File No. 333-06307 CIK #897004
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 4 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 38
(Exact Name of Trust)
Van Kampen Funds Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
VAN KAMPEN FUNDS INC. CHAPMAN AND CUTLER
Attention: A. Thomas Smith III, General Counsel 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 November 22, 2000 pursuant to paragraph (b) of Rule 485.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 38
BABY BOOMER OPPORTUNITY TRUST, SERIES 1
--------------------------------------------------------------------------------
PROSPECTUS PART ONE
NOTE: Part I of this Prospectus may not be distributed unless accompanied
by Part II.
Please retain both parts of this Prospectus for future reference.
--------------------------------------------------------------------------------
THE TRUST
Baby Boomer Opportunity Trust, Series 1 (the "Trust") is a unit
investment of Van Kampen American Capital Equity Opportunity Trust, Series 38.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a fixed, diversified portfolio of actively traded
equity securities primarily issued by companies from a variety of industries
expected to benefit from demographic trends associated with those born between
1946 and 1964, commonly referred to as the "Baby Boomers." Unless terminated
earlier, the Trust will terminate on August 6, 2001 ("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 Units.
PUBLIC OFFERING PRICE
The Public Offering Price per Unit is equal to the aggregate underlying
value of the Equity Securities plus or minus cash, if any, in the Capital and
Income Accounts, plus the applicable sales charge as described herein divided by
the number of Units outstanding. See "Summary of Essential Financial
Information" in this Part One.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THE
UNITS OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER 22, 2000
VAN KAMPEN FOCUS PORTFOLIOS (SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 38
BABY BOOMER OPPORTUNITY TRUST, SERIES 1
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AS OF SEPTEMBER 5, 2000
SPONSOR: VAN KAMPEN FUNDS INC.
SUPERVISOR: VAN KAMPEN INVESTMENT ADVISORY CORP.
(AN AFFILIATE OF THE SPONSOR)
EVALUATOR: AMERICAN PORTFOLIO EVALUATION SERVICES
(A DIVISION OF AN AFFILIATE OF THE SPONSOR)
TRUSTEE: THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BABY BOOMER
OPPORTUNITY
TRUST
----------------
GENERAL INFORMATION
<S> <C>
Number of Units 1,671,451.273
Fractional Undivided Interest in Trust per Unit 1/1,671,451.273
Public Offering Price:
Aggregate Value of Securities in Portfolio (1) $ 44,458,021.35
Aggregate Value of Securities per Unit (including accumulated dividends) $ 26.5985
Sales charge 3.0% (3.093% of Aggregate Value of Securities excluding principal cash) per Unit $ .8214
Public Offering Price per Unit (2) $ 27.4199
Redemption Price per Unit $ 26.5985
Secondary Market Repurchase Price per Unit $ 26.5985
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ .8214
</TABLE>
Supervisor's Annual Fee Maximum of $.0025 per Unit
Evaluator's Annual Fee Maximum of $.0025 per Unit
Evaluation Time Close of the New York Stock Exchange
Initial Date of Deposit August 5, 1996
Mandatory Termination Date August 6, 2001
Minimum Termination Value...................... The Trust may be terminated
if the net asset value of such Trust is less than $500,000 unless the net asset
value of such Trust deposits has exceeded $15,000,000, then the Trust Agreement
may be terminated if the net asset value of such Trust is less than $3,000,000.
<TABLE>
<CAPTION>
<S> <C>
Estimated Annual Dividends per Unit $.09084
Trustee's Annual fee $.008 per Unit
Estimated Annual Organizational Expenses (4) $.00724 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.
</TABLE>
--------------------------------------------------------------------------------
(1)Equity Securities listed on a national securities exchange are valued at the
closing sale price, or if no such price exists, or if the Equity Securities
are not listed, at the closing bid price thereof.
(2)Anyone ordering Units will have added to the Public Offering Price a pro
rata share of any cash in the Income and Capital Accounts.
(3)Effective on each August 5, the secondary sales charge will be reduced by
.5 of 1% to a minimum charge of 3.0%. See "Public Offering-Offering Price"
in Part Two.
(4)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 five
years. See "Expenses of the Trust" in Part Two and "Statement of Condition."
Historically, the sponsors of unit investment trusts have paid all the costs
of establishing such trusts.
PORTFOLIO
The Baby Boomer Opportunity Trust consists of 28 different issues of Equity
Securities which are primarily actively traded, equity securities issued by
companies from a variety of industries expected to benefit from demographic
trends associated with those born between 1946 and 1964, commonly referred to as
"Baby Boomers." All of the Equity Securities are listed on a national securities
exchange, or are traded in the over-the-counter market as of the Initial Date of
Deposit.
<TABLE>
<CAPTION>
PER UNIT INFORMATION
1997 (1) 1998 1999 2000
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value per Unit at beginning of period............ $ 9.79 $ 13.92 $ 16.05 $ 19.02
============ ============ ============ ============
Net asset value per Unit at end of period.................. $ 13.92 $ 16.05 $ 19.02 $ 24.90
============ ============ ============ ============
Distributions to Unitholders of investment income including
accumulated dividends paid on Units redeemed
(average Units outstanding for entire period)........... $ 0.27 $ 0.09 $ 0.10 $ 0.10
============ ============ ============ ============
Distributions to Unitholders from Equity Security
redemption proceeds (average Units
outstanding for entire period).......................... $ -- $ 0.04 $ -- $ 0.27
============ ============ ============ ============
Unrealized appreciation (depreciation) of Equity Securities
(per Unit outstanding at end of period)................. $ 3,29 $ 1.68 $ 2.01 $ 4.97
============ ============ ============ ============
Distributions of investment income by frequency
of payment
Quarterly............................................... $ 0.06 $ 0.08 $ 0.10 $ 0.09
Units outstanding at end of period......................... 2,761,502 2,176,807 1,899,756 1,685,844
--------------------------------------------------------------------------------
(1) For the period from August 5, 1996 (date of deposit) through July 31,
1997.
</TABLE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF VAN KAMPEN FUNDS INC. AND THE UNITHOLDERS OF VAN
KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 38 (BABY BOOMER
OPPORTUNITY TRUST, SERIES 1):
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of Van Kampen American Capital
Equity Opportunity Trust, Series 38 (Baby Boomer Opportunity Trust, Series 1) as
of July 31, 2000 and the related statements of operations and changes in net
assets for the three years ended July 31, 2000. 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 auditing standards generally
accepted in the United States of America. 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 July 31,
2000 by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee and the
Sponsor, as well as evaluating the overall financial statement presentation. We
believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Van Kampen American Capital
Equity Opportunity Trust, Series 38 (Baby Boomer Opportunity Trust, Series 1) as
of July 31, 2000 and the results of operations and changes in net assets for the
three years ended July 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.
GRANT THORNTON LLP
Chicago, Illinois
September 15, 2000
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 38
STATEMENTS OF CONDITION
JULY 31, 2000
BABY BOOMER
OPPORTUNITY
TRUST
---------------
Trust property
<S> <C>
Cash $ --
Securities at market value, (cost $17,074,219) (note 1) 42,014,823
Accumulated dividends 4,266
Receivable for securities sold --
Organizational costs 12,155
---------------
$ 42,031,244
===============
Liabilities and interest to Unitholders
Cash overdraft $ 4,156
Redemptions payable 44,258
Interest to Unitholders 41,982,830
---------------
$ 42,031,244
===============
ANALYSES OF NET ASSETS
Interest of Unitholders (1,685,844 Units of fractional undivided interest outstanding)
Cost to original investors of 3,081,360 Units (note 1) $ 34,639,039
Less initial underwriting commission (note 3) 1,554,568
---------------
33,084,471
Less redemption of 1,395,516 Units 21,996,694
---------------
11,087,777
Undistributed (overdistributed) net investment income
Net investment income 564,081
Less distributions to Unitholders 1,237,351
---------------
(673,270)
Realized gain (loss) on Security sale 7,197,762
Unrealized appreciation (depreciation) of Securities (note 2) 24,940,604
Distributions to Unitholders of Security sale proceeds (480,095)
Deferred Sales Charge (89,948)
---------------
Net asset value to Unitholders $ 41,982,830
===============
Net asset value per Unit (1,685,844 Units outstanding) $ 24.90
===============
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
BABY BOOMER OPPORTUNITY TRUST, SERIES 1
STATEMENTS OF OPERATIONS
YEARS ENDED JULY 31,
1998 1999 2000
------------ ------------ ------------
Investment income
<S> <C> <C> <C>
Dividend income...................................................... $ 209,245 $ 197,868 $ 165,641
Expenses
Trustee fees and expenses......................................... 26,459 21,172 19,806
Organizational fees............................................... 12,091 12,157 12,357
Evaluator fees.................................................... 7,121 5,924 4,790
Supervisory fees.................................................. 7,121 5,924 4,992
------------ ------------ ------------
Total expenses................................................. 52,792 45,177 41,945
------------ ------------ ------------
Net investment income............................................. 156,453 152,691 123,696
Realized gain (loss) from Securities sale
Proceeds............................................................. 8,710,044 4,914,470 5,396,607
Cost................................................................. 7,170,380 2,758,004 2,788,535
------------ ------------ ------------
Realized gain (loss).............................................. 1,539,664 2,156,466 2,608,072
Net change in unrealized appreciation (depreciation) of Securities...... 3,647,167 3,816,623 8,384,926
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................................ $ 5,343,284 $ 6,125,780 $11,116,694
============ ============ ============
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED JULY 31,
1998 1999 2000
------------ ------------ ------------
Increase (decrease) in net assets Operations:
Net investment income................................................ $ 156,453 $ 152,691 $ 123,696
Realized gain (loss) on Securities sales............................. 1,539,664 2,156,466 2,608,072
Net change in unrealized appreciation (depreciation) of Securities... 3,647,167 3,816,623 8,384,926
------------ ------------ ------------
Net increase (decrease) in net assets resulting from operations... 5,343,284 6,125,780 11,116,694
Distributions to Unitholders from:
Net investment income................................................ (207,834) (200,138) (168,865)
Security sale or redemption proceeds................................. -- -- (480,095)
Redemption of Units.................................................. (8,539,719) (4,789,692) (4,928,411)
Deferred sales charge................................................ (89,948) -- --
------------ ------------ ------------
Total increase (decrease)......................................... (3,494,217) 1,135,950 5,539,323
Net asset value to Unitholders
Beginning of period.................................................. 38,432,231 34,938,014 36,130,782
Additional Securities purchased from the proceeds of Unit Sales...... -- 56,818 312,725
------------ ------------ ------------
End of period (including undistributed (overdistributed) net investment income of
$(580,654), $(628,101) and $(673,270), respectively).............. $ 34,938,014 $36,130,782 $41,982,830
============ ============ ============
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
<CAPTION>
BABY BOOMER OPPORTUNITY TRUST, SERIES 1 PORTFOLIO AS OF JULY 31, 2000
--------------------------------------------------------------------------------------------------------------------------
VALUATION OF
NUMBER MARKET VALUE SECURITIES
OF SHARES NAME OF ISSUER PER SHARE (NOTE 1)
--------------- ------------------------------------------------------------------------------------ ---------------
<S> <C> <C> <C>
43,362 American International Group Incorporated $ 87.6875 $ 3,802,305
--------------------------------------------------------------------------------------------------------------------------
92,453 Cisco Systems, Incorporated 65.4375 6,049,893
--------------------------------------------------------------------------------------------------------------------------
30,821 Coachmen Industries, Incorporated 10.3750 319,768
--------------------------------------------------------------------------------------------------------------------------
51,278 Compaq Computer Corporation 28.0625 1,438,989
--------------------------------------------------------------------------------------------------------------------------
30,278 Conseco Incorporated 7.8750 238,439
--------------------------------------------------------------------------------------------------------------------------
31,287 Del Webb Corporation 15.2500 477,127
--------------------------------------------------------------------------------------------------------------------------
16,170 Delta Airlines Incorporated 53.6875 868,127
--------------------------------------------------------------------------------------------------------------------------
14,346 First Data Corporation 46.0625 660,813
--------------------------------------------------------------------------------------------------------------------------
29,115 Franklin Resources, Incorporated 35.8750 1,044,501
--------------------------------------------------------------------------------------------------------------------------
8,890 Gucci Group NV 95.6875 850,662
--------------------------------------------------------------------------------------------------------------------------
53,388 Harley-Davidson, Incorporated 44.8750 2,395,786
--------------------------------------------------------------------------------------------------------------------------
21,027 Hilton Hotels Corporation 10.2500 215,527
--------------------------------------------------------------------------------------------------------------------------
24,648 ING GROEP N V 67.2500 1,657,578
--------------------------------------------------------------------------------------------------------------------------
58,438 Intel Corporation 66.7500 3,900,736
--------------------------------------------------------------------------------------------------------------------------
22,281 K2, Incorporated 9.9375 221,417
--------------------------------------------------------------------------------------------------------------------------
21,258 Marriott International, Incorporated 40.0000 850,320
--------------------------------------------------------------------------------------------------------------------------
20,848 Mentor Corporation 18.0000 375,264
--------------------------------------------------------------------------------------------------------------------------
17,511 Merck & Company, Incorporated 71.6875 1,255,320
--------------------------------------------------------------------------------------------------------------------------
37,043 Microsoft Corporation 69.8125 2,586,064
--------------------------------------------------------------------------------------------------------------------------
64,933 Oracle Corporation 75.1875 4,882,150
--------------------------------------------------------------------------------------------------------------------------
21,027 Park Place Entertainment 12.5625 264,152
--------------------------------------------------------------------------------------------------------------------------
25,762 Petco Animal Supplies, Incorporated 19.8125 510,410
--------------------------------------------------------------------------------------------------------------------------
47,741 Pfizer, Incorporated 43.1250 2,058,831
--------------------------------------------------------------------------------------------------------------------------
20,192 Service Corporation International 2.5625 51,742
--------------------------------------------------------------------------------------------------------------------------
2,729 Sodexho Marriott Service Incorporated 16.9375 46,222
--------------------------------------------------------------------------------------------------------------------------
63,427 Tiffany & Company 34.2500 2,172,375
--------------------------------------------------------------------------------------------------------------------------
38,509 T. Rowe Price Associates 40.8750 1,574,055
--------------------------------------------------------------------------------------------------------------------------
31,904 WorldCom, Incorporated 39.0625 1,246,250
--------------- ---------------
940,666 $ 42,014,823
=============== ===============
--------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 38
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998, 1999 AND 2000
--------------------------------------------------------------------------------
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 no such price exists or if the
Equity Securities are not listed, at the closing bid price thereof.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national or foreign securities exchange or the
relevant stock exchanges, on the closing sale prices on the exchange. 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 determined
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.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
Organizational Costs - The trust will bear all or a portion of its
organizational costs, which will be deferred and amoritized over the life of the
Trust.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at July 31, 2000 is as follows:
Unrealized Appreciation $ 27,547,462
Unrealized Depreciation (2,606,858)
----------------
$ 24,940,604
================
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 4.5% of the public offering price which is
equivalent to 4.712% of the aggregate offering price of the Securities Effective
on each August 5, commencing August 5, 1997, the secondary sales charge will
instead include only a one-time initial sales charge of 4.0% of the Public
Offering Price and will decrease by .5 of 1% on each subsequent August 5, to a
minimum sales charge of 3.0%.
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 or Shelter" in the Consumer Price Index.
NOTE 4 - REDEMPTION OF UNITS
For the years ended July 31, 1998, 1999 and 2000, 584,695 Units, 280,161
Units and 226,470 Units, respectively, were presented for redemption.
VAN KAMPEN FOCUS PORTFOLIOS (SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
BABY BOOMER OPPORTUNITY TRUST PROSPECTUS PART TWO
--------------------------------------------------------------------------------
THE FUND. Van Kampen American Capital Equity Opportunity Trust, Van Kampen
Equity Opportunity Trust or Van Kampen Focus Portfolios (the "Fund" ) are
comprised of separate and distinct unit investment trusts, including series of
the Baby Boomer Opportunity Trust (the "Trust"). The Trust offers investors the
opportunity to purchase Units representing proportionate interests in a fixed
portfolio of equity securities issued by companies from a variety of industries
expected to benefit from demographic trends associated with those born between
1946 and 1964, commonly referred to as the "Baby Boomers" ("Equity Securities"
or "Securities" ). See "Trust Portfolio" . Unless terminated earlier, the Trust
will terminate on the Mandatory Termination Date set forth under "Summary of
Essential Financial Information" in Part One and any Securities then held will,
within a reasonable time thereafter, be liquidated or distributed by the
Trustee. Any Securities liquidated at termination will be sold at the then
current market value for such Securities; therefore, the amount distributable in
cash to a Unitholder upon termination may be more or less than the amount such
Unitholder paid for his Units.
ATTENTION FOREIGN INVESTORS. If you are not a United States citizen or
resident, distributions from the Trust will generally be subject to U.S. Federal
withholding taxes; however, under certain circumstances treaties between the
United States and other countries may reduce or eliminate such withholding tax.
See "Federal Taxation." Such investors should consult their tax advisers
regarding the imposition of U.S. withholding on distributions.
OBJECTIVE OF THE TRUST..The objective of the Trust is to provide the
potential for capital appreciation and income, consistent with the preservation
of invested capital, by investing in a portfolio of equity securities of
companies from a variety of industries expected to benefit from demographic
trends associated with those born between 1946 and 1964. See "Objectives and
Securities Selection." There is, of course, no guarantee that the objective of
the Trust will be achieved.
PUBLIC OFFERING PRICE. The Public Offering Price of the Units of the Trust
includes the aggregate underlying value of the Securities in the Trust's
portfolio, the applicable sales charge described herein, and cash, if any, in
the Income and Capital Accounts held or owned by the Trust. For sales charges in
the secondary market, see "Public Offering." The minimum purchase is 100 Units
except for certain transactions described under "Public Offering."
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.
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.
DIVIDEND AND CAPITAL DISTRIBUTIONS. Distributions of dividends and capital,
if any, received by the Trust will be paid in cash on the applicable
Distribution Date to Unitholders of record on the record date as set forth in
the "Summary of Essential Financial Information" in Part One. Gross dividends
received by the Trust will be distributed to Unitholders. Expenses of the Trust
will be paid with proceeds from the sale of Securities. For the consequences of
such sales, see "Federal Taxation" . Additionally, upon termination of the
Trust, the Trustee will distribute, upon surrender of Units for redemption, to
each Unitholder his pro rata share of the Trust's assets, less expenses, in the
manner set forth under "Rights of Unitholders--Distributions of Income and
Capital."
SECONDARY MARKET FOR UNITS. Although not obligated to do so, the Sponsor
intends to maintain a market for Units of the Trust and offer to repurchase such
Units at prices which are based on the aggregate underlying value of Equity
Securities in the Trust (generally determined by the closing sale or bid prices
of the Securities) plus or minus cash, if any, in the Capital and Income
Accounts of the Trust. If a secondary market is not maintained, a Unitholder may
redeem Units through redemption at prices based upon the aggregate underlying
value of the Equity Securities in the Trust plus or minus a pro rata share of
cash, if any, in the Capital and Income Accounts of the Trust. A Unitholder
tendering 1,000 or more Units for redemption may request a distribution of
shares of Securities (reduced by customary transfer and registration charges) in
lieu of payment in cash. See "Rights of Unitholders--Redemption of Units."
TERMINATION. Commencing nine business days before, but beginning no later
than the Mandatory Termination Date, Equity Securities may be sold in connection
with the termination of the Trust. The Sponsor will determine the manner, timing
and execution of the sale of the Equity Securities. Written notice of any
termination of the Trust specifying the time or times at which Unitholders may
surrender their certificates for cancellation shall be given by the Trustee to
each Unitholder at his address appearing on the registration books of the Trust
maintained by the Trustee. At least 30 days prior to the Mandatory Termination
Date the Trustee will provide written notice thereof to all Unitholders and will
include with such notice a form to enable Unitholders to elect a distribution of
shares of Equity Securities if such Unitholder owns at least 1,000 Units of the
Trust, rather than to receive payment in cash for such Unitholder's pro rata
share of the amounts realized upon the disposition by the Trustee of Equity
Securities. All Unitholders will receive cash in lieu of any fractional shares.
To be effective, the election form, together with surrendered certificates if
issued, and other documentation required by the Trustee, must be returned to the
Trustee at least five business days prior to the Mandatory Termination Date.
Unitholders not electing a distribution of shares of Equity Securities will
receive a cash distribution from the sale of the remaining Securities within a
reasonable time after the Trust is terminated. See "Trust
Administration--Amendment or Termination."
REINVESTMENT OPTION. Unitholders of any Van Kampen unit investment trust may
utilize their redemption or termination proceeds to purchase units of any other
Van Kampen trust in the initial offering period accepting rollover investments
subject to a reduced sales charge to the extent stated in the related prospectus
(which may be deferred in certain cases). Unitholders also have the opportunity
to have their distributions reinvested into additional Units of the Trust, if
Units are available at the time of reinvestment, or 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 the possible deterioration of the
financial condition of the issuers, the general condition of the stock market
and volatile interest rates. See "Risk Factors" and "Trust Portfolio."
THE TRUST
The Fund is comprised of separate and distinct unit investment trusts,
including series of the Baby Boomer Opportunity 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 Funds Inc., as Sponsor, American Portfolio Evaluation Services, a
division of Van Kampen Investment Advisory Corp., as Evaluator, Van Kampen
Investment Advisory Corp., as Supervisor, and The Bank of New York, as Trustee
or their predecessors.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities
issued by companies from a variety of industries expected to benefit from
demographic trends associated with those born between 1946 and 1964, commonly
referred to as "Baby Boomers." Diversification of assets in the Trust will not
eliminate the risk of loss always inherent in the ownership of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
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, although the actual interest in the Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Unitholders, which may include the Sponsor, or
until the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The Trust seeks to increase the value of your Units over time and provide
dividend income by investing in a portfolio of common stocks of companies that
we believe will benefit from demographic trends associated with the Baby Boomer
generation. In selecting stocks for the portfolio, we considered the extent to
which the companies provide goods or services to Baby Boomers.
THE BABY BOOMER GENERATION. Baby Boomers represent more than one-third of all
Americans. The Baby Boom generation includes the 76 million Americans born
between 1946 and 1964. Baby Boomers began turning 50 years old in 1996.
Approximately every seven seconds of every day for the following ten years a
Baby Boomer will turn 50. Estimates show that the number of people between 50
and 64 will almost double over the fifteen years following 1996.
The needs and desires of this generation are significant concerns of many
businesses. For example, when the first Baby Boomers arrived, the diaper
industry prospered. When they took their first steps, the shoe industry grew.
When Baby Boomers started families, the construction industry prospered because
schools and larger houses had to be built. When they focused on their careers in
the 1980s, publications like The Wall Street Journal and Fortune experienced
significant growth.
As Baby Boomers move into their fifties, we expect them to continue to make
significant changes in their lifestyles. We expect this will continue to impact
the American economy. We believe Baby Boomers will make concrete plans for
retirement, have more leisure time, and use computers at home to communicate,
plan and shop. We also expect their health care concerns will become
increasingly important. As a result, we selected companies that we believe are
in a solid position to benefit from these shifting American demographics. The
Trust targets companies from the following economic sectors:
o Entertainment
o Leisure
o Financial
o Real Estate
o Healthcare
o Technology
GENERAL. An investor will be subject to taxation on the dividend income
received from the Trust and on gains from the sale or liquidation of Securities
(see "Federal Taxation" ). Investors should be aware that there is not any
guarantee that the objectives of the Trust will be achieved because 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. Common stocks may be especially susceptible
to general stock market movements and to volatile increases and decreases of
value as market confidence in and perceptions of the issuers change. Investors
should be aware that there can be no assurance that the value of the underlying
Securities will increase or that the issuers of the Equity Securities will pay
dividends on outstanding common shares. Any distributions of income will
generally depend upon the declaration of dividends by the issuers of the
Securities and the declaration of any dividends depends upon several factors
including the financial condition of the issuers and general economic
conditions.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in the Trust as of the Initial Date of
Deposit. Subsequent to the Initial Date of Deposit, the Securities may no longer
meet such criteria. Should an Equity Security no longer meet such criteria, such
Equity Security will not, simply as a result of such fact, be removed from the
portfolio of the Trust.
Investors should be aware that the Trust is not a "managed" fund and as a
result the adverse financial condition of a company will not result in its
elimination from the portfolio except under extraordinary circumstances (see
"Trust Administration--Portfolio Administration" ). In addition, Securities will
not be sold by the Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in particular that the
Securities were selected by the Sponsor as of the Initial Date of Deposit. 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 Equity Securities which are primarily issued by
companies from a variety of industries expected to benefit from demographic
trends associated with those born between 1946 and 1964, commonly referred to as
the "Baby Boomers" . All of the Equity Securities are listed on a national
securities exchange, the NASDAQ National Market System or are traded in the
over-the-counter market.
GENERAL. The Trust consists of (a) the Securities listed under " Portfolio"
in Part One as may continue to be held from time to time in the Trust, (b) any
additional Securities acquired and held by the Trust pursuant to the provisions
of the Trust Agreement and (c) any 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 Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will in most cases be distributed to Unitholders and will not be
reinvested, no assurance can be given that the Trust will retain for any length
of time its present size and composition. Although the portfolio is not managed,
the Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. See "Trust Administration--Portfolio Administration."
Equity Securities, however, will not be sold by the Trust to take advantage of
market fluctuations or changes in anticipated rates of appreciation or
depreciation.
RISK FACTORS
EQUITY SECURITIES. An investment in Units should be made with an
understanding of the risks which an investment in common stocks entails,
including the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market may worsen and
the value of the Equity Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock market
movements and to volatile increases and decreases of value as market confidence
in and perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, 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. Certain of the issuers may currently be in arrears with
respect to preferred stock dividend payments. Common stocks do not represent an
obligation of the issuer and, therefore, do not offer any assurance of income or
provide the same degree of protection of capital as do debt securities. The
issuance of additional debt securities or preferred stock will create prior
claims for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay dividends on
its common stock or the rights of holders of common stock with respect to assets
of the issuer upon liquidation or bankruptcy. The value of common stocks is
subject to market fluctuations for as long as the common stocks remain
outstanding, and thus the value of the Equity Securities in the portfolio 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 or at the time a Unitholder
purchases Units.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Cumulative preferred stock dividends must be paid before
common stock dividends and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on liquidation
which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made for
any of the Equity Securities, that any market for the Equity Securities will be
maintained or of the liquidity of the Equity Securities in any markets made. In
addition, the Trust may be restricted under the Investment Company Act of 1940
from selling Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemptions, and the value of the Trust, will be
adversely affected if trading markets for the Equity Securities are limited or
absent.
As described under "Trust Operating Expenses," all of the expenses of the
Trust will be paid from the sale of Securities from the Trust. It is expected
that such sales will be made at the end of the initial offering period and each
month thereafter through termination of the Trust. Such sales will result in
capital gains and losses and may be made at times and prices which adversely
affect the Trust. For a discussion of the tax consequences of such sales, see
"Federal Taxation."
Unitholders will be unable to dispose of any of the Equity Securities in the
portfolio, as such, and will not be able to vote the Equity Securities. As the
holder of the Equity Securities, the Trustee will have the right to vote all of
the voting stocks in the Trust and will vote such stocks in accordance with the
instructions of the Sponsor. In the absence of any such instructions by the
Sponsor, the Trustee will vote such stocks so as to insure that the stocks are
voted as closely as possible in the same manner and the same general proportion
as are shares held by owners other than the Trust.
FEDERAL TAXATION
GENERAL. 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, as amended (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 opinions, it is assumed that
each Security is equity for federal income tax purposes. In the opinion of
Chapman and Cutler, special counsel for the Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Security when such income is considered to be received by the
Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his pro rata portion of each Security when such dividends are considered to
be received by the Trust regardless of whether such dividends are used to pay a
portion of any deferred sales charge imposed. Unitholders will be taxed in this
manner regardless of whether distributions from the Trust are actually received
by the Unitholder or are automatically reinvested (see "Rights of
Unitholders--Reinvestment Option").
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent an
in kind distribution of stock is received by such Unitholder from the Trust as
described below). The price a Unitholder pays for his Units, generally including
sales charges, is allocated among his pro rata portion of each Security held by
the Trust (in proportion to the fair market values thereof on the valuation date
closest to the date the Unitholder purchases his Units) in order to determine
his initial tax basis for his pro rata portion of each Security held by the
Trust. Unitholders should consult their own tax advisers with regard to the
calculation of basis. For federal income tax purposes, a Unitholder's pro rata
portion of the dividends, as defined by Section 316 of the Code, paid by a
corporation 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 exceed 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 Units.
4. 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).
DIVIDENDS RECEIVED DEDUCTION. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. Unitholders should consult with their
tax advisers with respect to the limitations on and possible modifications to
the dividends received deduction.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
LIMITATIONS ON DEDUCTIBILITY OF TRUST EXPENSES BY UNITHOLDERS. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. 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 A TRUST
OR DISPOSITION OF UNITS. As discussed above, a Unitholder may recognize taxable
gain (or loss) when a Security is disposed of by a Trust or if the Unitholder
disposes of a Unit (although losses incurred by Rollover Unitholders may be
subject to disallowance, as discussed above). The Internal Revenue Service
Restructuring and Reform Act of 1998 (the "1998 Tax 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)
realized from property (with certain exclusions) is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). 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 of determining the holding period of the
Unit. Capital gains realized from assets held for one year or less are taxed at
the same rates as ordinary income.
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 a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust involved including his
pro rata portion of all Securities represented by a Unit. The Taxpayer Relief
Act of 1997 (the "1997 Tax Act") includes provisions that treat certain
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 discussed in "Rights of Unitholders--Redemption of
Units," under certain circumstances a Unitholder tendering Units for redemption
may request an in kind distribution of certain Securities in the Trust. A
Unitholder may also under certain circumstances request an in kind distribution
of certain Securities in the Trust upon the termination of the Trust. A
Unitholder will receive cash representing his pro rata portion of the foreign
Securities in the Trust. See "Rights of Unitholders--Redemption of UnitsThe
Unitholder requesting an in kind distribution will be liable for expenses
related thereto (the "Distribution Expenses") and the amount of such in kind
distribution will be reduced by the amount of the Distribution Expenses. 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's assets for
federal income tax purposes. The receipt of an in kind distribution will result
in a Unitholder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an in kind distribution
with respect to each Security owned by the Trust 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 corporation. 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
a Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security or for a foreign Security held by a 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 or such foreign Security held by such Trust.
Because each 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 such Trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by such Trust. Unitholders who request an in kind distribution are advised
to consult their tax advisers in this regard.
COMPUTATION OF THE UNITHOLDER'S TAX BASIS. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder for
his Units. The cost of the Units is allocated among the 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
as described above.
OTHER MATTERS. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust (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.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporation for a three-year period ending with the close
of its taxable year preceding payment was effectively connected to the conduct
of a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the United
States and a foreign country. Non-U.S. Unitholders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions from the
Trust.
It should be noted that payments to the Trust of dividends on Securities that
are attributable to foreign corporations may be subject to foreign withholding
taxes and Unitholders should consult their tax advisers regarding the potential
tax consequences relating to the payment of any such withholding taxes by the
Trust. Any dividends withheld as a result thereof will nevertheless be treated
as income to the Unitholders. Because, under the grantor trust rules, an
investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect to such taxes.
The 1997 Tax Act imposes a required holding period for such credits. Investors
should consult their tax advisers with respect to foreign withholding taxes and
foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of the Trust a statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security (resulting from redemption or the
sale of any Security), and the fees and expenses paid by the Trust. The Trustee
will also furnish annual information returns to Unitholders and to the Internal
Revenue Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel to the Fund 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.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal and certain aspects of
New York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit
in one of the Trust that (a) is (i) for United States federal income tax
purposes a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unitholder in
paragraph (a) but whose income from a Unit is effectively connected with such
Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable. Unitholders should consult their tax advisers
regarding potential foreign, state or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
COMPENSATION OF SPONSOR AND EVALUATOR. The Sponsor will not receive any fees
in connection with its activities relating to the Trust. However, Van Kampen
Investment Advisory Corp., which is an affiliate of the Sponsor, will receive an
annual supervisory fee which is not to exceed the amount set forth under
"Summary of Essential Financial Information" in Part One for providing portfolio
supervisory services for the Trust. Such fee (which is based on the number of
Units outstanding on January 1 of each year for which such compensation relates)
may exceed the actual costs of providing such supervisory services for this
Trust, but at no time will the total amount received for portfolio supervisory
services rendered to all Series of the Fund and to any other unit investment
trusts sponsored by the Sponsor for which the Supervisor provides portfolio
supervisory services in any calendar year exceed the aggregate cost to the
Supervisor of supplying such services in such year. In addition, the Evaluator,
which is a division of Van Kampen Investment Advisory Corp., shall receive the
annual per Unit evaluation fee set forth under "Summary of Essential Financial
Information" in Part One (which amount is based on the number of Units
outstanding on January 1 of each year for which such compensation relates) for
regularly evaluating the Trust portfolio. The foregoing fees are payable as
described under "General" below. Both of the foregoing fees may be increased
without approval of the Unitholders by amounts not exceeding proportionate
increases under the category "All Services Less Rent of Shelter" in the Consumer
Price Index published by the United States Department of Labor or, if such
category is no longer published, in a comparable category. The Sponsor 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 Compensation."
TRUSTEE'S FEE. For its services the Trustee will receive the annual per Unit
fee from the Trust set forth under "Summary of Essential Financial Information"
in Part One (which amount is based on the number of Units outstanding on January
1 of each year for which such compensation relates). The Trustee's fees are
payable 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 to
Unitholders 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 a five year period. The
following additional charges are or may be incurred by the Trust: (a) normal
expenses (including the cost of mailing reports to Unitholders) incurred in
connection with the operation of the Trust, (b) fees of the Trustee for
extraordinary services, (c) expenses of the Trustee (including legal and
auditing expenses) and of counsel designated by the Sponsor, (d) various
governmental charges, (e) expenses and costs of any action taken by the Trustee
to protect the Trust and the rights and interests of Unitholders, (f)
indemnification of the Trustee for any loss, liability or expenses incurred in
the administration of the Trust without negligence, bad faith or willful
misconduct on its part, (g) accrual of costs associated with liquidating
securities and (h) expenditures incurred in contacting Unitholders upon
termination of the Trust. Each Trust may pay the expenses of updating its
registration statement each year. Unit investment trust sponsors have
historically paid these expenses. The expenses set forth herein are payable as
described under "General" below.
GENERAL. The fees and expenses of the Trust will accrue on a daily basis. The
fees and expenses are payable out of 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. It is expected that the balance in the Capital Account will
be insufficient to provide for amounts payable by the Trust and that Equity
Securities will be sold from the Trust to pay such amounts. These sales will
result in capital gains or losses to Unitholders. See "Federal Taxation" .
PUBLIC OFFERING
GENERAL. Units are offered at the Public Offering Price. The Public Offering
Price is based on the aggregate underlying value of the Securities in the
Trust's portfolio, the sales charge described below, and cash, if any, in the
Income and Capital Accounts held or owned by the Trust. The sales charge for
secondary market transactions is described under "Summary of Essential FInancial
Information" in Part One and will generally be reduced by .5 of 1% annually to a
minimum sales charge of 3.5%.
Any sales charge reduction will primarily be the responsibility of the
selling broker, dealer or agent. Employees, officers and directors (including
their spouses, children, grandchildren, parents, grandparents, siblings,
mothers-in-law, fathers-in-law, sons-in-law and daughters-in-law, and trustees,
custodians or fiduciaries for the benefit of such persons) of Van Kampen Funds
Inc. and its affiliates, dealers and their affiliates and vendors providing
services to the Sponsor may purchase Units at the Public Offering Price less the
applicable dealer concession.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge reduction
for quantity purchases) less the concession the Sponsor typically allows to
brokers and dealers for purchases (see "Public Offering--Unit Distribution" ) by
(1) investors who purchase Units through registered investment advisers,
certified financial planners and registered broker-dealers who in each case
either charge periodic fees for brokerage services, financial planning,
investment advisory or asset management service, or provide such services in
connection with the establishment of an investment account for which a
comprehensive "wrap fee" charge is imposed, (2) bank trust departments investing
funds over which they exercise exclusive discretionary investment authority and
that are held in a fiduciary, agency, custodial or similar capacity, (3) any
person who for at least 90 days, has been an officer, director or bona fide
employee of any firm offering Units for sale to investors or their spouse or
children and (4) officers and directors of bank holding companies that make
Units available directly or through subsidiaries or bank affiliates.
Notwithstanding anything to the contrary in this Prospectus, such investors,
bank trust departments, firm employees and bank holding company officers and
directors who purchase Units through this program will not receive sales charge
reductions for quantity purchases.
OFFERING PRICE. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in Part One in
accordance with fluctuations in the prices of the underlying Securities in the
Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to the total sales charge and dividing the sum so obtained by the number
of Units outstanding. The Public Offering Price shall also include the
proportionate share of any cash held in the Capital Account. This computation
produced a gross underwriting profit equal to the total sales charge. 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. After the
close of business on the day before the Initial Date of Deposit, the Evaluator
will appraise or cause to be appraised daily the value of the underlying
Securities as of the Evaluation Time on days the New York Stock Exchange is open
and will adjust the Public Offering Price of the Units commensurate with such
valuation. Such Public Offering Price will be effective for all orders received
prior to the Evaluation Time on each such day. Orders received by the Trustee or
Sponsor 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 Sponsor currently does not intend to maintain a secondary market
during the last six months of a Trust's life.
The aggregate underlying value of the Securities during the initial offering
period is determined on each business day by the Evaluator in the following
manner: If the Securities are listed on a national or foreign securities
exchange or the Nasdaq Stock Market, Inc., this evaluation is generally based on
the closing sale prices on that exchange or market (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 or market, at the closing asked prices. If
the Securities are not listed on a national or foreign securities exchange or
the Nasdaq Stock Market, Inc. or, if so listed and the principal market therefor
is other than on the exchange or market, the evaluation shall generally be based
on the current asked price on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for evaluation). If
current asked prices are unavailable, the evaluation is generally determined (a)
on the basis of current asked prices for comparable securities, (b) by
appraising the value of the Securities on the asked side of the market or (c) by
any combination of the above. The value of any foreign securities is based on
the applicable currency exchange rate in U.S. dollars as of the Evaluation Time.
The value of the Securities for purposes of secondary market transactions and
redemptions is described under "Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor 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 will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. 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. Any
discount provided to investors will be borne by the selling dealer or agent as
indicated under "General" above. For secondary market transactions, the
concession or agency commission will amount to 70% of the sales charge
applicable to the transaction. The breakpoint concession or agency commission
are applied on either a Unit or a dollar basis utilizing a breakpoint equivalent
of $10 per Unit and will be applied on whichever basis is more favorable to the
broker-dealer. The breakpoints will be adjusted to take into consideration
purchase orders stated in dollar which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units except as stated
herein. In connection with fully disclosed transactions with the Sponsor, the
minimum purchase requirement will be that number of Units set forth in the
contract between the Sponsor and the related broker or agent. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units and to change the amount of the concession or agency commission to dealers
and others from time to time.
SPONSOR COMPENSATION. The Sponsor will receive a gross sales commission equal
to the total sales charge imposed on Units, less any reduced sales charge (as
described under "General" above). Any discount provided to investors will be
borne by the selling broker, dealer or agent as indicated under "General" above.
In addition, the Sponsor 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 Sponsor 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 may further realize 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 purchasers of Units
(excluding dealer concessions and agency commissions allowed, if any) will be
retained by the Sponsor.
Broker-dealers of the Trust, banks and/or others may be eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their representatives who have sold a minimum number of units
of unit investment trusts created by the Sponsor during a specified time period.
In addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, banks and/or others may be eligible
to win other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to such brokers, dealers, banks and/or others that sponsor
sales contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by such
persons at the public offering price during such programs. Also, the Sponsor in
its discretion may from time to time pursuant to objective criteria established
by the Sponsor pay fees to qualifying entities for certain services or
activities which are primarily intended to result in sales of Units of the
Trust. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of the Trust. These programs will not change the price Unitholders
pay for their Units or the amount that the Trust will receive from the Units
sold.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior to
the date of settlement for the purchase of Units may be used in the Sponsor's
business and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor intends to maintain a
secondary market for Units of the Trust for the period indicated. In so
maintaining a market, 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 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 Sponsor intends to
maintain a market for the Units offered hereby and offer continuously to
purchase Units at prices, subject to change at any time, based upon the
aggregate underlying value of the Equity Securities in the Trust. If the supply
of Units exceeds demand or if some other business reason warrants it, the
Sponsor may either discontinue all purchases of Units or discontinue purchases
of Units at such prices. It is the current intention of the Sponsor not to
maintain a market for Units during the final six months of the Trust's life. In
the event that a market is not maintained for the Units and the Unitholder
cannot find another purchaser, a Unitholder desiring to dispose of his Units may
be able to dispose of such Units only by tendering them to the Trustee for
redemption at the Redemption Price. See "Rights of Unitholders--Redemption of
Units." A Unitholder who wishes to dispose of his Units should inquire of his
broker as to current market prices in order to determine whether there is in
existence any price in excess of the Redemption Price and, if so, the amount
thereof.
TAX-SHELTERED RETIREMENT PLANS. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The purchase
of Units of the Trust may be limited by the plans' provisions and does not
itself establish such plans.
RIGHTS OF UNITHOLDERS
CERTIFICATES. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust will be evidenced by certificates unless a
Unitholder or the Unitholder's registered broker-dealer makes a written request
to the Trustee that ownership be in book entry form. 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 or interchange. Destroyed, stolen, mutilated or lost
certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity, evidence of ownership and payment of expenses incurred. Mutilated
certificates must be surrendered to the Trustee for replacement.
DISTRIBUTIONS OF INCOME AND CAPITAL. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account of the Trust. Proceeds
from the sale of Securities to meet redemptions of Units shall be segregated
within the Capital Account from proceeds from the sale of Securities made to
satisfy the fees, expenses and charges of the Trust.
The Trustee will distribute any income received with respect to any of the
Securities in the Trust on or about the Income Distribution Dates to Unitholders
of record on the preceding Income Record Dates. See "Summary of Essential
Financial Information" in Part One. Proceeds received on the sale of any
Securities in the Trust, to the extent not used to meet redemptions of Units,
pay the deferred sales charge or pay fees and expenses, will be distributed
annually on the Capital Account Distribution Date to Unitholders of record on
the preceding Capital Account Record Date. Proceeds received from the
disposition of any of the Securities after a record date and prior to the
following distribution date will be held in the Capital Account and not
distributed until the next distribution date applicable to such Capital Account.
The Trustee is not required to pay interest on funds held in the Capital or
Income Accounts (but may itself earn interest thereon and therefore benefits
from the use of such funds).
The distribution to 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. 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.
The Trustee will deduct 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 the Income and Capital
Accounts such amounts, if any, as it deems necessary to establish a reserve for
any governmental charges payable out of the Trust. Amounts so withdrawn shall
not be considered a part of the Trust's assets until such time as the Trustee
shall return all or any part of such amounts to the appropriate accounts. In
addition, the Trustee may withdraw from the Income and Capital Accounts such
amounts as may be necessary to cover redemptions of Units.
REINVESTMENT OPTION. Unitholders of the Trust may elect to have each
distribution of income, capital gains and/or capital on their Units
automatically reinvested in additional Units of the Trust (to the extent Units
may be lawfully offered for sale in the state in which the Unitholder resides).
To participate in the reinvestment plan, a Unitholder may either contact his or
her broker or agent or file with the Trustee a written notice of election at
least ten days prior to the Record Date for which the first distribution is to
apply. A Unitholder's election to participate in the reinvestment plan will
apply to all Units of the Trust owned by such Unitholder and such election will
remain in effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market") or, until such
time as additional Units cease to be issued by the Trust (see "The Trust" ),
distributions may be reinvested in such additional Units. If Units are
unavailable in the secondary market, distributions which would otherwise have
been reinvested shall be paid in cash to the Unitholder on the applicable
Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made based on the net asset value for Units of the Trust as of the Evaluation
Time on the related Distribution Dates. Under the reinvestment plan, the Trust
will pay the Unitholder's distributions to the Trustee which in turn will
purchase for such Unitholder full and fractional Units of the Trust and will
send such Unitholder a statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of income, capital gains
and/or capital on their Units automatically reinvested in shares of certain Van
Kampen mutual funds 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 Trust. The prospectus relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen Funds Inc. at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, Illinois 60181-5555. Texas
residents who desire to reinvest may request that a broker-dealer registered in
Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
income, capital gains and/or capital on the participant's Units will, on the
applicable distribution date, automatically be applied, as directed by such
person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange 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 adviser
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. For as long as the Sponsor deems it to be in the best
interest of the Unitholders, the accounts of the Trust shall be audited, not
less frequently than annually, by independent certified public accountants, and
the report of such accountants shall be furnished by the Trustee to Unitholders
upon request. Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each person who at any time during the
calendar year was a registered Unitholder a statement (i) a statement 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) a
statement 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 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 Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286 and, in the case of Units evidenced by a
certificate, by tendering such certificate to the Trustee, duly endorsed or
accompanied by proper instruments of transfer with signature guaranteed (or by
providing satisfactory indemnity, as in connection with lost, stolen or
destroyed certificates) and by payment of applicable governmental charges, if
any. No redemption fee will be charged. On the third business day following such
tender, the Unitholder will be entitled to receive in cash an amount for each
Unit equal to the Redemption Price per Unit next computed after receipt by the
Trustee of such tender of Units. The "date of tender" is deemed to be the date
on which Units are received by the Trustee, except that as regards Units
received after the Evaluation Time the date of tender is the next day on which
the New York Stock Exchange is open for trading and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the redemption
price computed on that day.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by the
Trustee from those designated on a current list provided by the Supervisor for
this purpose. Units so redeemed shall be cancelled.
Unitholders tendering 1,000 Units or more for redemption may request from the
Trustee in lieu of a cash redemption a distribution in kind ("In Kind
Distributions") of an amount and value of Securities per Unit equal to the
Redemption Price per Unit as determined as of the evaluation next following the
tender. An In Kind Distribution on redemption of Units will be made by the
Trustee through the distribution of each of the Securities in book-entry form to
the account of the Unitholder's bank or broker-dealer at Depository Trust
Company. The tendering Unitholder will receive his pro rata number of whole
shares of each of the Securities comprising the portfolio and cash from the
Capital Account equal to the fractional shares to which the tendering Unitholder
is entitled. In implementing these redemption procedures, the Trustee shall make
any adjustments necessary to reflect differences between the Redemption Price of
the Securities distributed in kind as of the date of tender. If funds in the
Capital Account are insufficient to cover the required cash distribution to the
tendering Unitholder, the Trustee may sell Securities according to the criteria
discussed above. For the tax consequences related to an In Kind Distribution see
"Federal Taxation."
To the extent that Securities are redeemed in kind or sold, the size of the
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result in
lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder depending
on the value of the Securities in the portfolio at the time of redemption.
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in the Trust determined on the
basis of (i) the cash on hand in the Trust, (ii) the value of the Securities in
the Trust and (iii) dividends receivable on the Securities in the Trust 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 and sales charges of the Trust. During the initial offering period, the
redemption price and the secondary market repurchase price will also include
estimated organizational costs. For these purposes, the Evaluator may determine
the value of the Securities in the following manner: If the Securities are
listed on a national or foreign securities exchange or the Nasdaq Stock Market,
Inc., this evaluation is generally based on the closing sale prices on that
exchange or market (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
or market, 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 or
market, the evaluation may be based on the current bid price on the
over-the-counter market. If current bid prices are unavailable or inappropriate,
the evaluation may be determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the Securities on the bid side of the
market or (c) by any combination of the above. The value of any foreign
securities is based on the applicable currency exchange rate in U.S. dollars as
of the Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the Securities
in the Trust is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
SPONSOR PURCHASES OF UNITS. The Trustee shall notify the Sponsor of any
tender of Units for redemption. If the Sponsor's bid in the secondary market at
that time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by the
Trustee. Units held by the Sponsor may be tendered to the Trustee for redemption
as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord
with the Public Offering Price described in the then currently effective
prospectus describing such Units. Any profit resulting from the resale of such
Units will belong to the Sponsor which likewise will bear any loss resulting
from a lower offering or redemption price subsequent to its acquisition of such
Units.
PORTFOLIO ADMINISTRATION. The portfolio of the Trust is not "managed" by the
Sponsor, Supervisor or the Trustee; their activities described herein are
governed solely by the provisions of the Trust Agreement. Traditional methods of
investment management for a managed fund typically involve frequent changes in a
portfolio of securities on the basis of economic, financial and market analyses.
The Trust, however, will not be managed. The Trust Agreement, however, provides
that the Sponsor may (but need not) direct the Trustee to dispose of an Equity
Security in certain events such as the issuer having defaulted on the payment on
any of its outstanding obligations or the price of an Equity Security has
declined to such an extent or other such credit factors exist so that in the
opinion of the Sponsor, the retention of such Securities would be detrimental to
the Trust. Pursuant to the Trust Agreement and with limited exceptions, the
Trustee may sell any securities or other properties acquired in exchange for
Equity Securities such as those acquired in connection with a merger or other
transaction. If offered such new or exchanged securities or property, the
Trustee shall reject the offer. However, in the event such securities or
property are nonetheless acquired by the Trust, they may be accepted for deposit
in the Trust and either sold by the Trustee or held in the Trust pursuant to the
direction of the Sponsor (who may rely on the advice of the Supervisor).
Therefore, except as stated under "Trust Portfolio" for failed securities and as
provided in this paragraph, the acquisition by the Trust of any securities other
than the Securities is prohibited. Proceeds from the sale of Securities (or any
securities or other property received by the Trust in exchange for Equity
Securities) are credited to the Capital Account for distribution to Unitholders
or to pay fees and expenses of the Trust.
As indicated under "Rights of Unitholders--Redemption of Units" above, the
Trustee may also sell Securities designated by the Supervisor, or if not so
directed, in its own discretion, for the purpose of redeeming Units of the Trust
tendered for redemption and the payment of expenses.
When your Trust sells Securities, the composition and diversity of the
Securities in the Trust may be altered. In order to obtain the best price for a
Trust, it may be necessary for the Supervisor to specify minimum amounts
(generally 100 shares) in which blocks of Securities are to be sold. In
effecting purchases and sales of a Trust's portfolio securities, the Sponsor may
direct that orders be placed with and brokerage commissions be paid to brokers,
including brokers which may be affiliated with the Trusts, the Sponsor or
dealers participating in the offering of Units. In addition, in selecting among
firms to handle a particular transaction, the Sponsor may take into account
whether the firm has sold or is selling units of unit investment trusts which it
sponsors.
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
of 51% of the Units then outstanding, provided that no such amendment or waiver
will reduce the interest in the Trust of any Unitholder without the consent of
such Unitholder or reduce the percentage of Units required to consent to any
such amendment or waiver without the consent of all Unitholders. The Trustee
shall advise the Unitholders of any amendment promptly after execution thereof.
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Trust Units then outstanding or by the Trustee when
the value of the Trust, as shown by any evaluation, is less than that amount set
forth under Minimum Termination Value in "Summary of Essential Financial
Information" in 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 Part One.
Commencing nine business days before, but no later than, the Mandatory
Termination Date, the Trustee may begin to sell Securities in connection with
the termination of the Trust. The Sponsor will determine the manner, timing and
execution of the sales of the Equity 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. Written notice of any
termination specifying the time or times at which Unitholders may surrender
their certificates for cancellation, if any are then issued and outstanding,
shall be given by the Trustee to each Unitholder so holding a certificate at his
address appearing on the registration books of the Trust maintained by the
Trustee. At least 30 days before the Mandatory Termination Date the Trustee will
provide written notice thereof to all Unitholders and will include with such
notice a form to enable Unitholders owning 1,000 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 previous business day if a holiday) the Trustee will
deliver each requesting Unitholder's pro rata number of whole shares of each of
the Equity Securities in the portfolio to the account of the broker-dealer or
bank designated by the Unitholder at Depository Trust Company. The value of the
Unitholder's fractional shares of the Equity Securities will be paid in cash.
Unitholders with less than 1,000 Units and those not requesting an In Kind
Distribution will receive a cash distribution from the sale of the remaining
Equity Securities within a reasonable time following the Mandatory Termination
Date. Regardless of the distribution involved, the Trustee will deduct from the
funds of the Trust any accrued costs, expenses, advances or indemnities provided
by the Trust Agreement, including estimated compensation of the Trustee, costs
of liquidation and any amounts required as a reserve to provide for payment of
any applicable taxes or other governmental charges. Any sale of Equity
Securities in the Trust upon termination may result in a lower amount than might
otherwise be realized if such sale were not required at such time. The Trustee
will then distribute to each Unitholder his pro rata share of the balance of the
Income and Capital Accounts.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement, in substantially the same form as the annual
distribution statement, of the amount distributable. At such time as the Trustee
in its sole discretion will determine that any amounts held in reserve are no
longer necessary, it will make distribution thereof to Unitholders in the same
manner.
LIMITATIONS ON LIABILITIES. The Sponsor, the Evaluator, the Supervisor and
the Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any of the Securities. In the event of the failure of the Sponsor to act under
the Trust Agreement, the Trustee may act thereunder and shall not be liable for
any action taken by it in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the Trust
which the Trustee may be required to pay under any present or future law of the
United States of America or of any other taxing authority having jurisdiction.
In addition, the Trust Agreement contains other customary provisions limiting
the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the Evaluator shall be under no liability to the Trustee, Sponsor
or Unitholders for errors in judgment. This provision shall not protect the
Evaluator in any case of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
SPONSOR. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the
Trust. The Sponsor is an indirect subsidiary of Van Kampen Investments Inc. Van
Kampen Investments Inc. is a wholly owned subsidiary of MSAM Holdings II, Inc.,
which in turn is a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.
("MSDW").
MSDW, 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; credit
services; asset management; trading of futures, options, foreign exchange
commodities and swaps (involving foreign exchange, commodities, indices and
interest rates); and real estate advice, financing and investing.
Van Kampen Funds 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 its principal offices at 1 Parkview Plaza, P.O. Box 5555,
Oakbrook Terrace, Illinois 60181-5555, (630) 684-6000. As of November 30, 1999,
the total stockholders' equity of Van Kampen Funds Inc. was $141,554,861
(audited). (This paragraph relates only to the Sponsor and not to the Trust or
to any other Series thereof. The information is included herein only for the
purpose of informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
As of September 30, 2000, the Sponsor and its Van Kampen affiliates managed
or supervised more than $100 billion of investment products. The Sponsor and its
Van Kampen affiliates offer more than 50 open-end mutual funds, 37 closed-end
funds and have sponsored over 2,700 series of fixed income and equity unit
investment trusts.
If the Sponsor fails to perform any of its duties under the Trust Agreement
or becomes incapable of acting or becomes bankrupt or its affairs are taken over
by public authorities, then the Trustee may (i) appoint a successor Sponsor at
rates of compensation deemed by the Trustee to be reasonable and not exceeding
amounts prescribed by the Securities and Exchange Commission, (ii) terminate the
Trust Agreement and liquidate the Trust as provided therein or (iii) continue to
act as Trustee without terminating the Trust Agreement.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may from
time to time be required under any applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided" ). The Trustee is
required to keep a certified copy or duplicate original of the Trust Agreement
on file in its office available for inspection at all reasonable times during
the usual business hours by any Unitholder, together with a current list of the
Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
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. Winston & Strawn has acted as counsel for the Trustee.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The financial statements 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.
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 38,
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Chicago and State
of Illinois on the 22nd day of November, 2000.
Van Kampen American Capital Equity Opportunity Trust, Series 38
(Registrant)
By Van Kampen Funds Inc.
(Depositor)
By: Christine K. Putong
Assistant Secretary
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on August 25, 2000 by the
following persons who constitute a majority of the Board of Directors of Van
Kampen Funds Inc.:
SIGNATURE TITLE
Richard F. Powers III Chairman and Chief Executive Officer )
John H. Zimmermann III President )
A. Thomas Smith III Executive Vice President, )
General Counsel and Secretary )
Michael H. Santo Executive Vice President and Chief Operations )
and Technology Officer )
Christine K. Putong______________
(Attorney in Fact)*
--------------------
* An executed copy of each of the related powers of attorney is filed herewith
or was filed with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Van Kampen Focus Portfolios, Series 136
(File No. 333-70897) and the same are hereby incorporated herein by this
reference.
