File No: 333-
CIK #1025304
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust: VAN KAMPEN FOCUS PORTFOLIOS, SERIES 141
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 undivided fractional
beneficial interests
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
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The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
The information in this prospectus is not complete and may be changed. No person
may sell Units of the Trust until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell Units and is not soliciting an offer to buy Units in any state where the
offer or sale is not permitted.
Preliminary Prospectus Dated January 7, 1999
Subject To Completion
Corporate Bond Trust, Series 1
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Corporate Bond Trust, Series 1 (the "Trust") is a unit investment trust
included in Van Kampen Focus Portfolios, Series 141. The Trust seeks to provide
interest income and capital preservation by investing in convertible bonds. Of
course, we cannot guarantee that the Trust will achieve its objective. The
dollar weighted average maturity of the Bonds is __ years.
Estimated Current Return: --%
Estimated Long-Term Return: --%
CUSIP: --
Estimated current return shows the estimated cash you should receive each
year divided by the unit price. Estimated long term return shows the estimated
return over the estimated life of your Trust. We base this estimate on an
average of the bond yields over their estimated life. This estimate also
reflects the sales charge and estimated expenses. We derive the average yield
for your portfolio by weighting each bond's yield by its value and estimated
life. Unlike estimated current return, estimated long term return accounts for
maturities, discounts and premiums of the bonds. These estimates show a
comparison rather than a prediction of returns. No return calculation can
predict your actual return. Your actual return may vary from these estimates.
_________ ___, 1999
You should read this prospectus and retain it for future reference.
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The Securities and Exchange Commision 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.
Summary of Essential Financial Information
Initial Date of Deposit: _______ ___, 1999
Principal Amount of Bonds: $
Principal Amount of Bonds per Unit (1): $
Number of Units:
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Unit Price
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Aggregate Offering Price of Bonds $
Aggregate Offering Price of Bonds per Unit $
Plus Sales Charge per Unit $
Public Offering Price per Unit (2) $
Redemption Price per Unit $
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Expenses
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Sales Charge (% of Public Offering Price) --%
Estimated Annual Expenses per Unit
Trustee's Fee (3) $
Evaluator's Supervisory Fee $
Evaluator's Evaluation Fee (3) $
Other Operating Expenses $
-----------------
Total Annual Expenses per Unit $
=================
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Estimated Annual Income Per Unit
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Estimated Interest Income $
Less Estimated Expenses $
Estimated Net Interest Income $
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Estimated Distributions
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Initial Distribution $ -- on
_____ __, 1999
Normal Distribution (4) $
Record Dates June 10 and December 10
Distribution Dates June 25 and December 25
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(1) Because certain of the Bonds may from time to time under certain
circumstances be sold or redeemed or will be called or mature in accordance
with their terms (including the call or sale of zero coupon bonds at prices
less than par value), there is no guarantee that the value of each Unit at
Trust termination will be equal to the Principal Amount of Bonds per Unit.
(2) After the First Settlement Date (______ ___, 1999), Unitholders will pay
accrued interest from such date to the settlement date less distributions
from the Interest Account after the First Settlement Date.
(3) This fee is assessed per $1,000 principal amount of Bonds. Other fees are
assessed per Unit.
(4) This is based on estimated cash flows per Unit which will vary with changes
in expenses, interest rates and maturity, call, exchange or sale of the
Bonds. Estimated cash flows are set forth in the Information Supplement or
are available upon request.
<TABLE>
<CAPTION>
PORTFOLIO
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Offering
Aggregate Name of Issuer, Title, Interest Rate and Redemption Price to
Principal Maturity Date of Bonds(1)(2) Rating(3) Feature(4) Trust (2)
- --------------- --------------------------------------------------------- ---------- -------------- ------------
<S> <C> <C> <C> <C>
- --------------- ------------
$ $
=============== ============
</TABLE>
For an explanation of the footnotes used on this page, see "Notes to Portfolio".
Notes to Portfolio
(1) The Bonds are represented by "regular way" or "when issued" contracts for
the performance of which an irrevocable letter of credit, obtained from an
affiliate of the Trustee, has been deposited with the Trustee. Contracts to
acquire the Bonds were entered into on ______ __, 1999 and have settlement
dates ranging from ______ __, 1999 to ______ __, 1999.
(2) Other information regarding the Bonds is as follows:
Cost to Profit (Loss)
Sponsor to Sponsor
--------------- ---------------
$ $
"#" prior to the coupon rate indicates that the Bond was issued at an
original issue discount. The tax effect of Bonds issued at an original issue
discount is described in "Federal Tax Status."
(3) All ratings are by Standard & Poor's unless otherwise indicated. "*"
indicates that the rating of the Bond is by Moody's. "o" indicates that the
rating is contingent upon receipt by the rating agency of a policy of
insurance obtained by the issuer of the bonds. "N/R" indicates that the
rating service did not provide a rating for that Bond. For a brief
description of the ratings see "Description of Ratings" in the Information
Supplement.
(4) This is the year in which each Bond is initially or currently callable and
the call price for that year. Each Bond continues to be callable at
declining prices thereafter (but not below par value) except for original
issue discount bonds which are redeemable at prices based on the issue price
plus the amount of original issue discount accreted to redemption date plus,
if applicable, some premium, the amount of which will decline in subsequent
years. "S.F." indicates a sinking fund is established with respect to an
issue of Bonds. Certain Bonds may be subject to redemption without premium
prior to the date shown pursuant to extraordinary optional or mandatory
redemptions if certain events occur. See "Risk Factors."
Report of Certified Public Accountants
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of
Van Kampen Focus Portfolios, Series 141:
We have audited the accompanying statement of condition and the portfolio of
Van Kampen Focus Portfolios, Series 141 as of ______ ___, 1999. The statement of
condition and portfolio are the responsibility of the Sponsor. Our
responsibility is to express an opinion on such financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of an irrevocable letter of credit deposited to purchase bonds 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 141 as of ______ ___, 1999, in conformity with generally accepted
accounting principles.
Chicago, Illinois GRANT THORNTON LLP
______ ___, 1999
Statement of Condition
As of ________ ___, 1999
INVESTMENT IN BONDS
Contracts to purchase Bonds (1)(2) $
Accrued interest to the First Settlement Date (1)(2)
--------------------
Total $
====================
LIABILITY AND INTEREST OF UNITHOLDERS
Liability--
Accrued interest payable to Sponsor (1)(2) $
Interest of Unitholders--
Cost to investors
Less: Gross underwriting commission
--------------------
Net interest to Unitholders (1)(2)
--------------------
Total $
====================
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(1) The value of the Bonds is determined by Interactive Data Corporation on the
bases set forth under "Public Offering--Offering Price." The contracts to
purchase Bonds are collateralized by an irrevocable letter of credit in an
amount sufficient to satisfy such contracts.
(2) The Trustee will advance the amount of the net interest accrued to the First
Settlement Date to the Trust for distribution to the Sponsor as the
Unitholder of record as of such date.
THE TRUST
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The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Agreement (the "Trust Agreement") among Van Kampen Funds
Inc., as Sponsor, American Portfolio Evaluation Services, a division of Van
Kampen Investment Advisory Corp., as Evaluator, and The Bank of New York, as
Trustee, and ______, as Supervisor.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
aggregate principal amount of Bonds indicated in the "Summary of Essential
Financial Information." The Bonds initially consist of delivery statements
relating to contracts for their purchase and cash, cash equivalents and/or
irrevocable letters of credit issued by a financial institution. Thereafter, the
Trustee, in exchange for the Bonds, delivered to the Sponsor evidence of
ownership of the number of Units indicated under "Summary of Essential Financial
Information."
Additional Units of the Trust may be issued at any time by depositing in the
Trust (i) additional Bonds, (ii) contracts to purchase Bonds together with cash
or irrevocable letters of credit or (iii) cash (or a letter of credit) with
instructions to purchase additional Bonds. As additional Units are issued by the
Trust, the aggregate value of the Bonds will be increased and the fractional
undivided interest represented by each Unit will be decreased. The Sponsor may
continue to make additional deposits into the Trust following the Initial Date
of Deposit provided that the additional deposits will be in amounts which will
maintain, as nearly as practicable, the original proportionate relationship
among the principal value of each Bond in the Trust portfolio. Investors may
experience a dilution of their investments and a reduction in their anticipated
income because of fluctuations in the prices of the Bonds between the time of
the deposit and the purchase of the Bonds and because the Trust will pay the
associated brokerage or acquisition fees.
Each Unit of the Trust initially offered represents an undivided interest in
the Trust. To the extent that any Units are redeemed by the Trustee or
additional Units are issued as a result of additional Securities being deposited
by the Sponsor, the fractional undivided interest in the Trust represented by
each unredeemed Unit will increase or decrease accordingly, although the actual
interest in the Trust 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.
The Trust consists of (a) the Bonds (including contracts for the purchase
thereof) held from time to time in the Trust, (b) any additional Bonds acquired
and held by the Trust pursuant to the provisions of the Trust Agreement and (c)
any cash held in the Income and Principal Accounts. Neither the Sponsor nor the
Trustee is liable in any way for any failure in any of the Securities.
OBJECTIVES AND BOND SELECTION
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The Trust seeks to provide interest income and capital preservation by
investing in convertible bonds.
RISK FACTORS
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All investments involve risks. This section describes the main risks that can
impact the value of bonds in your Trust. You should understand these risks
before you invest. If the value of the bonds falls, the value of your units will
also fall. We cannot guarantee that your Trust will achieve it objective or that
your investment return will be positive over any period.
Market risk is the risk that the value of the bonds in your Trust will
fluctuate. This could cause the value of your units to fall below your original
purchase price or below the par value. Market value fluctuates in response to
various factors. These can include changes in interest rates, inflation, the
financial condition of a bond's issuer, perceptions of the issue, or ratings on
a bond. Even though the Supervisor carefully supervises your portfolio, you
should remember that no one manages your portfolio. Your Trust will not sell a
bond solely because the market value falls as is possible in a managed fund.
Interest rate risk is the risk that the value of bonds will fall if interest
rates increase. Bonds typically fall in value when interest rates rise and rise
in value when interest rates fall. Bonds with longer periods before maturity are
often more sensitive to interest rate changes.
Credit risk is the risk that a bond's issuer is unable to meet its obligation
to pay principal or interest on the bond.
Call risk is the risk that the issuer prepays or "calls" a bond before its
stated maturity. An issuer might call a bond if interest rates fall and the bond
pays a higher interest rate or if it no longer needs the money for the original
purpose. If an issuer calls a bond, your Trust will distribute the principal to
you but your future interest distributions will fall. You might not be able to
reinvest this principal at as high a yield. A bond's call price could be less
than the price your Trust paid for the bond and could be below the bond's par
value. This means that you could receive less than the amount you paid for your
units. If enough bonds in your Trust are called, your Trust could terminate
early. We list the first date that the issuer can call each bond in the
portfolio along with the price the issuer would have to pay.
Bond quality risk is the risk that a bond will fall in value if a rating
agency decreases the bond's rating.
Bond concentration risk is the risk that your Trust is less diversified
because it concentrates in a particular type of bond. When a certain type of
bond makes up 25% or more of a Trust, the Trust is considered to be
"concentrated" in that bond type. Your Trust invests in convertible bonds. A
convertible bond is a bond that the holder can exchange for a predefined number
of shares of common stock of the issuer (or sometimes a subsidiary of the
issuer). The value of a convertible bond generally increases or decreases as the
price of the related stock increases or decreases. This means that the value of
these bonds could fluctuate more than bonds that do not convert to a common
stock. Convertible bonds often offer higher income yields than the dividend
yield of the related common stock but lower than non-convertible bonds of
similar investment quality issued by the issuer. The value of a convertible bond
is often higher than the bond's conversion value (the value of the common stock
that the holder could receive upon conversion). Convertible bonds tend to rank
senior to common stocks in the issuer's capital structure but junior to
non-convertible bonds. This means that convertible bondholders generally have a
right to receive interest payments only after the issuer makes payments on all
senior bonds but before the issuer makes dividend payments to common
stockholders.
Reduced diversification risk is the risk that your Trust will become smaller
and less diversified as bonds are sold, are called or mature. This could
increase your risk of loss and increase your share of Trust expenses.
Liquidity risk is the risk that the value of a bond will fall if trading in
the bond is limited or absent. No one can guarantee that a liquid trading market
will exist for any bond because the bonds may trade in the over-the-counter
market (they may not trade on a securities exchange).
More about the Bonds. The "Portfolio" notes additional characteristics of the
bonds. This section briefly describes some of these characteristics.
Original issue discount bonds were initially issued at a price below their
face (or par) value. These bonds typically pay a lower interest rate than
comparable bonds that were issued at or about their par value. In a stable
interest rate environment, the market value of these bonds tends to increase
more slowly in early years and in greater increments as the bonds approach
maturity. The issuers of these bonds may be able to call or redeem a bond before
their stated maturity date and at a price less than the bond's par value.
Zero coupon bonds are a type of original issue discount bond. These bonds do
not pay any current interest during their life. If you own this type of bond,
you have the right to receive a final payment of the bond's par value at
maturity. The price of these bonds often fluctuates greatly during periods of
changing market interest rates compared to bonds that make current interest
payments. The issuers of certain of these bonds can call the bond at a price
below the bond's par value.
Year 2000 Readiness Disclosure. These two paragraphs constitute "Year 2000
Readiness Disclosure" within the meaning of the Year 2000 Information and
Readiness Disclosure Act of 1998. The Trust could be negatively impacted if
computer systems used by the Sponsor, Evaluator, Supervisor, Trustee or other
service providers to the Trust do not properly process date-related information
after December 31, 1999. 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
Trust are taking comparable steps. We cannot guarantee that these steps will be
sufficient to avoid any adverse impact on the Trust. This problem is expected to
impact issuers 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 Bonds.
In addition, it is possible that the markets for the Bonds may be
detrimentally affected by computer failures throughout the financial services
industry beginning January 1, 2000. Improperly functioning trading systems may
result in settlement problems and liquidity issues. Moreover, corporate and
governmental data processing errors may adversely affect issuers or insurers and
overall economic uncertainties. The ability of individual issuers or insurers to
make payments on the Bonds will be affected by remediation costs.
Accordingly, the Bonds may be adversely affected.
ESTIMATED CURRENT AND LONG-TERM RETURNS
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The Estimated Current Returns and the Estimated Long-Term Returns as of the
Date of Deposit are set forth on the cover of this Prospectus. Estimated Current
Return is calculated by dividing the estimated net annual interest income per
Unit by the Public Offering Price. The estimated net annual interest income per
Unit will vary with changes in fees and expenses of the Trust and with the
principal prepayment, redemption, maturity, exchange or sale of Bonds. The
Public Offering Price will vary with changes in the price of the Bonds.
Accordingly, there is no assurance that the present Estimated Current Return
will be realized in the future. Estimated Long-Term Return is calculated using a
formula which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements of the Bonds and (2) takes into account the expenses and sales
charge associated with Units. Since the value and estimated retirements of the
Bonds and the expenses of a Trust will change, there is no assurance that the
present Estimated Long-Term Return will be realized in the future. The Estimated
Current Return and Estimated Long-Term Return are expected to differ because the
calculation of Estimated Long-Term Return reflects the estimated date and amount
of principal returned while the Estimated Current Return calculation includes
only net annual interest income and Public Offering Price.
PUBLIC OFFERING
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General. Units are offered at the Public Offering Price. During the initial
offering period the Public Offering Price is based on the aggregate offering
price of the Bonds, the sales charge described below, cash, if any, in the
Principal Account and accrued interest, if any. After the initial public
offering period, the secondary market public offering price is based on the bid
prices of the Bonds, the sales charge described below, cash, if any, in the
Principal Account and accrued interest, if any. The minimum purchase in the
primary and secondary market is 100 Units.
The initial offering period sales charges are as follows:
Initial Offering Period Sales Charge
as Percent of
--------------------------------------
Public Offering Offering Price
Trust Price of Bonds
--------------------------------------
Less than $100,000... % %
$100,000 to $249,999.
$250,000 to $499,999.
$500,000 to $999,999.
$1 million or more...
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*The breakpoint sales charges are also applied on a dollar basis using a
breakpoint equivalent of $10 per Unit and will be applied on whichever basis
is more favorable to the investor.
The secondary market sales charge is computed as described in the following
table based upon the estimated long-term return life of a Trust's portfolio:
Years To Maturity Sales Charge
------------------ --------------
1 %
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21 or more
For purposes of computation of the estimated long-term return life, Bonds
will be deemed to mature on their expressed maturity dates unless: (a) the Bonds
have been called for redemption or are subject to redemption at an earlier call
date, in which case this call date will be deemed to be the maturity date; or
(b) the Bonds are subject to a "mandatory tender", in which case the mandatory
tender will be deemed to be the maturity date. The sales charges in the above
table are expressed as a percentage of the Public Offering Price per Unit.
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 Bonds. The price of Units on the Initial Date
of Deposit was determined by adding the applicable sales charge to the aggregate
offering price of the Bonds and dividing the sum by the number of Units
outstanding. This price determination was made on the basis of an evaluation of
the Bonds prepared by Interactive Data Corporation, a firm regularly engaged in
the business of evaluating, quoting or appraising comparable securities. During
the initial offering period, the Evaluator will value the Bonds as of the
Evaluation Time on days the New York Stock Exchange is open for business and
will adjust the Public Offering Price of Units accordingly. This Public Offering
Price will be effective for all orders received at or prior to the Evaluation
Time on each such day. The "Evaluation Time" is the close of trading on the New
York Stock Exchange on each day that the Exchange is open for trading. Orders
received by the Trustee, Sponsor or the Underwriter for purchases, sales or
redemptions after that time, or on a day when the New York Stock Exchange is
closed, will be held until the next determination of price. The secondary market
Public Offering Price per Unit will be equal to the aggregate bid price of the
Bonds plus the applicable secondary market sales charge and dividing the sum by
the number of Units outstanding. For secondary market purposes, this computation
will be made by the Evaluator as of the Evaluation Time for each day on which
any Unit is tendered for redemption and as necessary.
The aggregate price of the Bonds is determined on the basis of bid prices or
offering prices, as is appropriate, (a) on the basis of current market prices
obtained from dealers or brokers who customarily deal in bonds comparable to
those held by the Fund; (b) if these prices are not available, on the basis of
current market prices for comparable bonds; (c) by causing the value of the
Bonds to be determined by others engaged in the practice of evaluation, quoting
or appraising comparable bonds; or (d) by any combination of the above. Market
prices of the Bonds will generally fluctuate with changes in market interest
rates.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior to
the date of settlement for the purchase of Units may be used in the Sponsor's
business and may be deemed to be a benefit to the Sponsor, subject to the
limitations of the Securities Exchange Act of 1934.
Accrued Interest. Accrued interest is an accumulation of unpaid interest on
securities which generally is paid semi-annually, although the Trust accrues
interest daily. Because of this, the Trust always has an amount of interest
earned but not yet collected by the Trustee. For this reason, with respect to
sales settling after the First Settlement Date, the proportionate share of
accrued interest to the settlement date is added to the Public Offering Price of
Units. Unitholders will receive the amount of accrued interest paid on their
Units on the next distribution date. In an effort to reduce the accrued interest
which would have to be paid by Unitholders, the Trustee will advance the amount
of accrued interest to the Sponsor as the Unitholder of record as of the First
Settlement Date. Consequently, the accrued interest added to the Public Offering
Price of Units will include only accrued interest from the First Settlement Date
to the date of settlement, less any distributions from the Interest Account
after the First Settlement Date. Because of the varying interest payment dates
of the Bonds, accrued interest at any point in time will be greater than the
amount of interest actually received by the Trust and distributed to
Unitholders. If a Unitholder sells or redeems all or a portion of his Units, he
will be entitled to receive his proportionate share of the accrued interest from
the purchaser of his Units.
Unit Distribution. Units will be distributed to the public by the
Underwriter, broker-dealers and others at the Public Offering Price, plus
accrued interest. The Sponsor intends to qualify Units for sale in a number of
states. Broker-dealers or others will be allowed a concession or agency
commission in connection with the distribution of Units during the initial
offering period for any single transaction equal to ____% of the Public Offering
Price per Unit.
The breakpoint concessions or agency commissions are also applied on a dollar
basis utilizing a breakpoint equivalent of $1,000 per Unit and will be applied
on whichever basis is more favorable to the distributor. Certain commercial
banks may be making Units available to their customers on an agency basis. A
portion of the sales charge paid by these customers (equal to the agency
commission referred to above) is retained by or remitted to the banks. Any
discount provided to investors will be borne by the selling dealer or agent. For
secondary market transactions, the concession or agency commission will amount
to 70% of the applicable sales charge. The Sponsor reserves the right to reject,
in whole or in part, any order for the purchase of Units and to change the
amount of the concession or agency commission to dealers and others from time to
time.
Sponsor and Underwriter Compensation. The Underwriter will receive a gross
sales commission equal to the sales charge applicable to the transaction
involved. See "Public Offering--General". The Sponsor will receive from the
Underwriter the excess of this gross sales commission over ____% of the Public
Offering Price per Unit for sales up to $_______ and over ____% of the Public
Offering Price per Unit for sales in excess of $____________.
In addition, the Sponsor or Underwriter will realize a profit or loss, as a
result of the difference between the price paid for the Bonds by the Sponsor and
the cost of the Bonds to the Trust. See "Notes to Portfolio." The Sponsor has
not participated as sole underwriter or as manager or as a member of the
underwriting syndicates from which the Bonds in the Trusts were acquired. The
Sponsor or the Underwriter may further realize profit or loss during the initial
offering period as a result of possible fluctuations in the market value of the
Bonds since all proceeds received from purchasers of Units (excluding dealer
concessions or agency commissions allowed, if any) will be retained by the
Sponsor or Underwriter. The Sponsor and Underwriter will also 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 in connection with maintaining
a secondary market for Units and will also realize profits or losses resulting
from a redemption of repurchased Units at a price above or below the purchase
price.
The Underwriter and broker-dealers of the Trusts, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsor a nominal award for each of their representatives who have sold a
minimum number of units of unit investment trusts created by the Sponsor during
a specified time period. In addition, at various times the Sponsor may implement
other programs under which the sales forces of such firms may be eligible to win
other nominal awards for certain sales efforts, or under which the Sponsor will
reallow to any such firms 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 firms for certain services or activities which are primarily intended
to result in sales of Units of the Trust. Such payments are made by the Sponsor
out of its own assets, and not out of the assets of the Trust. These programs
will not change the price Unitholders pay for their Units or the amount that the
Trust will receive from the Units sold. Approximately every eighteen months the
Sponsor holds a business seminar which is open to underwriters that sell units
of trusts it sponsors. The Sponsor pays substantially all costs associated with
the seminar, excluding underwriter travel costs. Each Underwriter is invited to
send a certain number of representatives based on the gross number of units such
firm underwrites during a designated time period.
Market for Units. Although not obligated to do so, the Underwriter intends
to, maintain a market for Units and offer to purchase Units at prices, subject
to change at any time, based upon the aggregate bid prices of the Bonds plus
accrued interest and any principal cash on hand, less any amounts representing
taxes or other governmental charges payable out of the Trust and less any
accrued Trust expenses. If the supply of Units exceeds demand or if some other
business reason warrants it, the Sponsor and/or the Underwriter may either
discontinue all purchases of Units or discontinue purchases of Units at these
prices. If a market is not maintained and the Unitholder cannot find another
purchaser, 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". A Unitholder who wishes to dispose of his
Units should inquire of his broker as to current market prices in order to
determine whether there is in any price in excess of the Redemption Price and,
if so, the amount thereof. The Trustee will notify the Underwriter of any tender
of Units for redemption. If the Underwriter's bid in the secondary market at
that time equals or exceeds the Redemption Price per Unit, it may purchase the
Units not later than the day on which the Units would otherwise have been
redeemed by the Trustee.
RIGHTS OF UNITHOLDERS
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Distributions of Interest and Principal. Interest received by a Trust, pro
rated on an annual basis, will be distributed on each Distribution Date
described under "Summary of Essential Financial Information" to Unitholders of
record on the preceding Record Date. The amount and time of the first
distribution is described in under "Summary of Essential Financial Information".
Interest received by the Trust, including that part of the proceeds of any
disposition of Bonds which represents accrued interest, is credited by the
Trustee to the Interest Account. Other receipts are credited to the Principal
Account. After deduction of amounts sufficient to reimburse the Trustee, without
interest, for any amounts advanced and paid to the Sponsor as the Unitholder of
record as of the First Settlement Date, interest received will be distributed on
each distribution date to Unitholders of record as of the preceding record date.
All distributions will be net of estimated expenses. Funds in the Principal
Account will be distributed on each semi-annual distribution date to Unitholders
of record as of the preceding semi-annual record date. The Trustee is not
required to pay interest on funds held in the Principal or Interest Account (but
may itself earn interest thereon and therefore benefits from the use of these
funds) nor to make a distribution from the Principal Account unless the amount
available for distribution therein shall equal at least $1.00 per Unit. However,
should the amount available for distribution in the Principal Account equal or
exceed $10.00 per Unit, the Trustee will make a special distribution from the
Principal Account on the next distribution date to Unitholders of record on the
related record date.
Because interest payments are not received by the Trust at a constant rate
throughout the year, interest distributions may be more or less than the amount
credited to the Interest Account as of the record date. For the purpose of
minimizing fluctuations in interest distributions, the Trustee is authorized to
advance amounts necessary to provide interest distributions of approximately
equal amounts. The Trustee is reimbursed for these advances from funds in the
Interest Account on the next record date. Persons who purchase Units between a
record date and a distribution date will receive their first distribution on the
second distribution date after the purchase, under the applicable plan of
distribution.
Reinvestment Option. Unitholders may elect to have distributions on their
Units automatically reinvested in shares of certain Van Kampen or Morgan Stanley
mutual funds which are registered in the Unitholder's state of residence (the
"Reinvestment Funds"). Each Reinvestment Fund has investment objectives that
differ from those of the Trusts. The prospectus relating to each Reinvestment
Fund describes its investment policies and the procedures to follow to begin
reinvestment. A Unitholder may obtain a prospectus for the Reinvestment Funds
from Van Kampen Funds Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois
60181.
After becoming a participant in a reinvestment plan, each Trust distribution
will automatically be applied on the applicable distribution date to purchase
shares of the applicable Reinvestment Fund at a net asset value computed on such
date. Unitholders with an existing Guaranteed Reinvestment Option (GRO) Program
account (whereby a sales charge is imposed on distribution reinvestments) may
transfer their existing account into a new GRO account which allows purchases of
Reinvestment Fund shares at net asset value. Confirmations of all reinvestments
will be mailed to the Unitholder by the Reinvestment Fund. A participant may
elect to terminate his or her reinvestment plan and receive future distributions
in cash by notifying the Trustee in writing at least five days before the next
distribution date. Each Reinvestment Fund, its sponsor and investment adviser
have the right to terminate its reinvestment plan 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, of the certificates representing
the Units to be redeemed, duly endorsed or accompanied by proper instruments of
transfer with signature guaranteed (or by providing satisfactory indemnity, such
as in connection with lost, stolen or destroyed certificates) and by payment of
applicable governmental charges, if any. Redemption of Units cannot occur until
certificates representing the Units or satisfactory indemnity have been received
by the Trustee. No later than seven calendar days following satisfactory tender,
the Unitholder will receive an amount for each Unit equal to the Redemption
Price per Unit next computed after receipt by the Trustee of the tender of
Units. The "date of tender" is deemed to be the date on which Units are received
by the Trustee, except that as regards Units received after the Evaluation Time
on days of trading on the New York Stock Exchange, the date of tender is the
next day on which that Exchange is open and the Units will be deemed to have
been tendered to the Trustee on that day for redemption at the Redemption Price.
Under Internal Revenue Service regulations, the Trustee is required to
withhold a specified percentage of a Unit redemption if the Trustee has not
received the Unitholder's tax identification number as required by such
regulations. Any amount withheld is transmitted to the Internal Revenue Service
and may be recovered by the Unitholder only when filing a return. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, at any time a Unitholder elects to tender
Units for redemption, the Unitholder should provide a tax identification number
to the Trustee in order to avoid this possible "back-up withholding".
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the bid price of the Bonds as
of the Evaluation Time on days of trading on the New York Stock Exchange on the
date any such determination is made. The Evaluator determines the Redemption
Price per Unit on days Units are tendered for redemption. The Redemption Price
per Unit is the pro rata share of each Unit on the basis of (i) the cash on hand
in the Trust or moneys in the process of being collected, (ii) the value of the
Bonds based on the bid prices of the Bonds, except for cases in which the value
of insurance has been included, (iii) accrued interest, less (a) amounts
representing taxes or other governmental charges and (b) the accrued Trust
expenses. The Evaluator may determine the value of the Bonds by employing any of
the methods set forth in "Public Offering--Offering Price." Accrued interest
paid on redemption shall be withdrawn from the Interest Account or, if the
balance therein is insufficient, from the Principal Account. All other amounts
will be withdrawn from the Principal Account. Units so redeemed shall be
cancelled.
The price at which Units may be redeemed could be less than the price paid by
the Unitholder and may be less than the par value of the Bonds represented by
the Units redeemed. The Trustee may sell Bonds to cover redemptions. When Bonds
are sold, the size and diversity of the Trust will be reduced. Sales may be
required at a time when Bonds would not otherwise be sold and might result in
lower prices than might otherwise be realized.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or 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 Bonds is not reasonably practicable, or for other
periods as the SEC may by order permit. Under certain extreme circumstances the
Sponsor may apply to the SEC for an order permitting a full or partial
suspension of the right of Unitholders to redeem their Units.
Certificates. Ownership of Units is evidenced by certificates unless a
Unitholder makes a written request to the Trustee that ownership be in book
entry form. Units are transferable by making a written request to the Trustee
and, in the case of Units in certificate form, by presentation and surrender 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, or certificate 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 guaranty program accepted by the Trustee. The Trustee
may require additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or certificates
of corporate authority. Certificates will be issued in denominations of one Unit
or any multiple thereof. Although no such charge is now made, the Trustee may
require a Unitholder to pay a reasonable fee for each certificate re-issued 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 interest and other
receipts received for each distribution. For as long as the Sponsor deems it to
be in the best interest of Unitholders, the accounts of each Trust will be
audited annually by independent certified public accountants and the report of
the accountants will be furnished to Unitholders upon request. Within a
reasonable period of time after the end of each year, the Trustee will furnish
to each person who was a registered Unitholder during that year a statement
describing the interest and principal received on the Bonds, actual Trust
distributions, Trust expenses, a list of the Bonds and other Trust information.
Unitholders will be furnished the Evaluator's evaluations of the Bonds upon
request.
TRUST ADMINISTRATION
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The Underwriter and Supervisor. ______ is the Underwriter and Supervisor for
the Trust.
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 Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286, telephone
(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".
Portfolio Administration. The Trust is not managed a fund and, except as
provided in the Trust Agreement, Bonds generally will not be sold or replaced.
The Sponsor may, however, direct that Bonds be sold in certain limited
situations to protect the Trust based on advice from the Supervisor. These
situations may include default in interest or principal payments on the Bonds or
other obligations of an issuer, an advanced refunding or institution of certain
legal proceedings. In addition, the Trustee may sell Bonds designated by the
Supervisor for purposes of redeeming Units or payment of expenses. The
Supervisor will consider a variety of factors in designating Bonds to be sold
including interest rates, market value and marketability. Except in limited
circumstances, the Trustee must reject any offer by an issuer to issue bonds in
exchange or substitution for the Bonds (such as a refunding or refinancing
plan). The Trustee will promptly notify Unitholders of any exchange or
substitution. The Information Supplement contains a more detailed description of
circumstances in which Bonds may be sold or replaced. See "Additional
Information".
The Trust Agreement provides that the Trustee may not exercise the conversion
option on any of the convertible bonds in the Trust or continue to hold
securities received upon such exercise in the Trust. If any of the convertible
bonds are called for redemption, the Sponsor in consultation with the Supervisor
will instruct the Trustee to either (i) tender the convertible bonds for
redemption; (ii) sell the convertible bonds prior to redemption; or (iii)
exercise the conversion option on the convertible bonds and exchange the
convertible bonds at the specified price for a specified number of shares of
common stock of the issuer; and then sell the shares of common stock received
upon the exercise of such option.
Replacement Bonds. No assurance can be given that the Trust will retain its
present size or composition because Bonds may be sold, redeemed or mature from
time to time and the proceeds will be distributed to Unitholders and will not be
reinvested. In the event of a failure to deliver any Bond that has been
purchased under a contract ("Failed Bonds"), the Sponsor is authorized under the
Trust Agreement to direct the Trustee to acquire other bonds ("Replacement
Bonds") to make up the original portfolio of the Trust. Replacement Bonds must
be purchased within 20 days after delivery of the notice of the failed contract
and the purchase price (exclusive of accrued interest) may not exceed the amount
of funds reserved for the purchase of the Failed Bonds. The Replacement Bonds
must be substantially identical to the Failed Bonds in terms of (i) the
exemption from federal and state taxation, (ii) maturity, (iii) yield to
maturity and current return, (iv) Standard & Poor's or Moody's ratings. The
Trustee shall notify all Unitholders and within five days after the acquisition
of a Replacement Bond and shall make a pro rata distribution of the amount, if
any, by which the cost of the Failed Bond exceeded the cost of the Replacement
Bond plus accrued interest. If Failed Bonds are not replaced, the Sponsor will
refund the sales charge attributable to the Failed Bonds to all Unitholders of
the Trust and distribute the principal and accrued interest (at the coupon rate
of the Failed Bonds to the date of removal from the Trust) attributable to the
Failed Bonds within 30 days after removal. If Failed Bonds are not replaced, the
estimated net annual interest income per Unit would be reduced and the estimated
current return and estimated long-term return might be lowered. Unitholders may
not be able to reinvest their proceeds in other securities at a yield equal to
or in excess of the yield of the Failed Bonds.
Amendment of Trust Agreement. The Sponsor and the Trustee 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 the
interest of the 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 to permit the acquisition of Bonds in addition to or in substitution for any
of the Bonds initially deposited in the Trust, except for the substitution of
certain refunding Bonds. The Trustee will notify Unitholders of any amendment.
Termination of Trust Agreement. The Trust will terminate upon the redemption,
sale or other disposition of the last Bond held in the Trust. The Trust may also
be terminated at any time by consent of Unitholders of 51% of the Units then
outstanding or by the Trustee when the value of the Trust is less than 20% of
the original principal amount of Bonds. The Trustee will notify each Unitholder
of any termination within a reasonable time and will then liquidate any
remaining Bonds. The sale of Bonds upon termination may result in a lower amount
than might otherwise be realized if the sale was not required at that time. For
this reason, among others, the amount realized by a Unitholder upon termination
may be less than the principal amount of Bonds per Unit or value at the time of
purchase. The Trustee will distribute to each Unitholder his share of the
balance of the Interest and Principal Accounts after deduction of costs,
expenses or indemnities. The Unitholder will receive a final distribution
statement with this distribution. When the Trustee in its sole discretion
determines that any amounts held in reserve are no longer necessary, it will
distribute these amounts to Unitholders. The Information Supplement contains
further information regarding termination of the Trust. See "Additional
Information".
Limitation on Liabilities. The Sponsor, Evaluator, Supervisor and Trustee
shall be under no liability to Unitholders for taking any action or for
refraining from taking any action in good faith pursuant to the Trust Agreement,
or for errors in judgment, but shall be liable only for their own willful
misfeasance, bad faith or gross negligence (negligence in the case of the
Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee of
any of the Bonds. In the event of the failure of the Sponsor to act under the
Trust Agreement, the Trustee may act thereunder and shall not be liable for any
action taken by it in good faith under the Trust Agreement. The Trustee is not
liable for any taxes or governmental charges imposed on the Bonds, on it as
Trustee under the Trust Agreement or on the Fund 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 and Sponsor 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; provided, however, that the Evaluator shall be under no
liability to the Trustee, Sponsor or Unitholders for errors in judgment.
FEDERAL TAX STATUS
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The following is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986 (the "Code"). Unit holders 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.
Neither the Sponsor nor Chapman and Cutler has reviewed the Convertible Bonds
to be deposited in the Trust. Rather, they have assumed that the Convertible
Bonds qualify as debt 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 Unit holder 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 Unit holders thereof under the Code. Each
Unit holder will be considered to have received his pro rata share of the income
derived from each Convertible Bond when such income is considered to be received
by the Trust. Each Unit holder will also be required to include in taxable
income for Federal income tax purposes, original issue discount with respect to
his or her interest in any Convertible Bonds held by the Trust at the same time
and in the same manner as though the Unit holder were the direct owner of such
interest.
2. Each Unit holder will be considered to have received all of the interest
paid on his or her pro rata portion of each Convertible Bond when such interest
is received by the Trust, whether such interest is actually received by the Unit
holder or is automatically reinvested.
3. Each Unit holder will have a taxable event when the Trust disposes of a
Convertible Bond (whether by sale, taxable exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unit holder. The
price a Unit holder pays for his or her Units, generally including sales
charges, is allocated among his or her pro rata portion of each Convertible Bond
held by the Trust (in proportion to the fair market values thereof on the
valuation date closest to the date the Unit holder purchases his or her Units)
in order to determine his or her tax basis for his or her pro rata portion of
each Convertible Bond held by such Trust. Unit holders must reduce the tax basis
of their Units for their share of accrued interest received, if any, on
Convertible Bonds delivered after the date the Unit holders pay for their Units
to the extent that such interest accrued on such Convertible Bonds during the
period from the Unit holder's settlement date to the date such Convertible Bonds
are delivered to the Trust and, consequently, such Unit holders may have an
increase in taxable gain or reduction in capital loss upon the disposition of
such Units.
4. The basis of each Unit and of each Convertible Bond which was issued with
original issue discount (or which has market discount) must be increased by the
amount of accrued original issue discount (and market discount, if the Unit
holder elects to include market discount in income as it accrues) and the basis
of each Unit and of each Convertible Bond which was purchased by the Trust at a
premium must be reduced by the annual amortization of bond premium which the
Unit holder has properly elected to amortize under Section 171 of the Code. The
tax basis reduction requirements of the Code relating to amortization of bond
premium may, under some circumstances, result in the Unit holder realizing a
taxable gain when his or her Units are sold or redeemed for an amount equal to
or less than his or her original cost. Original issue discount is effectively
treated as interest for Federal income tax purposes and the amount of original
issue discount in this case is generally the difference between the bond's
purchase price and its stated redemption price at maturity. A Unit holder will
be required to include in gross income for each taxable year the sum of his or
her daily portions of any original issue discount attributable to the
Convertible Bonds held by the Trust as such original issue discount accrues for
such year even though the income is not distributed to the Unit holders during
such year unless a Convertible Bond's original issue discount is less than a "de
minimis" amount as determined under the Code. To the extent the amount of such
discount is less than the respective "de minimis" amount, such discount shall be
treated as zero. In general, original issue discount accrues daily under a
constant interest rate method which takes into account the semi-annual
compounding of accrued interest. Unit holders should consult their tax advisers
regarding the Federal income tax consequences and accretion of original issue
discount.
5. A Unit holder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Convertible Bonds held by the Trust will generally
be considered a capital gain (except in the case of a dealer or a financial
institution). A Unit holder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Convertible Bonds held by the Trust
will generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unit holders should consult their tax advisers regarding
the recognition of such capital gains and losses for Federal income tax
purposes.
The Convertible Bonds --Premium. If a Unit holder's tax basis of his or her
pro rata portion in any Convertible Bonds held by the Trust exceeds the amount
payable by the issuer of the Convertible Bonds with respect to such pro rata
interest upon maturity (or, in certain cases, the call date) of the Convertible
Bond, such excess would be considered premium which may be amortized by the Unit
holder at the Unit holder's election as provided in Section 171 of the Code.
Unit holders should consult their tax advisors regarding whether such election
should be made and the manner of amortizing premium.
The Convertible Bonds--Original Issue Discount. Certain of the Convertible
Bonds in the Trust may have been acquired with "original issue discount." In the
case of any Convertible Bonds in the Trust acquired with "original issue
discount" that exceeds a "de minimis" amount as specified in the Code, such
discount is includable in taxable income of the Unit holders on an accrual basis
computed daily, without regard to when payments of interest on such Convertible
Bonds are received. The Code provides a complex set of rules regarding the
accrual of original issue discount. These rules provide that original issue
discount generally accrues on the basis of a constant compound interest rate
over the term of the Convertible Bonds. Unit holders should consult their tax
advisers as to the amount of original issue discount which accrues.
Special original issue discount rules apply if the purchase price of the
Convertible Bond by the Trust exceeds its original issue price plus the amount
of original issue discount which would have previously accrued based upon its
issue price (its "adjusted issue price"). Similarly these special rules would
apply to a Unit holder if the tax basis of his or her pro rata portion of a
Convertible Bond issued with original issue discount exceeds his or her pro rata
portion of its adjusted issue price. Unit holders should also consult their tax
advisers regarding these special rules.
It is possible that a Convertible Bond that has been issued at an original
issue discount may be characterized as a "high-yield discount obligation" within
the meaning of Section 163(e)(5) of the Code. To the extent that such an
obligation is issued at a yield in excess of six percentage points over the
applicable Federal rate, a portion of the original issue discount on such
obligation will be characterized as a distribution on stock (e.g., dividends)
for purposes of the dividends received deduction which is available to certain
corporations with respect to certain dividends received by such corporation.
The Convertible Bonds--Market Discount. If a Unit holder's tax basis in his
or her pro rata portion of Convertible Bonds is less than the allocable portion
of such Convertible Bond's stated redemption price at maturity (or, if issued
with original issue discount, the allocable portion of its "revised issue
price"), such difference will constitute market discount unless the amount of
market discount is "de minimis" as specified in the Code. Market discount
accrues daily computed on a straight line basis, unless the Unit holder elects
to calculate accrued market discount under a constant yield method. Unit holders
should consult their tax advisers as to the amount of market discount which
accrues.
Accrued market discount is generally includable in taxable income to the Unit
holders as ordinary income for Federal tax purposes upon the receipt of serial
principal payments on the Convertible Bonds, on the sale, maturity or
disposition of such Convertible Bonds by the Trust, and on the sale by a Unit
holder of Units, unless a Unit holder elects to include the accrued market
discount in taxable income as such discount accrues. If a Unit holder does not
elect to annually include accrued market discount in taxable income as it
accrues, deductions for any interest expense incurred by the Unit holder which
is incurred to purchase or carry his or her Units will be reduced by such
accrued market discount. In general, the portion of any interest expense which
was not currently deductible would ultimately be deductible when the accrued
market discount is included in income. Unit holders should consult their tax
advisers regarding whether an election should be made to include market discount
in income as it accrues and as to the amount of interest expense which may not
be currently deductible.
The Convertible Bonds--Basis. The tax basis of a Unit holder with respect to
his or her interest in a Convertible Bond is increased by the amount of original
issue discount (and market discount, if the Unit holder elects to include market
discount, if any, on the Convertible Bonds held by the Trust in income as it
accrues) thereon properly included in the Unit holder's gross income as
determined for Federal income tax purposes and reduced by the amount of any
amortized premium which the Unit holder has properly elected to amortize under
Section 171 of the Code. A Unit holder's tax basis in his or her Units will
equal his or her tax basis in his or her pro rata portion of all of the assets
of the Trust. In addition, any sales charge paid by the Unit holder will
increase the Unit holder's basis in his Units.
Limitations on Deductibility of the Trust's Expenses by Unit holders. Each
Unit holder's pro rata share of each expense paid by the Trust is deductible by
the Unit holder to the same extent as though the expense had been paid directly
by such Unit holder. 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. Unit holders may be required to treat some or all of the expenses
of the Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Convertible Bonds by
the Trust or Disposition of Units. The Internal Revenue Service Restructuring
and Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers other
than corporations, net capital gain (which is defined as net long-term capital
gain over net short-term capital loss for the taxable year) realized from
property (with certain exclusions) is subject to a maximum marginal stated tax
rate of 20% (10% in the case of certain taxpayers in the lowest tax bracket).
Capital gain or loss is long-term if the holding period for the asset is more
than one year, and is short-term if the holding period for the asset is one year
or less. The date on which a Unit is acquired (i.e., the "trade date") is
excluded for purposes 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.
To the extent a Convertible Bond held by the Trust has any original issue
discount, market discount, or market premium, as previously discussed, a portion
of the Unit holder's gain on a sale of his Units, or on a sale of a Convertible
Bond by the Trust, may be characterized 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. Unit holders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If the Unit holder disposes of a Unit, he or she is deemed thereby to have
disposed of his or her entire pro rata interest in all assets of the Trust
involved including his or her pro rata portion of all the Convertible Bonds
represented by the Unit. The Taxpayer Relief Act of 1997 (the "1997 Tax Act")
includes provisions that treat certain transactions designed to reduce or
eliminate risk of loss and opportunities for gain (e.g., short sales, offsetting
notional principal contracts, futures or forward contracts, or similar
transactions) as constructive sales for purposes of recognition of gain (but not
loss) and for purposes of determining the holding period. Unit holders should
consult their own tax advisors with regard to any such constructive sales rules.
Computation of the Unit Holder's Tax Basis. Initially, a Unit holder's tax
basis in his or her Units will generally equal the price paid by such Unit
holder for his or her Units. The cost of the Units is allocated among the
Convertible Bonds held in the Trust in accordance with the proportion of the
fair market values of such Convertible Bonds on the valuation date nearest the
date the Units are purchased in order to determine such Unit holder's tax basis
for his or her pro rata portion of each Convertible Bond.
Unit holders must reduce the tax basis of their Units for their share of
accrued interest received, if any, on Convertible Bonds delivered after the date
the Unit holders pay for their Units to the extent that such interest accrued on
such Convertible Bonds during the period from the Unit holder's settlement date
to the date such Convertible Bonds are delivered to the Trust and, consequently,
such Unit holders may have an increase in taxable gain or reduction in capital
loss upon the disposition of such Units.
Foreign Investors. Interest income (including any original issue discount)
on, or any gain from the sale or other disposition of a Foreign investor's
(i.e., an investor other than a U.S. citizen or resident, or a U.S. corporation,
partnership or trust) pro rata interest in any Convertible Bond or the sale of
his or her Units will not be subject to United States Federal income taxes,
including withholding taxes, provided that all of the following conditions are
met: (i) the interest income or gain is not effectively connected with the
conduct by the foreign investor of a trade or business within the United States,
(ii) if the interest is United States source income (which is the case for each
Convertible Bond held by the Trust) and the Convertible Bond is issued after
July 18, 1984 (which is the case for each Convertible Bond held by the Trust),
then the foreign investor does not own, directly or indirectly, 10% or more of
the total combined voting power of all classes of voting stock of the issuer of
the Convertible Bond and the foreign investor is not a controlled foreign
corporation related (within the meaning of Section 864(d)(4) of the Code) to the
issuer of the Convertible Bond, (iii) with respect to any gain, 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 (iv) the foreign investor provides all
certification which may be required or his or her 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.
It should be noted that the Revenue Reconciliation Act of 1993 included a
provision which eliminates the exemption from United States taxation, including
withholding taxes, for certain "contingent interest." The provision applies to
interest received after December 31, 1993. No opinion is expressed herein
regarding the potential applicability of this provision and whether United
States taxation or withholding taxes could be imposed with respect to income
derived from the Units as a result thereof. Unit holders and prospective
investors should consult with their tax advisers regarding the potential effect
of this provision on their investment in Units.
General. Each Unit holder will be requested to provide the Unit holder's
taxpayer identification number to the Trustee and to certify that the Unit
holder has not been notified that payments to the Unit holder 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 Unit holder (including amounts received upon the redemption of
Units) will be subject to back-up withholding.
Unit holders desiring to purchase Units for tax-deferred plans and IRAs
should consult their broker for details on establishing such accounts. Units may
also be purchased by persons who already have self-directed plans established.
Except as specifically provided above, the foregoing discussion relates only
to the tax treatment of United States Unit holders with regard to United States
Federal income taxes; Unit holders may be subject to foreign, state and local
taxation. As used herein, the term "U.S. Unit holder" means an owner of a Unit
in the Trust that (a) is (i) for United States Federal income tax purposes a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States Federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unit holder in paragraph (a) but whose
income from a Unit is effectively connected with such Unit holder'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. Unit
holders should consult their tax advisers regarding potential state or local
taxation with respect to the Units.
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.
EXPENSES
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The Sponsor will not receive any fees in connection with its activities
relating to the Trust. However, American Portfolio Evaluation Services, a
division of Van Kampen Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive the annual evaluation fee indicated under "Summary of
Essential Financial Information" in Prospectus Part I for providing portfolio
evaluation services for the Fund. In addition, the Supervisor will receive the
annual supervisory fee indicated under "Summary of Essential Financial
Information" for providing supervisory services to the Trust's portfolio. These
fees may exceed the actual costs of providing these services for the Trust but
the total amount received by the Evaluator for providing these services to all
unit investment trusts will not exceed the total cost of providing the services
in any calendar year. For its services the Trustee will receive the fee
indicated under "Summary of Essential Financial Information." Part of the
Trustee's compensation for its services is expected to result from the use of
the funds being held in the Principal and Interest Accounts for future
distributions, payment of expenses and redemptions since these Accounts are
non-interest bearing to Unitholders.
The following additional charges are or may be incurred by the Trust: (a)
fees of the Trustee for extraordinary services, (b) expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the
Sponsor, (c) various governmental charges, (d) expenses and costs of any action
taken by the Trustee to protect the Trust and the rights and interests of
Unitholders, (e) indemnification of the Trustee for any loss, liability or
expenses incurred by it in the administration of the Fund without negligence,
bad faith or willful misconduct on its part, (f) any special custodial fees
payable in connection with the sale of any of the Bonds in a Trust, (g)
expenditures incurred in contacting Unitholders upon termination of the Trusts
and (h) costs incurred to reimburse the Trustee for advancing funds to the
Trusts to meet scheduled distributions (which costs may be adjusted periodically
in response to fluctuations in short-term interest rates). The fees and expenses
set forth herein are payable out of the Trust. When such fees and expenses are
paid by or owing to the Trustee, they are secured by a lien on the portfolio of
the applicable Trust. If the balances in the Interest and Principal Accounts are
insufficient to provide for amounts payable by the Trust, the Trustee has the
power to sell Bonds to pay such amounts.
Each month, the Trustee will deduct from the Interest Account and, to the
extent funds are not sufficient therein, from the Principal Account, amounts
necessary to pay the expenses of the Trust. The Trustee also may withdraw from
these Accounts such amounts, if any, as it deems necessary to establish a
reserve for any governmental charges payable out of the Trust. Amounts so
withdrawn shall not be considered a part of the Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
Accounts. All costs and expenses incurred in creating and establishing the
Trust, including the cost of the initial preparation, printing and execution of
the Trust Agreement and the certificates, legal and accounting expenses,
advertising and selling expenses, expenses of the Trustee, initial evaluation
fees and other out-of-pocket expenses have been borne by the Sponsor at no cost
to the Trust.
ADDITIONAL INFORMATION
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This Prospectus does not contain all the information set forth in the
Registration Statement filed by the Trust with the SEC. The Information
Supplement, which has been filed with the SEC, includes more detailed
information concerning the Bonds, investment risks and general information about
the Trust. This Prospectus incorporates by reference the entire Information
Supplement. The Information Supplement may be obtained by contacting the Trustee
or is available along with other related materials at the SECInternet site
(http://www.sec.gov).
OTHER MATTERS
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Legal Matters. The legality of the Units offered hereby and certain matters
relating to Federal tax law have 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 special counsel to the Trust
for New York tax matters.
Independent Certified Public Accountants. The statement of condition and the
related portfolio at the Initial Date of Deposit included in this Prospectus
have been audited by Grant Thornton LLP, independent certified public
accountants, as set forth in their report in this Prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
TABLE OF CONTENTS
Title Page
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Summary of Essential Financial Information 2
Portfolio 3
Notes to Portfolio 4
Report of Certified Public Accounts 5
Statement of Condition 5
The Trust 6
Objectives and Bond Selection 6
Risk Factors 6
Estimated Current and Long-Term Returns 8
Public Offering 8
Rights of Unitholders 10
Trust Administration 12
Federal Tax Status 14
Expenses 17
Additional Information 18
Other Matters
PROSPECTUS
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________ ____, 1999
Corporate Bond Trust, Series 1
Information Supplement
Van Kampen Focus Portfolios, Series 141
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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 for
the Trust. This Information Supplement should be read in conjunction with the
Trust prospectus. This Information Supplement is not a prospectus (but is
incorporated into the Prospectus by reference), 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 Prospectus Part I and all capitalized
terms have been defined in the Prospectus.
Table of Contents
Page
Risk Factors............................................................... 2
Portfolio Administration................................................... 3
Sponsor Information ....................................................... 4
Trustee Information........................................................ 5
Termination of the Trust Agreement......................................... 5
Description of Ratings..................................................... 6
Estimated Cash Flows to Unitholders........................................ 8
Risk Factors
Certain of the Bonds may have been acquired at a market discount from par
value at maturity. The coupon interest rates on discount bonds at the time they
were purchased and deposited in a Trust were lower than the current market
interest rates for newly issued bonds of comparable rating and type. If such
interest rates for newly issued comparable bonds increase, the market discount
of previously issued bonds will become greater, and if such interest rates for
newly issued comparable bonds decline, the market discount of previously issued
bonds will be reduced, other things being equal. Investors should also note that
the value of bonds purchased at a market discount will increase in value faster
than bonds purchased at a market premium if interest rates decrease. Conversely,
if interest rates increase, the value of bonds purchased at a market discount
will decrease faster than bonds purchased at a market premium. In addition, if
interest rates rise, the prepayment risk of higher yielding, premium Securities
and the prepayment benefit for lower yielding, discount bonds will be reduced. A
bond purchased at a market discount and held to maturity will have a larger
portion of its total return in the form of taxable income and capital gain and
less in the form of tax-exempt interest income than a comparable bond newly
issued at current market rates. See "Federal Tax Status" in Prospectus Part II.
Market discount attributable to interest changes does not indicate a lack of
market confidence in the issue.
Certain of the Bonds may be "zero coupon" bonds. Zero coupon bonds are
purchased at a deep discount because the buyer receives only the right to
receive a final payment at the maturity of the bond and does not receive any
periodic interest payments. The effect of owning deep discount bonds which do
not make current interest payments (such as the zero coupon bonds) is that a
fixed yield is earned not only on the original investment but also, in effect,
on all discount earned during the life of such obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable to
reinvest the income on such obligation at a rate as high as the implicit yield
on the discount obligation, but at the same time eliminates the holder's ability
to reinvest at higher rates in the future. For this reason, zero coupon bonds
are subject to substantially greater price fluctuations during periods of
changing market interest rates than are securities of comparable quality which
pay interest.
Certain of the Bonds may have been purchased on a "when, as and if issued" or
"delayed delivery" basis. See "Notes to Portfolio" in the Prospectus. The
delivery of any such Bonds may be delayed or may not occur. Interest on these
Bonds begins accruing to the benefit of Unitholders on their respective dates of
delivery. To the extent any Bonds are actually delivered to the Trust after
their respective expected dates of delivery, Unitholders who purchase their
Units prior to the date such Bonds are actually delivered to the Trustee would
be required to adjust their tax basis in their Units for a portion of the
interest accruing on such Bonds during the interval between their purchase of
Units and the actual delivery of such Bonds. As a result of any such adjustment,
the Estimated Current Returns during the first year would be slightly lower than
those stated in the Prospectus which would be the returns after the first year,
assuming the portfolio of the Trust and estimated annual expenses other than
that of the Trustee do not vary from that set forth in Prospectus. Unitholders
will be "at risk" with respect to all Bonds in the portfolio including "when, as
and if issued" and "delayed delivery" Bonds (i.e., may derive either gain or
loss from fluctuations in the evaluation of such Bonds) from the date they
commit for Units.
Certain of the Bonds may be subject to redemption prior to their stated
maturity date pursuant to sinking fund provisions, call provisions or
extraordinary optional or mandatory redemption provisions or otherwise. A
sinking fund is a reserve fund accumulated over a period of time for retirement
of debt. A callable debt obligation is one which is subject to redemption or
refunding prior to maturity at the option of the issuer. A refunding is a method
by which a debt obligation is redeemed, at or before maturity, by the proceeds
of a new debt obligation. In general, call provisions are more likely to be
exercised when the offering side valuation is at a premium over par than when it
is at a discount from par. The exercise of redemption or call provisions will
(except to the extent the proceeds of the called bonds are used to pay for Unit
redemptions) result in the distribution of principal and may result in a
reduction in the amount of subsequent interest distributions; it may also affect
the current return on Units of the Trust. The Trust portfolio contains a listing
of the sinking fund and call provisions, if any, with respect to each of the
debt obligations. Extraordinary optional redemptions and mandatory redemptions
result from the happening of certain events. Generally, events that may permit
the extraordinary optional redemption of bonds or may require the mandatory
redemption of bonds include, among others: a final determination that the
interest on the bonds is taxable; the substantial damage or destruction by fire
or other casualty of the project for which the proceeds of the bonds were used;
an exercise by a local, state or Federal governmental unit of its power of
eminent domain to take all or substantially all of the project for which the
proceeds of the bonds were used; changes in the economic availability of raw
materials, operating supplies or facilities or technological or other changes
which render the operation of the project for which the proceeds of the bonds
were used uneconomic; changes in law or an administrative or judicial decree
which renders the performance of the agreement under which the proceeds of the
bonds were made available to finance the project impossible or which creates
unreasonable burdens or which imposes excessive liabilities, such as taxes, not
imposed on the date the bonds are issued on the issuer of the bonds or the user
of the proceeds of the bonds; an administrative or judicial decree which
requires the cessation of a substantial part of the operations of the project
financed with the proceeds of the bonds; an overestimate of the costs of the
project to be financed with the proceeds of the bonds resulting in excess
proceeds of the bonds which may be applied to redeem bonds; or an underestimate
of a source of funds securing the bonds resulting in excess funds which may be
applied to redeem bonds. The issuer of certain bonds in the Trust may have sold
or reserved the right to sell, upon the satisfaction of certain conditions, to
third parties all or any portion of its rights to call bonds in accordance with
the stated redemption provisions of such bonds. In such a case the issuer no
longer has the right to call the bonds for redemption unless it reacquires the
rights from such third party. A third party pursuant to these rights may
exercise the redemption provisions with respect to a bond at a time when the
issuer of the bond might not have called a bond for redemption had it not sold
such rights. The Sponsor is unable to predict all of the circumstances which may
result in such redemption of an issue of Bonds.
To the best knowledge of the Sponsor, there is no litigation pending as of
the Initial Date of Deposit in respect of any Bonds which might reasonably be
expected to have a material adverse effect upon the Trust. At any time after the
Initial Date of Deposit, litigation may be initiated on a variety of grounds
with respect to Bonds in the Trust. Such litigation, as, for example, suits
challenging the issuance of pollution control revenue bonds under environmental
protection statutes, may affect the validity of such Bonds. While the outcome of
litigation of such nature can never be entirely predicted, the Trust has
received or will receive opinions of bond counsel to the issuing authorities of
each Bond on the date of issuance to the effect that such Bonds have been
validly issued. In addition, other factors may arise from time to time which
potentially may impair the ability of issuers to meet obligations undertaken
with respect to the Bonds.
Portfolio Administration
The Trustee is empowered to sell, for the purpose of redeeming Units tendered
by any Unitholder, and for the payment of expenses for which funds may not be
available, such of the Bonds designated by the Evaluator as the Trustee in its
sole discretion may deem necessary. The Evaluator, in designating such Bonds,
will consider a variety of factors including (a) interest rates, (b) market
value and (c) marketability. The Sponsor may direct the Trustee to dispose of
Bonds upon default in payment of principal or interest, institution of certain
legal proceedings, default under other documents adversely affecting debt
service, default in payment of principal or interest or other obligations of the
same issuer, decline in projected income pledged for debt service on revenue
bonds or decline in price or the occurrence of other market or credit factors,
including advance refunding (i.e., the issuance of refunding securities and the
deposit of the proceeds thereof in trust or escrow to retire the refunded
securities on their respective redemption dates), so that in the opinion of the
Sponsor the retention of such Bonds would be detrimental to the interest of the
Unitholders. Because of restrictions on the Trustee under certain circumstances,
the Sponsor may seek a full or partial suspension of the right of Unitholders to
redeem their Units in an the Trust. See "Rights of Unitholders--Redemption of
Units" in the Prospectus. The Sponsor is empowered, but not obligated, to direct
the Trustee to dispose of Bonds in the event of an advanced refunding.
The Sponsor is required to instruct the Trustee to reject any offer made by
an issuer of any of the Bonds to issue new obligations in exchange or
substitution for any Bond pursuant to a refunding or refinancing plan, except
that the Sponsor may instruct the Trustee to accept or reject such an offer or
to take any other action with respect thereto as the Sponsor may deem proper if
(1) the issuer is in default with respect to such Bond or (2) in the written
opinion of the Sponsor the issuer will probably default with respect to such
Bond in the reasonably foreseeable future. Any obligation so received in
exchange or substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Bonds originally
deposited thereunder. Within five days after the deposit of obligations in
exchange or substitution for underlying Bonds, the Trustee is required to give
notice thereof to each Unitholder of the Trust thereby affected, identifying the
Bonds eliminated and the Bonds substituted therefor. Except as stated herein and
under "Fund Administration--Replacement Bonds" in the Prospectus regarding the
substitution of Replacement Bonds for Failed Bonds, the acquisition by the Trust
of any securities other than the Bonds initially deposited is not permitted.
If any default in the payment of principal or interest on any Bonds occurs
and no provision for payment is made therefor within 30 days, the Trustee is
required to notify the Sponsor thereof. If the Sponsor fails to instruct the
Trustee to sell or to hold such Bonds within 30 days after notification by the
Trustee to the Sponsor of such default, the Trustee may in its discretion sell
the defaulted Bond and not be liable for any depreciation or loss thereby
incurred.
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 Trust 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, telephone (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 Bonds for the portfolios of any of the Trust. In
accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such records
shall include the name and address of, and the certificates issued by the Trust
to, every Unitholder of the Trust. Such books and records shall be open to
inspection by any Unitholder at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or Federal statute, rule or
regulation. 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 Bonds held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of the trusts 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 Trust
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.
Termination of the Trust Agreement
The Trust may be terminated at any time by consent of Unitholders of 51% of
the Units the then outstanding or by the Trustee when the value of the Trust, as
shown by any evaluation, is less than 20% of the original principal amount of
Bonds. The Trust will be liquidated by the Trustee in the event that a
sufficient number of Units not yet sold are tendered for redemption by the
Underwriters, including the Sponsor, so that the net worth of the Trust would be
reduced to less than 40% of the initial principal amount of the Trust. If the
Trust is liquidated because of the redemption of unsold Units by the
Underwriter, the Sponsor will refund to each purchaser of Units the entire sales
charge paid by such purchaser. The Trust Agreement provides that the Trust shall
terminate upon the redemption, sale or other disposition of the last Bond held
in such Trust, but in no event shall it continue beyond the end of the year
preceding the fiftieth anniversary of the Trust Agreement. In the event of
termination of the Trust, written notice thereof will be sent by the Trustee to
each Unitholder at his address appearing on the registration books of the Trust
maintained by the Trustee. Within a reasonable time thereafter the Trustee shall
liquidate any Bond then held in the Trust and shall deduct from the funds of the
Trust any accrued costs, expenses or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee and costs of
liquidation and any amounts required as a reserve to provide for payment of any
applicable taxes or other government charges. The sale of Bonds in the Trust
upon termination may result in a lower amount than might otherwise be realized
if such sale were not required at such time. For this reason, among others, the
amount realized by a Unitholder upon termination may be less than the principal
amount or par amount of Bonds represented by the Units held by such Unitholder.
The Trustee shall then distribute to each Unitholder his share of the balance of
the Interest and Principal Accounts. With such distribution the Unitholder shall
be furnished a final distribution statement of the amount distributable. At such
time as the Trustee in its sole discretion shall determine that any amounts held
in reserve are no longer necessary, it shall make distribution thereof to
Unitholders in the same manner.
Description of Ratings
Standard & Poor's, A Division of the McGraw-Hill Companies. A Standard &
Poor's bond rating is a current assessment of the creditworthiness of an obligor
with respect to a specific debt obligation. This assessment of creditworthiness
may take into consideration obligors such as guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase or sell a security, inasmuch
as it does not comment as to market price. The ratings are based on current
information furnished to Standard & Poor's by the issuer and obtained by
Standard & Poor's from other sources it considers reliable. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability of,
such information.
The ratings are based, in varying degrees, on the following considerations:
I. Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in
accordance with the terms of the obligation.
II.Nature of and provisions of the obligation.
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under
the laws of bankruptcy and other laws affecting creditors' rights.
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC - Debt rated BB, B, CCC and CC is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposure to adverse
conditions.
Plus (+) or Minus (-): To provide more detailed indications of credit
quality, the ratings from "AA" to "BBB" may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
Provisional Ratings: A provisional rating ("p") assumes the successful
completion of the project being financed by the issuance of the bonds being
rated and indicates that payment of debt service requirements is largely or
entirely dependent upon the successful and timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion,
makes no comment on the likelihood of, or the risk of default upon failure of,
such completion. Accordingly, the investor should exercise his own judgment with
respect to such likelihood and risk.
Moody's Investors Service, Inc. A brief description of the applicable
Moody's rating symbols and their meanings follows:
Aaa--Bonds which are rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". Interest payments are protected by a large, or by an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. With the occasional
exception of oversupply in a few specific instances, the safety of obligations
of this class is so absolute that their market value is affected solely by money
market fluctuations.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. These Aa bonds are high grade, their market value virtually immune
to all but money market influences, with the occasional exception of oversupply
in a few specific instances.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as higher medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. The market
value of A-rated bonds may be influenced to some degree by credit circumstances
during a sustained period of depressed business conditions. During periods of
normalcy, bonds of this quality frequently move in parallel with Aaa and Aa
obligations, with the occasional exception of oversupply in a few specific
instances.
Baa--Bonds which are rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the high
end of its category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
Con--Bonds for which the security depends upon the completion of some act or
the fulfillment of some condition are rated conditionally. These are bonds
secured by (a) earnings of projects under construction, (b) earnings of projects
unseasoned in operating experience, (c) rentals which begin when facilities are
completed, or (d) payments to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon completion of
construction or elimination of basis of condition.
Estimated Cash Flows to Unitholders
The tables below set forth the per Unit estimated monthly and semi-annual
distributions of interest and principal to Unitholders. The tables assume no
changes in expenses, no changes in the current interest rates, no exchanges,
redemptions, sales or prepayments of the underlying Bonds prior to maturity or
expected retirement date and the receipt of principal upon maturity or expected
retirement date. To the extent the foregoing assumptions change actual
distributions will vary.
<TABLE>
<CAPTION>
Distribution Dates
(Each June and Estimated Estimated Estimated
December Unless Interest Principal Total
Otherwise Specified) Distribution Distribution Distribution
--------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
</TABLE>
S-2
CONTENTS OF REGISTRATION STATEMENT
This 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 Proposed form of Trust Agreement (to be supplied by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be supplied by amendment).
3.2 Opinion and consent of counsel as to New York tax status of securities
being registered (to be supplied by amendment).
4.1 Consent of Interactive Data Corporation (to be supplied by amendment).
4.2 Consent of Grant Thornton LLP (to be supplied by amendment).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen Focus Portfolios, Series 141 has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Chicago and State of Illinois on the 7th day of
January, 1999.
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 141
(Registrant)
By VAN KAMPEN FUNDS INC.
(Depositor)
Gina Costello______________________________
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on January 7, 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 Costello (Attorney-in-fact*)
- --------------------------------------------------------------------------------
*An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the Registration
Statement on Form S-6 of Van Kampen American Capital Equity Opportunity Trust,
Series 64 (File No. 333-33087) Van Kampen American Capital Equity Opportunity
Trust, Series 87 (File No. 333-44581) and the same are hereby incorporated
herein by this reference.
