MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 208
The Prospectus filed with Amendment No. 1 of the Registration Statement
on Form S-6 has been revised to reflect information regarding the deposit of Van
Kampen Focus Portfolios, Series 208 on March 1, 2000. An effort has been made to
set forth below each of the major changes and also to reflect the same by
blacklining the marked counterparts of the Prospectus submitted with the
Amendment.
Cover Page. The date of the Prospectus has been completed.
Pages 2-3. "The Summary of Essential Financial Information" section
and "Fee Table" have been completed.
Pages 4-6. Revisions have been made and the portfolio has been
completed.
Pages 7-8. The descriptions of the Securities issuers have been
completed.
Pages 9-10. The Report of Independent Certified Public Accountants and
Statements of Condition have been completed.
FILE NO. 333-30032
CIK #1101076
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: VAN KAMPEN FOCUS PORTFOLIOS, SERIES 208
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: A. Thomas Smith III, General Counsel
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title of securities being registered: Units of proportionate interest
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT
/ X / Check box if it is proposed that this filing will become effective at 2:00
p.m. on March 1, 2000 pursuant to Rule 487.
Van Kampen
Focus Portfolios(SM)
A Division of Van Kampen Funds Inc.
The Dow 5SM & Tech Strategic Trust, March 2000 Series
- --------------------------------------------------------------------------------
Van Kampen Focus Portfolios, Series 208 includes the unit investment trust
described above (the "Trust"). The Dow 5SM & Tech Trust uses a refined indexing
strategy that seeks to identify a diversified portfolio of well-known stocks.
The Trust seeks to provide above-average total return by increasing the value of
your Units and providing dividend income. Of course, we cannot guarantee that
the Trust will achieve its objective.
March 1, 2000
You should read this prospectus and retain it for future reference.
- --------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved of the
Units or passed upon the adequacy or accuracy of this prospectus. Any contrary
representation is a criminal offense.
<TABLE>
<CAPTION>
Summary of Essential Financial Information
March 1, 2000
The Dow 5SM
& Tech
Public Offering Price Trust
------------
<S> <C>
Aggregate value of Securities per Unit (1) $ 9.900
Sales charge 0.295
Less deferred sales charge 0.195
Public offering price per Unit (2) $ 10.000
Trust Information
Initial number of Units (3) 15,108
Aggregate value of Securities (1) $ 149,568
Estimated initial distribution per Unit (June 2000) (4) $ .03
Estimated annual dividends per Unit (4) $ .15041
Redemption price per Unit (5) $ 9.705
</TABLE>
General Information
Initial Date of Deposit March 1, 2000
Mandatory Termination Date May 30, 2001
Record Dates June 10 and December 10
Distribution Dates June 25 and December 25
- --------------------------------------------------------------------------------
(1) Each Security is valued at the most recent closing sale price as of the
close of the New York Stock Exchange on the business day before the Initial
Date of Deposit. You will bear all or a portion of the expenses incurred in
organizing and offering your Trust. The public offering price includes the
estimated amount of these costs. The Trustee will deduct these expenses
from your Trust at the end of the initial offering period (approximately
three months). The estimated amount is described on the next page.
(2) The public offering price will include any accumulated dividends or cash in
the Income or Capital Accounts of your Trust.
(3) The number of Units may be adjusted so that the public offering price per
Unit equals $10 at the close of the New York Stock Exchange on the Initial
Date of Deposit. The number of Units and fractional interest of each Unit
will increase or decrease to the extent of any adjustment.
(4) This estimate is based on the most recently declared quarterly dividends or
interim and final dividends accounting for any foreign withholding taxes.
Actual dividends may vary due to a variety of factors. See "Risk Factors".
(5) The initial redemption price is reduced by the remaining deferred sales
charge. See "Rights of Unitholders--Redemption of Units". The redemption
price includes the estimated organizational and offering costs. The
redemption price will not include these costs after the initial offering
period.
Fee Table
Transaction Fees (as % of offering price)
Initial sales charge (1)...................................... 1.00%
Deferred sales charge (2)..................................... 1.95%
----------
Maximum sales charge.......................................... 2.95%
==========
Maximum sales charge on reinvested dividends.................. 1.95%
==========
Estimated Organizational Costs per Unit (2)................... $ 0.03150
==========
Estimated Annual Expenses per Unit
Trustee's fee and operating expenses.......................... $ 0.01350
Evaluation fees............................................... $ 0.00250
Supervisory fees.............................................. $ 0.00250
----------
Estimated annual expenses per Unit............................ $ 0.01850
==========
Estimated Costs Over Time
One year...................................................... $ 35
Three years................................................... $ 85
Five years.................................................... N/A
Ten years..................................................... N/A
This fee table is intended to assist you in understanding the costs that you
will bear and to present a comparison of fees. The "Estimated Costs Over Time"
example illustrates the expenses you would pay on a $1,000 investment assuming a
5% annual return and redemption at the end of each period. This example assumes
that you reinvest your investment into a new series of the Trust each year. This
example also assumes that you reinvest your distributions at the end of each
year. Of course, you should not consider this example a representation of actual
past or future expenses or annual rate of return which may differ from those
assumed for this example. The sales charge and expenses are described under
"Public Offering" and "Trust Operating Expenses".
- --------------------------------------------------------------------------------
(1) The initial sales charge is the difference between the maximum sales charge
and the deferred sales charge.
(2) The total deferred sales charge is actually $0.195 per Unit as described
below. This amount will exceed the percentage above if the public offering
price per Unit falls below $10 and will be less than the percentage above
if the public offering price per Unit exceeds $10. The deferred sales
charge accrues daily from June 10, 2000 through February 9, 2001. The Trust
pays a proportionate amount of this charge on the 10th day of each month
beginning in the accrual period until paid in full.
(3) You will bear all or a portion of the expenses incurred in organizing and
offering your Trust. The Trustee will deduct the actual amount of these
expenses from your Trust at the end of the initial offering period.
The Dow 5SM & Tech Trust
The Trust follows a simple investment strategy involving two components. The
first component (the "Dow 5") involves the following strategy: Begin with the
ten highest dividend-yielding stocks in the Dow Jones Industrial Average.
Eliminate the stock with the lowest share price. Of the remaining stocks, buy
the five with the lowest share price. The second component (the "Tech 5")
involves the following strategy: Begin with the stocks of the technology
companies in the Nasdaq-100 Index (as defined by Compustat's Standard & Poor's
Technology Sector Identifier). Rank these companies by market capitalization.
Buy the stocks of the five companies with the largest market capitalization.
When the Trust terminates, you can elect to follow the strategy by redeeming
your Units and reinvesting the proceeds in a new trust portfolio, if available.
[CHART APPEARS HERE]
The Trust is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
<TABLE>
<CAPTION>
Portfolio
- --------------------------------------------------------------------------------------------------------------
Current Cost of
Number Market Value Dividend Securities
of Shares Name of Issuer (1) per Share (2) Yield (3) to Trust (2)
---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
421 Caterpillar, Inc. $ 35.063 3.71% $ 14,761.31
112 Cisco Systems, Inc. 132.188 0.00 14,805.00
291 Du Pont (E.I.) de Nemours and Company 50.500 2.77 14,695.50
261 Eastman Kodak Company 57.313 3.07 14,958.56
131 Intel Corporation 113.063 0.11 14,811.19
424 International Paper Company 36.813 2.72 15,608.50
166 Microsoft Corporation 89.375 0.00 14,836.25
205 Oracle Corporation 74.250 0.00 15,221.25
397 SBC Communications, Inc. 38.000 2.57 15,086.00
+ 154 Telefonaktiebolaget LM Ericsson (Ericsson AB) 96.000 0.21 14,784.00
- ---------- -------------
2,562 $ 149,567.56
========== =============
</TABLE>
See "Notes to Portfolio".
Hypothetical Strategy Performance
The table below compares the hypothetical total return of stocks selected
using the Trust's 15-month investment strategy (the "Strategy Stocks") with the
stocks in the Dow Jones Industrial Average ("The Dow 30SM") and Standard &
Poor's 500 Index ("S&P 500"). Total return includes any dividends paid on the
stocks together with any increase or decrease in the value of the stocks. The
table illustrates a hypothetical investment in the Strategy Stocks -- similar to
buying Units of the Trust, redeeming them after each 15-month period and
reinvesting the proceeds in a new trust portfolio.
These hypothetical returns are not actual past performance of the Trust or
prior series and do not reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
<CAPTION>
Hypothetical Total Return
- ------------------------------------------------------------------------------------------------------------------------------------
Strategy
Year Stocks The Dow 30SM S&P 500
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1989 47.77% 32.19% 31.56%
1990 (0.27) (0.55) (3.12)
1991 45.91 24.20 30.33
1992 16.31 7.40 7.59
1993 9.95 16.95 10.03
1994 13.54 5.05 1.36
1995 48.38 36.83 37.44
1996 44.65 28.84 22.90
1997 28.16 24.88 33.32
1998 66.74 18.14 28.52
1999 44.12 27.20 21.02
</TABLE>
Notes to Hypothetical Performance Tables
The stocks for each strategy for each period were identified by applying the
Trust strategy on the first trading day of the period on the principal trading
exchange. It should be noted that the stocks in any table are not the same
stocks from year to year and may not be the same stocks as those included in the
Trust. Total return for each period was calculated by (1) subtracting the
closing sale price of the stocks on the first trading day of the period from the
closing sale price of the stocks on the last trading day of the period, (2)
adding dividends paid during that period and (3) dividing the result by the
closing sale price of the stocks on the first trading day of the period.
Adjustments were made to reflect events such as stock splits and corporate
spin-offs. Total return does not take into consideration sales charges,
commissions, expenses or taxes that will be incurred by Unitholders. With
respect to foreign securities, all values are converted into U.S. dollars using
the applicable currency exchange rate.
The tables represent hypothetical past performance of the Trust strategy (not
the Trust) and are not guarantees or indications of future performance of the
Trust. Unitholders will not necessarily realize as high a total return as the
hypothetical returns in the tables for several reasons including, among others:
the total return figures in the tables do not reflect sales charges,
commissions, Trust expenses or taxes; the Trusts are established at different
times of the year; the Trust may not be able to invest equally in the Securities
and may not be fully invested at all times; the Securities are often purchased
or sold at prices different from the closing prices used in buying and selling
Units; and currency exchange rates will be different. In addition, both stock
prices (which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect actual returns. There can be no
assurance that the Trust will outperform the related stock index over its life
or future rollover periods, if available. The sources for the information
contained in the tables are Barron's, Bloomberg L.P., Dow Jones Corporation,
Morgan Stanley Capital International, Ibbotson Associates, Datastream
International, Inc., Extell Financial LTD. and Factset. The Sponsor has not
independently verified the data obtained from these sources but has no reason to
believe that this data is incorrect in any material respect.
Notes to Portfolio
(1) The Securities are initially represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited
with the Trustee. Contracts to acquire Securities were entered into on
February 29, 2000 and have a settlement date of March 3, 2000 (see "The
Trust").
(2) The market value of each Security is based on the most recent closing sale
price as of the close of the New York Stock Exchange on the business day
before the Initial Date of Deposit. Other information regarding the
Securities, as of the Initial Date of Deposit, is as follows:
Profit
Cost to (Loss) To
Sponsor Sponsor
-------------- --------------
$ 149,568 $ --
"+" indicates that the stock is held in the form of American Depository Receipts
or similar receipts.
(3) Current Dividend Yield for each Security is based on the estimated annual
dividends per share and the Security's market value as of the close of the
New York Stock Exchange on the business day before the Initial Date of
Deposit. Estimated annual dividends per share are calculated by annualizing
the most recently declared regular dividends or by adding the most recent
regular interim and final dividends declared and reflect any foreign
withholding taxes.
The Securities. A brief description of each of the issuers of the Securities
is listed below.
Caterpillar, Inc. Caterpillar, Inc. designs, manufactures, and markets
construction, mining, agricultural, and forestry machinery. The company also
manufactures engines and other related parts for its equipment. Caterpillar
distributes its products through a worldwide organization of dealers.
Cisco Systems, Inc. Cisco Systems, Inc. supplies data networking products to
the corporate enterprise and public wide area service provider markets. The
company offers a variety of products including routers, LAN switches, frame
relay/ATM, and remote access concentrators. Cisco's clients include utilities,
corporations, universities, governments, and small to medium-size businesses
worldwide.
Du Pont (E. I.) de Nemours and Company. Du Pont (E. I.) de Nemours and
Company is a global chemical and life sciences company. The company serves
worldwide markets, including food and nutrition, health care, agriculture,
fashion and apparel, home and construction, electronics, and transportation.
Eastman Kodak Company. Eastman Kodak Company develops, manufactures, and
markets consumer and commercial imaging products. The company's imaging systems
include films, photographic papers, processing services, photographic chemicals,
cameras, and projectors. Kodak also develops digital camera systems which do not
use silver halide film technology.
Intel Corporation. Intel Corporation designs, manufactures, and sells
computer components and related products. The company's major products include
microprocessors, chipsets, embedded processors and microcontrollers, flash
memory products, graphics products, network and communications products, systems
management software, conferencing products, and digital imaging products.
International Paper Company. International Paper Company produces printing
paper, packaging, and forest products. The company operates specialty businesses
in global markets as well as a broadly based distribution network. International
Paper exports its products worldwide.
Microsoft Corporation. Microsoft Corporation develops, manufactures,
licenses, sells, and supports software products. The company offers operating
system software, server application software, business and consumer applications
software, software development tools, and Internet and intranet software.
Microsoft also develops the MSN network of Internet products and services.
Oracle Corporation. Oracle Corporation supplies software for enterprise
information management. The company offers databases and relational servers,
application development and decision support tools, and enterprise business
applications. Oracle's software runs on network computers, personal digital
assistants, set-top devices, workstations, PCs, minicomputers, mainframes, and
massively parallel computers.
SBC Communications, Inc. SBC Communications, Inc. provides communications
services in the United States and in other countries. The company provides local
and long-distance phone service, wireless and data communications, paging,
Internet access and messaging, cable and satellite television, security
services, and telecommunications equipment. SBC also provides directory
advertising and publishing.
Telefonaktiebolaget LM Ericsson (Ericsson AB). Telefonaktiebolaget LM
Ericsson (Ericsson AB) develops and produces advanced systems and products for
wired and mobile communications in public and private networks. The products
line includes digital and analog systems for telephones and networks, microwave
radio links, radar surveillance systems and business systems. The company
produces and markets worldwide.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of Van
Kampen Focus Portfolio, Series 208:
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen Focus Portfolios, Series 208 as of March 1, 2000. 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 securities
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen Focus Portfolios, Series
208 as of March 1, 2000, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Chicago, Illinois
March 1, 2000
<TABLE>
<CAPTION>
STATEMENT OF CONDITION
As of March 1, 2000
INVESTMENT IN SECURITIES
<S> <C>
Contracts to purchase Securities (1) $ 149,568
-----------
Total $ 149,568
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Organizational costs (2) $ 476
Deferred sales charge liability (3) 2,946
Interest of Unitholders--
Cost to investors (4) 151,080
Less: Gross underwriting commission and organizational costs (2)(4)(5) 4,934
-----------
Net interest to Unitholders (4) 146,146
-----------
Total $ 149,568
===========
</TABLE>
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(1) The value of the Securities is determined by Interactive Data Corporation
on the bases set forth under "Public Offering--Offering Price". The
contracts to purchase Securities are collateralized by separate irrevocable
letters of credit which have been deposited with the Trustee.
(2) A portion of the public offering price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing the Trust.
The amount of these costs are set forth in the "Fee Table." A distribution
will be made as of the close of the initial offering period to an account
maintained by the Trustee from which the organizational expense obligation
of the investors will be satisfied.
(3) Represents the amount of mandatory distributions from the Trust on the
bases set forth under "Public Offering".
(4) The aggregate public offering price and the aggregate sales charge are
computed on the bases set forth under "Public Offering--Offering Price".
(5) Assumes the maximum sales charge.
THE TRUST
- --------------------------------------------------------------------------------
The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the date of
this Prospectus (the "Initial Date of Deposit"), among Van Kampen Funds Inc., as
Sponsor, Van Kampen Investment Advisory Corp., as Supervisor, The Bank of New
York, as Trustee, and American Portfolio Evaluation Services, a division of Van
Kampen Investment Advisory Corp., as Evaluator.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities
which are components of major stock market indexes. The Trust may be an
appropriate medium for investors who desire to participate in a portfolio of
stocks with greater diversification than they might be able to acquire
individually.
On the Initial Date of Deposit, the Sponsor deposited delivery statements
relating to contracts for the purchase of the Securities and an irrevocable
letter of credit in the amount required for these purchases with the Trustee. In
exchange for these contracts the Trustee delivered to the Sponsor documentation
evidencing the ownership of Units of the Trust. Unless otherwise terminated as
provided in the Trust Agreement, the Trust will terminate on the Mandatory
Termination Date and any remaining Securities will be liquidated or distributed
by the Trustee within a reasonable time. As used in this Prospectus the term
"Securities" means the securities (including contracts to purchase these
securities) listed in "Portfolio" for the Trust and any additional securities
deposited into the Trust.
Additional Units may be issued at any time by depositing in the Trust (i)
additional Securities, (ii) contracts to purchase Securities together with cash
or irrevocable letters of credit or (iii) cash (or a letter of credit) with
instructions to purchase additional Securities. As additional Units are issued
by the Trust, the aggregate value of the Securities will be increased and the
fractional undivided interest represented by each Unit will be decreased. The
Sponsor may continue to make additional deposits into 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 same percentage relationship
among the number of shares of each Security in the Trust's portfolio that
existed immediately prior to the subsequent deposit. Investors may experience a
dilution of their investments and a reduction in their anticipated income
because of fluctuations in the prices of the Securities between the time of the
deposit and the purchase of the Securities and because the 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 represented by each unredeemed
Unit will increase or decrease accordingly, although the actual interest 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 Securities (including contracts for the
purchase thereof) listed under the "Portfolio" as may continue to be held from
time to time in the Trust, (b) any additional Securities acquired and held by
the Trust pursuant to the provisions of the Trust Agreement and (c) any cash
held in the related Income and Capital Accounts. Neither the Sponsor nor the
Trustee shall be liable in any way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------------
The objective of the Trust is to provide an above average total return
through a combination of potential capital appreciation and dividend income by
investing in a portfolio of actively traded equity securities selected using the
Trust's investment strategy. There is no assurance that the Trust will achieve
its objective.
The publishers of the indexes have not participated in any way in the
creation of the Trust or in the selection of stocks included in the Trust not
approved any information herein relating thereto.
The Trust portfolio is selected by implementing the Trust strategy as of the
close of business three business days prior to the Initial Date of Deposit (the
"Selection Time"). The dividend yield is computed by annualizing the last
dividend declared and dividing the result by the market value at the Selection
Time.
The Trust investment strategy is designed to be implemented on an annual
basis. Investors who hold Units through Trust termination may have investment
results that differ significantly from a Unit investment that is reinvested into
a new trust every twelve months.
A balanced investment portfolio incorporates various style and capitalization
characteristics. The Sponsor offers unit trusts with a variety of styles and
capitalizations to meet your needs. The Sponsor determines style characteristics
(growth and value) based on the criteria used in selecting a Trust portfolio.
Generally, a growth portfolio includes companies in a growth phase of their
business with increasing earnings. A value portfolio generally includes
companies with low relative price-earnings ratios that the Sponsor believes are
undervalued. The Sponsor determines market capitalizations as follows based on
the weighted median market capitalization of a portfolio: Small-Cap -- less than
$1.6 billion; Mid-Cap -- $1.6 billion to $9.5 billion; and Large-Cap -- over
$9.5 billion. The Sponsor determines all style and capitalization
characteristics as of the Initial Date of Deposit and the characteristics may
vary thereafter. The Sponsor will not remove a Security from the Trust as a
result of any change in characteristics.
Investors should note that the above criteria were applied to the Securities
for inclusion in the Trust as of three business days prior to the Initial Date
of Deposit. Subsequent to this date, the Securities may no longer be included in
an index or meet the above criteria. Should a Security no longer be included in
the indexes or meet the selection criteria, the Security will not as a result
thereof be removed from its Trust portfolio.
RISK FACTORS
- --------------------------------------------------------------------------------
Price Volatility. The Trust invests in stocks. The value of Units will
fluctuate with the value of these stocks and may be more or less than the price
you originally paid for your Units. The market value of stocks sometimes moves
up or down rapidly and unpredictably. Because the Trust is unmanaged, the
Trustee will not sell stocks in response to market fluctuations as is common in
managed investments. In addition, because the Trust holds a relatively small
number of stocks, you may encounter greater market risk than in a more
diversified investment. As with any investment, we cannot guarantee that the
performance of the Trust will be positive over any period of time.
Dividends. Stocks represent ownership interests in the issuers and are not
obligations of the issuers. Common stockholders have a right to receive
dividends only after the company has provided for payment of its creditors,
bondholders and preferred stockholders. Common stocks do not assure dividend
payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
Technology Issuers. The Trust invests significantly in technology companies.
These companies face risks related to rapidly changing technology, rapid product
obsolescence, cyclical market patterns, evolving industry standards and frequent
new product introductions. An unexpected change in technology can have a
significant negative impact on a company. The failure of a company to introduce
new products or technologies or keep pace with rapidly changing technology, can
have a negative impact on the company's results. Technology stocks tend to
experience substantial price volatility and speculative trading. Announcements
about new products, technologies, operating results or marketing alliances can
cause stock prices to fluctuate dramatically. At times, however, extreme price
and volume fluctuations are unrelated to the operating performance of a company.
This can impact your ability to redeem your Units at a price equal to or greater
than what you paid.
The market for certain products may have only recently begun to develop, is
rapidly evolving or is characterized by increasing suppliers. Key components of
some technology products are available only from limited sources. This can
impact the cost of and ability to acquire these components. Some technology
companies serve highly concentrated customer bases with a limited number of
large customers. Any failure to meet the standard of these customers can result
in a significant loss or reduction in sales. Many products and technologies are
incorporated into other products. As a result, some companies are highly
dependent on the performance of other technology companies. We cannot guarantee
that these customers will continue to place additional orders or will place
orders in similar quantities as in the past.
Legislation/Litigation. From time to time, various legislative initiatives
are proposed in the United States and abroad which may have a negative impact on
certain of the companies represented in the Trust. In addition, litigation
regarding any of the issuers of the Securities, such as that concerning
Microsoft Corporation, or of the industries represented by these issuers may
negatively impact the share prices of these Securities. No one can predict what
impact any pending or threatened litigation will have on the share prices of the
Securities.
No FDIC Guarantee. An investment in your Trust is not a deposit of any bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
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. 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, the resulting
difficulties could adversely impact your Trust. 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 your Trust are taking comparable steps. We cannot guarantee
that these steps will be sufficient to avoid any adverse impact on your Trust.
This problem may impact corporations to varying degrees based on factors such as
industry sector and degree of technological sophistication. We cannot predict
what impact, if any, this problem will have on the issuers of the Securities.
In addition, computer failures throughout the financial services industry
beginning January 1, 2000 could have a detrimental affect on the markets for the
Securities. Improperly functioning trading systems may result in settlement
problems and liquidity issues. Moreover, corporate and governmental data
processing errors may adversely affect issuers and overall economic
uncertainties. Remediation costs will affect the earnings of individual issuers.
These costs could be substantial. Issuers may report these costs inconsistently
in U.S. and foreign financial markets. All of these issues could adversely
affect the Securities and your Trust.
PUBLIC OFFERING
- --------------------------------------------------------------------------------
General. Units are offered at the Public Offering Price which includes the
underlying value of the Securities, the initial sales charge, and cash, if any,
in the Income and Capital Accounts. The "Fee Table" describes the sales charges
in detail. If any deferred sales charge payment date is not a business day, we
will charge the payment on the next business day. A portion of the Public
Offering Price includes an amount of Securities to pay for all or a portion of
the costs incurred in establishing your Trust. These costs include the cost of
preparing documents relating to your Trust (such as the prospectus, trust
agreement and closing documents), federal and state registration fees, the
initial fees and expenses of the Trustee and legal and audit expenses. The
initial offering period sales charge is reduced as follows:
Transaction Size Sales Charge
- --------------------- ----------------
$50,000 - $99,999 2.70%
$100,000 - $149,999 2.45
$150,000 - $999,999 2.10
$1,000,000 or more 1.20
The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied on
whichever basis is more favorable to the investor. Any sales charge reduction is
the responsibility of the selling broker, dealer or agent. An investor may
aggregate purchases of Units of the Trust for purposes of qualifying for volume
purchase discounts listed above. The reduced sales charge structure will also
apply on all purchases by the same person from any one dealer of units of Van
Kampen-sponsored unit investment trusts which are being offered in the initial
offering period (a) on any one day (the "Initial Purchase Date") or (b) on any
day subsequent to the Initial Purchase Date if the units purchased are of a unit
investment trust purchased on the Initial Purchase Date. In the event units of
more than one trust are purchased on the Initial Purchase Date, the aggregate
dollar amount of such purchases will be used to determine whether purchasers are
eligible for a reduced sales charge. Such aggregate dollar amount will be
divided by the public offering price per unit of each respective trust purchased
to determine the total number of units which such amount could have purchased of
each individual trust. Purchasers must then consult the applicable trust's
prospectus to determine whether the total number of units which could have been
purchased of a specific trust would have qualified for a reduced sales charge
and the amount of such reduction. To determine the applicable sales charge
reduction it is necessary to accumulate all purchases made on the Initial
Purchase Date and all purchases made in accordance with (b) above. Units
purchased in the name of the spouse of a purchaser or in the name of a child of
such purchaser ("immediate family members") will be deemed to be additional
purchases by the purchaser for the purposes of calculating the applicable sales
charge. The reduced sales charges will also be applicable to a trustee or other
fiduciary purchasing securities for one or more trust estate or fiduciary
accounts. If you purchase units on more than one day to achieve the discounts
described in this paragraph, the discount allowed on any single day will apply
only to Units purchased on that day (a retroactive discount is not given on all
prior purchases).
A portion of the sales charge is waived for certain accounts described in
this paragraph. Purchases by these accounts are subject only to the portion of
the deferred sales charge that is retained by the Sponsor. Please refer to the
section called "Wrap Fee and Advisory Accounts" for additional information on
these purchases. Units may be purchased in the primary or secondary market at
the Public Offering Price less the concession the Sponsor typically allows to
brokers and dealers for purchases by (1) investors who purchase Units through
registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management service, or provide such
services in connection with the establishment of an investment account for which
a comprehensive "wrap fee" charge is imposed, (2) bank trust departments
investing funds over which they exercise exclusive discretionary investment
authority and that are held in a fiduciary, agency, custodial or similar
capacity, (3) any person who for at least 90 days, has been an officer, director
or bona fide employee of any firm offering Units for sale to investors or their
immediate family members (as described above) and (4) officers and directors of
bank holding companies that make Units available directly or through
subsidiaries or bank affiliates. Notwithstanding anything to the contrary in
this Prospectus, such investors, bank trust departments, firm employees and bank
holding company officers and directors who purchase Units through this program
will not receive sales charge reductions for quantity purchases.
During the initial offering period of the Trust offered in this prospectus,
unitholders of any other Van Kampen-sponsored unit investment trusts may utilize
their redemption or termination proceeds to purchase Units of the Trust offered
in this prospectus at the Public Offering Price per Unit less 1%.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, and trustees, custodians or fiduciaries for the
benefit of such persons) of the Van Kampen Funds Inc. and its affiliates,
dealers and their affiliates and vendors providing services to the Sponsor may
purchase Units at the Public Offering Price less the applicable dealer
concession.
The minimum purchase is 100 Units (25 Units for retirement accounts) but may
vary by selling firm. However, in connection with fully disclosed transactions
with the Sponsor, the minimum purchase requirement will be that number of Units
set forth in the contract between the Sponsor and the related broker or agent.
Offering Price. The Public Offering Price of Units will vary from the amounts
stated under "Summary of Essential Financial Information" in accordance with
fluctuations in the prices of the underlying Securities. The initial price of
the Securities was determined by Interactive Data Corporation, a firm regularly
engaged in the business of evaluating, quoting or appraising comparable
securities. The Evaluator will generally determine the value of the Securities
as of the Evaluation Time on each business day and will adjust the Public
Offering Price of Units accordingly. This Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each business
day. The Evaluation Time is the close of the New York Stock Exchange on each
Trust business day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a business day,
will be held until the next determination of price. The term "business day", as
used herein and under "Rights of Unitholders--Redemption of Units", excludes
Saturdays, Sundays and holidays observed by the New York Stock Exchange. The
term "business day" also excludes any day on which more than 33% of the
Securities are not traded on their principal trading exchange due to a customary
business holiday on that exchange.
The aggregate underlying value of the Securities during the initial offering
period is determined on each business day by the Evaluator in the following
manner: If the Securities are listed on a national or foreign securities
exchange or the Nasdaq Stock Market, Inc., this evaluation is generally based on
the closing sale prices on that exchange or market (unless it is determined that
these prices are inappropriate as a basis for valuation) or, if there is no
closing sale price on that exchange or market, at the closing asked prices. If
the Securities are not listed on a national or foreign securities exchange or
the Nasdaq Stock Market, Inc. or, if so listed and the principal market therefor
is other than on the exchange or market, the evaluation shall generally be based
on the current asked price on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for evaluation). If
current asked prices are unavailable, the evaluation is generally determined (a)
on the basis of current asked prices for comparable securities, (b) by
appraising the value of the Securities on the asked side of the market or (c) by
any combination of the above. The value of any foreign securities is based on
the applicable currency exchange rate as of the Evaluation Time. The value of
the Securities for purposes of secondary market transactions and redemptions is
described under "Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather the
entire pool of Securities in the Trust, taken as a whole, which are represented
by the Units.
Unit Distribution. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. Units repurchased in the
secondary market, if any, may be offered by this Prospectus at the secondary
market Public Offering Price in the manner described above.
The Sponsor intends to qualify Units for sale in a number of states. Brokers,
dealers and others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period as
set forth in the following table. A portion of the concession or agency
commission represents an amount paid by the Sponsor out of its own assets as
additional compensation.
Concession
or Agency
Transaction Size Commission
- --------------------- ----------------
Less than $50,000 2.25%
$50,000 - $99,999 2.00
$100,000 - $149,999 1.75
$150,000 - $999,999 1.40
$1,000,000 or more 0.65
In addition to the regular concession or agency commission earned by selling
firms, during the initial offering period any firm that distributes 500,000 -
999,999 Units of The Dow 5SM & Tech Trust will receive additional compensation
of $0.0025 per Unit; any firm that distributes 1,000,000 - 1,999,999 Units of
The Dow 5SM & Tech Trust will receive additional compensation of $0.005 per
Unit; any firm that distributes 2,000,000 - 2,999,999 Units of The Dow 5SM &
Tech Trust will receive additional compensation of $0.01 per Unit; any firm that
distributes 3,000,000 - 3,999,999 Units of The Dow 5SM & Tech Trust will receive
additional compensation of $0.015 per Unit; any firm that distributes 4,000,000
- - 4,999,999 Units of The Dow 5SM & Tech Trust will receive additional
compensation of $0.02 per Unit; and any firm that distributes 5,000,000 Units or
more of The Dow 5SM & Tech Trust will receive additional compensation of $0.025
per Unit.
For transactions involving unitholders of other unit investment trusts who
use their redemption or termination proceeds to purchase Units of the Trusts
offered in this prospectus, the initial concession or agency commission allowed
on sales during the initial offering period will equal 1.30%. The concession or
agency commission for secondary market transactions will equal 70% of the sales
charge applicable to the transaction. Any discount provided to investors will be
borne by the selling dealer or agent as indicated under "General" above.
Notwithstanding anything to the contrary herein, in no case shall the total of
any concessions, agency commissions and any additional compensation allowed or
paid to any broker, dealer or other distributor of Units with respect to any
individual transaction exceed the total sales charge applicable to such
transaction. The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units and to change the amount of the concession or
agency commission to dealers and others from time to time. The breakpoint
concessions or agency commissions are also applied on a Unit basis utilizing a
breakpoint equivalent of $10 per Unit and will be applied on whichever basis is
more favorable to the broker, dealer or agent.
Broker-dealers, banks and/or others may be eligible to participate in a
program in which such firms receive from the Sponsor a nominal award for each of
their representatives who have sold a minimum number of units of unit investment
trusts created by the Sponsor during a specified time period. In addition, at
various times the Sponsor may implement other programs under which the sales
forces of brokers, dealers, banks and/or others may be eligible to win other
nominal awards for certain sales efforts, or under which the Sponsor will
reallow to such brokers, dealers, banks and/or others that sponsor sales
contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by such
persons at the public offering price during such programs. Also, the Sponsor in
its discretion may from time to time pursuant to objective criteria established
by the Sponsor pay fees to qualifying entities for certain services or
activities which are primarily intended to result in sales of Units. Such
payments are made by the Sponsor out of its own assets, and not out of the
assets of any Trust. These programs will not change the price Unitholders pay
for their Units or the amount that any Trust will receive from the Units sold.
Sponsor Compensation. The Sponsor will receive a gross sales commission equal
to the total sales charge applicable to each transaction. Any sales charge
discount provided to investors will be borne by the selling dealer or agent. In
addition, the Sponsor will realize a profit or loss as a result of the
difference between the price paid for the Securities by the Sponsor and the cost
of the Securities to a Trust on the Initial Date of Deposit as well as on
subsequent deposits. See "Notes to Portfolio". The Sponsor has not participated
as sole underwriter or as manager or as a member of the underwriting syndicates
or as an agent in a private placement for any of the Securities. The Sponsor may
realize profit or loss as a result of the possible fluctuations in the market
value of the Securities, since all proceeds received from purchasers of Units
are retained by the Sponsor. In maintaining a secondary market, the Sponsor will
realize profits or losses in the amount of any difference between the price at
which Units are purchased and the price at which Units are resold (which price
includes the applicable sales charge) or from a redemption of repurchased Units
at a price above or below the purchase price. Cash, if any, made available to
the Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the Sponsor,
subject to the limitations of the Securities Exchange Act of 1934.
The Sponsor or an affiliate may have participated in a public offering of one
or more of the Securities. The Sponsor, an affiliate or their employees may have
a long or short position in these Securities or related securities. An affiliate
may act as a specialist or market maker for these Securities. An officer,
director or employee of the Sponsor or an affiliate may be an officer or
director for issuers of the Securities.
Purchases and sales of Securities by your Trust may impact the value of the
Securities. This may especially be the case during the initial offering of
Units, upon Trust termination and in the course of satisfying large Unit
redemptions. Any publication of a list of Securities, or a list of anticipated
Securities, to be included in a Trust may also cause increased buying activity
in certain Securities. Once this information becomes public, investors may
purchase individual Securities appearing in such a publication and may do so
during or prior to the initial offering of Units. It is possible that these
investors could include investment advisory and brokerage firms of the Sponsor
or its affiliates or firms that are distributing Units. This activity may cause
your Trust to purchase stocks at a higher price than those buyers who effect
purchases prior to purchases by your Trust.
Market for Units. Although it is not obligated to do so, the Sponsor
currently intends to maintain a market for Units of the Trust and to purchase
Units at the secondary market repurchase price (which is described under "Right
of Unitholders--Redemption of Units"). The Sponsor may discontinue purchases of
Units or discontinue purchases at this price at any time. In the event that a
secondary market is not maintained, a Unitholder will be able to dispose of
Units by tendering them to the Trustee for redemption at the Redemption Price.
See "Rights of Unitholders--Redemption of Units". Unitholders should contact
their broker to determine the best price for Units in the secondary market.
Units sold prior to the time the entire deferred sales charge has been collected
will be assessed the amount of the remaining deferred sales charge at the time
of sale. The Trustee will notify the Sponsor of any tendered of Units for
redemption. If the Sponsor's bid in the secondary market equals or exceeds the
Redemption Price per Unit, it may purchase the Units not later than the day on
which Units would have been redeemed by the Trustee. The Sponsor may sell
repurchased Units at the secondary market Public Offering Price per Unit.
RETIREMENT ACCOUNTS
- --------------------------------------------------------------------------------
Units are available for purchase in connection with certain types of
tax-sheltered retirement plans, including Individual Retirement Accounts for
individuals, Simplified Employee Pension Plans for employees, qualified plans
for self-employed individuals, and qualified corporate pension and profit
sharing plans for employees. The minimum purchase for these accounts is reduced
to 25 Units but may vary by selling firm. The purchase of Units may be limited
by the plans' provisions and does not itself establish such plans.
WRAP FEE AND ADVISORY ACCOUNTS
- --------------------------------------------------------------------------------
Units may be available for purchase in connection with "wrap fee" accounts
and other similar accounts. You should consult your financial professional to
determine whether you can benefit from these accounts. For these purchases you
generally only pay the portion of the sales charge that is retained by your
Trust's Sponsor, Van Kampen Funds Inc. For example, these tables illustrate the
transaction fees you will pay as a percentage of the public offering price per
Unit.
The Dow 5SM
& Tech
Trust
---------
Fee paid on purchase 0.00%
Deferred sponsor retention 0.70
---------
Total 0.70%
=========
You should consult the "Public Offering--General" section for specific
information on this and other sales charge discounts.
RIGHTS OF UNITHOLDERS
- --------------------------------------------------------------------------------
Distributions. Dividends and any net proceeds from the sale of Securities
received by your Trust will generally be distributed to Unitholders on each
Distribution Date to Unitholders of record on the preceding Record Date. These
dates appear under "Summary of Essential Financial Information". A person
becomes a Unitholder of record on the date of settlement (generally three
business days after Units are ordered). Unitholders may elect to receive
distributions in cash or to have distributions reinvested into additional Units.
Distributions may also be reinvested into Van Kampen mutual funds. See "Rights
of Unitholders--Reinvestment Option".
Dividends received by your Trust are credited to the Income Account of the
Trust. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds received on the
sale of any Securities, to the extent not used to meet redemptions of Units or
pay deferred sales charge, fees or expenses, will be distributed to Unitholders.
Proceeds received from the disposition of any Securities after a record date and
prior to the following distribution date will be held in the Capital Account and
not distributed until the next distribution date. Any distribution to
Unitholders consists of each Unitholder's pro rata share of the available cash
in the Income and Capital Accounts as of the related Record Date.
Reinvestment Option. Unitholders may have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option (to the
extent Units may be lawfully offered for sale in the state in which the
Unitholder resides) through two options. Brokers and dealers can use the
Dividend Reinvestment Service through Depository Trust Company or purchase the
Automatic Reinvestment Option CUSIP, if available. Unitholders will be subject
to the remaining deferred sales charge payments due on Units. To participate in
this reinvestment option, a Unitholder must file with the Trustee a written
notice of election, together with any certificate representing Units and other
documentation that the Trustee may then require, at least five days prior to the
related Record Date. A Unitholder's election will apply to all Units owned by
the Unitholder and will remain in effect until changed by the Unitholder. If
Units are unavailable for reinvestment, distributions will be paid in cash.
Purchases of additional Units made pursuant to the reinvestment plan will be
made at the net asset value for Units as of the Evaluation Time on the
Distribution Date.
In addition, under the Guaranteed Reinvestment Option Unitholders may elect
to have distributions automatically reinvested in certain Van Kampen mutual
funds (the "Reinvestment Funds"). Each Reinvestment Fund has investment
objectives which differ from those of the Trust. The prospectus relating to each
Reinvestment Fund describes its investment policies and how to begin
reinvestment. A Unitholder may obtain a prospectus for the Reinvestment Funds
from the Sponsor. Purchases of shares of a Reinvestment Fund will be made at a
net asset value computed on the Distribution Date. Unitholders with an existing
Guaranteed Reinvestment Option account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new
account which allows purchases of Reinvestment Fund shares at net asset value.
A participant may elect to terminate his or her reinvestment plan and receive
future distributions in cash by notifying the Trustee in writing no later than
five days before a distribution date. The Sponsor, each Reinvestment Fund, and
its investment adviser shall have the right to suspend or terminate these
reinvestment plans at any time.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286. Certificates must be tendered to the
Trustee, duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed (or by providing satisfactory indemnity in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. On the seventh day following the tender, the
Unitholder will be entitled to receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received by the Trustee after the Evaluation
Time or on a day which is not a Trust business day, the date of tender is deemed
to be the next business day.
Unitholders tendering 1,000 or more Units of the Trust for redemption may
request an in kind distribution of Securities equal to the Redemption Price per
Unit on the date of tender. The Trust generally does not offer in kind
distributions of portfolio securities that are held in foreign markets. An in
kind distribution will be made by the Trustee through the distribution of each
of the Securities in book-entry form to the account of the Unitholder's
broker-dealer at Depository Trust Company. Amounts representing fractional
shares will be distributed in cash. The Trustee may adjust the number of shares
of any Security included in a Unitholder's in kind distribution to facilitate
the distribution of whole shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in kind or sold, the size of the Trust will be, and
the diversity of the Trust may be, reduced. Sales may be required at a time when
Securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. The price received upon redemption may be more or less
than the amount paid by the Unitholder depending on the value of the Securities
at the time of redemption. Special federal income tax consequences will result
if a Unitholder requests an in kind distribution. See "Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in the Trust determined on the
basis of (i) the cash on hand in the Trust, (ii) the value of the Securities in
the Trust and (iii) dividends receivable on the Securities in the Trust trading
ex-dividend as of the date of computation, less (a) amounts representing taxes
or other governmental charges payable out of the Trust, (b) the accrued expenses
of the Trust and (c) any unpaid deferred sales charge payments. During the
initial offering period, the redemption price and the secondary market
repurchase price will include estimated organizational and offering costs. For
these purposes, the Evaluator may determine the value of the Securities in the
following manner: If the Securities are listed on a national or foreign
securities exchange or the Nasdaq Stock Market, Inc., this evaluation is
generally based on the closing sale prices on that exchange or market (unless it
is determined that these prices are inappropriate as a basis for valuation) or,
if there is no closing sale price on that exchange or market, at the closing bid
prices. If the Securities are not so listed or, if so listed and the principal
market therefor is other than on the exchange or market, the evaluation may be
based on the current bid price on the over-the-counter market. If current bid
prices are unavailable or inappropriate, the evaluation may be determined (a) on
the basis of current bid prices for comparable securities, (b) by appraising the
Securities on the bid side of the market or (c) by any combination of the above.
The value of any foreign securities is based on the applicable currency exchange
rate as of the Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the SEC determines that
trading on that Exchange is restricted or an emergency exists, as a result of
which disposal or evaluation of the Securities is not reasonably practicable, or
for other periods as the SEC may permit.
Special Redemption and Rollover. We currently intend to offer a subsequent
series of the Trust for a Rollover when the current Trust terminates. On the
Mandatory Termination Date you will have the option to (1) participate in the
Rollover and have your Units reinvested into a subsequent trust series, if
available, (2) receive an in kind distribution of Securities (if applicable) or
(3) receive a cash distribution.
If you elect to participate in the Rollover, your Units will be redeemed on
the Mandatory Termination Date. As the redemption proceeds become available, the
proceeds (including dividends) will be invested in a new trust series at the
public offering price for the new trust. The Trustee will attempt to sell
Securities to satisfy the redemption as quickly as practicable on the Mandatory
Termination Date. We do not anticipate that the sale period will be longer than
one day, however, certain factors could affect the ability to sell the
Securities and could impact the length of the sale period. The liquidity of any
Security depends on the daily trading volume of the Security and the amount
available for redemption and reinvestment on any day.
We intend to make subsequent trust series available for sale at various times
during the year. Of course, we cannot guarantee that a subsequent trust or
sufficient units will be available or that any subsequent trusts will offer the
same investment strategy or objectives as the current Trust. We cannot guarantee
that a Rollover will avoid any negative market price consequences resulting from
trading large volumes of securities. Market price trends may make it
advantageous to sell or buy securities more quickly or more slowly than
permitted by the Trust procedures. We may, in our sole discretion, modify a
Rollover or stop creating units of a trust at any time regardless of whether all
proceeds of Unitholders have been reinvested in a Rollover. If we decide not to
offer a subsequent series, Unitholders will be notified prior to the Mandatory
Termination Date. Cash which has not been reinvested in a Rollover will be
distributed to Unitholders shortly after the Mandatory Termination Date.
Rollover participants may receive taxable dividends or realize taxable capital
gains which are reinvested in connection with a Rollover but may not be entitled
to a deduction for capital losses due to the "wash sale" tax rules. Due to the
reinvestment in a subsequent trust, no cash will be distributed to pay any
taxes. See "Taxation".
Certificates. Ownership of Units is evidenced in book-entry form unless a
Unitholder makes a written request to the Trustee that ownership be in
certificate form. Units are transferable by making a written request to the
Trustee and, in the case of Units in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not limited
to, trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Fractional certificates
will not be issued. The Trustee may require a Unitholder to pay a reasonable fee
for each certificate reissued or transferred and to pay any governmental charge
that may be imposed in connection with each transfer or interchange. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Reports Provided. Unitholders will receive a statement of dividends and other
amounts received by the Trust for each distribution. Within a reasonable time
after the end of each year, each person who was a Unitholder during that year
will receive a statement describing dividends and capital received, actual Trust
distributions, Trust expenses, a list of the Securities and other Trust
information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
TRUST ADMINISTRATION
- --------------------------------------------------------------------------------
Portfolio Administration. The Trust is not a managed fund and, except as
provided in the Trust Agreement, Securities generally will not be sold or
replaced. The Sponsor may, however, direct that Securities be sold in certain
limited circumstances to protect the Trust based on advice from the Supervisor.
These situations may include events such as the issuer having defaulted on
payment of any of its outstanding obligations or the price of a Security has
declined to such an extent or other credit factors exist so that in the opinion
of the Sponsor retention of the Security would be detrimental to the Trust. If a
public tender offer has been made for a Security or a merger or acquisition has
been announced affecting a Security, the Trustee may either sell the Security or
accept a tender offer for cash if the Supervisor determines that the sale or
tender is in the best interest of Unitholders. the Trustee will distribute any
cash proceeds to Unitholders. In addition, the Trustee may sell Securities to
redeem Units or pay Trust expenses or deferred sales charges. The Trustee must
reject any offer for securities or property other than cash in exchange for the
Securities. If securities or property are nonetheless acquired by the Trust, the
Sponsor may direct the Trustee to sell the securities or property and distribute
the proceeds to Unitholders or to accept the securities or property for deposit
in the Trust. Should any contract for the purchase of any of the Securities
fail, the Sponsor will (unless substantially all of the moneys held in the Trust
to cover the purchase are reinvested in substitute Securities in accordance with
the Trust Agreement) refund the cash and sales charge attributable to the failed
contract to all Unitholders on or before the next distribution date.
When your Trust sells Securities, the composition and diversity of the
Securities in the Trust may be altered. In order to obtain the best price for
the Trust, it may be necessary for the Supervisor to specify minimum amounts
(generally 100 shares) in which blocks of Securities are to be sold. In
effecting purchases and sales of the Trust's portfolio securities, the Sponsor
may direct that orders be placed with and brokerage commissions be paid to
brokers, including brokers which may be affiliated with the Trust, the Sponsor
or dealers participating in the offering of Units. In addition, in selecting
among firms to handle a particular transaction, the Sponsor may take into
account whether the firm has sold or is selling units of unit investment trusts
which it sponsors.
Pursuant to an exemptive order, a terminating Trust may be permitted to sell
Securities to a new trust series if those Securities meet the investment
strategy of the new trust. The exemption enables the Trust to eliminate
commission costs on these transactions. The price for those securities will be
the closing sale price on the sale date on the exchange where the Securities are
principally traded, as certified by the Sponsor.
Amendment of the Trust Agreement. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
Termination. The Trust will terminate on its Mandatory Termination Date or
upon the sale or other disposition of the last Security held in the Trust. The
Trust may be terminated at any time with consent of Unitholders representing
two-thirds of the outstanding Units or by the Trustee when the value of the
Trust is less than $500,000 ($3,000,000 if the value of the Trust has exceeded
$15,000,000) (the "Minimum Termination Value"). Unitholders will be notified of
any termination. The Trustee may begin to sell Securities in connection with the
Trust termination nine business days before, and no later than, the Mandatory
Termination Date. Approximately thirty days before this date, the Trustee will
notify Unitholders of the termination and provide a form enabling qualified
Unitholders to elect an in kind distribution of Securities. See "Rights of
Unitholders--Redemption of Units". This form must be returned at least five
business days prior to the Mandatory Termination Date. Unitholders will receive
a final cash distribution within a reasonable time after the Mandatory
Termination Date (unless the Unitholder has elected an in kind distribution or
is a participant in a Rollover). All distributions will be net of Trust expenses
and costs. Unitholders will receive a final distribution statement following
termination. The Information Supplement contains further information regarding
termination of the Trust. See "Additional Information".
Limitations on Liabilities. The Sponsor, Evaluator, Supervisor and Trustee
are under no liability for taking any action or for refraining from taking any
action in good faith pursuant to the Trust Agreement, or for errors in judgment,
but shall be liable only for their own willful misfeasance, bad faith or gross
negligence (negligence in the case of the Trustee) in the performance of their
duties or by reason of their reckless disregard of their obligations and duties
hereunder. The Trustee is not be liable for depreciation or loss incurred by
reason of the sale by the Trustee of any of the Securities. In the event of the
failure of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and is not be liable for any action taken by it in good faith under
the Trust Agreement. The Trustee is not liable for any taxes or other
governmental charges imposed on the Securities, on it as Trustee under the Trust
Agreement or on the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other taxing
authority having jurisdiction. In addition, the Trust Agreement contains other
customary provisions limiting the liability of the Trustee. The Trustee, Sponsor
and Supervisor may rely on any evaluation furnished by the Evaluator and have no
responsibility for the accuracy thereof. Determinations by the Evaluator shall
be made in good faith upon the basis of the best information available to it.
Sponsor. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the
Trusts. 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, 1999, the total stockholders' equity of Van Kampen
Funds Inc. was $141,554,861 (audited). The Information Supplement contains
additional information about the Sponsor.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law. Additional information
regarding the Trustee is set forth in the Information Supplement, including the
Trustee's qualifications and duties, its ability to resign, the effect of a
merger involving the Trustee and the Sponsor's ability to remove and replace the
Trustee. See "Additional Information".
Performance Information. The Sponsor may from time to time in its advertising
and sales materials compare the then current estimated returns on the Trust and
returns over specified time periods on other similar Van Kampen trusts or
investment strategies utilized by the Trusts (which may show performance net of
expenses and charges which the Trust would have charged) with returns on other
taxable investments such as the common stocks comprising the Dow Jones
Industrial Average, the S&P 500, other investment indices, corporate or U.S.
government bonds, bank CDs, money market accounts or money market funds, or with
performance data from Lipper Analytical Services, Inc., Morningstar
Publications, Inc. or various publications, each of which has characteristics
that may differ from those of the Trusts. Information on percentage changes in
the dollar value of Units may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective Unitholders. Total return figures may not be averaged and may not
reflect deduction of the sales charge, which would decrease return. No provision
is made for any income taxes payable. Past performance may not be indicative of
future results. The Trust portfolio is not managed and Unit price and return
fluctuate with the value of stocks in the portfolio, so there may be a gain or
loss when Units are sold. As with other performance data, performance
comparisons should not be considered representative of the Trust's relative
performance for any future period.
TAXATION
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General. The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust.
For purposes of the following discussion and opinions, it is assumed that
each Security is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Security when such income is considered to be received by the
Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his or her pro rata portion of each Security when such dividends are
considered to be received by the Trust. Unitholders will be taxed in this manner
regardless of whether distributions from the Trust are actually received by the
Unitholder or are considered to be automatically reinvested (see "Rights of
Unitholders--Reinvestment Option").
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent an
in kind distribution of stock is received by such Unitholder from the Trust as
described below). The price a Unitholder pays for his Units, generally including
sales charges, is allocated among his pro rata portion of each Security held by
the Trust (in proportion to the fair market values thereof on the valuation date
closest to the date the Unitholder purchases his Units) in order to determine
his initial tax basis for his pro rata portion of each Security held by the
Trust. Unitholders should consult their own tax advisers with regard to the
calculation of basis. For federal income tax purposes, a Unitholder's pro rata
portion of the dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to a Security held by the Trust is taxable as ordinary
income to the extent of such corporation's current and accumulated "earnings and
profits". A Unitholder's pro rata portion of dividends paid on such Security
which exceed such current and accumulated earnings and profits will first reduce
a Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Security shall generally be treated as
capital gain. In general, the holding period for such capital gain will be
determined by the period of time a Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unitholders should consult their tax advisers regarding
the recognition of gains and losses for federal income tax purposes. In
particular, a Rollover Unitholder should be aware that a Rollover Unitholder's
loss, if any, incurred in connection with the exchange of Units for units in the
next new series of the Trust (the "New Fund") will generally be disallowed with
respect to the disposition of any Securities pursuant to such exchange to the
extent that such Unitholder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into account such
Unitholder's deemed ownership of the securities underlying the Units in the New
Fund in the manner described above, if such substantially identical securities
were acquired within a period beginning 30 days before and ending 30 days after
such disposition. However, any gains incurred in connection with such an
exchange by a Rollover Unitholder would be recognized. Unitholders should
consult their tax advisers regarding the recognition of gains and losses for
federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trust is deferred. The income a Unitholder must take into account
for federal income tax purposes is not reduced by amounts deducted to pay the
deferred sales charge. Unitholders should consult their own tax advisors as to
the income tax consequences of the deferred sales charge.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Regulations have been
issued which address special rules that must be considered in determining
whether the 46 day holding period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. Unitholders should consult with their
tax advisers with respect to the limitations on and possible modifications to
the dividends received deduction.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. As a result of the Tax Reform Act of 1986, certain miscellaneous
itemized deductions, such as investment expenses, tax return preparation fees
and employee business expenses will be deductible by an individual only to the
extent they exceed 2% of such individual's adjusted gross income. Unitholders
may be required to treat some or all of the expenses of a Trust as miscellaneous
itemized deductions subject to this limitation.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations. Unitholders should
consult with their tax advisers with respect to the limitations on and possible
modifications to the dividends received deduction.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the
Trust or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. The Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Tax Act") provides that for tax-payers 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.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust including his pro rata
portion of all Securities represented by a Unit.
The Taxpayer Relief Act of 1997 (the "1997 Tax Act") includes provisions that
treat certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their own
tax advisers with regard to any such constructive sales rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of Unitholders--Redemption of
Units," under certain circumstances a Unitholder tendering Units for redemption
may request an in kind distribution of the Securities in the Trust. A Unitholder
may also under certain circumstances request an in kind distribution of the
Securities in the Trust upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units". The Unitholder requesting an in kind
distribution will be liable for expenses related thereto (the "Distribution
Expenses") and the amount of such in kind distribution will be reduced by the
amount of the Distribution Expenses. See "Rights of Unitholders--Redemption of
Units". As previously discussed, prior to the redemption of Units or the
termination of the Trust, a Unitholder is considered as owning a pro rata
portion of each of the Trust's assets for federal income tax purposes. The
receipt of an in kind distribution will result in a Unitholder receiving whole
shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an in kind distribution
with respect to each Security owned by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion in the Securities held by
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will generally
recognize gain or loss based upon the difference between the amount of cash
received by the Unitholder and his tax basis in such fractional share of a
Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an in
kind distribution will have to analyze the tax consequences with respect to each
Security owned by the Trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by the Trust. Unitholders who request an in kind distribution are advised
to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder for
his Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
as described above.
Other Matters. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust will generally be
subject to United States income taxation and withholding in the case of Units
held by non-resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporation for a three-year period ending with the close
of its taxable year preceding payment was effectively connected to the conduct
of a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the United
States and a foreign country. Non-U.S. Unitholders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions from the
Trust.
It should be noted that payments to the Trust of dividends on Securities that
are attributable to foreign corporations may be subject to foreign withholding
taxes and Unitholders should consult their tax advisers regarding the potential
tax consequences relating to the payment of any such withholding taxes by the
Trust. Any dividends withheld as a result thereof will nevertheless be treated
as income to the Unitholders. Because, under the grantor trust rules, an
investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect to such taxes.
The 1997 Tax Act imposes a required holding period for such credits. Investors
should consult their tax advisers with respect to foreign withholding taxes and
foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of the Trust a statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security (resulting from redemption or the
sale of any Security), and the fees and expenses paid by the Trust. The Trustee
will also furnish annual information returns to Unitholders and to the Internal
Revenue Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel for New York tax matters, the Trust is not
an association taxable as a corporation and the income of the Trust will be
treated as the income of the Unitholders under the existing income tax laws of
the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal and certain aspects of
New York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit
in the Trust that (a) is (i) for United States federal income tax purposes a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unitholder in paragraph (a) but whose
income from a Unit is effectively connected with such Unitholder's conduct of a
United States trade or business. The term also includes certain former citizens
of the United States whose income and gain on the Units will be taxable.
Unitholders should consult their tax advisers regarding potential foreign, state
or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
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Compensation of Sponsor, Supervisor and Evaluator. The Sponsor will not
receive any fees in connection with its activities relating to the Trust.
However, the Supervisor and Evaluator, which are affiliates of the Sponsor, will
receive the annual fee for portfolio supervisory and evaluation services set
forth in the "Fee Table". These fees may exceed the actual costs of providing
these services to the Trust but at no time will the total amount received for
supervisory and evaluation services rendered to all Van Kampen unit investment
trusts in any calendar year exceed the aggregate cost of providing these
services in that year.
Trustee's Fee. For its services the Trustee will receive the fee from the
Trust set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Trust expenses). The Trustee benefits to the extent there are
funds in the Capital and Income Accounts since these Accounts are non-interest
bearing to Unitholders and the amounts earned by the Trustee are retained by the
Trustee. Part of the Trustee's compensation for its services to the Trust is
expected to result from the use of these funds.
Miscellaneous Expenses. The following additional charges are or may be
incurred the Trust: (a) normal expenses (including the cost of mailing reports
to Unitholders) incurred in connection with the operation of the Trust, (b) fees
of the Trustee for extraordinary services, (c) expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the
Sponsor, (d) various governmental charges, (e) expenses and costs of any action
taken by the Trustee to protect the Trust and the rights and interests of
Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of the Trust without negligence, bad
faith or wilful misconduct on its part, (g) foreign custodial and transaction
fees, (h) costs associated with liquidating the securities held in the Trust
portfolio, (i) any offering costs incurred after the end of the initial offering
period and (j) expenditures incurred in contacting Unitholders upon termination
of the Trust. The Trust will also pay a license fee to Dow Jones & Company, Inc.
for use of certain service marks.
General. The expenses of the Trust will accrue on a daily basis. The deferred
sales charge, fees and expenses are generally paid out of the Capital Account of
the Trust. When these amounts are paid by or owing to the Trustee, they are
secured by a lien on the Trust's portfolio. It is expected that Securities will
be sold to pay these amounts which will result in capital gains or losses to
Unitholders. See "Taxation". The Supervisor's, Evaluator's and Trustee's fees
may be increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index or, if this category is not published, in a
comparable category.
OTHER MATTERS
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Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Winston & Strawn has acted as counsel to the Trustee
and as special counsel for New York tax matters.
Independent Certified Public Accountants. The statement of condition and the
related portfolio included in this Prospectus have been audited by Grant
Thornton LLP, independent certified public accountants, as set forth in their
report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
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This Prospectus does not contain all the information set forth in the
Registration Statement filed by your Trust with the SEC. The Information
Supplement, which has been filed with the SEC, includes more detailed
information concerning the Securities, investment risks and general information
about the Trust. Information about your Trust (including the Information
Supplement) can be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. You may obtain information about the Public Reference Room by
calling 1-202-942-8090. Reports and other information about your Trust are
available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of this information may be obtained, after paying a
duplication fee, by electronic request at the following e-mail address:
[email protected] or by writing the SEC's Public Reference Section, Washington,
D.C. 20549-0102.
TABLE OF CONTENTS
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Title Page
----- ----
Summary of Essential Financial Information.. 2
Fee Table................................... 3
The Dow 5SM & Tech Trust.................... 4
Notes to Hypothetical Performance Tables.... 6
Notes to Portfolio.......................... 6
The Securities.............................. 7
Report of Independent Certified
Public Accountants....................... 8
Statement of Condition ..................... 9
The Trust................................... A-1
Objectives and Securities Selection......... A-1
Risk Factors................................ A-2
Public Offering............................. A-3
Retirement Accounts......................... A-7
Wrap Fee and Advisory Accounts.............. A-7
Rights of Unitholders....................... A-7
Trust Administration........................ A-10
Taxation.................................... A-12
Trust Operating Expenses.................... A-16
Other Matters............................... A-17
Additional Information...................... A-17
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When Units of the Trust are no longer available this prospectus may be used as a
preliminary prospectus for a future Trust. If this prospectus is used for future
Trusts you should note the following:
The information in this prospectus is not complete with respect to future Trust
series and may be changed. No person may sell Units of future Trusts until a
registration statement is filed with the Securities and Exchange Commission and
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.
EMSPRO208
PROSPECTUS
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MARCH 1, 2000
Van Kampen
Focus Portfolios(SM)
A Division of Van Kampen Funds Inc.
The Dow 5SM & Tech Strategic Trust,
March 2000
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this prospectus for future reference
Van Kampen
Information Supplement
Van Kampen Focus Portfolios, Series 208
- --------------------------------------------------------------------------------
This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the Prospectus. You
should read this Information Supplement in conjunction with the Prospectus. This
Information Supplement is not a prospectus. It does not include all of the
information that you should consider before investing in the Trust. This
Information Supplement may not be used to offer or sell Units without the
Prospectus. You can obtain copies of the Prospectus by contacting the Sponsor at
One Parkview Plaza, Oakbrook Terrace, Illinois 60181 or by contacting your
broker. This Information Supplement is dated as of the date of the Prospectus.
All capitalized terms have been defined in the Prospectus.
Table of Contents
Page
Risk Factors 2
The Trust 4
The Indexes 4
Sponsor Information 5
Trustee Information 6
Trust Termination 6
RISK FACTORS
Price Volatility. Because the Trusts invest in stocks you should understand
the risks of investing in common stocks before purchasing Units. These risks
include the risk that the financial condition of the company or the general
condition of the stock market may worsen and the value of the stocks (and
therefore Units) will fall. Stocks are especially susceptible to general stock
market movements. The value of common stocks often rises or falls rapidly and
unpredictably as market confidence and perceptions of companies change. These
perceptions are based on factors including expectations regarding government
economic policies, inflation, interest rates, economic expansion or contraction,
political climates and economic or banking crises. The value of Units will
fluctuate with the value of the stocks in a Trust and may be more or less than
the price you originally paid for your Units. As with any investment, we cannot
guarantee that the performance of a Trust will be positive over any period of
time. Because the Trusts are unmanaged, the Trustee will not sell stocks in
response to market fluctuations as is common in managed investments. In
addition, because some Trusts hold a relatively small number of stocks, you may
encounter greater market risk than in a more diversified investment.
Dividends. Stocks represent ownership interests in a company and are not
obligations of the company. Common stockholders have a right to receive payments
from the company that is subordinate to the rights of creditors, bondholders or
preferred stockholders of the company. This means that common stockholders have
a right to receive dividends only if a company's board of directors declares a
dividend and the company has provided for payment of all of its creditors,
bondholders and preferred stockholders. If a company issues additional debt
securities or preferred stock, the owners of these securities will have a claim
against the company's assets before common stockholders if the company declares
bankruptcy or liquidates its assets even though the common stock was issued
first. As a result, the company may be less willing or able to declare or pay
dividends on its common stock.
Technology Issuers. The Trusts may invest significantly in issuers within the
technology industry. A portfolio concentrated in a single industry may present
more risk than a portfolio broadly diversified over several industries. The
Trusts, and therefore Unitholders, may be particularly susceptible to a negative
impact resulting from adverse market conditions or other factors affecting
technology issuers because any negative impact on the technology industry will
not be diversified among issuers within other unrelated industries. Accordingly,
an investment in Units should be made with an understanding of the
characteristics of the technology industry and the risks which such an
investment may entail.
Technology companies generally include companies involved in the development,
design, manufacture and sale of computers, computer related equipment, computer
networks, communications systems, telecommunications products, electronic
products, and other related products, systems and services. The market for
technology products and services, especially those specifically related to the
Internet, is characterized by rapidly changing technology, rapid product
obsolescence, cyclical market patterns, evolving industry standards and frequent
new product introductions. The success of the issuers of the Securities depends
in substantial part on the timely and successful introduction of new products.
An unexpected change in one or more of the technologies affecting an issuer's
products or in the market for products based on a particular technology could
have a material adverse affect on an issuer's operating results. Furthermore,
there can be no assurance that the issuers of the Securities will be able to
respond timely to compete in the rapidly developing marketplace.
The market for certain technology products and services may have only
recently begun to develop, is rapidly evolving and is characterized by an
increasing number of market entrants. Additionally, certain technology companies
may have only recently commenced operations or offered equity securities to the
public. Such companies are in the early stage of development and have a limited
operating history on which to analyze future operating results. It is important
to note that following its initial public offering a security is likely to
experience substantial stock price volatility and speculative trading.
Accordingly, there can be no assurance that upon redemption of Units or
termination of a Trust a Unitholder will receive an amount greater than or equal
to the Unitholder's initial investment.
Based on trading history, factors such as announcements of new products or
development of new technologies and general conditions of the industry have
caused and are likely to cause the market price of technology common stocks to
fluctuate substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to the
operating performance of such companies. This market volatility may adversely
affect the market price of the Securities and therefore the ability of a
Unitholder to redeem units, or roll over Units into a new trust, at a price
equal to or greater than the original price paid for such Units.
Some key components of certain products of technology issuers are currently
available only from single sources. There can be no assurance that in the future
suppliers will be able to meet the demand for components in a timely and cost
effective manner. Accordingly, an issuer's operating results and customer
relationships could be adversely affected by either an increase in price for, or
and interruption or reduction in supply of, any key components. Additionally,
many technology issuers are characterized by a highly concentrated customer base
consisting of a limited number of large customers who may require product
vendors to comply with rigorous and constantly developing industry standards.
Any failure to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies are incorporated into
other related products, certain companies are often highly dependent on the
performance of other computer, electronics and communications companies. There
can be no assurance that these customers will place additional orders, or that
an issuer of Securities will obtain orders of similar magnitude as past orders
form other customers. Similarly, the success of certain companies is tied to a
relatively small concentration of products or technologies with intense
competition between companies. Accordingly, a decline in demand of such
products, technologies or from such customers could have a material adverse
impact on issuers of the Securities.
Litigation. Microsoft Corporation represents a significant portion of your
Trust. Microsoft Corporation is currently engaged in litigation with Sun
Microsystems, Inc., the U.S. Department of Justice, several state Attorneys
General. The complaints against Microsoft include, copyright infringement,
unfair competition, and antitrust violations. The claims seek injunctive relief
and monetary damages. In the action brought against Microsoft by the U.S.
Department of Justice, the United States District Court for the District of
Columbia issued findings of fact that included a finding that Microsoft
possesses and exercised monopoly power. This does not represent a final decision
in this or the other cases pending against Microsoft. Microsoft's management has
asserted that it believes that resolving these matters will not have a material
adverse impact on the company's financial position or its results of operations.
In public statements following these findings of fact, Microsoft has stated that
it will continue to review the court's findings and analyze their impact.
No one can predict the outcome of the litigation pending against these
companies or how the current uncertainty concerning regulatory and legislative
measures will ultimately be resolved. No one can predict the impact that these
and other possible developments will have on the price of these stocks or any
Trust.
Liquidity. Whether or not the stocks in a Trust are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
Additional Units. The Sponsor may create additional Units of a Trust by
depositing into the Trust additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Trust will pay brokerage fees.
Voting. Only the Trustee may sell or vote the stocks in a Trust. While you
may sell or redeem your Units, you may not sell or vote the stocks in your
Trust. The Sponsor will instruct the Trustee how to vote the stocks. The Trustee
will vote the stocks in the same general proportion as shares held by other
shareholders if the Sponsor fails to provide instructions.
Year 2000. The Trusts could be negatively impacted if computer systems used
by the Sponsor, Evaluator, Supervisor or Trustee or other service providers to
the Trusts do not properly process date-related information after January 1,
2000. This is commonly known as the "Year 2000 Problem". The Sponsor, Evaluator,
Supervisor and Trustee are taking steps to address this problem and to obtain
reasonable assurances that other service providers to the Trusts are taking
comparable steps. We cannot guarantee that these steps will be sufficient to
avoid any adverse impact on the Trusts. This problem is expected to impact
corporations to varying degrees based on factors such as industry sector and
degree of technological sophistication. We cannot predict what impact, if any,
this problem will have on the issuers of stocks in the Trusts.
THE TRUST
In seeking the Trust's objectives, the Sponsor considered the ability of
the Securities to outpace inflation. While inflation is currently relatively
low, the United States has historically experienced periods of double-digit
inflation. While the prices of securities will fluctuate, over time securities
have outperformed the rate of inflation, and other less risky investments, such
as government bonds and U.S. Treasury bills. Past performance is, however, no
guarantee of future results.
The companies represented in the Trust are some of the most well-known and
highly capitalized companies in the world. There is, of course, no assurance
that the Trust (which includes expenses and sales charges) will achieve its
objective.
THE INDEXES
The Dow Jones Industrial Average. The Dow Jones Industrial Average ("DJIA")
was first published in The Wall Street Journal in 1896. Initially consisting of
just 12 stocks, the DJIA expanded to 20 stocks in 1916 and its present size of
30 stocks on October 1, 1928. Effective November 1, 1999, Dow Jones & Co. added
Home Depot, Microsoft Corporation, Intel Corporation and SBC Communications Inc.
to the Dow Jones Industrial Average and removed Chevron Corporation, Goodyear
Tire & Rubber Company, Sears, Roebuck & Company and Union Carbide Corporation.
The following is the list as it currently appears:
Alcoa, Inc.
American Express Company
AT&T Corporation
Boeing Company
Caterpillar, Inc.
Citigroup, Inc.
Coca-Cola Company
Eastman Kodak Company
E.I. du Pont de Nemours & Company
Exxon Corporation
General Electric Company
General Motors Corporation
Hewlett-Packard Company
Home Depot Inc.
Honeywell International Inc.
Intel Corporation
International Business Machines Corporation
International Paper Company
J.P. Morgan & Company, Inc.
Johnson & Johnson
McDonald's Corporation
Merck & Company, Inc.
Microsoft Corporation
Minnesota Mining & Manufacturing Company
Philip Morris Companies, Inc.
Procter & Gamble Company
SBC Communications Inc.
United Technologies Corporation
Wal-Mart Stores, Inc.
Walt Disney Company
"Dow JonesSM", "Dow Jones Industrial AverageSM", "The Dow 5SM", "The Dow
10SM", "The Dow 30SM", "The DowSM", and "DJIASM" are proprietary to and service
marks of Dow Jones & Company, Inc. and have been licensed for use for certain
purposes by the Trusts. The Trusts are not sponsored, endorsed, sold or promoted
by Dow Jones and Dow Jones makes no representation regarding the avisability of
investing in any Trust.
The Nasdaq-100 Index. The Nasdaq-100 Index is composed of 100 of the
largest and most-active non-financial domestic and international stocks traded
on the Nasdaq Stock Market based on market capitalization. Nasdaq is also one of
the first fully electronic stock markets in the world. This modern-day
securities market began operations in 1971 and today lists more companies than
any other market in the U.S. The Nasdaq Stock Market, Inc. has established
procedures for, and controls over, substitutions of securities and may
periodically, at its discretion, make changes in component stocks so that the
Index will more accurately reflect the overall composition of the non-financial
sector of The Nasdaq Stock Market. Eligibility criteria for the Nasdaq-100 Index
includes a minimum average daily trading volume of 100,000 shares. Generally,
companies also must have seasoned on Nasdaq or another major exchange, which
means they have been listed for a minimum of two years. If a security would
otherwise qualify to be in the top 25% of the issuers included in the Index by
market capitalization, then a one-year seasoning criteria would apply. If the
security is a foreign security, the company must have a world wide market value
of at least $10 billion, a U.S. market value of at least $4 billion, and average
trading volume of at least 200,000 shares per day. In addition, foreign
securities must be eligible for listed-options trading.
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, 1999, the total stockholders' equity of Van Kampen
Funds Inc. was $141,554,861 (audited). (This paragraph relates only to the
Sponsor and not to the Trust or to any other Series thereof. The information is
included herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
As of December 31, 1999, the Sponsor and its Van Kampen affiliates managed
or supervised approximately $88 billion of investment products. The Sponsor and
its Van Kampen affiliates managed $75.9 billion of assets for more than 50
open-end mutual funds, 39 closed-end funds and more than 2,700 unit trusts. All
of Van Kampen's open-end funds, closed-ended funds and unit investment trusts
are professionally distributed by leading financial firms nationwide. Since
1976, the Sponsor has serviced over two million investor accounts, opened
through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE INFORMATION
The Trustee is The Bank of New York, a trust company organized under the
laws of New York. The Bank of New York has its unit investment trust division
offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668. The Bank
of New York is subject to supervision and examination by the Superintendent of
Banks of the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for each Trust. Such
records shall include the name and address of, and the number of Units of each
Trust held by, every Unitholder. Such books and records shall be open to
inspection by any Unitholder at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute, rule or
regulation. The Trustee is required to keep a certified copy or duplicate
original of the Trust Agreement on file in its office available for inspection
at all reasonable times during the usual business hours by any Unitholder,
together with a current list of the Securities held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
TRUST TERMINATION
A Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Trust then outstanding or by the
Trustee when the value of the Securities owned by a Trust, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of the Trust has
exceeded $15,000,000). A Trust will be liquidated by the Trustee in the event
that a sufficient number of Units of such Trust not yet sold are tendered for
redemption by the Sponsor, so that the net worth of such Trust would be reduced
to less than 40% of the value of the Securities at the time they were deposited
in such Trust. If a Trust is liquidated because of the redemption of unsold
Units by the Sponsor, the Sponsor will refund to each purchaser of Units the
entire sales charge paid by such purchaser. The Trust Agreement will terminate
upon the sale or other disposition of the last Security held thereunder, but in
no event will it continue beyond the Mandatory Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities will begin to be sold in
connection with the termination of the Trusts. The Sponsor will determine the
manner, timing and execution of the sales of the Securities. The Sponsor shall
direct the liquidation of the Securities in such manner as to effectuate orderly
sales and a minimal market impact. In the event the Sponsor does not so direct,
the Securities shall be sold within a reasonable period and in such manner as
the Trustee, in its sole discretion, shall determine. At least 30 days before
the Mandatory Termination Date the Trustee will provide written notice of any
termination to all Unitholders of the appropriate Trust and in the case of a
Trust will include with such notice a form to enable Unitholders owning 1,000 or
more Units to request an in kind distribution of the U.S.-traded Securities. To
be effective, this request must be returned to the Trustee at least five
business days prior to the Mandatory Termination Date. On the Mandatory
Termination Date (or on the previous business day if a holiday) the Trustee will
deliver each requesting Unitholder's pro rata number of whole shares of the
U.S.-traded Securities in a Trust to the account of the broker-dealer or bank
designated by the Unitholder at Depository Trust Company. A Unitholder electing
an in kind distribution will not receive a distribution of shares of the foreign
exchange-traded Securities but will instead receive cash representing his pro
rata portion of such Securities. The value of the Unitholder's fractional shares
of the Securities will be paid in cash. Unitholders with less than 1,000 Units,
Unitholders in a Trust with 1,000 or more Units not requesting an in kind
distribution and Unitholders who do not elect the Rollover Option will receive a
cash distribution from the sale of the remaining Securities within a reasonable
time following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the appropriate Trust any
accrued costs, expenses, advances or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee, costs of liquidation
and any amounts required as a reserve to provide for payment of any applicable
taxes or other governmental charges. Any sale of Securities in a Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder of each Trust his pro rata share of the balance of the Income
and Capital Accounts of such Trust.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent series of the Trusts pursuant to the Rollover Option.
There is, however, no assurance that units of any new series of the Trusts will
be offered for sale at that time, or if offered, that there will be sufficient
units available for sale to meet the requests of any or all Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
CONTENTS OF REGISTRATION STATEMENTS
This Amendment to the Registration Statement comprises the following papers and
documents:
The facing sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to the Federal Income tax status of
securities being registered.
3.3 Opinion and consent of counsel as to New York tax status of
securities being registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Accountants.
SIGNATURES
The Registrant, Van Kampen Focus Portfolios, Series 208 hereby
identifies Van Kampen Merritt Equity Opportunity Trust, Series 1, Series 2,
Series 4 and Series 7 and Van Kampen American Capital Equity Opportunity Trust,
Series 13, Series 14, Series 57 and Series 89 for purposes of the
representations required by Rule 487 and represents the following: (1) that the
portfolio securities deposited in the series as to the securities of which this
Registration Statement is being filed do not differ materially in type or
quality from those deposited in such previous series; (2) that, except to the
extent necessary to identify the specific portfolio securities deposited in, and
to provide essential financial information for, the series with respect to the
securities of which this Registration Statement is being filed, this
Registration Statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such previous
series as to which the effective date was determined by the Commission or the
staff; and (3) that it has complied with Rule 460 under the Securities Act of
1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen Focus Portfolios, Series 208 has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago and State of
Illinois on the 1st day of March 2000.
Van Kampen Focus Portfolios, Series 208
By Van Kampen Funds Inc.
By Christine K. Putong
---------------------------------------
Assistant Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on March 1, 2000
by the following persons who constitute a majority of the Board of Directors of
Van Kampen Funds Inc.
SIGNATURE TITLE
Richard F. Powers III Chairman and Chief Executive )
Officer )
John H. Zimmerman III President and Chief Operating )
Officer )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
A. Thomas Smith III Executive Vice President, )
General Counsel and Secretary )
Michael H. Santo Executive Vice President )
Christine K. Putong
----------------------------
(Attorney-in-fact*)
- --------------------------------------------------------------------------------
*An executed copy of each of the related powers of attorney is filed herewith or
was filed with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Van Kampen Focus Portfolios, Series 136
(File No. 333-70897) and the same are hereby incorporated herein by this
reference.
EXHIBIT 1.1
VAN KAMPEN FOCUS PORTFOLIOS
SERIES 208
TRUST AGREEMENT
Dated: March 1, 2000
This Trust Agreement among Van Kampen Funds Inc., as Depositor,
American Portfolio Evaluation Services, a division of Van Kampen Investment
Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp., as
Supervisory Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Van Kampen American Capital Equity Opportunity Trust, Series
87 and Subsequent Series, Standard Terms and Conditions of Trust, Effective
January 27, 1998" (herein called the "Standard Terms and Conditions of Trust")
and such provisions as are set forth in full and such provisions as are
incorporated by reference constitute a single instrument. All references herein
to Articles and Sections are to Articles and Sections of the Standard Terms and
Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee agree as
follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(24), listed in the Schedule
hereto, have been deposited in trust under this Trust Agreement.
2. The fractional undivided interest in and ownership of each Trust
represented by each Unit is an amount the numerator of which is one and the
denominator of which is the amount set forth under "Summary of Essential
Financial Information - Initial Number of Units" in the Prospectus. Such
fractional undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03, (b) increased or decreased in
connection with an adjustment to the number of Units pursuant to Section 2.03,
or (c) decreased by the number of Units redeemed pursuant to Section 5.02.
3. The terms "Capital Account Record Date" and "Income Account Record
Date" shall mean the "Record Dates" set forth under "Summary of Essential
Financial Information" in the Prospectus.
4. The terms "Capital Account Distribution Date" and "Income Account
Distribution Date" shall mean the "Distribution Dates" set forth under "Summary
of Essential Financial Information" in the Prospectus.
5. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" set forth under "Summary of Essential Financial Information"
in the Prospectus.
6. Notwithstanding anything to the contrary in the Standard Terms and
Conditions of Trust and subject to the requirements set forth in this paragraph,
unless the Prospectus otherwise requires, the Sponsor may, on any Business Day
(the "Trade Date"), subscribe for additional Units as follows:
(a) Prior to the Evaluation Time on such Business Day, the
Sponsor shall provide notice (the "Subscription Notice") to the
Trustee, by telephone or by written communication, of the Sponsor's
intention to subscribe for additional Units. The Subscription Notice
shall identify the additional Securities to be acquired (unless such
additional Securities are a precise replication of the then existing
portfolio) and shall either (i) specify the quantity of additional
Securities to be deposited by the Sponsor on the settlement date for
such subscription or (ii) instruct the Trustee to purchase additional
Securities with an aggregate value as specified in the Subscription
Notice.
(b) Promptly following the Evaluation Time on such Business Day,
the Sponsor shall verify with the Trustee the number of additional
Units to be created.
(c) Not later than the time on the settlement date for such
subscription when the Trustee is to deliver or assign the additional
Units created hereby, the Sponsor shall deposit with the Trustee (i)
any additional Securities specified in the Subscription Notice (or
contracts to purchase such additional Securities together with cash or
a letter of credit in the amount necessary to settle such contracts)
or (ii) cash or a letter of credit in an amount equal to the aggregate
value of the additional Securities specified in the Subscription
Notice, and adding and subtracting the amounts specified in the first
and second sentences of Section 5.01, computed as of the Evaluation
Time on the Business Day preceding the Trade Date divided by the
number of Units outstanding as of the Evaluation Time on the Business
Day preceding the Trade Date, times the number of additional Units to
be created.
(d) On the settlement date for such subscription, the Trustee
shall, in exchange for the Securities and cash or letter of credit
described above, deliver to, or assign in the name of or on the order
of, the Sponsor the number of Units verified by the Sponsor with the
Trustee.
7. Section 6.01(e) is hereby replaced with the following:
(e) (1) Subject to the provisions of subparagraph (2) of this
paragraph, the Trustee may employ agents, sub-custodians, attorneys,
accountants and auditors and shall not be answerable for the default
or misconduct of any such agents, sub-custodians, attorneys,
accountants or auditors if such agents, sub-custodians, attorneys,
accountants or auditors shall have been selected with reasonable care.
The Trustee shall be fully protected in respect of any action under
this Indenture taken or suffered in good faith by the Trustee in
accordance with the opinion of counsel, which may be counsel to the
Depositor acceptable to the Trustee, provided, however that this
disclaimer of liability shall not excuse the Trustee from the
responsibilities specified in subparagraph (2) below. The fees and
expenses charged by such agents, sub-custodians, attorneys,
accountants or auditors shall constitute an expense of the Trust
reimbursable from the Income and Capital Accounts of the affected
Trust as set forth in section 6.04 hereof.
(2) The Trustee may place and maintain in the care of an Eligible
Foreign Custodian (which is employed by the Trustee as a sub-custodian
as contemplated by subparagraph (1) of this paragraph (e) and which
may be an affiliate or subsidiary of the Trustee or any other entity
in which the Trustee may have an ownership interest) any investments
(including foreign currencies) for which the primary market is outside
the United States, and such cash and cash equivalents in amounts
reasonably necessary to effect the Trust's transactions in such
investments, provided that:
(a) The Trustee shall perform all duties assigned to the
Foreign Custody Manager by Rule 17f-5 under the Investment
Company Act of 1940 (17 CFR ss. 270.17f-5) ("Rule 17f-5"), as now
in effect or as such rule may be amended in the future. The
Trustee shall not delegate such duties.
(b) The Trustee shall exercise reasonable care, prudence and
diligence such as a person having responsibility for the
safekeeping of Trust assets would exercise, and shall be liable
to the Trust for any loss occurring as a result of its failure to
do so.
(c) The Trustee shall indemnify the Trust and hold the Trust
harmless from and against any risk of loss of Trust assets held
in accordance with the foreign custody contract.
(d) The Trustee shall maintain and keep current written
records regarding the basis for the choice or continued use of a
particular Eligible Foreign Custodian pursuant to this
subparagraph for a period of not less than six years from the end
of the fiscal year in which the Trust was terminated, the first
two years in an easily accessible place. Such records shall be
available for inspection by Unitholders and the Securities and
Exchange Commission at the Trustee's offices at all reasonable
times during its usual business hours.
(3) "Eligible Foreign Custodian" shall have the meaning assigned
to it in Rule 17f-5.
(4) "Foreign Custody Manager" shall have the meaning assigned to
it in Rule 17f-5.
8. Section 1.01 (1), (3) and (4) shall be replaced in their entirety by
the following:
(1) "Depositor" shall mean Van Kampen Funds Inc. and its
succesors in interest, or any successor depositor appointed as
hereinafter provided.
(3) "Evaluator" shall mean American Portfolio Evaluation Services
(a division of a Van Kampen Investment Advisory Corp.) and its
successors in interest, or any successor evaluator appointed as
hereinafter provided.
(4) "Supervisory Servicer" shall mean Van Kampen Investment
Advisory Corp. and its successors in interest, or any successor
portfolio supervisor appointed as hereinafter provided.
9. Section 3.15 of the Standard Terms and Conditions of Trust is hereby
replaced in its entirety by the following:
Section 3.15. Deferred Sales Charge. If the Prospectus related to
the Trust specifies a deferred sale charge, the Trustee shall, on each
Deferred Sales Charge Payment Date and as permitted by such
Prospectus, withdraw from the Capital Account an amount per Unit equal
to the Deferred Sales Charge Payment and credit such amount to a
special non-Trust account maintained at the Trustee out of which the
deferred sales charge will be distributed to the Depositor. If the
balance in the Capital Account is insufficient to make any such
withdrawal, the Trustee shall, as directed by the Depositor, either
advance funds in an amount equal to the proposed withdrawal and be
entitled to reimbursement of such advance upon the deposit of
additional moneys in the Capital Account, sell Securities and credit
the proceeds thereof to such special Depositor's account or credit (if
permitted by law) Securities in kind to such special Depositor's
Account. If a Unitholder redeems Units prior to full payment of the
deferred sales charge, the Trustee shall, if so provided in the
related Prospectus, on the Redemption Date, withhold from the
Redemption Price payable to such Unitholder an amount equal to the
unpaid portion of the deferred sales charge and distribute such amount
to such special Depositor's Account. The Depositor may at any time
instruct the Trustee in writing to distribute to the Depositor cash or
Securities previously credited to the special Depositor's account.
Amounts to be credited to the special Depositor's account with respect
to each Deferred Sales Charge Payment are due and payable to the
Depositor on the related Deferred Sales Charge Payment Date.
The term "Deferred Sales Charge Payment Dates" shall mean the
10th day of each month beginning July 10, 2000 and continuing through
February 10, 2001. If any Deferred Sales Charge Payment Date is not a
Business Day, that Deferred Sales Charge Payment Date shall be deemed
to be the next business day. The term "Deferred Sales Charge Payment"
shall mean a fraction of the total maximum deferred sales charge
specified in the Prospectus, the numerator of which is one and the
denominator of which is equal to the total number of Deferred Sales
Charge Payment Dates.
10. Section 3.07(a) of the Standard Terms and Conditions of Trust is
hereby amended by adding the following Section 3.07(a)(x) immediately after
Section 3.07(a)(ix):
"(x) that there has been a public tender offer made for a
Security or a merger or acquisition is announced affecting a Security,
and that in the opinion of the Supervisory Servicer the sale or tender
of the Security is in the best interest of the Unitholders."
11. Sections 4.01(b) and (c) of the Standard Terms and Conditions of
Trust are hereby replaced in their entirety by the following:
(b) During the initial offering period such Evaluation shall be
made in the following manner: if the Securities are listed on a
national or foreign securities exchange or traded on the Nasdaq Stock
Market, Inc., such Evaluation shall generally be based on the last
available closing sale price on or immediately prior to the Evaluation
Time on the exchange or market which is the principal market therefor,
which shall be deemed to be the New York Stock Exchange if the
Securities are listed thereon (unless the Evaluator deems such price
inappropriate as a basis for evaluation) or, if there is no such
available closing sale price on such exchange or market at the last
available asked price of the Equity Securities. If the Securities are
not listed such an exchange or traded on the Nasdaq Stock Market, Inc.
or, if so listed and the principal market therefor is other than on
such exchange or market, or there is no such available sale price on
such exchange or market, such Evaluation shall generally be based on
the following methods or any combination thereof whichever the
Evaluator deems appropriate: (i) in the case of Equity Securities, on
the basis of the current asked price on the over-the-counter market
(unless the Evaluator deems such price inappropriate as a basis for
evaluation), (ii) on the basis of current offering prices for the Zero
Coupon Obligations as obtained from investment dealers or brokers who
customarily deal in securities comparable to those held by the Fund,
(iii) if offering prices are not available for the Zero Coupon
Obligations or the Equity Securities, on the basis of offering or
asked price for comparable securities, (iv) by determining the
valuation of the Zero Coupon Obligations or the Equity Securities on
the offering or asked side of the market by appraisal or (v) by any
combination of the above. If the Trust holds Securities denominated in
a currency other than U.S. dollars, the Evaluation of such Security
shall be converted to U.S. dollars based on current offering side
exchange rates (unless the Evaluator deems such prices inappropriate
as a basis for valuation). The Evaluator may add to the Evaluation of
each Security which is principally traded outside of the United States
the amount of any commissions and relevant taxes associated with the
acquisition of the Security. As used herein, the closing sale price is
deemed to mean the most recent closing sale price on the relevant
securities exchange immediately prior to the Evaluation time. For each
Evaluation, the Evaluator shall also confirm and furnish to the
Trustee and the Depositor, on the basis of the information furnished
to the Evaluator by the Trustee as to the value of all Trust assets
other than Securities, the calculation of the Trust Evaluation to be
computed pursuant to Section 5.01.
(c) For purposes of the Trust Evaluations required by Section
5.01 in determining Redemption Value and Unit Value, Evaluation of the
Securities shall be made in the manner described in Section 4.01(b),
on the basis of current bid prices for the Zero Coupon Obligations,
the bid side value of the relevant currency exchange rate expressed in
U.S. dollars and, except in those cases in which the Equity Securities
are listed on a national or foreign securities exchange or traded on
the Nasdaq Stock Market, Inc. and the last available sale prices are
utilized, on the basis of the last available bid price of the Equity
Securities. In addition, the Evaluator (i) shall not make the addition
specified in the fourth sentence of Section 4.01(b) and (ii) may
reduce the Evaluation of each Security which is principally traded
outside of the United States by the amount of any liquidation costs
and any capital gains or other taxes which would be incurred by the
Trust upon the sale of such Security, such taxes being computed as if
the Security were sold on the date of the Evaluation.
IN WITNESS WHEREOF, the undersigned have caused this Trust Agreement to
be executed and their corporate seals to be hereto affixed and attested; all as
of the day, month and year first above written.
Van Kampen Funds Inc.
By James J. Boyne
- -------------------------------------
Senior Vice President
Attest:
By Weston B. Wetherell
- ---------------------------------
Vice President
American Portfolio Evaluation Services,
a division of Van Kampen Investment Advisory Corp.
By James J. Boyne
- -------------------------------------
Senior Vice President
Attest
By Weston B. Wetherell
- ---------------------------------
Vice President
Van Kampen Investment Advisory Corp.
By James J. Boyne
- -------------------------------------
Senior Vice President
Attest
By Weston B. Wetherell
- ----------------------------------
Vice President
The Bank of New York
By Jeffrey Cohen
- ----------------------------------
Vice President
Attest
By Robert Weir
- -----------------------------
Assistant Treasurer
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED IN
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 208
(Note: Incorporated herein and made a part hereof is each "Portfolio" as set
forth in the Prospectus.)
EXHIBIT 3.1
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
March 1, 2000
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Van Kampen Focus Portfolios, Series 208
---------------------------------------
Gentlemen:
We have served as counsel for Van Kampen Funds Inc. as Sponsor and
Depositor of Van Kampen Focus Portfolios, Series 208 (hereinafter referred to as
the "Trust"), in connection with the preparation, execution and delivery of a
Trust Agreement dated March 1, 2000, among Van Kampen Funds Inc., as Depositor,
American Portfolio Evaluation Services, a division of Van Kampen Investment
Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp., as
Supervisory Servicer, and The Bank of New York, as Trustee, pursuant to which
the Depositor has delivered to and deposited the Securities listed in the
Schedule to the Trust Agreement with the Trustee and pursuant to which the
Trustee has provided to or on the order of the Depositor documentation
evidencing ownership of Units of fractional undivided interest in and ownership
of the Trust (hereinafter referred to as the "Units"), created under said Trust
Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the
execution and issuance of certificates evidencing the Units in the
Trust have been duly authorized; and
2. The certificates evidencing the Units in the Trust, when duly
executed and delivered by the Depositor and the Trustee in accordance
with the aforementioned Trust Agreement, will constitute valid and
binding obligations of such Trust and the Depositor in accordance with
the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-30032) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EXHIBIT 3.2
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
March 1, 2000
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Van Kampen Focus Portfolios, Series 208
---------------------------------------
Gentlemen:
We have acted as counsel for Van Kampen Funds Inc., Depositor of Van
Kampen Focus Portfolios, Series 208 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a Trust
Agreement dated March 1, 2000 (the "Indenture") among Van Kampen Funds Inc., as
Depositor, American Portfolio Evaluation Services, a division of Van Kampen
Investment Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp.,
as Supervisory Servicer, and The Bank of New York, as Trustee. The Fund is
comprised of the following unit investment trust: The Dow 5 & Tech Strategic
Trust, March 2000 Series (the "Trust").
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we have
deemed pertinent.
The assets of the Trust will consist of a portfolio of equity
securities (the "Equity Securities") as set forth in the Prospectus. For
purposes of this opinion, it is assumed that each Equity Security is equity for
federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters of
law as we consider to be applicable, we are of the opinion that, under existing
United States Federal income tax law:
(i) The Trust is not an association taxable as a corporation
for Federal income tax purposes but will be governed by the provisions
of subchapter J (relating to Trusts) of chapter 1, Internal Revenue
Code of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata
share of each asset of the Trust in the proportion that the number of
Units held by him bears to the total number of Units outstanding. Under
subpart E, subchapter J of chapter 1 of the Code, income of the Trust
will be treated as income of each Unitholder in the proportion
described, and an item of Trust income will have the same character in
the hands of a Unitholder as it would have in the hands of the Trustee.
Each Unitholder will be considered to have received his pro rata share
of income derived from each Trust asset when such income is considered
to be received by the Trust. A Unitholder's pro rata portion of
distributions of cash or property by a corporation with respect to an
Equity Security ("dividends" as defined by Section 316 of the Code )
are taxable as ordinary income to the extent of such corporation's
current and accumulated "earnings and profits." A Unitholder's pro rata
portion of dividends which exceed such current and accumulated earnings
and profits will first reduce the Unitholder's tax basis in such Equity
Security, and to the extent that such dividends exceed a Unitholder's
tax basis in such Equity Security, shall be treated as gain from the
sale or exchange of property.
(iii) The price a Unitholder pays for his Units, generally
including sales charges, is allocated among his pro rata portion of
each Equity Security held by Trust (in proportion to the fair market
values thereof on the valuation date closest to the date the Unitholder
purchases his Units), in order to determine his tax basis for his pro
rata portion of each Equity Security held by the Trust.
(iv) Gain or loss will be recognized to a Unitholder (subject
to various nonrecognition provisions under the Code) upon redemption or
sale of his Units, except to the extent an in kind distribution of
stock is received by such Unitholder from the Trust as discussed below.
Such gain or loss is measured by comparing the proceeds of such
redemption or sale with the adjusted basis of his Units. Before
adjustment, such basis would normally be cost if the Unitholder had
acquired his Units by purchase. Such basis will be reduced, but not
below zero, by the Unitholder's pro rata portion of dividends with
respect to each Equity Security which are not taxable as ordinary
income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unitholder (subject
to various nonrecognition provisions under the Code) and the amount
thereof will be measured by comparing the Unitholder's aliquot share of
the total proceeds from the transaction with his basis for his
fractional interest in the asset disposed of. Such basis is ascertained
by apportioning the tax basis for his Units (as of the date on which
his Units were acquired) among each of the Trust assets (as of the date
on which his Units were acquired) ratably according to their values as
of the valuation date nearest the date on which he purchased such
Units. A Unitholder's basis in his Units and of his fractional interest
in each Trust asset must be reduced, but not below zero, by the
Unitholder's pro rata portion of dividends with respect to the Equity
Security which is not taxable as ordinary income.
(vi) Under the Indenture, under certain circumstances, a
Unitholder tendering Units for redemption may request an in kind
distribution of Equity Securities upon the redemption of Units or upon
the termination of the Trust. As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust's assets.
The receipt of an in kind distribution will result in a Unitholder
receiving an undivided interest in whole shares of stock and possibly
cash. The potential federal income tax consequences which may occur
under an in kind distribution with respect to each Equity Security
owned by the Trust will depend upon whether or not a Unitholder
receives cash in addition to Equity Securities. An "Equity Security"
for this purpose is a particular class of stock issued by a particular
corporation. A Unitholder will not recognize gain or loss if a
Unitholder only receives Equity Securities in exchange for his or her
pro rata portion in the Equity Securities held by the Trust. However,
if a Unitholder also receives cash in exchange for a fractional share
of an Equity Security held by the Trust, such Unitholder will generally
recognize gain or loss based upon the difference between the amount of
cash received by the Unitholder and his tax basis in such fractional
share of an Equity Security held by the Trust. The total amount of
taxable gains (or losses) recognized upon such redemption will
generally equal the sum of the gain (or loss) recognized under the
rules described above by the redeeming Unitholder with respect to each
Equity Security owned by the Trust.
A domestic corporation owning Units in the Trust may be eligible for
the 70% dividends received deduction pursuant to Section 243(a) of the Code with
respect to such Unitholder's pro rata portion of dividends received by the Trust
(to the extent such dividends are taxable as ordinary income and are
attributable to domestic corporations), subject to the limitations imposed by
Sections 246 and 246A of the Code.
To the extent dividends received by the Trust are attributable to
foreign corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Section 67 of the Code provides that certain itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by individuals only to the extent they exceed 2% of
such individual's adjusted gross income. Unitholders may be required to treat
some or all of the expenses of the Trust as miscellaneous itemized deductions
subject to this limitation.
A Unitholder will recognize taxable gain (or loss) when all or part of
his pro rata interest in an Equity Security is either sold by the Trust or
redeemed or when a Unitholder disposes of his Units in a taxable transaction, in
each case for an amount greater (or less) than his tax basis therefor, subject
to various non-recognition provisions of the Code.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trust. Any dividends withheld as a result thereof will
nevertheless be treated as income to the Unitholders. Because under the grantor
trust rules, an investor is deemed to have paid directly his share of foreign
taxes that have been paid or accrued, if any, an investor may be entitled to a
foreign tax credit or deduction for United States tax purposes with respect to
such taxes. A required holding period is imposed for such credits.
Any gain or loss recognized on a sale or exchange will, under current
law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including foreign, state or local taxes or
collateral tax consequences with respect to the purchase, ownership and
disposition of Units.
Very truly yours,
CHAPMAN AND CUTLER
WINSTON & STRAWN
200 Park Avenue
New York, New York 10166-4193
March 1, 2000
Van Kampen Focus Portfolios, Series 208
c/o The Bank of New York, as Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen Focus Portfolios,
Series 208 (the "Fund") consisting of The Dow 5 & Tech Strategic Trust, March
2000 Series (individually a "Trust" and, in the aggregate, the "Trusts") for
purposes of determining the applicability of certain New York taxes under the
circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the "Indenture"),
dated as of today (the "Date of Deposit") among Van Kampen Funds Inc. (the
"Depositor"), American Portfolio Evaluation Services, a division of an affiliate
of Depositor, as Evaluator, Van Kampen Investment Advisory Corp., an affiliate
of the Depositor, as Supervisory Servicer (the "Supervisory Servicer"), and The
Bank of New York, as trustee (the "Trustee"). As described in the prospectus
relating to the Fund dated today to be filed as an amendment to a registration
statement heretofore filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (respectively, the "Prospectus" and the
"Registration Statement") (File Number 333-30032), the objectives of the Fund
are to provide the potential for dividend income and capital appreciation
through investment in a fixed portfolio of actively traded equity securities in
the industry, lines, nature of business markets, denominated in the Trust's
name. It is noted that no opinion is expressed herein with regard to the Federal
tax aspects of the securities, the Trusts, units of the Trusts (the "Units"), or
any interest, gains or losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to each Trust the securities and/or contracts and cash for the
purchase thereof together with an irrevocable letter of credit in the amount
required for the purchase price of the securities comprising the corpus of the
Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities to
be deposited in the Trusts, and, upon the receipt thereof, will deliver to the
Depositor a registered certificate for the number of Units representing the
entire capital of the Trusts as more fully set forth in the Prospectus. The
Units, which are represented by certificates ("Certificates"), will be offered
to the public upon the effectiveness of the registration statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash dividends
received by the Fund and with the proceeds from the disposition of securities
held in the Fund and the proceeds of the treasury obligation on maturity and the
distribution of such cash dividends and proceeds to the Unit holders. The
Trustee will also maintain records of the registered holders of Certificates
representing an interest in the Fund and administer the redemption of Units by
such Certificate holders and may perform certain administrative functions with
respect to an automatic reinvestment option.
Generally, equity securities held in the Trusts may be removed
therefrom by the Trustee at the direction of the Depositor upon the occurrence
of certain specified events which adversely affect the sound investment
character of the Fund, such as default by the issuer in payment of declared
dividends or of interest or principal on one or more of its debt obligations.
Prior to the termination of the Fund, the Trustee is empowered to sell
equity securities designated by the Supervisory Servicer only for the purpose of
redeeming Units tendered to it and of paying expenses for which funds are not
available. The Trustee does not have the power to vary the investment of any
Unit holder in the Fund, and under no circumstances may the proceeds of sale of
any equity securities held by the Fund be used to purchase new equity securities
to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on business
corporations, and, for purposes of that Article, Section 208(l)(d) defines the
term "corporation" to include, among other things, "any business conducted by a
trustee or trustees wherein interest or ownership is evidenced by certificate or
other written instrument."
The Regulations promulgated under Section 208 provide as follows:
(b) The term corporation includes . . . any business
conducted by a trustee or trustees wherein interest or ownership is
evidenced by certificate or other written instrument.
(2) A business conducted by a trustee or trustees in
which interest or ownership is evidenced by certificate or
other written instrument includes, but is not limited to, an
association commonly referred to as a business trust or
Massachusetts trust. In determining whether a trustee or
trustees are conducting a business, the form of the agreement
is of significance but is not controlling. The actual
activities of the trustee or trustees, not their purposes and
powers, will be regarded as decisive factors in determining
whether a trust is subject to tax under Article 9-A of the Tax
Law. The mere investment of funds and the collection of income
therefrom with incidental replacement of securities and
reinvestment of funds, does not constitute the conduct of a
business in the case of a business conducted by a trustee or
trustees.
20 NYCRR 1-2.5(b).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that where a
trustee merely invests funds and collects and distributes the income therefrom,
the trust is not engaged in business and is not subject to the franchise tax.
Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171 (3rd Dept. 1948), order
resettled, 274 A.D. 1073, 85 N.Y.S.2d 705 (3rd Dept. 1949).
In an Opinion of the Attorney General of the State of New York, 47 N.Y.
Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee of an
unincorporated investment trust was without authority to reinvest amounts
received upon the sales of securities and could dispose of securities making up
the trust only upon the happening of certain specified events or the existence
of certain specified conditions, the trust was not subject to the franchise tax.
See also Fibreboard Asbestos Compensation Trust (Advisory Opinion) Commission of
Taxation and Finance, TSB-A-97(3)(C) and 75B-A-97(1)I, January 21, 1997, CCH NY
St. Tax Rep.P. 402-649; and Petition of Richards, TXB-A-94(2)I, Commissioner of
Taxation and Finance, February 1, 1994, CCH 1993-1994 NY New Matters Transfer
Binder atP. 401-477.
In the instant situation, the Trustee is not empowered to, and we
assume will not, sell equity securities contained in the corpus of the Fund and
reinvest the proceeds therefrom. Further, the power to sell such equity
securities is limited to circumstances in which the credit-worthiness or
soundness of the issuer of such equity security is in question or in which cash
is needed to pay redeeming Unit holders or to pay expenses, or where the Fund is
liquidated subsequent to the termination of the Indenture. In substance, the
Trustee will merely collect and distribute income and will not reinvest any
income or proceeds, and the Trustee has no power to vary the investment of any
Unit holder in the Fund.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust will be
deemed to be the owner of the trust under certain circumstances, and therefore
taxable on his proportionate interest in the income thereof. Where this Federal
tax rule applies, the income attributed to the grantor will also be income to
him for New York income tax purposes. See TSB-M-78(9)(c), New York Department of
Taxation and Finance, June 23, 1978.
By letter dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be considered as
owning a share of each asset of a Trust in the proportion that the number of
Units held by such holder bears to the total number of Units outstanding and the
income of a Trust will be treated as the income of each Unit holder in said
proportion pursuant to Subpart E of Part I, Subchapter J of Chapter 1 of the
Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we specifically rely,
we are of the opinion that under existing laws, rulings, and court decisions
interpreting the laws of the State and City of New York:
1. Each of the Trusts will not constitute an association taxable
as a corporation under New York law, and, accordingly, will not be
subject to tax on its income under the New York State franchise tax or
the New York City general corporation tax.
2. The income of the Trusts will be treated as the income of the
Unit holders under the income tax laws of the State and City of New
York.
3. Unit holders who are not residents of the State of New York
are not subject to the income tax laws thereof with respect to any
interest or gain derived from the Fund or any gain from the sale or
other disposition of the Units, except to the extent that such
interest or gain is from property employed in a business, trade,
profession or occupation carried on in the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name and the
reference to our firm in the Registration Statement and in the Prospectus.
Very truly yours,
WINSTON & STRAWN
EXHIBIT 4.1
INTERACTIVE DATA
FINANCIAL TIMES Information
100 William Street, 15th Floor, New York, NY 10038 USA
Tel: (212) 269-6300 Fax: (212) 771-6445
February 29, 2000
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen Focus Portfolios, Series 208 The Dow 5 & Tech Strategic Trust,
March 2000 Series (A Unit Investment Trust) Registered Under the Securities
Act of 1933, File No. 333-30032
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund, a copy of which is attached hereto.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Corporation, as the
Evaluator, and to the use of the Obligations prepared by us which are referred
to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
Steve Miano
Director Fixed Income Data Operations
EXHIBIT 4.2
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
We have issued our report dated March 1, 2000 on the statement of
condition and related securities portfolio of Van Kampen Focus Portfolios,
Series 208 as of March 1, 2000 contained in the Registration Statement on Form
S-6 and Prospectus. We consent to the use of our report in the Registration
Statement and Prospectus and to the use of our name as it appears under the
caption "Other Matters-Independent Certified Public Accountants."
Grant Thornton LLP
Chicago, Illinois
March 1, 2000
