MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 127
The Prospectus filed with Amendment No. 1 of the Registration Statement
on Form S-6 has been revised to reflect information regarding the deposit of Van
Kampen Focus Portfolios, Series 127 on January 5, 1999. An effort has been made
to set forth below each of the major changes and also to reflect the same by
blacklining the marked counterparts of the Prospectus submitted with the
Amendment.
Pages 2-3. The "Summary of Essential Financial Information" and "Fee Table"
sections have been completed.
Pages 4-8. Certain revisions have been made and each "Portfolio" and the
notes thereto has been completed.
Pages 9-14. The descriptions of the portfolio securities have been completed.
Pages 14-16. The Report of Independent Certified Public Accountants' and
Statements of Condition have been completed.
FILE NO. 333-68657
CIK #1025280
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: VAN KAMPEN FOCUS PORTFOLIOS, SERIES 127
B. Name of Depositor: VAN KAMPEN FUNDS INC.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
CHAPMAN AND CUTLER VAN KAMPEN FUNDS INC.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title of securities being registered: Units of fractional undivided
beneficial interest.
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT
/ X / Check box if it is proposed that this filing will become effective at
- ---- 2:00 p.m. on January 5, 1999 pursuant to Rule 487.
Van Kampen
Focus Portfolios
Great International Firms Trust, Series 7
Brand Name Equity Trust, Series 8
- --------------------------------------------------------------------------------
Van Kampen Focus Portfolios, Series 127 includes the unit investment trusts
described above (the "Trusts"). Each Trust seeks to increase the value of your
investment by investing in a diversified portfolio of stocks. Of course, we
cannot guarantee that a Trust will achieve its objective.
The Units are not deposits or obligations of any bank or government agency
and are not guaranteed.
January 5, 1999
You should read this prospectus and retain it for future reference.
- --------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved of
the Units or passed upon the adequacy or accuracy of this prospectus. Any
contrary representation is a criminal offense.
<TABLE>
Summary of Essential Financial Information
January 5, 1999
<CAPTION>
Brand
Great Name
International Equity
Firms Trust Trust
---------------- ----------------
<S> <C> <C>
Public Offering Price
Aggregate value of Securities per Unit (1) $ 9.90 $ 9.90
Sales charge 0.45 0.45
Less deferred sales charge 0.35 0.35
Public offering price per Unit (2) $ 10.00 $ 10.00
Trust Information
Initial number of Units (3) 77,354 14,785
Aggregate value of Securities (1) $ 765,807 $ 146,376
Estimated initial distribution per Unit (4) $ 0.08 $ 0.01
Estimated annual dividends per Unit (4) $ 0.12750 $ 0.12821
Redemption price per Unit (5) $ 9.53 $ 9.55
</TABLE>
General Information
Initial Date of Deposit January 5, 1999
Mandatory Termination Date January 5, 2004
Record Dates Tenth day of March, June, September and December
Distribution Dates Twenty-fifth day of March, June, September and December
- --------------------------------------------------------------------------------
(1)Each stock in a Trust is valued at the last closing sale price on its
principal trading exchange, or at the last asked price if not listed, on the
day before the Initial Date of Deposit. You will bear all or a portion of the
expenses incurred in organizing and offering your Trust. The Public Offering
Price includes the estimated amount of these costs. The Trustee will deduct
these expenses from your Trust at the end of the initial offering period
(approximately three months). The estimated amount for each Trust is
described on the next page.
(2)The Public Offering Price will include any accumulated dividends or cash in
the Income or Capital Accounts of a Trust. (3) At the Evaluation Time on the
Initial Date of Deposit the number of Units may be adjusted so that the
Public Offering Price per Unit equals $10. The number of Units and
fractional interest of each Unit in a Trust will increase or decrease to the
extent of any adjustment.
(4)This estimate is based on the most recently declared quarterly dividends or
interim and final dividends accounting for any foreign withholding taxes.
Actual dividends may vary due to a variety of factors. See "Risk Factors".
The estimated annual dividends per Unit and estimated initial distribution
per Unit for the Great International Firms Trust are net of estimated Trust
expenses (which are generally paid from the Income Account of this Trust).
(5)The redemption price is reduced by any remaining deferred sales charge. See
"Rights of Unitholders--Redemption of Units". The redemption price includes
the estimated organizational and offering costs. The redemption price will
not included these costs after the initial offering period.
Fee Table
Brand
Great Name
International Equity
Firms Trust Trust
----------- -----------
Transaction Fees (as % of offering price)
Initial sales charge (1) 1.00% 1.00%
Deferred sales charge (2) 3.50% 3.50%
----------- -----------
Maximum sales charge 4.50% 4.50%
=========== ===========
Maximum sales charge on reinvested dividends 3.50% 3.50%
=========== ===========
Estimated Organizational Costs per Unit (3) $ 0.02364 $ 0.01818
=========== ===========
Estimated Annual Expenses per Unit
Trustee's fee and operating expenses $ 0.01175 $ 0.01020
Supervisory and evaluation fees $ 0.00500 $ 0.00500
----------- -----------
Estimated annual expenses per Unit $ 0.01675 $ 0.01520
=========== ===========
Estimated Costs Over Time
One year $ 49 $ 48
Three years $ 53 $ 52
Five years $ 57 $ 56
Ten years N/A N/A
This fee table is intended to assist you in understanding the costs that you
will bear and to present a comparison of fees. The "Estimated Costs Over Time"
example illustrates the expenses you would pay on a $1,000 investment assuming a
5% annual return and redemption at the end of each period. This example assumes
that you reinvest all distributions at the end of each year. Of course, you
should not consider this example a representation of actual past or future
expenses or annual rate of return which may differ from those assumed in this
example. The sales charge and expenses are described under "Public Offering" and
"Trust Operating Expenses".
- --------------------------------------------------------------------------------
(1)The initial sales charge is the difference between the maximum sales charge
and the deferred sales charge.
(2)The deferred sales charge is actually equal to $0.35 per Unit. This amount
will exceed the percentage above if the Public Offering Price per Unit falls
below $10 and will be less than the percentage above if the Public Offering
Price per Unit exceeds $10. The deferred sales charge accrues daily and is
assessed from May 5, 1999 through January 4, 2000.
(3)You will bear all or a portion of the expenses incurred in organizing and
offering your Trust. The Trustee will deduct the actual amount of these
expenses from your Trust at the end of the initial offering period.
Great International Firms Trust
The Trust seeks to provide the potential for capital appreciation. In
selecting the Securities, we considered the following factors, among others: the
extent to which the issuers are global leaders in their respective markets and
industries; the extent to which the issuers are leading companies within their
home markets; the attractiveness of the Securities based on an evaluation of
return on equity, price to earnings ratio and price to cash flows; and the
diversification of the Trust portfolio by countries and industries. We attempted
to select companies from developed, industrialized countries that are
well-capitalized world and market leaders, exhibit attractive balance sheets and
offer a diversified line of products and/or services.
The Trust seeks to provide the potential for greater rewards from a
diversified international investment portfolio. In the past eleven years, the
U.S. stock market (as represented by the Standard & Poor's 500 Index) has ranked
among the top five markets in total return only one time and has never ranked
first. Many global equity markets have outperformed the U.S. market in past
years. International firms across the globe are expanding their business,
exporting to more countries and becoming better known to the investment
community. By investing in international stocks, you may benefit from greater
growth potential and added diversity than by concentrating in U.S. securities
alone. If you invested only in a portfolio of U.S. securities, a negative turn
in the market could adversely affect the portfolio. By dedicating a portion of
an investment portfolio to global investments, you may be better protected
against negative movements in a single market. The Trust seeks to provide a
convenient and efficient way to take advantage of the growth potential of
international investing by offering a diversified portfolio of blue chip,
industry-leading companies in countries around the world.
<CHART APPEARS HERE>
The table below illustrates that no single stock market has dominated over
time and that foreign markets have generally offered returns superior to those
available in the U.S. The table shows the total returns of the top performing
stock markets in developed countries for each of the years indicated (as
represented by Morgan Stanley Capital International indices) compared with the
U.S. market (as represented by the Standard & Poor's 500 Index).
Total Return Total Return
Top Performing Market United States Market
---------------------- --------------------
1986 112.77% (Spain) 13.42%
1987 55.96% (Finland) 0.61%
1988 50.19% (Denmark) 11.64%
1989 101.12% (Austria) 26.91%
1990 5.99% (United Kingdom) (5.59%)
1991 42.77% (Hong Kong) 27.17%
1992 27.42% (Hong Kong) 4.16%
1993 109.91% (Hong Kong) 7.02%
1994 51.29% (Finland) (0.85%)
1995 42.42% (Switzerland) 34.74%
1996 41.27% (Spain) 22.90%
1997 44.84% (Switzerland) 33.10%
The table represents historical performance of unmanaged indices which are
composites of equity securities considered representative of equity performance
in the countries specified. The historical performance is shown for illustrative
purposes only, represents past performance which is not indicative of future
performance of the Trust and does not include sales charges or expenses which
are imposed on Trust Units.
As with any investment, we cannot guarantee that the Trust will achieve its
objective. The value of your Units may fall below the price you paid for the
Units. You should read the "Risk Factors" section before you invest.
<TABLE>
<CAPTION>
Portfolio
- -----------------------------------------------------------------------------------------------------------------
Current Cost of
Number Market Value Dividend Securities
of Shares Name of Issuer (1) per Share (2) Yield (3) to Trust (2)
- ---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
544 Akzo Nobel, N.V. $ 44.824 2.19% $ 24,384.52
171 Axa 151.977 0.91 25,988.15
2,000 Bank of Tokyo - Mitsubishi, Limited 10.170 0.63 20,339.59
1,703 Bass Plc 14.241 3.72 24,252.66
591 Bayer AG 43.642 2.37 25,792.29
1,660 British Petroleum Company PLC 15.370 2.70 25,513.88
1,646 British Telecom 15.727 2.19 25,886.09
87 Danone 297.450 0.95 25,878.16
184 Den Danske Bank Group 139.749 1.74 25,713.83
1,437 Electrolux AB 17.720 1.50 25,464.10
721 Glaxo Wellcome Plc 35.570 1.63 25,645.71
2,860 Imperial Chemical Industries Plc 8.241 6.45 23,569.08
34 L'OREAL 792.412 0.31 26,942.00
214 Mannesman AG 123.238 0.44 26,372.88
315 Metro AG 81.488 1.28 25,668.82
11 Nestle SA 2,250.274 0.91 24,753.02
3,750 News Corporation, Limited 6.840 0.23 25,649.79
202 Nokia Oyj 131.280 0.48 26,518.59
13 Novartis 2,067.325 0.71 26,875.23
369 Philips Electronics 69.543 1.31 25,661.37
2,361 Reuters Group PLC 10.639 2.20 25,119.52
481 Rhone-Poulenc S.A. 53.222 1.08 25,599.63
497 Royal Dutch Petroleum Company 49.733 2.90 24,717.16
57 SAP AG 429.322 0.35 24,471.33
381 Siemens AG 66.231 1.23 25,234.18
300 Sony Corporation 71.939 0.53 21,581.77
1,000 Takeda Chemical Industries 37.444 0.53 37,444.15
4,000 Toshiba Corporation 5.934 1.15 23,735.48
1,000 Toyota Motor Corporation 26.408 0.66 26,407.51
290 Unilever NV 84.918 1.24 24,626.27
- ---------- -------------
28,879 $ 765,806.76
========== =============
</TABLE>
See "Notes to Portfolios".
Brand Name Equity Trust
The Trust seeks to provide the potential for capital appreciation and income,
consistent with the preservation of invested capital. We attempted to select a
portfolio of leading brand name companies that provide the potential for growth
at sustainably higher rates than the general stock market for an extended period
of time. In selecting the Securities, we considered the following factors, among
others: (a) the issuer's position within the industry, (b) breadth and stability
of the issuer's business base and (c) growth potential.
Most of the products produced by the issuers in the Trust are consumable
products used around the world. We believe that global demographics provide the
potential for growth in these products in excess of overall economic growth. The
companies in the Trust are generally leaders in their field. We believe these
leadership positions should be sustained given the stability of the markets
generally and the strength of these companies. In addition, we attempted to
select companies with superior management which can help the company maintain a
leadership position within its market. We attempted to select companies which
exhibit attractive balance sheets, strong cash flow and above-average returns on
investment. Exploitation of the attractive product markets requires investment
to drive future growth. Debt capacity and cash flow may help to provide a
company the ability to reinvest in the business. A high return on investment
(and return on equity) may provide the potential for high growth rates from
reinvestment.
<CHART APPEARS HERE>
Consumer Products Companies. Companies within the non-durable consumer goods
industry are typically considered growth companies. A growth company is
generally defined as a relatively steady performer over time which provides the
potential to sustain an above-average growth rate during various economic
cycles. Because of their size, resilience and strength, brand name companies
appear to be some of the most favorable growth companies in which to invest. We
believe that brand name companies are poised to benefit as access to and
consumer demand in developing countries continues to grow. Many of these
companies are industry leaders in domestic and international markets.
They are established, well-managed, financially strong and proven performers.
Many companies have undertaken restructuring and expansion projects which have
increased their profit potential. As large companies, they are able to provide
their brands with a great deal of support, including large advertising budgets,
research and development prowess, effective distribution and promotional
efforts, exposure to international markets and expansion to capitalize on growth
opportunities in developing countries. We believe that as cost differences
between brand name and generic products shrink, consumers may pay a premium for
products they recognize and believe to be of better quality.
The Food and Beverage Industry. The Department of Commerce ranks the food and
beverage industry as the second largest U.S. manufacturing sector. In recent
years, this industry has had consistently positive earnings and has tended to be
recession-resistant. Performance has reflected consumer demand more than general
economic conditions. Food processing companies include manufacturers of packaged
foods and processors of agricultural products. Distributors include food
wholesalers and retailers, supermarket chains and restaurants. The issuers in
the Trust include companies that have successfully adapted to new consumer
demands. We anticipate that continued adaptation will result in consumer support
and lead to continued growth.
Pharmaceutical Industry. Pharmaceutical companies have historically provided
significant growth opportunities. Pharmaceutical companies develop, manufacture
and sell prescription and over-the-counter drugs. They are well known for the
significant amounts of money they spend on research and development. As the
population of the United States ages, pharmaceutical companies will continue to
develop new drugs through advanced technologies and diagnostics. These companies
are involved in the development and distribution of drugs and vaccines
world-wide. These activities may make the pharmaceutical sector attractive for
investors seeking growth.
As with any investment, we cannot guarantee that the Trust will achieve its
objective. The value of your Units may fall below the price you paid for the
Units. You should read the "Risk Factors" section before you invest.
<TABLE>
<CAPTION>
Portfolio
- -----------------------------------------------------------------------------------------------------------------
Current Cost of
Number Market Value Dividend Securities
of Shares Name of Issuer (1) per Share (2) Yield (3) to Trust (2)
- ---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
88 American Home Products Corporation $ 55.688 1.62% $ 4,900.50
110 Avon Products, Inc. 43.625 1.56 4,798.75
3 70 Benckiser NV 69.375 0.00 4,856.25
91 Bestfoods 53.625 1.83 4,879.88
37 Bristol-Myers Squibb Company 130.375 1.32 4,823.88
43 Clorox Company 114.938 1.25 4,942.31
73 Coca Cola Company 67.188 0.89 4,904.69
139 Coca Cola Enterprises, Inc. 34.625 0.46 4,812.88
53 Colgate-Palmolive Company 90.000 1.22 4,770.00
171 Dial Corporation 28.438 1.13 4,862.81
101 Gillette Company 47.813 1.07 4,829.06
78 Hershey Foods Corporation 62.313 1.54 4,860.38
187 Interstate Bakeries 25.750 1.09 4,815.25
206 Mattel, Inc. 23.688 1.35 4,879.63
145 McCormick & Company 34.000 2.00 4,930.00
33 Merck & Co., Inc. 149.750 1.44 4,941.75
120 Nabisco Holdings Corporation 42.000 1.67 5,040.00
+ 46 Nestle SA 107.500 0.94 4,945.00
120 PepsiCo, Inc. 40.625 1.28 4,875.00
93 Philip Morris Companies, Inc. 52.563 3.35 4,888.31
54 Proctor & Gamble Company 90.000 1.27 4,860.00
82 Quaker Oats Company 59.250 1.92 4,858.50
154 Ralston-Ralston Purina Group 31.500 1.27 4,851.00
176 Sara Lee Corporation 28.313 1.77 4,983.00
86 Schering-Plough Corporation 56.063 0.78 4,821.38
+ 59 Unilever NV 83.625 1.52 4,933.88
165 Walt Disney Company 29.563 0.71 4,877.81
65 Warner-Lambert Company 75.000 0.85 4,875.00
201 Whitman Corporation 23.938 0.84 4,811.44
54 Wm. Wrigley Jr. Company 91.625 0.87 4,947.75
- ---------- -------------
3,100 $ 146,376.09
========== =============
</TABLE>
See "Notes to Portfolios".
Notes to Portfolios
(1) The Securities are initially represented by "regular way" contracts for
the performance of which an irrevocable letter of credit has been deposited with
the Trustee. Contracts to acquire Securities were entered into on January 4,
1999 and have a settlement date of January 7, 1999 (see "The Trusts").
(2) The market value of each Security is based on the closing sale price on
the applicable exchange on the day prior to the Initial Date of Deposit or the
last asked price if not listed on an exchange. Other information regarding the
Securities, as of the Initial Date of Deposit, is as follows:
Profit
Cost to (Loss) To
Sponsor Sponsor
-------------- --------------
Great International Firms Trust $ 766,381 $ (574)
Brand Name Equity Trust $ 146,631 $ (255)
"+" indicates that the stock is held in the form of American Depositary Receipts
or similar receipts.
"3" indicates that the stock is a stock of a foreign company traded on a U.S.
securities exchange.
(3)Current Dividend Yield for each Security is based on the estimated annual
dividends per share and the Security's market value as of the close of trading
on the day prior to the Initial Date of Deposit. Estimated annual dividends per
share are calculated by annualizing the most recently declared dividends or by
adding the most recent interim and final dividends declared and reflect any
foreign withholding taxes.
The Securities. A brief description of each of the issuers of the stocks in
each Trust appears below.
Great International Firms Trust
Akzo Nobel N.V. Akso Nobel N.V. produces and markets healthcare products,
coatings, chemicals and fibers. The company provides chemicals, man-made fibers,
paints, enamels and salts, ethical drugs, veterinary products, hospital supplies
and diagnostic products. Geographically, Akzo Nobel's activities are largely
concentrated in Europe and the United States.
Axa. Axa is a French insurance group providing insurance (life and
non-life), reinsurance, financial and real estate services in Europe, Asia,
Africa and North America. The company's insurance activities in the United
States are conducted through Equitable.
The Bank of Tokyo-Mitsubishi, Ltd. The Bank of Tokyo-Mitsubishi, Ltd.
provides a broad range of financial services to businesses, government, and
private individuals. The Bank, through its global subsidiaries, offers
commercial, investment, and trust banking products and services.
Bass PLC. Bass PLC produces and distributes beer and soft drinks. The
company also owns, manages, leases and franchises public houses ("pubs"), hotels
and restaurants, operates bingo clubs, betting shops, bowling centers,
entertainment centers, and other leisure retailing outlets, The Group also
manufactures, supplies, and operates amusement and gaming machines.
Bayer AG. Bayer AG manufactures a variety of industrial chemicals and
polymers, as well as human and animal health care products, pharmaceuticals and
agricultural crop protection agents. The company also produces photographic and
imaging products and systems. Bayer markets its products to the automotive,
electronic, medical, construction, farming, textile, utility and printing
enterprises worldwide.
British Petroleum Company Plc. British Petroleum Company Plc explores for,
produces, refines and retails petroleum products and manufactures chemicals. The
company produces and retails petroleum products throughout the world and owns
and operates approximately 18,000 gasoline stations. British Petroleum's
chemicals business's key products are acetic acid, acrylonitrile and
polyethylene.
British Telecommunications Plc. British Telecommunications Plc provides
telecommunications services. The company provides local and long-distance
telephone call products and services in the United Kingdom, telephone exchange
lines to homes and businesses, international telephone calls to and from the
United Kingdom and telecommunications equipment for customers' premises. BT has
operations internationally.
Danone. Danone produces packaged foods and beverages. Danone produces dairy
products, including yogurts, cheeses and dairy desserts; biscuits, including
cookies and snacks and beverages, including bottled water and beer. In addition,
the company makes, sauces, ready-made meals, baby foods and containers.
Den Danske Bank Group. Den Danske Bank Group provides financial services
including banking, insurance, mortgage finance, asset management, leasing and
information technology facility management services. The Bank operates branches
throughout Denmark, as well as international subsidiary banks. Den Danske offers
asset management for institutional and life insurance clients domestically and
internationally.
Electrolux AB. Electrolux AB manufactures appliances and outdoor products.
The company produces household and commercial appliances, such as refrigerators,
ovens, washing machines, vacuum cleaners and other floor care machines.
Electrolux also makes chain saws, lawn mowers and weed eaters. Some of the
brandnames used are "Frigidaire", "Husqvarna" and "Poulan/Weed Eater". The
company operates worldwide.
Glaxo Wellcome Plc. Glaxo Wellcome Plc researches, develops, manufactures
and markets pharmaceuticals. The Groups operates in 57 countries, while its
products are manufactured in around 33 countries and sold in over 150. The
company's main products include "Zantac", an anti-ulcer drug; "Serevent", a
respiratory drug; "Imigran", a migraine drug; "Camictal", a treatment for
epilepsy; and "Epivir", for HIV.
Imperial Chemical Industries Plc. Imperial Chemical Industries Plc is an
international chemical company. The company produces paints, acrylics,
polyurethanes, films, chemicals and polymers and adhesives and sealants.
L'OREAL. L'OREAL manufactures, markets and sells health and beauty aids. The
company's products are sold internationally and include cosmetics, hair
products, moisturizers, perfumes and pharmaceuticals. L'OREAL also holds
interests in magazine publishing, film production and distribution and art
galleries.
Mannesmann AG. Mannesmann AG designs and manufactures a wide range of
industrial products, production machinery and assembly systems, as well as
telecommunication gears and equipment. The company provides car instruments,
electronics, plastic and mechanical parts to car manufacturers; produces and
trades various steel pipes and sells traffic control systems, as well as
engineers production plants worldwide.
Metro AG. Metro AG operates a range of stores including department stores,
supermarkets, do-it-yourself building centers, clothing stores, restaurants,
computer and electronics stores and warehouse superstores. Metro's stores are
located in Germany, China and throughout Europe.
Nestle SA. Nestle SA is a consumer packaged goods company. The company has
subsidiaries that produce and sell beverages, milk products, culinary products,
frozen food, chocolate, ready-to-eat dishes, refrigerated products, food service
products, pet food, pharmaceuticals and cosmetics. Nestle has 495 production
facilities in approximately 77 countries.
The News Corporation Limited. The News Corporation Limited is an
international media company. The company's operations include the production and
distribution of motion pictures and television programming; television,
satellite, and cable broadcasting; and the publication of newspapers, magazines,
books and promotional inserts.
Nokia Oyj. Nokia Oyj is an international telecommunications company. The
company develops and manufactures mobile phones, networks and systems for
cellular and fixed networks. Nokia also develops and supplies access networks,
multimedia equipment and other telecom related products. The company operates in
about 45 countries and provides its products and services worldwide.
Novartis. Novartis was created by the merger of Sandoz and Ciba-Geigy, the
Swiss pharmaceutical companies. Novartis manufactures healthcare products for
use in a broad range of medical fields, as well as nutritional and agricultural
products. Novartis markets its products worldwide.
Koninklijke (Royal) Philips Electronics N.V. Koninklijke (Royal) Philips
Electronics N.V., through subsidiaries, manufactures lighting, consumer
electronics, music and film, multimedia devices, domestic appliances and
personal care items, semi-conductors, medical devices, communications systems
and industrial electronics. The company sells its products worldwide.
Reuters Group Plc. Reuters Group Plc is an international news and
information organization. The company provides economic and financial
information to the business community, and supplies news services to the media.
Rhone-Poulenc S.A. Rhone-Poulenc S.A. manufactures chemicals, polymers,
fibers, pharmaceuticals and agricultural chemicals. The company has sales
throughout the world, with a concentration in France, the United States and
Canada.
Royal Dutch Petroleum Company. Royal Dutch Petroleum Company owns 60% of the
Royal Dutch/Shell Group of companies. These companies are involved in all phases
of the petroleum industry from exploration to final processing and delivery.
Royal Dutch Petroleum company has no operations of its own, and virtually the
whole of its income is derived from its 60% interest.
SAP AG. SAP AG (Systeme, Anwendungen, Produkte in der Datenverarbeitung) is
a multi-national software company with its headquarter in Walldorf, Germany. The
company develops business software, consults on organizational usage of its
application software and provides training services. SAP markets its products
and services through subsidiaries, distributors and other business partners
worldwide.
Siemens AG. Siemens AG manufactures a wide range of industrial and consumer
products. The company builds locomotives, traffic control systems, automotive
electronics and engineers electrical power plants. Siemens also provides public
and private communications networks, computers, building control systems,
medical equipment, household appliances and electrical components. The company
operates worldwide.
Sony Corporation. Sony Corporation develops and manufactures consumer and
industrial electronic equipment. The company's products include audio and video
equipment, televisions, displays, semiconductors, electronic components,
computers and computer peripherals, and telecommunication equipment. Sony is
also active in the worldwide music and image-based software markets.
Takeda Chemical Industries. Takeda Chemical Industries produces and sells
health-care related products. The company specializes in pharmaceuticals,
health-care products, foods, vitamins, chemicals, agrochemicals and
environmental materials. Takeda Chemical Industries is also active in launching
new drugs.
Toshiba Corporation. Toshiba Corporation manufactures electric machinery.
The company specializes in data communications system, electronic devices, heavy
electric machinery, and consumer electronics. Toshiba is also active in the
business of semiconductors, computers, and communications field.
Toyota Motor Corporation. Toyota Motor Corporation produces, sells, leases,
and repairs passenger cars, trucks, buses, boats, airplanes, and other products
in Japan and most foreign countries. The company is also involved in the
businesses of real estate, civil engineering, insurance, and other businesses.
Unilever NV. Unilever NV manufactures branded and packaged consumer goods,
including food, detergents and personal care products. The company shares
operations with Unilever Plc. The two companies are linked by a series of
agreements and operate as a single entity as much as possible. Unilever sells
its products internationally.
Brand Name Equity Trust
Major Pharmaceuticals
American Home Products Corporation. American Home Products Corporation
discovers, develops, manufactures, distributes, and sells health care products
and agricultural products. Health care products include branded and generic
ethical pharmaceuticals, biologicals, nutritionals, consumer health care
products, and animal pharmaceuticals. Agricultural products include crop
protection and pest control products.
Bristol-Myers Squibb Company. Bristol-Myers Squibb Company, a diversified
worldwide health and personal care company, manufactures and markets
pharmaceuticals, consumer medicines, beauty care products, nutritionals, and
medical devices. The company's products include over-the-counter medications,
orthopedic devices, ostomy care, wound management products, nutritional
supplements, and other personal care items.
Merck & Co., Inc. Merck & Co., Inc. is a worldwide research-intensive health
products company. The company operates through five divisions: human health
managed pharmaceutical care, manufacturing, research, and vaccine. Merck's
products include treatments for osteoporosis and high blood pressure. The
company markets its products under brand names such as "Cozar", "Fosamax",
"Trusopt", and "Pepcid AC".
Schering-Plough Corporation. Schering-Plough Corporation, through its
subsidiaries, discovers, develops, manufactures, and markets pharmaceutical and
health care products worldwide. The company currently markets
allergy/respiratory products, anti-infective and anticancer products,
dermatologicals, cardiovasculars, animal health products, sun care products,
over-the-counter drugs, and other health care products.
Warner-Lambert Company. Warner-Lambert Company discovers, develops,
manufactures, and markets pharmaceutical, consumer health care and confectionary
products. The company's products include "Listerine" mouthwash, "Trident" gum,
"Schick" razors, "Tetra" fish food, "Sudafed" decongestant, "Lubriderm" body
bar, "Dilantin" epilepsy drug, "Centrax" tranquilizer, "Neosporin" topical
antibiotic, and other products.
Media Conglomerates
The Walt Disney Company. The Walt Disney Company is a diversified worldwide
entertainment company with operations in creative content, broadcasting, and
theme parks and resorts. The company produces motion pictures, television
programs, and musical recordings; licenses its intellectual property; and
publishes books and magazines. Disney also operates ABC radio and television and
theme parks in the US and overseas.
Package Goods/Cosmetics
Avon Products, Inc. Avon Products, Inc. is a worldwide manufacturer and
direct-seller of beauty products, fashion jewelry and prestige fragrances. The
company markets its products to consumers in 135 countries through approximately
2.6 million independent representatives. Avon also offers fashion jewelry,
apparel, gifts, collectibles and home furnishings.
Benckiser NV. Benckiser NV is an international producer and supplier of
cleaning and washing agents. The company manufactures household cleansers,
dishwashing detergents, water softeners, laundry additives and special cleaning
agents. Products include brands such as; " water softener, "Vanish" laundry
additives, and "Cillit" and "Lime-A-Way" limescale cleaners. Other products
include "Calgonite", "Finish", "Cling Free" and "Jet Dry".
The Clorox Company. The Clorox Company manufactures and markets non-durable
household consumer products. The company's products are sold primarily through
grocery and other retail stores in the United States and internationally.
Clorox' products include "Formula 409", "Clorox" and "Pine-Sol" cleaning agents;
"Black Flag" and "Combat" insect control products; and "Armor All" automobile
products.
Colgate-Palmolive Company. Colgate-Palmolive Company, a global consumer
products company, manufactures oral care, personal care, household care, and pet
nutrition products. The company owns and leases 346 manufacturing, distribution,
research, and office facilities worldwide. Products are marketed under the
"Colgate", "Palmolive", "Mennen", "Ajax", "Fab", "Science Diet", and other
names.
The Dial Corporation. The Dial Corporation is a consumer products company.
Products are grouped among four core groups of "DIAL" soaps and bath products,
"PUREX" detergents and other laundry cleaners, "RENUZIT" air fresheners, and
"ARMOUR" canned meats. The company's products are sold domestically through
supermarkets, mass merchandisers, drug stores, and membership club stores, and
abroad in the Americas.
Gillette Company. Gillette Company manufactures grooming products, writing
instruments and stationary, toothbrushes and oral care products, and alkaline
batteries. The company's products include blades and razors, shaving
preparations, electric shavers, hair epilation devices, and other products.
Gillette sells its goods around the world.
The Procter & Gamble Company. The Procter & Gamble Company manufactures and
markets consumer products throughout the world. The company operates through
five business segments: laundry and cleaning, paper, beauty care, food and
beverages, and health care. Brand names include "Tide", ", "Bounty", "Charmin",
"Pampers", "Vidal Sassoon", "Cover Girl", "Folgers", "Jif", "Scope", "Vicks" and
others.
Packaged Foods
Bestfoods. Bestfoods is an international packaged food company. The company
produces a variety of food products, including "Hellmann's" and "Best Foods"
mayonnaise and dressings; "Skippy" peanut butter; "Mazola" corn oil; "Knorr"
soups, sauces, and bouillon; and "Entenmann's", "Thomas' English Muffins",
"Arnold", and "Brownberry" breads. Bestfoods's products are marketed in 110
countries.
Nabisco Holdings Corporation. Nabisco Holdings Corporation manufactures and
sells a variety of packaged foods. The company's products include candy,
cookies, oatmeal, condiments, and dog treats. Nabisco sells its line under a
number of brand names including "Ritz", "Bubble Yum", "Stella D'Oro", "Blue
Bonnet", and "Snackwell's". The Company operates worldwide.
Nestle SA. Nestle SA is a consumer packaged goods company. The company has
subsidiaries that produce and sell beverages, milk products, culinary products,
frozen food, chocolate, ready-to-eat dishes, refrigerated products, food service
products, pet food, pharmaceuticals and cosmetics. Nestle has 495 production
facilities in approximately 77 countries.
The Quaker Oats Company. The Quaker Oats Company markets and manufactures
food and beverages internationally. The company's major brands include "Quaker"
cereals and grain-based snacks; "Cap'n Crunch" and "Life" cereals; "Aunt Jemima"
mixes and syrup; "Rice-A-Roni", "Pasta Roni", and "Near East" side dishes; and
"Gatorade" thirst quenchers.
Ralston-Ralston Purina Group. Ralston-Ralston Purina Group consists of two
businesses worldwide. Ralston Purina Pet Products produces dry dog, and dry and
soft-moist cat foods. Eveready Battery Company, Inc. manufactures dry cell
batteries and flashlights.
Sara Lee Corporation. Sara Lee Corporation manufactures and markets
brand-name products for consumers throughout the world. The company has
operations in more than 40 countries and markets branded products in more than
140 countries. Sara Lee's products include "Sara Lee" food items, "Jimmy Dean"
packaged meats, "Coach" leatherware, "Hanes" clothing and hosiery, "L'eggs"
hosiery, and "Champion" activewear, among others.
Unilever NV. Unilever NV manufactures branded and packaged consumer goods,
including food, detergents and personal care products. The company shares
operations with Unilever Plc. The two companies are linked by a series of
agreements and operate as a single entity as much as possible. Unilever sells
its products internationally.
Recreational Products/Toys
Mattel, Inc. Mattel, Inc. designs, manufactures and markets children's toys.
The company's core product lines includes "Barbie", "Fisher-Price", "Disney" and
"Hot Wheels" toys and accessories. Mattel markets its products around the world.
Soft Drinks
The Coca-Cola Company. The Coca-Cola Company manufactures, markets, and
distributes soft drink concentrates and syrups. The company manufactures and
sells soft drink and noncarbonated beverages, including fountain syrups, some
finished beverages, and certain juice and juice-drink products. Coca-Cola sells
its concentrates and syrups for bottled and canned beverages to authorized
bottling and canning operations.
Coca-Cola Enterprises, Inc. Coca-Cola Enterprises, Inc. markets,
distributes, and produces bottled and canned beverages of The Coca-Cola Company.
The company's bottling territories in North America consist of 45 states in the
United States, the District of Columbia, and all 10 Canadian provinces.
Coca-Cola Enterprises's European operations include Great Britain, Belgium,
Luxembourg, the Netherlands, and most of France.
PepsiCo, Inc. PepsiCo, Inc. operates on a worldwide basis in the soft drink
and snack food segments. The company's products include "Pepsi-Cola", "Slice",
and "Mountain Dew" soft drinks and "Fritos" and "Doritos" snack foods. PepsiCo
also owns Tropicana Products, Inc., a producer and marketer of branded juices
including "Tropicana Pure Premium", "Tropicana Season's Best", and "Dole".
Whitman Corporation. Whitman Corporation produces and distributes
"Pepsi-Cola" and other non-alcoholic beverage products by Pepsi-Cola General
Bottlers, Inc. The company currently serves 12 midwestern states, as well as
northern and western Poland.
Specialty Foods/Candy
Hershey Foods Corporation. Hershey Foods Corporation manufactures,
distributes, and sells consumer food products. The company produces and
distributes a line of chocolate and non-chocolate confectionery, grocery, and
pasta products. Hershey's customers include grocery wholesalers, chain grocery
stores, candy distributors, mass merchandisers, and drug stores throughout the
United States, Canada, and Mexico.
Interstate Bakeries Corporation. Interstate Bakeries Corporation produces and
distributes baked goods. The company bakes a variety of breads, buns and rolls
under the names "Wonder", "Hostess", and "Home Pride", among others, as well as
a number of regional brand names. Interstate operates approximately 69 bakeries
and 1,500 thrift stores throughout the United States.
McCormick & Company, Inc. McCormick & Company, Inc. is a specialty food
company. The company manufactures spices, seasonings, flavorings, and other
specialty food products and sells such products to the retail food market, the
food service market and to industrial food processors throughout the world.
McCormick, through its subsidiaries, also manufactures and markets plastic and
packaging products.
Wm. Wrigley Jr. Company. Wm. Wrigley Jr. Company manufactures chewing gum.
The company sells its gum under the brand names "Wrigley's Spearmint",
"Doublemint", "Juicy Fruit", and "Big Red". Other brand names include
"Freedent", "Orbit", and "Hubba Bubba", among others. Wrigley sells its products
in over 140 countries.
Tobacco
Philip Morris Companies, Inc. Philip Morris Companies, Inc. is a consumer
packaged goods company. The company operates through five subsidiaries. Philip
Morris' products include "Bull's-Eye", "Breakstone's", "Kraft", "Cambridge" and
"Marlboro" cigarettes, "Cracker Barrel" and "Polly-O" cheeses, "Crystal Light",
"Maxwell House", and "Miller", "Milwaukee's Best" and "Meister Brau" beer.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of
Van Kampen Focus Portfolios, Series 127:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen Focus Portfolios, Series 127 as of January 5, 1999. The
statements of condition and portfolios are the responsibility of the Sponsor.
Our responsibility is to express an opinion on such financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of an irrevocable letter of credit deposited to purchase securities
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen Focus Portfolios, Series
127 as of January 5, 1999, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Chicago, Illinois
January 5, 1999
STATEMENTS OF CONDITION
As of January 5, 1999
Brand
Great Name
International Equity
Firms Trust Trust
--------------- --------------
INVESTMENT IN SECURITIES
Contracts to purchase Securities (1) $ 765,807 $ 146,376
--------------- --------------
Total $ 765,807 $ 146,376
=============== ==============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Organizational costs (2) $ 1,829 $ 269
Deferred sales charge liability (3) 27,074 5,175
Interest of Unitholders--
Cost to investors (4) 773,540 147,850
Less: Gross underwriting commission and
organizational costs (2)(4)(5) 36,636 6,918
--------------- --------------
Net interest to Unitholders (4) 736,904 140,932
--------------- --------------
Total $ 765,807 $ 146,376
=============== ==============
(1)The value of the Securities is determined by Interactive Data Corporation
on the bases set forth under "Public Offering--Offering Price". The contracts
to purchase Securities are collateralized by separate irrevocable letters of
credit which have been deposited with the Trustee.
(2)A portion of the Public Offering Price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing a Trust. The
amount of these costs are set forth in the "Fee Table". A distribution will
be made as of the close of the initial offering period to an account
maintained by the Trustee from which this obligation of the investors will be
satisfied.
(3)Represents the amount of mandatory distributions from a Trust on the bases
set forth under "Public Offering". (4) The aggregate public offering price
and the aggregate sales charge are computed on the bases set forth under
"Public Offering--Offering Price".
(5)Assumes the maximum sales charge.
THE TRUSTS
- --------------------------------------------------------------------------------
The Trusts were created under the laws of the State of New York pursuant to a
Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the date of
this Prospectus (the "Initial Date of Deposit"), among Van Kampen Funds Inc., as
Sponsor, Van Kampen Investment Advisory Corp., as Supervisor, The Bank of New
York, as Trustee, and American Portfolio Evaluation Services, a division of Van
Kampen Investment Advisory Corp., as Evaluator.
The Trusts offer investors the opportunity to purchase Units representing
proportionate interests in portfolios of actively traded securities. A Trust may
be an appropriate medium for investors who desire to participate in a portfolio
of securities with greater diversification than they might be able to acquire
individually.
On the Initial Date of Deposit, the Sponsor deposited delivery statements
relating to contracts for the purchase of the Securities and an irrevocable
letter of credit in the amount required for these purchases with the Trustee. In
exchange for these contracts the Trustee delivered to the Sponsor documentation
evidencing the ownership of Units of the Trusts. Unless otherwise terminated as
provided in the Trust Agreement, the Trusts will terminate on the Mandatory
Termination Date and any remaining Securities will be liquidated or distributed
by the Trustee within a reasonable time. As used in this Prospectus the term
"Securities" means the securities (including contracts to purchase these
securities) listed in "Portfolio" for each Trust and any additional securities
deposited into each Trust.
Additional Units of a Trust may be issued at any time by depositing in the
Trust (i) additional Securities, (ii) contracts to purchase Securities together
with cash or irrevocable letters of credit or (iii) cash (or a letter of credit)
with instructions to purchase additional Securities. As additional Units are
issued by a Trust, the aggregate value of the Securities will be increased and
the fractional undivided interest represented by each Unit will be decreased.
The Sponsor may continue to make additional deposits into a Trust following the
Initial Date of Deposit provided that the additional deposits will be in amounts
which will maintain, as nearly as practicable, the same percentage relationship
among the number of shares of each Security in the Trustportfolio that existed
immediately prior to the subsequent deposit (an equal dollar amount of each
Security for the first ninety days for the Great International Firms Trust).
Investors may experience a dilution of their investments and a reduction in
their anticipated income because of fluctuations in the prices of the Securities
between the time of the deposit and the purchase of the Securities and because
the Trusts will pay the associated brokerage or acquisition fees.
Each Unit of a Trust initially offered represents an undivided interest in
that Trust. To the extent that any Units are redeemed by the Trustee or
additional Units are issued as a result of additional Securities being deposited
by the Sponsor, the fractional undivided interest in that Trust represented by
each unredeemed Unit will increase or decrease accordingly, although the actual
interest in the Trust 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.
Each Trust consists of (a) the Securities (including contracts for the
purchase thereof) listed under the applicable "Portfolio" 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 related Income and Capital Accounts. Neither the Sponsor nor
the Trustee shall be liable in any way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------------
Each Trust seeks to increase the value of your investment by investing in a
diversified portfolio of stocks. We cannot guarantee that a Trust will achieve
its objective.
You should note that we applied the selection criteria to the Securities for
inclusion in the Trusts as of the Initial Date of Deposit. After this date, the
Securities may no longer meet the selection criteria. Should a Security no
longer meet the selection criteria, we will generally not remove the Security
from its Trust portfolio.
A balanced investment portfolio incorporates various style and
capitalization characteristics. We offer unit trusts with a variety of styles
and capitalizations to meet your needs. We determine style characteristics
(growth or value) based on the criteria used in selecting the Trust portfolio.
Generally, a growth portfolio includes companies in a growth phase of their
business with increasing earnings. A value portfolio generally includes
companies with low relative price-earnings ratios that we believe are
undervalued. We determine market capitalizations as follows based on the
weighted median market capitalization of a portfolio: Small-Cap-- less than $1
billion; Mid-Cap-- $1 billion to $5 billion; and Large-Cap-- over $5 billion. We
determine all style and capitalization characteristics as of the Initial Date of
Deposit and the characteristics may vary thereafter. We will not remove a
Security from a Trust as a result of any change in characteristics.
RISK FACTORS
- --------------------------------------------------------------------------------
Price Volatility. The Trusts invest in stocks of U.S. and foreign companies.
The value of Units will fluctuate with the value of these stocks and may be more
or less than the price you originally paid for your Units. The market value of
stocks sometimes moves up or down rapidly and unpredictably. Because the Trusts
are unmanaged, the Trustee will not sell stocks in response to market
fluctuations as is common in managed investments. As with any investment, we
cannot guarantee that the performance of a Trust will be positive over any
period of time.
Dividends. Stocks represent ownership interests in the issuers and are not
obligations of the issuers. Common stockholders have a right to receive
dividends only after the company has provided for payment of its creditors,
bondholders and preferred stockholders. Common stocks do not assure dividend
payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
Foreign Stocks. Because certain Trusts invest in stocks of foreign companies,
they involve additional risks that differ from an investment in domestic stocks.
These risks include the risk of losses due to future political and economic
developments, international trade conditions, foreign withholding taxes and
restrictions on foreign investments and exchange of securities. These Trusts
also involve the risk that fluctuations in exchange rates between the U.S.
dollar and foreign currencies may negatively affect the value of the stocks.
These Trusts involve the risk that information about the stocks is not publicly
available or is inaccurate due to the absence of uniform accounting and
financial reporting standards. In addition, some foreign securities markets are
less liquid than U.S. markets. This could cause a Trust to buy stocks at a
higher price or sell stocks at a lower price than would be the case in a highly
liquid market. Foreign securities markets are often more volatile and involve
higher trading costs than U.S. markets, and foreign companies, securities
markets and brokers are also generally not subject to the same level of
supervision and regulation as in the U.S. Certain stocks may be held in the form
of American Depositary Receipts or other similar receipts ("ADRs"). ADRs
represent receipts for foreign common stock deposited with a custodian (which
may include the Trustee). The ADRs in a Trust trade in the U.S. in U.S. dollars
and are registered with the Securities and Exchange Commission. ADRs generally
involve the same types of risks as foreign common stock held directly. Some ADRs
may experience less liquidity than the underlying common stocks traded in their
home market.
On January 1, 1999, eleven member countries of the European Economic and
Monetary Union (EMU) introduced a new European currency called the Euro. This
may result in uncertainties for European securities markets and operation of
your Trust. This introduction requires the redenomination of European debt and
equity securities over a period of time. This could result in various accounting
differences and/or tax treatments that otherwise would not likely occur. As part
of the Euro conversion, participating countries will no longer control their own
monetary policies by directing independent interest rates or currency
transactions. Instead, a new European Central Bank has authority to direct
monetary policy, including money supply of the national currencies of the
participating countries in the Euro. The full conversion process will occur over
a period of time. The conversion schedule calls for the introduction of Euro
coins and banknotes on January 1, 2002. The schedule provides for cancellation
of the national currencies of independent participating countries by July 1,
2002. Certain EMU members, including the United Kingdom, are not officially
implementing the Euro at this time. This could raise additional questions and
complications within European markets. European markets could face significant
difficulties if the Euro introduction does not take place as planned. These
difficulties could include such things as severe currency fluctuations and
market disruptions. It is too early to determine whether the conversion is
taking place as scheduled or whether future difficulties will occur. No one can
predict the impact of the conversion. All of these issues could have a negative
impact on the value of your Units.
Consumer Products Companies. The Brand Name Equity Trust primarily includes
issuers within the consumer goods industry. Any negative impact on this industry
will have a greater impact on the value of Units than on a portfolio diversified
over several industries. The companies in this Trust include companies in the
non-durable consumer goods, food and beverage, and pharmaceuticals sectors. The
Great International Firms Trust also holds significant amounts of these types of
issuers. You should understand the risks of these companies before you invest.
These companies face risks due to cyclicality of revenues and earnings, changing
consumer demands, regulatory restrictions, products liability litigation,
extensive competition, foreign tariffs, foreign exchange rates, transportation
costs, the cost of raw materials, unfunded pension fund liabilities and employee
and retiree benefit costs and financial deterioration resulting from leveraged
buy-outs, takeovers or acquisitions. Because the economic health of consumers
greatly impacts these companies, recession or tightening of consumer credit or
spending could adversely affect these issuers. Phamaceutical companies face
additional risks such as extensive governmental regulation, lengthy governmental
drug review processes and substantial research and development costs. The
failure to obtain government approval or successful test results for a drug
could have a substantial negative impact on a company. All of these factors can
have a negative impact on the value of your Units.
Year 2000 Readiness Disclosure. The following two paragraphs constitute
"Year 2000 Readiness Disclosure" within the meaning of the Year 2000 Information
and Readiness Disclosure Act of 1998. If computer systems used by the Sponsor,
Evaluator, Supervisor or Trustee or other service providers to the Trusts do not
properly process date-related information after December 31, 1999, the resulting
difficulties could adversely impact the Trusts. This is commonly known as the
"Year 2000 Problem". The Sponsor, Evaluator, Supervisor and Trustee are taking
steps to address this problem and to obtain reasonable assurances that other
service providers to the Trusts are taking comparable steps. We cannot guarantee
that these steps will be sufficient to avoid any adverse impact on the Trusts.
This problem may impact corporations to varying degrees based on factors such as
industry sector and degree of technological sophistication. We cannot predict
what impact, if any, this problem will have on the issuers of the Securities.
In addition, computer failures throughout the financial services industry
beginning January 1, 2000 could have a detrimental affect on the markets for the
Securities. Improperly functioning trading systems may result in settlement
problems and liquidity issues. Moreover, corporate and governmental data
processing errors may adversely affect issuers and overall economic
uncertainties. Remediation costs will affect the earnings of individual issuers.
These costs could be substantial. Issuers may report these costs inconsistently
in U.S. and foreign financial markets. All of these issuers could adversely
affect the Securities and the Trusts.
PUBLIC OFFERING
- --------------------------------------------------------------------------------
General. Units are offered at the Public Offering Price which includes the
underlying value of the Securities, the initial sales charge, and cash, if any,
in the Income and Capital Accounts. The "Fee Table" describes the sales charges
in detail. If any deferred sales charge payment date is not a business day, we
will charge the payment on the next business day. If you purchase Units after
the initial deferred sales charge payment, you will only pay that portion of the
payments not yet collected. Beginning on January 5, 2000, the secondary market
sales charge will be 4.00% and will not include deferred payments. This sales
charge will decrease by .5% on each following January 5, to a minimum of 3.00%.
The initial offering period sales charge is reduced as follows:
Aggregate
Dollar Amount
of Units Purchased* Sales Charge
- --------------------- ----------------
$50,000 - $99,999 4.20%
$100,000 - $249,999 4.00
$250,000 - $499,999 3.50
$500,000 - $999,999 3.00
$1,000,000 or more 2.50
- ---------------
*The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied on
whichever basis is more favorable to the investor.
Any sales charge reduction is the responsibility of the selling broker,
dealer or agent. An investor may aggregate purchases of Units of the Trusts for
purposes of qualifying for volume purchase discounts listed above. The reduced
sales charge structure will also apply on all purchases by the same person from
any one dealer of units of Van Kampen-sponsored unit investment trusts which are
being offered in the initial offering period (a) on any one day (the "Initial
Purchase Date") or (b) on any day subsequent to the Initial Purchase Date if the
units purchased are of a unit investment trust purchased on the Initial Purchase
Date. In the event units of more than one trust are purchased on the Initial
Purchase Date, the aggregate dollar amount of such purchases will be used to
determine whether purchasers are eligible for a reduced sales charge. Such
aggregate dollar amount will be divided by the public offering price per unit of
each respective trust purchased to determine the total number of units which
such amount could have purchased of each individual trust. Purchasers must then
consult the applicable trust's prospectus to determine whether the total number
of units which could have been purchased of a specific trust would have
qualified for a reduced sales charge and the amount of such reduction. To
determine the applicable sales charge reduction it is necessary to accumulate
all purchases made on the Initial Purchase Date and all purchases made in
accordance with (b) above. Units purchased in the name of the spouse of a
purchaser or in the name of a child of such purchaser ("immediate family
members") will be deemed to be additional purchases by the purchaser for the
purposes of calculating the applicable sales charge. The reduced sales charges
will also be applicable to a trustee or other fiduciary purchasing securities
for one or more trust estate or fiduciary accounts.
Units may be purchased in the primary or secondary market at the Public
Offering Price less the concession the Sponsor typically allows to brokers and
dealers for purchases 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 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 immediate family members (as
described above) 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.
A purchaser desiring to purchase during a 13 month period $500,000 or more of
any combination of series of Van Kampen unit investment trusts may qualify for a
reduced sales charge by signing a nonbinding Letter of Intent with any single
broker-dealer. After signing a Letter of Intent, at the date total purchases,
less redemptions, of units of any combination of series of Van Kampen unit
investment trusts by a purchaser (including units purchased in the name of the
spouse of a purchaser or in the name of a child of such purchaser under 21 years
of age) exceed $500,000, the selling broker-dealer, bank or other will credit
the unitholder with cash as a retroactive reduction of the sales charge on such
units equal to the amount which would have been paid for the total aggregated
sales amount. If a purchase does not complete the required purchases under the
Letter of Intent within the 13 month period, no such retroactive sales charge
reduction shall be made.
During the initial offering period, unitholders of any Van Kampen-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase Units of all Trusts at the Public Offering Price per Unit less 1%.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, and trustees, custodians or fiduciaries for the
benefit of such persons) of the 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.
The minimum purchase is 100 Units (25 Units for retirement accounts) but may
vary by selling firm. However, 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.
Offering Price. The Public Offering Price of Units will vary from the amounts
stated under "Summary of Essential Financial Information" in accordance with
fluctuations in the prices of the underlying Securities in the Trusts. The
initial price of the Securities was determined by Interactive Data Corporation,
a firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities. The Evaluator will generally determine the value of the
Securities as of the Evaluation Time on each business day and will adjust the
Public Offering Price of Units accordingly. This Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each business
day. The Evaluation Time is the close of the New York Stock Exchange on each
Trust business day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a business day,
will be held until the next determination of price. The term "business day", as
used herein and under "Rights of Unitholders--Redemption of Units", excludes
Saturdays, Sundays and holidays observed by the New York Stock Exchange.
The aggregate underlying value of the equity securities in a Trust during the
initial offering period is determined on each business day by the Evaluator in
the following manner: If the equity securities are listed on a national or
foreign securities exchange, this evaluation is generally based on the closing
sale prices on that exchange (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale price on
that exchange, at the closing ask prices. If the equity securities are not
listed on a national or foreign securities exchange or, if so listed and the
principal market therefor is other than on the exchange, the evaluation shall
generally be based on the current ask price on the over-the-counter market
(unless it is determined that these prices are inappropriate as a basis for
evaluation). If current ask prices are unavailable, the evaluation is generally
determined (a) on the basis of current ask prices for comparable securities, (b)
by appraising the value of the equity securities on the ask 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 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 but rather the
entire pool of Securities in a Trust, 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 Units for sale in a number of states. Brokers,
dealers and others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period of
3.20% of the Public Offering Price. Volume concession or agency commissions of
any additional .30% will be given to an broker-dealer who purchases from the
Sponsor at least $100,000 (or 10,000 Units) on the Initial Date of Deposit or
$250,000 (or 25,000 Units) on any day after that date.
In addition to the amounts above, during the initial offering period any firm
that distributes 500,000 - 999,999 Units of a Trust will receive additional
compensation of $.005 per Unit; any firm that distributes 1,000,000 - 1,999,999
Units of such Trust will receive additional compensation of $.01 per Unit; any
firm that distributes 2,000,000 - 2,999,999 Units of such Trust will receive
additional compensation of $.015 per Unit; any firm that distributes 3,000,000
Units or more of such Trust will receive additional compensation of $.02 per
Unit. This additional compensation will be paid by the Sponsor out of its own
assets at the end of the initial offering period.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For transactions involving unitholders
of other Van Kampen unit investment trusts who use their redemption or
termination proceeds to purchase Units of the Trusts, the total concession or
agency commission will amount to 2.25% per Unit. For all secondary market
transactions the total concession or agency commission will amount to 70% of the
sales charge. Notwithstanding anything to the contrary herein, in no case shall
the total of any concessions, agency commissions and any additional compensation
allowed or paid to any broker, dealer or other distributor of Units with respect
to any individual transaction exceed the total sales charge applicable to such
transaction. 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.
Broker-dealers of the Trusts, 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
Trusts. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of any Trust. These programs will not change the price Unitholders
pay for their Units or the amount that a Trust will receive from the Units sold.
Sponsor Compensation. The Sponsor will receive a gross sales commission equal
to the total sales charge applicable to each transaction. Any sales charge
discount provided to investors will be borne by the selling dealer or agent. In
addition, the Sponsor will realize a profit or loss as a result of the
difference between the price paid for the Securities by the Sponsor and the cost
of the Securities to each Trust on the Initial Date of Deposit as well as on
subsequent deposits. See "Notes to Portfolios". 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. The Sponsor may
realize profit or loss as a result of the possible fluctuations in the market
value of the Securities, since all proceeds received from purchasers of Units
are retained by the Sponsor. In maintaining a secondary market, the Sponsor will
realize profits or 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) or from a redemption of repurchased Units
at a price above or below the purchase price. 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.
An affiliate of the Sponsor may have participated in a public offering of one
or more of the Securities. The Sponsor, an affiliate or their employees may have
a long or short position in these Securities or related securities. An affiliate
may act as a specialist or market maker for these Securities. An officer,
director or employee of the Sponsor or an affiliate may be an officer or
director for issuers of the Securities.
Market for Units. Although it is not obligated to do so, the Sponsor
currently intends to maintain a market for Units and to purchase Units at the
secondary market repurchase price (which is described under "Right of
Unitholders--Redemption of Units"). The Sponsor may discontinue purchases of
Units or discontinue purchases at this price at any time. In the event that a
secondary market is not maintained, a Unitholder will be able to dispose of
Units by tendering them to the Trustee for redemption at the Redemption Price.
See "Rights of Unitholders--Redemption of Units". Unitholders should contact
their broker to determine the best price for Units in the secondary market.
Units sold prior to the time the entire deferred sales charge has been collected
will be assessed the amount of any remaining deferred sales charge at the time
of sale. The Trustee will notify the Sponsor of any tendered of Units for
redemption. If the Sponsor's bid in the secondary market equals or exceeds the
Redemption Price per Unit, it may purchase the Units not later than the day on
which Units would have been redeemed by the Trustee. The Sponsor may sell
repurchased Units at the secondary market Public Offering Price per Unit.
Tax-Sheltered Retirement Plans. Units are available for purchase in
connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for the individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The minimum
purchase for these accounts is reduced to 25 Units but may vary by selling firm.
The purchase of Units may be limited by the plans' provisions and does not
itself establish such plans.
RIGHTS OF UNITHOLDERS
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Distributions. Dividends and any net proceeds from the sale of Securities
received by a Trust will generally be distributed to Unitholders on each
Distribution Date to Unitholders of record on the preceding Record Date. These
dates are listed under "Summary of Essential Financial Information". A person
becomes a Unitholder of record on the date of settlement (generally three
business days after Units are ordered). Unitholders may elect to receive
distributions in cash or to have distributions reinvested into additional Units.
Distributions may also be reinvested into Van Kampen mutual funds. See "Rights
of Unitholders--Reinvestment Option".
Dividends received by a Trust are credited to the Income Account of the
Trust. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds received on the
sale of any Securities, to the extent not used to meet redemptions of Units or
pay deferred sales charges, fees or expenses, will be distributed to
Unitholders. Proceeds received from the disposition of any 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. Any
distribution to Unitholders consists of each Unitholder's pro rate share of the
available cash in the Income and Capital Accounts as of the related Record Date.
Reinvestment Option. Unitholders may have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option (to the
extent Units may be lawfully offered for sale in the state in which the
Unitholder resides) through two options. Brokers and dealers can use the
Dividend Reinvestment Service through Depository Trust Company or purchase the
Automatic Reinvestment Option CUSIP. Unitholders will be subject to any
remaining deferred sales charge payments due on Units. To participate in this
reinvestment option, a Unitholder must file with the Trustee a written notice of
election, together with any certificate representing Units and other
documentation that the Trustee may then require, at least five days prior to the
related Record Date. A Unitholder's election will apply to all Units owned by
the Unitholder and will remain in effect until changed by the Unitholder. If
Units are unavailable for reinvestment, distributions will be paid in cash.
Purchases of additional Units made pursuant to the reinvestment plan will be
made at the net asset value for Units as of the Evaluation Time on the
Distribution Date.
In addition, under the Guaranteed Reinvestment Option Unitholders may elect
to have distributions automatically reinvested in certain Van Kampen mutual
funds (the "Reinvestment Funds"). Each Reinvestment Fund has investment
objectives which differ from those of the Trusts. The prospectus relating to
each Reinvestment Fund describes its investment policies and how to begin
reinvestment. A Unitholder may obtain a prospectus for the Reinvestment Funds
from the Sponsor. Purchases of shares of a Reinvestment Fund will be made at a
net asset value computed on the Distribution Date. Unitholders with an existing
Guaranteed Reinvestment Option account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new
account which allows purchases of Reinvestment Fund shares at net asset value.
A participant may elect to terminate his or her reinvestment plan and receive
future distributions in cash by notifying the Trustee in writing no later than
five days before a distribution date. The Sponsor, each Reinvestment Fund, and
its investment adviser shall have the right to suspend or terminate these
reinvestment plans at any time.
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. Certificates must be tendered to the
Trustee, duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed (or by providing satisfactory indemnity in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. On the seventh day following the tender, the
Unitholder will be entitled to receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received by the Trustee after the Evaluation
Time or on a day which is not a Trust business day, the date of tender is deemed
to be the next business day.
Unitholders tendering 1,000 or more Units of a Trust for redemption may
request an in kind distribution of equity securities equal to the Redemption
Price per Unit on the date of tender. Trusts generally do not offer in kind
distributions of portfolio securities that are held in foreign markets. An in
kind distribution will be made by the Trustee through the distribution of each
of the equity securities in book-entry form to the account of the Unitholder's
broker-dealer at Depository Trust Company. Amounts representing fractional
shares will be distributed in cash. The Trustee may adjust the number of shares
of any Security included in a Unitholder's in kind distribution to facilitate
the distribution of whole shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in kind or sold, the size of a Trust will be, and
the diversity of a 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
at the time of redemption. Special federal income tax consequences will result
if a Unitholder requests an in kind distribution. See "Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rate share of each Unit in each 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, (b) the accrued
expenses of the Trust and (c) any unpaid deferred sales charge payments. 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 equity securities in the
following manner: If the equity securities are listed on a national or foreign
securities exchange, this evaluation is generally based on the closing sale
prices on that exchange (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale price on
that exchange, at the closing bid prices. If the equity securities are not so
listed or, if so listed and the principal market therefore is other than on the
exchange, 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 equity 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 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 SEC determines that
trading on that Exchange is restricted or an emergency exists, as a result of
which disposal or evaluation of the Securities is not reasonably practicable, or
for other periods as the SEC may permit.
Certificates. Ownership of Units is evidenced in book entry form unless a
Unitholder makes a written request to the Trustee that ownership be in
certificate form. Units are transferable by making a written request to the
Trustee and, in the case of Units in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program 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. Fractional certificates
will not be issued. 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 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.
Reports Provided. Unitholders will receive a statement of dividends and
other amounts received by a Trust for each distribution. Within a reasonable
time after the end of each year, each person who was a Unitholder during that
year will receive a statement describing dividends and capital received, actual
Trust distributions, Trust expenses, a list of the Securities and other Trust
information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
TRUST ADMINISTRATION
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Portfolio Administration. The Trusts are not managed funds and, except as
provided in the Trust Agreement, Securities generally will not be sold or
replaced. The Sponsor may, however, direct that Securities be sold in certain
limited circumstances to protect the Trust based on advice from the Supervisor.
These situations may include events such as the issuer having defaulted on
payment of any of its outstanding obligations or the price of a Security has
declined to such an extent or other credit factors exist so that in the opinion
of the Sponsor retention of the Security would be detrimental to the Trust. In
addition, the Trustee may sell Securities to redeem Units or pay Trust expenses
or deferred sales charges. The Trustee must reject any offer for securities or
property in exchange for the Securities. If securities or property are
nonetheless acquired by a Trust, the Sponsor may direct the Trustee to sell the
securities or property and distribute the proceeds to Unitholders or to accept
the securities or property for deposit in the Trust. Should any contract for the
purchase of any of the Securities fail, the Sponsor will (unless substantially
all of the moneys held in the Trust to cover the purchase are reinvested in
substitute Securities in accordance with the Trust Agreement) refund the cash
and sales charge attributable to the failed contract to all Unitholders on or
before the next distribution date.
With respect to the Great International Firms Trust, the Sponsor may direct
the reinvestment of proceeds of the sale of Securities if the sale is the direct
result of serious adverse credit factors which, in the opinion of the Sponsor,
would make retention of the Securities detrimental to the Trust. In such as
case, the Sponsor may, but is not obligated to, direct the reinvestment of sale
proceeds in any other securities that meet the criteria for inclusion in this
Trust on the Initial Date of Deposit. The Sponsor may also instruct the Trustee
to take action necessary to ensure that this Trust continues to satisfy the
qualifications of a regulated investment company and to avoid imposition of tax
on undistributed income of this Trust.
To the extent practicable, the Supervisor may (but is not obligated to)
designate Securities to be sold by the Trustee in order to maintain the
proportionate relationship among the number of shares of individual issues of
Securities in a Trust. To the extent this is not practicable, 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 is sponsors.
Amendment of the Trust Agreement. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
Termination. Each Trust will terminate on the Mandatory Termination Date or
upon the sale or other disposition of the last Security held in the Trust. A
Trust may be terminated at any time with consent of Unitholders representing
two-thirds of the outstanding Units or by the Trustee when the value of the
Trust is less than $500,000 ($3,000,000 if the value of the Trust has exceeded
$15,000,000) (the "Minimum Termination Value"). Unitholders will be notified of
any termination. The Trustee may begin to sell Securities in connection with a
Trust termination nine business days before, and no later than, the Mandatory
Termination Date. Approximately thirty days before this date, the Trustee will
notify Unitholders of the termination and provide a form enabling qualified
Unitholders to elect an in kind distribution of Securities. See "Rights of
Unitholders--Redemption of Units". This form must be returned at least five
business days prior to the Mandatory Termination Date. Unitholders will receive
a final cash distribution within a reasonable time after the Mandatory
Termination Date (unless the Unitholder has elected an in kind distribution or
is a participant in the final Rollover). All distributions will be net of Trust
expenses and costs. Unitholders will receive a final distribution statement
following termination. The Information Supplement contains further information
regarding termination of the Trusts. See "Additional Information".
Limitations on Liabilities. The Sponsor, Evaluator, Supervisor and Trustee
are under no liability 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 is 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 is not be liable for any action taken by it in good faith under
the Trust Agreement. The Trustee is not liable for any taxes or other
governmental charges imposed on the Securities, on it as Trustee under the Trust
Agreement or on a 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
and Supervisor may rely on any evaluation furnished by the Evaluator and have no
responsibility for the accuracy thereof. Determinations by the Evaluator shall
be made in good faith upon the basis of the best information available to it.
Sponsor. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of
the Trust. The Sponsor is an indirect subsidiary of Morgan Stanley Dean Witter &
Co. 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 offices at One Parkview Plaza, Oakbrook Terrace, Illinois
60181, (630) 684-6000 and 2800 Post Oak Boulevard, Houston, Texas 77056, (713)
993-0500. As of November 30, 1997, the total stockholders' equity of Van Kampen
Funds Inc. was $132,381,000 (audited). The Information Supplement contains
additional information about the Sponsor.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of 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. Additional information
regarding the Trustee is set forth in the Information Supplement, including the
Trustee's qualifications and duties, its ability to resign, the effect of a
merger involving the Trustee and the Sponsor's ability to remove and replace the
Trustee. See "Additional Information".
Performance Information. The Sponsor may from time to time in its
advertising and sales materials compare the then current estimated returns on
the Trusts and returns over specified time periods on other trusts (which may
show performance net of expenses and charges which the Trusts would have
charged) with returns on other taxable investments such as the common stocks
comprising the Dow Jones Industrial Average, the S&P 500, other investment
indices, corporate or U.S. government bonds, bank CDs, money market accounts or
money market funds, or with performance data from Lipper Analytical Services,
Inc., Morningstar Publications, Inc. or various publications, each of which has
characteristics that may differ from those of the Trusts. Information on
percentage changes in the dollar value of Units may be included from time to
time in advertisements, sales literature, reports and other information
furnished to current or prospective Unitholders. Total return figures may not be
averaged and may not reflect deduction of the sales charge, which would decrease
return. No provision is made for any income taxes payable. Past performance may
not be indicative of future results. The Trust portfolios are not managed and
Unit price and return fluctuate with the value of common stocks in the
portfolios, so there may be a gain or loss when Units are sold. As with other
performance data, performance comparisons should not be considered
representative of the Trust's relative performance for any future period.
TAXATION
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The Great International Firms Trust. Great International Firms Trust intends
to elect and qualify on a continuing basis for special federal income tax
treatment as a "regulated investment company" under the Internal Revenue Code of
1986, as amended (the "Code"). If the Trust so qualifies and timely distributes
to Unitholders 90% or more of its taxable income (without regard to its net
capital gain, i.e., the excess of its net long-term capital gain over its net
short-term capital loss), it will not be subject to federal income tax on the
portion of its taxable income (including any net capital gain) that it
distributes to Unitholders. In addition, to the extent the Trust timely
distributes to Unitholders at least 98% of its taxable income (including any net
capital gain), it will not be subject to the 4% excise tax on certain
undistributed income of "regulated investment companies." Because the Trust
intends to timely distribute its taxable income (including any net capital
gain), it is anticipated that the Trust will not be subject to federal income
tax or the excise tax.
Distributions to Unitholders of the Trust's taxable income, other than
distributions which are designated as capital gain dividends, will be taxable as
ordinary income to Unitholders, except that to the extent that distributions to
a Unitholder in any year exceed the Trust's current and accumulated earnings and
profits, they will be treated as a return of capital and will reduce the
Unitholder's basis in his Units and, to the extent that they exceed his basis,
will be treated as a gain from the sale of his Units as discussed below.
Although distributions generally will be treated as distributed when paid,
distributions declared in October, November or December payable to Unitholders
of record on a specified date in one of those months and paid during January of
the following year will be treated as having been distributed by the Trust (and
received by the Unitholder) on December 31 of the year such distributions are
declared.
Distributions of the Trust's net capital gain which are properly designated
as capital gain dividends by the Trust will be taxable to Unitholders as
long-term capital gain, regardless of the length of time the Units have been
held by a Unitholder. A Unitholder may recognize a taxable gain or loss if the
Unitholder sells or redeems his Units. Any gain or loss arising from (or treated
as arising from) the sale or redemption of Units will generally be a capital
gain or loss, except in the case of a dealer or a financial institution. 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) is generally 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 for 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. Note, however, that the 1998 Tax Act and the Taxpayer Relief Act of 1997
(the "1997 Tax Act") provide that the application of the rules described above
in the case of pass-through entities such as the Trust will be prescribed in
future Treasury Regulations. The Internal Revenue Service has released
preliminary guidance which provides that, in general, pass-through entities such
as the Trust may designate their capital gains dividends as either a 20% rate
gain distribution, an unrecaptured section 1250 gain distribution or a 28% rate
gain distribution, depending on the nature of the gain received by the
pass-through entity. Unitholders should consult their own tax advisors as to the
tax rate applicable to capital gain dividends. Additionally, note that if a
Unitholder holds Units for six months or less and subsequently sells such Units
at a loss, the loss will be treated as a long-term capital loss to the extent
that any long-term capital gain distribution is made with respect to such Units
during the six-month period or less that the Unitholder owns the Units.
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. 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.
Generally, the tax basis of a Unitholder includes sales charges, and such
charges are not deductible. A portion of the sales charge for the Trust is
deferred. The income (or proceeds from redemption) a Unitholder must take into
account for federal income tax purposes is not reduced by amounts deducted to
pay the deferred sales charge.
Distributions which are taxable as ordinary income to Unitholders will
constitute dividends for federal income tax purposes. When Units are held by
corporate Unitholders, Trust distributions may qualify for the 70% dividends
received deduction, subject to limitations otherwise applicable to the
availability of the deduction, to the extent the distribution is attributable to
dividends received by the Trust from United States corporations (other than Real
Estate Investment Trusts) and is designated by the Trust as being eligible for
such 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. The Trust will provide
each Unitholder with information annually concerning what part of the Trust
distributions are eligible for the dividends received deduction.
The Trust may elect to pass through to the Unitholders the foreign income and
similar taxes paid by the Trust in order to enable such Unitholders to take a
credit (or deduction) for foreign income taxes paid by the Trust. If such an
election is made, Unitholders of the Trust, because they are deemed to own a pro
rata portion of the foreign securities held by the Trust, must include in their
gross income, for federal income tax purposes, both their portion of dividends
received by the Trust and also their portion of the amount which the Trust deems
to be the Unitholders' portion of foreign income taxes paid with respect to, or
withheld from, dividends, interest or other income of the Trust from its foreign
investments. Unitholders may then subtract from their federal income tax the
amount of such taxes withheld, or else treat such foreign taxes as deductions
from gross income; however, as in the case of investors receiving income
directly from foreign sources, the above described tax credit or deduction is
subject to certain limitations. The 1997 Tax Act imposes a required holding
period for such credits. Unitholders should consult their tax advisers regarding
this election and its consequences to them.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Trust so long as the Units
are held by or for 500 or more persons at all times during the taxable year or
another exception is met. In the event the Units are held by fewer than 500
persons, additional taxable income may be realized by the individual (and other
noncorporate) Unitholders in excess of the distributions received from the
Trust.
Distributions reinvested into additional Units of the Trust will be taxed to
a Unitholder in the manner described above (i.e., as ordinary income, long-term
capital gain or as a return of capital).
The federal tax status of each year's distributions will be reported to
Unitholders and to the Internal Revenue Service. 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.
The foregoing discussion relates only to the federal income tax status of the
Trust and to the tax treatment of distributions by the Trust to United States
Unitholders.
A Unitholder who is a foreign investor (i.e., an investor other than a United
States citizen or resident or a United States corporation, partnership, estate
or trust) should be aware that, generally, subject to applicable tax treaties,
distributions from the Trust which constitute dividends for Federal income tax
purposes (other than dividends which the Trust designates as capital gain
dividends) will be subject to United States income taxes, including withholding
taxes. However, distributions received by a foreign investor from the Trust that
are designated by the Trust as capital gain dividends should not be subject to
United States Federal income taxes, including withholding taxes, if all of the
following conditions are met (i) the capital gain dividend is not effectively
connected with the conduct by the foreign investor of a trade or business within
the United States, (ii) the foreign investor (if an individual) is not present
in the United States for 183 days or more during his or her taxable year, and
(iii) the foreign investor provides all certification which may be required of
his status (foreign investors may contact the Sponsor to obtain a Form W-8 which
must be filed with the Trustee and refiled every three calendar years
thereafter). Foreign investors should consult their tax advisers with respect to
United States tax consequences of ownership of Units. Units in the Trust and
Trust distributions may also be subject to state and local taxation and
Unitholders should consult their tax advisers in this regard.
The Brand Name Equity Trust. The following is a general discussion of certain
of the federal income tax consequences of the purchase, ownership and
disposition of the Units of Brand Name Equity Trust. The summary is limited to
investors who hold the Units as "capital assets" (generally, property held for
investment within the meaning of Section 1221 of the Internal Revenue Code of
1986 (the "Code")). Unitholders should consult their tax advisers in determining
the federal, state, local and any other tax consequences of the purchase,
ownership and disposition of Units in the Trust. For purposes of the following
discussion and opinion, it is assumed that each stock in the Trust is equity for
federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Trust asset when such income is considered to be received by
the Trust.
2. Each Unitholder will have a taxable event when the Trust disposes of 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 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
nearest the date the Unitholder purchase 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 calculation of
basis. For federal income tax purposes, a Unitholder's pro rata portion of
dividends as defined by Section 316 of the Code paid by a corporation with
respect to a Security held by the Trust are taxable as ordinary income to the
extent of such corporation's current and accumulated "earnings and profits". A
Unitholder's pro rata portion of dividends paid on such Security which exceeds
such current and accumulated earnings and profits will first reduce a
Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Equity 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.
3. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain, except in the case of a dealer or a financial
institution. A Unitholder's portion of loss, if any, upon the sale or redemption
of Units or the disposition of Securities held by the Trust will generally be
considered a capital loss (except in the case of a dealer or a financial
institution). Unitholders should consult their tax advisers regarding the
recognition of such capital gains and losses for federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trust is deferred. The income (or proceeds from redemption) a
Unitholder must take into account for federal income tax purposes is not reduced
by amounts deducted to pay the deferred sales charge. Unitholders should consult
their own tax advisers as to the income tax consequences of the deferred sales
charge.
Dividends Received Deduction. 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 received by the Trust regardless of whether such dividends
are used to pay a portion of a deferred sales charge. Unitholders will be taxed
in this manner regardless of whether distributions from the Trust are actually
received by the Unitholder or are automatically reinvested. 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 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. 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. It should be noted that various
legislative proposals that would affect the dividends received deduction have
been introduced. Unitholders should consult with their tax advisers with respect
to the limitations on and possible modifications to the dividends received
deduction.
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. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income. Unitholders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Unitholders should consult with their own tax advisers regarding the
deductibility of Trust expenses.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the
Trust or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when an Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. The Internal Revenue Service Restructing 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
purposed for 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 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 of 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. A Unitholder may also under certain
circumstances request an in kind distribution upon the termination of the Trust.
See "Rights of Unitholders--Redemption of Units. As previously discussed, prior
to the redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust'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 held 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
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of such Security held by the Trust, such Unitholder will
generally recognize gain or loss based upon the difference between the amount of
cash received by the Unitholder and his tax basis in such fractional share of a
Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an in
kind distribution will have to analyze the tax consequences with respect to each
Security owned by the Trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by the Trust. Unitholders who request an in kind distribution are advised
to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder of 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.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust (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 corporations for a three-year period ending with the close
of its taxable year preceding payment was not effectively connected to the
conduct of a trade or business within the United States. In addition, such
earnings may be exempt from U.S. withholding pursuant to a specific treaty
between the United States and a foreign country. Non-U.S. Unitholders should
consult their own tax advisers regarding the imposition of U.S. withholding on
distributions from the Trust.
It should be noted that payments to the Trust of dividends on 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.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unitholders under the existing income tax
laws of the State and City of New York.
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
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
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Compensation of Sponsor, Supervisor and Evaluator. The Sponsor will not
receive any fees in connection with its activities relating to the Trusts.
However, the Supervisor and Evaluator, which are affiliates of the Sponsor, will
receive the annual fee for portfolio supervisory and evaluation services set
forth in the "Fee Table". These fees may exceed the actual costs of providing
these services to the Trusts but at no time will the total amount received for
supervisory and evaluation services rendered to all Van Kampen unit investment
trusts in any calendar year exceed the aggregate cost of providing these
services in that year.
Trustee's Fee. For its services the Trustee will receive the fee from each
Trust set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Trust expenses). The Trustee benefits to the extent there are
funds 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 each Trust is
expected to result from the use of these funds.
Miscellaneous Expenses. The following additional charges are or may be
incurred by a Trust: (a) normal expenses (including the cost of mailing reports
to Unitholders) incurred in connection with the operation of such 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 a Trust and the rights and interests of
Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of a Trust without negligence, bad faith
or wilful misconduct on its part, (g) foreign custodial and transaction fees,
(h) costs associated with liquidating the securities held in a Trust portfolio
and (i) expenditures incurred in contacting Unitholders upon termination of a
Trust.
General. During the initial offering period, all of the fees and expenses of
a Trust will accrue on a daily basis and will be charged to the Trust at the end
of the initial offering period. After the initial offering period, all of the
fees and expenses of a Trust will accrue on a daily basis and will be charged to
the Trust on a monthly basis.
The deferred sales charge, fees and expenses are generally paid out of the
Capital Account of the Brand Name Equity Trust and out of the Income Account of
the Great International Firms Trust. When these amounts are paid by or owing to
the Trustee, they are secured by a lien on the related Trust's portfolio.
Securities may be sold to pay these amounts which will result in capital gains
or losses to Unitholders. See "Taxation". The Supervisor's, Evaluator's and
Trustee's 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 or, if this category is not published,
in a comparable category.
OTHER MATTERS
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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 to the Trustee
and as special counsel for New York tax matters.
Independent Certified Public Accountants. The statements of condition and the
related portfolios included in this Prospectus have been audited by Grant
Thornton LLP, independent certified public accountants, as set forth in their
report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
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This Prospectus does not contain all the information set forth in the
Registration Statement filed by the Trusts with the SEC. The Information
Supplement, which has been filed with the SEC, includes more detailed
information concerning the Securities, investment risks and general information
about the Trusts. The Information Supplement may be obtained by contacting the
Trustee at (800) 856-8487 or is available along with other related materials at
the SEC's internet site (http://www.sec.gov).
TABLE OF CONTENTS
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Title Page
----- ----
Summary of Essential Financial Information............................... 2
Fee Table................................................................ 3
Great International Firms Trust.......................................... 4
Brand Name Equity Trust.................................................. 6
Notes to Portfolios...................................................... 8
The Securities........................................................... 9
Report of Independent Certified Public Accountants....................... 15
Statements of Condition ................................................. 16
The Trusts............................................................... A-1
Objectives and Securities Selection...................................... A-1
Risk Factors............................................................. A-2
Public Offering.......................................................... A-3
Rights of Unitholders.................................................... A-7
Trust Administration..................................................... A-9
Taxation................................................................. A-11
Trust Operating Expenses................................................. A-17
Other Matters............................................................ A-18
Additional Information................................................... A-18
PROSPECTUS
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January 5, 1999
Van Kampen Focus Portfolios
Great International Firms Trust, Series 7
Brand Name Equity Trust, Series 8
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this prospectus for future reference.
Van Kampen
Information Supplement
Van Kampen Focus Portfolios, Series 127
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This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the Prospectus. This
Information Supplement should be read in conjunction with the Prospectus. This
Information Supplement is not a prospectus, does not include all of the
information that an investor should consider before investing in a Trust and may
not be used to offer or sell Units without the Prospectus. Copies of the
Prospectus can be obtained by contacting the Sponsor at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 or by contacting your broker. This Information
Supplement is dated as of the date of the Prospectus and all capitalized terms
have been defined in the Prospectus.
Table of Contents
Page
Risk Factors 2
The Trusts 3
Sponsor Information 4
Trustee Information 4
Trust Termination 5
RISK FACTORS
Price Volatility. Because the Trusts invest in stocks of U.S. and foreign
companies, you should understand the risks of investing in common stocks before
purchasing Units. These risks include the risk that the financial condition of
the company or the general condition of the stock market may worsen and the
value of the stocks (and therefore Units) will fall. Stocks are especially
susceptible to general stock market movements. The value of stocks often rises
or falls rapidly and unpredictably as market confidence and perceptions of
companies change. These perceptions are based on factors including expectations
regarding government economic policies, inflation, interest rates, economic
expansion or contraction, political climates and economic or banking crises. The
value of Units will fluctuate with the value of the stocks in a Trust and may be
more or less than the price you originally paid for your Units. As with any
investment, we cannot guarantee that the performance of a Trust will be positive
over any period of time. Because the Trusts are unmanaged, the Trustee will not
sell stocks in response to market fluctuations as is common in managed
investments. In addition, because some Trusts hold a relatively small number of
stocks, you may encounter greater market risk than in a more diversified
investment.
Dividends. Stocks represent ownership interests in a company and are not
obligations of the company. Common stockholders have a right to receive payments
from the company that is subordinate to the rights of creditors, bondholders or
preferred stockholders of the company. This means that common stockholders have
a right to receive dividends only if a company's board of directors declares a
dividend and the company has provided for payment of all of its creditors,
bondholders and preferred stockholders. If a company issues additional debt
securities or preferred stock, the owners of these securities will have a claim
against the company's assets before common stockholders if the company declares
bankruptcy or liquidates its assets even though the common stock was issued
first. As a result, the company may be less willing or able to declare or pay
dividends on its common stock.
Foreign Stocks. Because certain Trusts invest in foreign common stocks,
they involve additional risks that differ from an investment in domestic stocks.
Investments in foreign securities may involve a greater degree of risk than
those in domestic securities. There is generally less publicly available
information about foreign companies in the form of reports and ratings similar
to those that are published about issuers in the United States. Also, foreign
issuers are generally not subject to uniform accounting, auditing and financial
reporting requirements comparable to those applicable to United States issuers.
With respect to certain foreign countries, there is the possibility of adverse
changes in investment or exchange control regulations, expropriation,
nationalization or confiscatory taxation, limitations on the removal of funds or
other assets of a Trust, political or social instability, or diplomatic
developments which could affect United States investments in those countries.
Moreover, industrial foreign economies may differ favorably or unfavorably from
the United States' economy in terms of growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. Foreign securities markets are generally not as developed or
efficient as those in the United States. While growing in volume, they usually
have substantially less volume than the New York Stock Exchange, and securities
of some foreign issuers are less liquid and more volatile than securities of
comparable United States issuers. Fixed commissions on foreign exchanges are
generally higher than negotiated commissions on United States exchanges. There
is generally less government supervision and regulation of securities exchanges,
brokers and listed issuers than in the United States.
Foreign Currencies. Certain Trusts also involve the risk that fluctuations
in exchange rates between the U.S. dollar and foreign currencies may negatively
affect the value of the stocks. For example, if a foreign stock rose 10% in
price but the U.S. dollar gained 5% against the related foreign currency, a U.S.
investor's return would be reduced to about 5%. This is because the foreign
currency would "buy" fewer dollars or, conversely, a dollar would buy more of
the foreign currency. Many foreign currencies have fluctuated widely against the
U.S. dollar for a variety of reasons such as supply and demand of the currency,
investor perceptions of world or country economies, political instability,
currency speculation by institutional investors, changes in government policies,
buying and selling of currencies by central banks of countries, trade balances
and changes in interest rates. A Trust's foreign currency transactions will be
conducted with foreign exchange dealers acting as principals on a spot (i.e.,
cash) buying basis. These dealers realize a profit based on the difference
between the price at which they buy the currency (bid price) and the price at
which they sell the currency (offer price). The Evaluator will estimate the
currency exchange rates based on current activity in the related currency
exchange markets, however, due to the volatility of the markets and other
factors, the estimated rates may not be indicative of the rate a Trust might
obtain had the Trustee sold the currency in the market at that time.
Liquidity. Whether or not the stocks in a Trust are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
Additional Units. The Sponsor may create additional Units of a Trust by
depositing into the Trust additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Trust will pay brokerage fees.
Voting. Only the Trustee may sell or vote the stocks in a Trust. While you
may sell or redeem your Units, you may not sell or vote the stocks in your
Trust. The Sponsor will instruct the Trustee how to vote the stocks. The Trustee
will vote the stocks in the same general proportion as shares held by other
shareholders if the Sponsor fails to provide instructions.
Year 2000. The Trusts could be negatively impacted if computer systems used
by the Sponsor, Evaluator, Supervisor or Trustee or other service providers to
the Trusts do not properly process date-related information after January 1,
2000. This is commonly known as the "Year 2000 Problem". The Sponsor, Evaluator,
Supervisor and Trustee are taking steps to address this problem and to obtain
reasonable assurances that other service providers to the Trusts are taking
comparable steps. We cannot guarantee that these steps will be sufficient to
avoid any adverse impact on the Trusts. This problem is expected to impact
corporations to varying degrees based on factors such as industry sector and
degree of technological sophistication. We cannot predict what impact, if any,
this problem will have on the issuers of stocks in the Trusts.
THE TRUSTS
In seeking the Trusts' objectives, the Sponsor considered the ability of the
Securities to outpace inflation. While inflation is currently relatively low,
the United States has historically experienced periods of double-digit
inflation. While the prices of securities will fluctuate, over time securities
have outperformed the rate of inflation, and other less risky investments, such
as government bonds and U.S. Treasury bills. Past performance is, however, no
guarantee of future results.
Investors should note that the selection criteria were applied to the
Securities for inclusion in the Trusts as of the Initial Date of Deposit. Should
a Security no longer meet the criteria used for selection for a Trust, such
Security will not as a result thereof be removed from a Trust portfolio.
Stocks have been acknowledged as one of the best ways to stay ahead of
inflation over time. For example, common stocks (as represented by the Standard
& Poor's 500 Index) have generally outperformed long-term U.S. Government bonds,
U.S. Treasury bills and the rate of inflation over the long-term. Of course,
this represents past performance of these categories and there is no guarantee
of future results, either of these categories or of the Trust. In addition, the
certain Trusts seek to provide access to international markets which have often
generated historical returns superior to those in the United States. For
example, during 1993-1997, the United States stock market ranked among the top
three developed markets in total return only once and never ranked first
(measured by the Morgan Stanley Capital International USA Index and MSCI country
indexes).
SPONSOR INFORMATION
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; asset
management; trading of futures, options, foreign exchange commodities and swaps
(involving foreign exchange, commodities, indices and interest rates); real
estate advice, financing and investing; global custody, securities clearance
services and securities lending; and credit card services.
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 offices at One Parkview Plaza, Oakbrook Terrace, Illinois
60181, (630) 684-6000 and 2800 Post Oak Boulevard, Houston, Texas 77056, (713)
993-0500. As of November 30, 1997, the total stockholders' equity of Van Kampen
Funds Inc. was $132,381,000 (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, 1997, the Sponsor and its Van Kampen affiliates managed
or supervised approximately $65.3 billion of investment products, of which over
$10.85 billion is invested in municipal securities. The Sponsor and its Van
Kampen affiliates managed $54 billion of assets, consisting of $34.3 billion for
55 open-end mutual funds (of which 45 are distributed by Van Kampen Funds Inc.)
$14.2 billion for 37 closed-end funds and $5.5 billion for 106 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen's open-end funds, closed-ended funds and
unit investment trusts are professionally distributed by leading financial firms
nationwide. Based on cumulative assets deposited, the Sponsor believes that it
is the largest sponsor of insured municipal unit investment trusts, primarily
through the success of its Insured Municipals Income Trust(R) or the IM-IT(R)
trust. The Sponsor also provides surveillance and evaluation services at cost
for approximately $13 billion of unit investment trust assets outstanding. Since
1976, the Sponsor has serviced over two million investor accounts, opened
through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE INFORMATION
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 portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for each Trust. Such
records shall include the name and address of, and the number of Units of each
Trust held by, every Unitholder. 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. 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 each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
TRUST TERMINATION
A Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units of such Trust then outstanding or by the Trustee when the
value of the Securities owned by a Trust, as shown by any evaluation, is less
than $500,000 ($3,000,000 if the value of the Trust has exceeded $15,000,000). A
Trust will be liquidated by the Trustee in the event that a sufficient number of
Units of such Trust not yet sold are tendered for redemption by the Sponsor, so
that the net worth of such Trust would be reduced to less than 40% of the value
of the Securities at the time they were deposited in such Trust. If a Trust is
liquidated because of the redemption of unsold Units by the Sponsor, the Sponsor
will refund to each purchaser of Units the entire sales charge paid by such
purchaser. The Trust Agreement will terminate upon the sale or other disposition
of the last Security held thereunder, but in no event will it continue beyond
the Mandatory Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities will begin to be sold in
connection with the termination of the Trusts. The Sponsor will determine the
manner, timing and execution of the sales of the Securities. The Sponsor shall
direct the liquidation of the Securities in such manner as to effectuate orderly
sales and a minimal market impact. In the event the Sponsor does not so direct,
the Securities shall be sold within a reasonable period and in such manner as
the Trustee, in its sole discretion, shall determine. At least 30 days before
the Mandatory Termination Date the Trustee will provide written notice of any
termination to all Unitholders of the appropriate Trust and in the case of a
Trust will include with such notice a form to enable Unitholders owning 1,000 or
more Units to request an in kind distribution of the U.S.-traded Securities. To
be effective, this request must be returned to the Trustee at least five
business days prior to the Mandatory Termination Date. On the Mandatory
Termination Date (or on the next business day thereafter if a holiday) the
Trustee will deliver each requesting Unitholder's pro rata number of whole
shares of the U.S.-traded Securities in a Trust to the account of the
broker-dealer or bank designated by the Unitholder at Depository Trust Company.
The value of the Unitholder's fractional shares of the Securities will be paid
in cash. Unitholders with less than 1,000 Units, Unitholders in a Trust with
1,000 or more Units not requesting an in kind distribution will receive a cash
distribution from the sale of the remaining Securities within a reasonable time
following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the appropriate Trust any
accrued costs, expenses, advances or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee, costs of liquidation
and any amounts required as a reserve to provide for payment of any applicable
taxes or other governmental charges. Any sale of Securities in a Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder of each Trust his pro rata share of the balance of the Income
and Capital Accounts of such Trust.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
S-3
CONTENTS OF REGISTRATION STATEMENT
This Amendment of Registration Statement comprises the following papers
and documents:
The facing sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of Counsel as to the Federal Income tax status of securities being
registered.
3.3 Opinion and consent of counsel as to New York tax status of securites being
registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Acountants.
SIGNATURES
The Registrant, Van Kampen Focus Portfolios, Series 127, hereby
identifies Van Kampen Merritt Equity Opportunity Trust, Series 1, Series 2,
Series 4 and Series 7 and Van Kampen American Capital Equity Opportunity Trust,
Series 13, Series 14, Series 57 and Series 89 for purposes of the
representations required by Rule 487 and represents the following: (1) that the
portfolio securities deposited in the series as to the securities of which this
Registration Statement is being filed do not differ materially in type or
quality from those deposited in such previous series; (2) that, except to the
extent necessary to identify the specific portfolio securities deposited in, and
to provide essential financial information for, the series with respect to the
securities of which this Registration Statement is being filed, this
Registration Statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such previous
series as to which the effective date was determined by the Commission or the
staff; and (3) that it has complied with Rule 460 under the Securities Act of
1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen Focus Portfolios, Series 127 has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago and State of
Illinois on the 5th day of January, 1999.
Van Kampen Focus Portfolios, Series 127
By Van Kampen Funds Inc.
By Gina M. Costello
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on January 5, 1999
by the following persons who constitute a majority of the Board of Directors of
Van Kampen Funds Inc.
SIGNATURE TITLE
Don G. Powell Chairman and Chief Executive )
Officer )
John H. Zimmerman President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
Gina M. Costello (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 American Capital
Equity Opportunity Trust, Series 64 (File No. 333-33087) and Van Kampen American
Capital Equity Opportunity Trust, Series 87 (File No. 333-44581) and the same
are hereby incorporated herein by this reference.
EXHIBIT 1.1
VAN KAMPEN FOCUS PORTFOLIOS
SERIES 127
TRUST AGREEMENT
Dated: January 5, 1999
This Trust Agreement among Van Kampen Funds Inc., as Depositor,
American Portfolio Evaluation Services, a division of Van Kampen Investment
Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp., as
Supervisory Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Van Kampen American Capital Equity Opportunity Trust, Series
87 and Subsequent Series, Standard Terms and Conditions of Trust, Effective
January 27, 1998" (herein called the "Standard Terms and Conditions of Trust")
and such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references herein
to Articles and Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(24), listed in the Schedule
hereto, have been deposited in trust under this Trust Agreement.
2. The fractional undivided interest in and ownership of each Trust
represented by each Unit is an amount the numerator of which is one and the
denominator of which is the amount set forth under "Summary of Essential
Financial Information - Initial Number of Units" in the Prospectus. Such
fractional undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03, (b) increased or decreased in
connection with an adjustment to the number of Units pursuant to Section 2.03,
or (c) decreased by the number of Units redeemed pursuant to Section 5.02.
3. The terms "Capital Account Record Date" and "Income Account Record
Date" shall mean the "Record Dates" set forth under "Summary of Essential
Financial Information" in the Prospectus.
4. The terms "Capital Account Distribution Date" and "Income Account
Distribution Date" shall mean the "Distribution Dates" set forth under "Summary
of Essential Financial Information" in the Prospectus.
5. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" set forth under "Summary of Essential Financial Information"
in the Prospectus.
6. Section 6.01(e) is hereby replace with the following:
(e) (1) Subject to the provisions of subparagraph (2) of this
paragraph, the Trustee may employ agents, sub-custodians, attorneys,
accountants and auditors and shall not be answerable for the default or
misconduct of any such agents, sub-custodians, attorneys, accountants
or auditors if such agents, sub-custodians, attorneys, accountants or
auditors shall have been selected with reasonable care. The Trustee
shall be fully protected in respect of any action under this Indenture
taken or suffered in good faith by the Trustee in accordance with the
opinion of counsel, which may be counsel to the Depositor acceptable to
the Trustee, provided, however that this disclaimer of liability shall
not excuse the Trustee from the responsibilities specified in
subparagraph (2) below. The fees and expenses charged by such agents,
sub-custodians, attorneys, accountants or auditors shall constitute an
expense of the Trust reimbursable from the Income and Capital Accounts
of the affected Trust as set forth in section 6.04 hereof.
(2) The Trustee may place and maintain in the care of an
Eligible Foreign Custodian (which is employed by the Trustee as a
sub-custodian as contemplated by subparagraph (1) of the paragraph (e)
and which may be an affiliate or subsidiary of the Trustee or any other
entity in which the Trustee may have an ownership interest) any
investment (including foreign currencies) for which the primary market
is outside the United States, and such case and cash equivalents in
amounts reasonably necessary to effect the Trust's transactions in such
investments, provided that:
(a) The Trustee shall perform all duties assigned to the
Foreign Custody Manager by Rule 17f-5 under the Investment Company Act
of 1940 (17 CFR ss. 270,17f-5) ("Rule 17f-5"), as now in effect or as
such rule may be amended in the future. The Trustee shall not delegate
such duties.
(b) The Trustee shall exercise reasonable care, prudence and
diligence such as a person having responsibility for the safekeeping of
Trust assets would exercise, and shall be liable to the Trust for any
loss occurring as a result of its failure to do so.
(c) The Trustee shall indemnify the Trust and hold the Trust
harmless from and against any risk of loss of Trust assets held in
accordance with the foreign custody contract.
(d) The Trustee shall maintain and keep current written
records regarding the basis for the choice or continued use of a
particular Eligible Foreign Custodian pursuant to this subparagraph for
a period of not less than six years from the end of the fiscal year in
which the Trust was terminated, the first two years in an easily
accessible place. Such records shall be available for inspection by
Unitholders and the Securities and Exchange Commission at the Trustee's
offices at all reasonable times during it usual business hours.
(3) "Eligible Foreign Custodian" shall have the meaning
assigned to it in Rule 17f-5.
(4) "Foreign Custody Manager" shall have the meaning assigned
to it in Rule 17f-5.
7. Section 1.01 (21) shall be replaced in its entirety by the
following:
(21) "Percentage Ratio" shall mean, for each Trust
which will issue additional Units pursuant to Section 2.03 hereof, (a)
an equal proportionate amount of each Equity Security with respect to
Great International Firms Trust, Series 7 and (b) the percentage
relationship existing immediately prior to the related additional
deposit of Securities among the maturity value per Unit of the Zero
Coupon Obligations, each Security per Unit as a percent of all shares
of Equity Securities and the sum of the maturity value per Unit of the
Zero Coupon Obligations and all Equity Securities attributable to each
Unit with respect to the Brand Name Equity Turst, Series 8. The
Percentage Ratio shall be adjusted to the extent necessary, and may be
rounded, to reflect the occurrence of a stock dividend, a stock split
or a similar event which affects the capital structure of the issuer of
an Equity Security."
8. Section 1.01 (1), (3) and (4) shall be replaced in their entirety
by the following:
(1) "Depositor" shall mean Van Kampen Funds Inc. and its
successors in interest, or any successor depositor appointed as hereinafter
provided.
(3) "Evaluator" shall mean American Portfolio Evaluation
Services (a division of a Van Kampen Investment Advisory Corp.) and its
successors in interest, or any successor evaluator appointed as hereinafter
provided.
(4) "Supervisory Servicer" shall mean Van Kampen Investment
Advisory Corp. and its successors in interest, or any successor portfolio
supervisor appointed as hereinafter provided.
9. Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust and subject to the requirements set forth in this paragraph,
unless the Prospectus otherwise requires, the Sponsor may, on any Business Day
(the "Trade Date"), subscribe for additional Units as follows:
(a) Prior to the Evaluation Time on such Business Day, the
Sponsor shall provide notice (the "Subscription Notice") to the Trustee, by
telephone or by written communication, of the Sponsor's intention to subscribe
for additional Units. The Subscription Notice shall identify the additional
Securities to be acquired (unless such additional Securities are a precise
replication of the then existing portfolio) and shall either (i) specify the
quantity of additional Securities to be deposited by the Sponsor on the
settlement date for such subscription or (ii) instruct the Trustee to purchase
additional Securities with an aggregate value as specified in the Subscription
Notice.
(b) Promptly following the Evaluation Time on such Business Day,
the Sponsor shall verify with the Trustee the number of additional Units to be
created.
(c) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver or assign the additional Units
created hereby, the Sponsor shall deposit with the Trustee (i) any additional
Securities specified in the Subscription Notice (or contracts to purchase such
additional Securities together with cash or a letter of credit in the amount
necessary to settle such contracts) or (ii) cash or a letter of credit in an
amount equal to the aggregate value of the additional Securities specified in
the Subscription Notice, and adding and subtracting the amounts specified in the
first and second sentences of Section 5.01, computed as of the Evaluation Time
on the Business Day preceding the Trade Date divided by the number of Units
outstanding as of the Evaluation Time on the Business Day preceding the Trade
Date, times the number of additional Units to be created.
(d) On the settlement date for such subscription, the Trustee
shall, in exchange for the Securities and cash or letter of credit described
above, deliver to, or assign in the name of or on the order of, the Sponsor the
number of Units verified by the Sponsor with the Trustee.
IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to
be executed and their corporate seals to be hereto affixed and attested; all as
of the day, month and year first above written.
Van Kampen Funds Inc.
By James J. Boyne
Vice President
Attest:
By Nicholas Dalmaso
Assistant Secretary
American Portfolio Evaluation Services, a
division of Van Kampen Investment Advisory
Corp.
By James J. Boyne
Vice President
Attest
By Nicholas Dalmaso
Assistant Secretary
Van Kampen Investment Advisory Corp.
By James J. Boyne
Vice President
Attest
By Nicholas Dalmaso
Assistant Secretary
The Bank of New York
By Jeffrey Cohen
Vice President
Attest
By Robert Weir
Assistant Treasurer
SCHEDULE A TO TRUST AGREEMENT SECURITIES INITIALLY DEPOSITED
IN
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 127
(Note: Incorporated herein and made a part hereof is each "Portfolio" as set
forth in the Prospectus.)
EXHIBIT 3.1
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
January 5, 1999
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Van Kampen Focus Portfolios, Series 127
---------------------------------------
Gentlemen:
We have served as counsel for Van Kampen Funds Inc. as Sponsor and
Depositor of Van Kampen Focus Portfolios, Series 127 (hereinafter referred to as
the "Trust"), in connection with the preparation, execution and delivery of a
Trust Agreement dated January 5, 1999, among Van Kampen Funds Inc., as
Depositor, American Portfolio Evaluation Services, a division of Van Kampen
Investment Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp.,
as Supervisory Servicer, and The Bank of New York, as Trustee, pursuant to which
the Depositor has delivered to and deposited the Securities listed in the
Schedule to the Trust Agreement with the Trustee and pursuant to which the
Trustee has provided to or on the order of the Depositor documentation
evidencing ownership of Units of fractional undivided interest in and ownership
of the Trust (hereinafter referred to as the "Units"), created under said Trust
Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement
and the execution and issuance of certificates evidencing the Units in
the Trust have been duly authorized; and
2. The certificates evidencing the Units in the Trust, when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will constitute
valid and binding obligations of such Trust and the Depositor in
accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-68657) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EXHIBIT 3.2
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
January 5, 1999
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Van Kampen Focus Portfolios, Series 127
---------------------------------------
Gentlemen:
We have acted as counsel for Van Kampen Funds Inc., Depositor of Van
Kampen Focus Portfolios, Series 127 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a Trust
Agreement dated January 5, 1999 (the "Indenture") among Van Kampen Funds Inc.,
as Depositor, American Portfolio Evaluation Services, a division of Van Kampen
Investment Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp.,
as Supervisory Servicer, and The Bank of New York, as Trustee. The Fund is
comprised of two separate unit investment trusts, Brand Name Equity Trust,
Series 8 and Great International Firms Trust, Series 7. The following discussion
and opinion applies only to Brand Name Equity Trust, Series 8 (the "Trust").
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we have
deemed pertinent.
The assets of the Trust will consist of a portfolio of equity
securities (the "Securities") as set forth in the Prospectus. For purposes of
the following discussion and opinion, it is assumed that each Security is equity
for federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters of
law as we consider to be applicable, we are of the opinion that, under existing
United States Federal income tax law:
(i) The Trust is not an association taxable as a corporation
for Federal income tax purposes but will be governed by the provisions
of subchapter J (relating to Trusts) of chapter 1, Internal Revenue
Code of 1986 (the "Code").
(ii) Each Unitholder will be considered as owning a pro rata
share of each asset of the trust in the proportion that the number of
Units held by him bears to the total number of Units outstanding. Under
subpart E, subchapter J of chapter 1 of the Code, income of the Trust
will be treated as income of each Unitholder in the proportion
described, and an item of Trust income will have the same character in
the hands of a Unitholder as it would have in the hands of the Trustee.
Each Unitholder will be considered to have received his pro rata share
of income derived from each Trust asset when such income is considered
to be received by the Trust. A Unitholder's pro rata portion of
distributions of cash or property by a corporation with respect to a
Security ("dividends" as defined by Section 316 of the Code ) is
taxable as ordinary income to the extent of such corporation's current
and accumulated "earnings and profits." A Unitholder's pro rata portion
of dividends paid on such Security which exceeds such current and
accumulated earnings and profits will first reduce the Unitholder's tax
basis in such Security, and to the extent that such dividends exceed a
Unitholder's tax basis in such Security, shall be treated as gain from
the sale or exchange of property.
(iii) 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 tax basis for his pro
rata portion of each Security held by the Trust.
(iv) Gain or loss will be recognized to a Unitholder (subject
to various nonrecognition provisions under the Code) upon redemption or
sale of his Units, except to the extent an in kind distribution of
stock is received by such Unitholder from the Trust as discussed below.
Such gain or loss is measured by comparing the proceeds of such
redemption or sale with the adjusted basis of his Units. Before
adjustment, such basis would normally be cost if the Unitholder had
acquired his Units by purchase. Such basis will be reduced, but not
below zero, by the Unitholder's pro rata portion of dividends with
respect to each Security which is not taxable as ordinary income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, taxable exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unitholder (subject
to various nonrecognition provisions under the Code) and the amount
thereof will be measured by comparing the Unitholder's aliquot share of
the total proceeds from the transaction with his basis for his
fractional interest in the asset disposed of. Such basis is ascertained
by apportioning the tax basis for his Units (as of the date on which
his Units were acquired) among each of the Trust assets (as of the date
on which his Units were acquired) ratably according to their values as
of the valuation date nearest the date on which he purchased such
Units. A Unitholder's basis in his Units and of his fractional interest
in each Trust asset must be reduced, but not below zero, by the
Unitholder's pro rata portion of dividends with respect to each
Security which is not taxable as ordinary income.
(vi) Under the Indenture, under certain circumstances, a
Unitholder tendering Units for redemption may request an in kind
distribution of Securities upon the redemption of Units or upon the
termination of the Trust. 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.
The receipt of an in kind distribution will result in a Unitholder
receiving an undivided interest in whole shares of stock and possibly
cash. The potential federal income tax consequences which may occur
under an in kind distribution with respect to each Security owned by
the Trust will depend upon 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 the
Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will
generally recognize gain or loss based upon the difference between the
amount of cash received by the Unitholder and his tax basis in such
fractional share of a Security held by the Trust. The total amount of
taxable gains (or losses) recognized upon such redemption will
generally equal the sum of the gain (or loss) recognized under the
rules described above by the redeeming Unitholder with respect to each
Security owned by the Trust.
A domestic corporation owning Units in the Trust may be eligible for
the 70% dividends received deduction pursuant to Section 243(a) of the Code 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), subject to the
limitations imposed by Sections 246 and 246A of the Code.
To the extent dividends received by a 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.
Section 67 of the Code provides that certain itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by individuals 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.
A Unitholder will recognize taxable gain (or loss) when all or part of
his pro rata interest in a Security is either sold by the Trust or redeemed or
when a Unitholder disposes of his Units in a taxable transaction, in each case
for an amount greater (or less) than his tax basis therefor, subject to various
non-recognition provisions of the Code.
It should be noted that payments to a 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. A
required holding period is imposed for such credits.
Any gain or loss recognized on a sale or exchange will, under current
law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including foreign, state or local taxes or
collateral tax consequences with respect to the purchase, ownership and
disposition of Units.
Very truly yours
CHAPMAN AND CUTLER
EXHIBIT 3.3
WINSTON & STRAWN
200 PARK AVENUE
NEW YORK, NEW YORK 10166-4193
January 5, 1999
Van Kampen Focus Portfolios, Series 127
c/o The Bank of New York, As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen Focus Portfolios,
Series 127 (the "Fund") consisting, among others of Brand Name Equity Trust,
Series 8 (individually a "Trust" and, in the aggregate, the "Trusts") for
purposes of determining the applicability of certain New York taxes under the
circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the "Indenture"),
dated as of today (the "Date of Deposit") among Van Kampen Funds Inc. (the
"Depositor"), American Portfolio Evaluation Services, a division of an affiliate
of the Depositor, as Evaluator, Van Kampen Investment Advisory Corp., an
affiliate of the Depositor, as Supervisory Servicer, and The Bank of New York,
as trustee (the "Trustee"). As described in the prospectus relating to the Fund
dated today to be filed as an amendment to a registration statement heretofore
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (respectively the "Prospectus" and the "Registration
Statement") (File Number 333-68657), the objectives of the Fund are to provide
the potential for dividend income and capital appreciation through investment in
a fixed portfolio of actively traded equity securities of companies engaged in,
providing services to companies in, the industry identified in Trust's name, or
are the type of securities identified in the name of the Trusts. It is noted
that no opinion is expressed herein with regard to the Federal tax aspects of
securities, the Trust, units of the Trust (the "Units"), or any income, gains or
losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to the Trust the securities and/or contracts and cash for the
purchase thereof together with an irrevocable letter of credit in the amount
required for the purchase price of the securities comprising the corpus of the
Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities to
be deposited in the Trust, and, upon the receipt thereof, will deliver to the
Depositor a registered certificate for the number of Units representing the
entire capital of the Trust as more fully set forth in the Prospectus. The
Units, which are represented by certificates ("Certificates"), will be offered
to the public upon the effectiveness of the Registration Statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash dividends and
interest received by the Trust and with the proceeds from the disposition of
securities held in the Trust and the distribution of such cash dividends,
interest and proceeds to the Unit holders. The Trustee will also maintain
records of the registered holders of Certificates representing an interest in
the Trust and administer the redemption of Units by such Certificate holders and
may perform certain administrative functions with respect to an automatic
investment option.
Generally, securities held in the Trust may be removed therefrom by the
Trustee at the direction of the Depositor upon the occurrence of certain
specified events which adversely affect the sound investment character of the
Trust, such as default by the issuer in payment of declared dividends or of
interest or principal on one or more of its debt obligations.
Prior to the termination of the Trust, the Trustee is empowered to sell
securities designated by the Supervisor only for the purpose of redeeming Units
tendered to it and of paying expenses for which funds are not available. The
Trustee does not have the power to vary the investment of any Unit holder in the
Trust, and under no circumstances may the proceeds of sale of any securities
held by the Trust be used to purchase new securities to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on business
corporations, and, for purposes of that Article, Section 208(l) defines the term
"corporation" to include, among other things, "any business conducted by a
trustee or trustees wherein interest or ownership is evidenced by certificate or
other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in which
interest or ownership is evidenced by certificate or other
written instrument includes, but is not limited to, an
association commonly referred to as a "business trust" or
"Massachusetts trust". In determining whether a trustee or
trustees are conducting a business, the form of the agreement
is of significance but is not controlling. The actual
activities of the trustee or trustees, not their purposes and
powers, will be regarded as decisive factors in determining
whether a trust is subject to tax under Article 9-A. The mere
investment of funds and the collection of income therefrom,
with incidental replacement of securities and reinvestment of
funds, does not constitute the conduct of a business in the
case of a business conducted by a trustee or trustees. 20
NYCRR 1-2.5(b)(2) (July 11, 1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that where a
trustee merely invests funds and collects and distributes the income therefrom,
the trust is not engaged in business and is not subject to the franchise tax.
Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171 (3rd Dept. 1948), order
resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd Dept. 1949).
In an Opinion of the Attorney General of the State of New York, 47 N.Y.
Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee of an
unincorporated investment trust was without authority to reinvest amounts
received upon the sales of securities and could dispose of securities making up
the trust only upon the happening of certain specified events or the existence
of certain specified conditions, the trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to, and we
assume will not, sell securities contained in the corpus of the Trust and
reinvest the proceeds therefrom. Further, the power to sell such securities is
limited to circumstances in which the credit-worthiness or soundness of the
issuer of such security is in question or in which cash is needed to pay
redeeming Unit holders or to pay expenses, or where the Trust is liquidated
subsequent to the termination of the Indenture. In substance, the Trustee will
merely collect and distribute income and will not reinvest any income or
proceeds, and the Trustee has no power to vary the investment of any Unit holder
in the Trust.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust will be
deemed to be the owner of the trust under certain circumstances, and therefore
taxable on his proportionate interest in the income thereof. Where this Federal
tax rule applies, the income attributed to the grantor will also be income to
him for New York income tax purposes. See TSB-M-78(9)(c), New York Department of
Taxation and Finance, June 23, 1978.
By letter, dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be considered as
owning a share of each asset of a Trust in the proportion that the number of
Units held by such holder bears to the total number of Units outstanding and the
income of a Trust will be treated as the income of each Unit holder in said
proportion pursuant to Subpart E of Part I, Subchapter J of Chapter 1 of the
Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we specifically rely,
we are of the opinion that under existing laws, rulings and court decisions
interpreting the laws of the State and City of New York:
1. The Trust will not constitute an association taxable as a
corporation under New York law, and, accordingly, will not be subject to tax on
its income under the New York State franchise tax or the New York City general
corporation tax;
2. The income of the Trust will be treated as the income of the Unit
holders under the income tax laws of the State and City of New York; and
3. Unit holders who are not residents of the State of New York are not
subject to the income tax laws thereof with respect to any interest or gain
derived from the Trust or any gain from the sale or other disposition of the
Units, except to the extent that such interest or gain is from property employed
in a business, trade, profession or occupation carried on in the State of New
York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name and the
reference to our firm in the Registration Statement and in the Prospectus.
Very truly yours,
WINSTON & STRAWN
EXHIBIT 4.1
Interactive Data
14 West Street
New York, NY 10005
January 5, 1999
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Great International Firms Trust, Series 7 and
Brand name Equity Trust, Series 8,
(A Unit Investment Trust) Registered Under the Securities
Act of 1933, File No. 333-68657
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Corporation, as the
Evaluator, and to the use of the Obligations prepared by us which are referred
to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
EXHIBIT 4.2
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
We have issued our report dated January 5, 1999 on the statements of
condition and related securities portfolios of Van Kampen Focus Portfolios,
Series 127 as of January 5, 1999 contained in the Registration Statement on Form
S-6 and Prospectus. We consent to the use of our report in the Registration
Statement and Prospectus and to the use of our name as it appears under the
caption "Other Matters-Independent Certified Public Accountants."
GRANT THORNTON LLP
Chicago, Illinois
January 5, 1999