cash, if any, in the Income
and Capital Accounts of the Trust. On the Initial Date of Deposit, the Public
Offering Price per Unit (which includes the sales charge) exceeded the values at
which Units could have been redeemed by the amounts shown under "Summary of
Essential Financial Information" in Prospectus Part One. 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 Securities and (iii) dividends
receivable on the 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 Securities in the following manner: if the 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 Securities 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
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 a Security in
certain events such as the issuer having defaulted on the payment on any of its
outstanding obligations or the price of a 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 Security 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 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 Securities (or
any securities or other property received by the Trust in exchange for
Securities) are credited to the Capital Account for distribution to Unitholders
or to meet redemptions. Except as stated under "Trust Portfolio--General" for
failed securities and as provided in this paragraph, the acquisition by the
Trust of any securities other than the Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above, the
Trustee may also sell 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 Securities to be sold by the Trustee, will
generally make selections in order to maintain, to the extent practicable, the
proportionate relationship among the number of shares of individual issues of
Securities in the Trust. To the extent this is not practicable, the composition
and diversity of the 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 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 such Trust of any
Unitholder without the consent of such Unitholder or reduce the percentage of
Units required to consent to any such amendment or waiver without the consent of
all Unitholders. The Trustee shall advise the Unitholders of any amendment
promptly after execution thereof.
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Trust then outstanding or by the
Trustee when the value of the Securities owned by the Trust, as shown by any
evaluation, is less than that amount set forth under Minimum Termination Value
in the "Summary of Essential Financial Information" in Prospectus Part One. The
Trust Agreement will terminate upon the sale or other disposition of the last
Security held thereunder, but in no event will it continue beyond the Mandatory
Termination Date stated under "Summary of Essential Financial Information" in
Prospectus Part One.
Commencing on the Mandatory Termination Date, Securities will begin to be
sold in connection with the termination of the Trust. The Sponsor will determine
the manner, timing and execution of the sales of the Securities. The Sponsor
shall direct the liquidation of the Securities in such manner as to effectuate
orderly sales and a minimal market impact. In the event the Sponsor does not so
direct, the Securities shall be sold within a reasonable period and in such
manner as the Trustee, in its sole discretion, shall determine. At least 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 Securities in the Trust to the account of the
broker-dealer or bank designated by the Unitholder at Depository Trust Company.
The value of the Unitholder's fractional shares of the Securities will be paid
in cash. Unitholders with less than 2,500 Units and Unitholders not requesting
an In Kind Distribution will receive a cash distribution from the sale of the
remaining Securities within a reasonable time following the Mandatory
Termination Date. Regardless of the distribution involved, the Trustee will
deduct from the funds of the Trust any accrued costs, expenses, advances or
indemnities provided by the Trust Agreement, including estimated compensation of
the Trustee, costs of liquidation and any amounts required as a reserve to
provide for payment of any applicable taxes or other governmental charges. Any
sale of Securities in the Trust upon termination may result in a lower amount
than might otherwise be realized if such sale were not required at such time.
The Trustee will then distribute to each Unitholder of 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 in the performance of their
duties or by reason of their reckless disregard of their obligations and duties
hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason
of the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under the Trust
Agreement. The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon or upon it as Trustee under the Trust Agreement or upon or in respect of
the Trust which the Trustee may be required to pay under any present or future
law of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the Evaluator shall be under no liability to the Trustee, Sponsor,
Supervisor or Unitholders for errors in judgment. This provision shall not
protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
MANAGING UNDERWRITER. First of Michigan Corporation, a member of the New York
Stock Exchange, is Michigan's largest full-service securities firm. Founded in
1933, First of Michigan Corporation specializes in a wide range of financial
services that include investment banking; investment products such as stocks,
bonds, unit trusts and mutual funds; and investment services such as retirement
plans, money management, underwriting and trading. First of Michigan offers
these services through its 550 employees located in 31 offices throughout
Michigan, as well as an office at 100 Wall Street, New York, New York.
SPONSOR. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect subsidiary
of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly owned subsidiary of MSAM
Holdings II, Inc., which in turn is a wholly owned subsidiary of Morgan Stanley,
Dean Witter, Discover & Co. ("MSDWD").
MSDWD is a global financial services firm with a market capitalization of
more than $21 billion which was created by the merger of Morgan Stanley Group
Inc. with and into Dean Witter, Discover & Co. on May 31, 1997. MSDWD, together
with various of its directly and indirectly owned subsidiaries, is engaged in a
wide range of financial services through three primary businesses: securities,
asset management and credit services. These principal businesses include
securities underwriting, distribution and trading; merger, acquisition,
restructuring and other corporate finance advisory activities; merchant banking;
stock brokerage and research services; asset management; trading of futures,
options, foreign exchange commodities and swaps (involving foreign exchange,
commodities, indices and interest rating and investing; global custody,
securities clearance services and securities lending; and credit card services.
As of June 2, 1997, MSDWD, together with its affiliated investment advisory
companies, had approximately $270 billion of assets under management,
supervision or fiduciary advice.
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 and Seattle. 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 Trusts or to any other Series thereof. The information is included herein
only for the purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual obligations. More
detailed financial information will be made available by the Sponsor upon
request.)
As of September 30, 1997, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $65.3 billion of investment
products, of which over $10.85 billion is invested in municipal securities. The
Sponsor and its Van Kampen American Capital affiliates managed $54 billion of
assets, consisting of $34.3 billion for 55 open-end mutual funds (of which 45
are distributed by Van Kampen American Capital Distributors, Inc.) $14.2 billion
for 37 closed-end funds and $5.5 billion for 106 institutional accounts. The
Sponsor has also deposited approximately $26 billion of unit investment trusts.
All of Van Kampen American Capital's open-end funds, closed-ended funds and unit
investment trusts are professionally distributed by leading financial firms
nationwide. Based on cumulative assets deposited, the Sponsor believes that it
is the largest sponsor of insured municipal unit investment trusts, primarily
through the success of its Insured Municipals Income Trust(R) or the IM-IT(R)
trust. The Sponsor also provides surveillance and evaluation services at cost
for approximately $13 billion of unit investment trust assets outstanding. Since
1976, the Sponsor has serviced over two million investor accounts, opened
through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts 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 the Banks of the State of New York and the Board of Governors
of the Federal Reserve System, and its deposits are insured by the Federal
Deposit Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of such Trust. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may from
time to time be required under any applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided"). The Trustee is
required to keep a certified copy or duplicate original of the Trust Agreement
on file in its office available for inspection at all reasonable times during
the usual business hours by any Unitholder, together with a current list of the
Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus, and undivided
profits of not less than $5,000,000.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The statement of condition and the
related securities portfolio 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 dealers. This Prospectus does not
constitute an offer to sell, or a solicitation of any offer to buy, securities
in any state to any persons to whom it is not lawful to make such offer in such
state.
Table of Contents Page
----------------- ------
The Trust 2
Objectives and Securities Selection 2
Trust Portfolio 3
Risk Factors 3
Tax Status 4
Trust Operating Expenses 6
Public Offering 7
Rights of Unitholders 8
Trust Administration 10
Other Matters 12
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration statements
and exhibits relating thereto, which the Fund has filed with the Securities and
Exchange Commission, Washington, D.C. under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
PROSPECTUS
PART TWO
FIRST OF MICHIGAN
REAL ESTATE
INCOME AND
GROWTH TRUST
SERIES 1
VAN KAMPEN
AMERICAN CAPITAL EQUITY
OPPORTUNITY TRUST
SERIES 27
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN
ACCOMPANIED BY PART ONE. BOTH PARTS OF THIS
PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
DATED AS OF THE DATE OF THE PROSPECTUS PART ONE
ACCOMPANYING THIS PROSPECTUS PART TWO.
FIRST OF MICHIGAN CORPORATION
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
Please retain 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 27, 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 Ci ty of Chicago and State of Illinois
on the 24th day of April, 1998.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 27
(Registrant)
By VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
(Depositor)
By: Gina Costello
Assistant Secretary
(SEAL)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on April 24, 1998 by the
following persons who constitute a majority of the Board of Directors of Van
Kampen American Capital Distributors, Inc.:
SIGNATURE TITLE
Don G. Powell Chairman and Chief )
Executive Officer )
John H. Zimmerman President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Gina Costello_______
(Atttorney in Fact)*
____________________
* An executed copy of each of the related powers of attorney was filed with
the Securities and Exchange Commission in connection with the Registration
Statement on Form S-6 of Van Kampen American Capital Equity Opportunity Trust,
Series 64 (File No. 333-33087) and Van Kampen American Capital Equity
Opportunity Trust, Series 87 (File No. 333-44581) and the same are hereby
incorporated herein by this reference.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated March 13, 1998 accompanying the financial
statements of Van Kampen American Capital Equity Opportunity Trust, Series 27 as
of December 31, 1997, and for the period then ended, contained in this
Post-Effective Amendment No. 2 to Form S-6.
We consent to the use of the aforementioned report in the Post-Effective
Amendment and to the use of our name as it appears under the caption "Auditors".
Grant THORNTON LLP
Chicago, Illinois
April 24, 1998
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