MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 217
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 217 on March 21, 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 4-7. Revisions have been made and the portfolios have been
completed.
Pages 8-10. The descriptions of the Securities issuers have been
completed.
Pages 11-12. The Report of Independent Certified Public Accountants
and Statements of Condition have been completed.
FILE NO. 333-31328
CIK #1104545
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 217
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 8:00
a.m. on March 21, 2000 pursuant to Rule 487.
Van Kampen
Focus Portfolios(SM)
A Division of Van Kampen Funds Inc.
Morgan Stanley Euro-Technology 20 IndexSM Trust, Series 3A
Morgan Stanley Euro-Technology 20 IndexSM Trust, Series 3B
- --------------------------------------------------------------------------------
Van Kampen Focus Portfolios, Series 217 includes the unit investment trusts
described above (the "Trusts"). Each Trust seeks to increase the value of your
investment by investing in a portfolio of stocks of European technology
companies included in the Morgan Stanley EuroTec IndexSM on the Initial Date of
Deposit. We offer the portfolio in two separate Trusts with different maturity
options. The Series A Trust terminates in 15 months for investors with shorter
investment horizons. The Series B Trust terminates in five years for investors
with longer investment horizons. Of course, we cannot guarantee that a Trust
will achieve its objective.
March 21, 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 21, 2000
Series A Series B
Public Offering Price Trust Trust
------------ ------------
<S> <C> <C>
Aggregate value of Securities per Unit (1) $ 9.900 $ 9.900
Sales charge 0.295 0.450
Less deferred sales charge 0.195 0.350
Public offering price per Unit (2) $ 10.000 $ 10.000
Trust Information
Initial number of Units (3) 26,023 26,023
Aggregate value of Securities (1) $ 257,627 $ 257,627
Estimated initial distribution per Unit (June 2000) (4) $ 0.02 $ 0.02
Estimated annual dividends per Unit (4) $ 0.02595 $ 0.02595
Redemption price per Unit (5) $ 9.69 $ 9.53
</TABLE>
General Information
Initial Date of Deposit March 21, 2000
Series A Mandatory Termination Date June 19, 2001
Series B Mandatory Termination Date March 21, 2005
Record Dates June 10 and December 10
Distribution Dates June 25 and December 25
- --------------------------------------------------------------------------------
(1) ZEach Security is valued at the most recent closing sale price as of the
close of the New York Stock Exchange on the last 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 for each Trust is
described on the next page.
(2) The public offering price will include any accumulated dividends or cash in
the Income or Capital Accounts of a Trust.
(3) At the close of the New York Stock Exchange on the Initial Date of Deposit,
the number of Units may be adjusted so that the public offering price per
Unit equals $10. The number of Units and fractional interest of each Unit
in a Trust will increase or decrease to the extent of any adjustment.
(4) This estimate is based on the most recently declared quarterly dividends or
interim and final dividends accounting for any foreign withholding taxes.
Actual dividends may vary due to a variety of factors. See "Risk Factors".
(5) The redemption price is reduced by any remaining deferred sales charge. See
"Rights of Unitholders--Redemption of Units". The redemption price includes
the estimated organizational and offering costs. The redemption price will
not include these costs after the initial offering period.
<TABLE>
<CAPTION>
Fee Table
Series A Series B
Trust Trust
-----------------------------
Transaction Fees (as % of offering price)
<S> <C> <C>
Initial sales charge (1)............................................. 1.00% 1.00%
Deferred sales charge (2)............................................ 1.95% 3.50%
-----------------------------
Maximum sales charge................................................. 2.95% 4.50%
=============================
Maximum sales charge on reinvested dividends......................... 1.95% 3.50%
=============================
Estimated Organizational Costs per Unit.............................. $ 0.02064 $ 0.01873
=============================
Estimated Annual Expenses per Unit
Trustee's fee and operating expenses................................. $ 0.03688 $ 0.04627
Supervisory and evaluation fees...................................... $ 0.00500 $ 0.00500
-----------------------------
Estimated annual expenses per Unit................................... $ 0.04188 $ 0.05127
=============================
Estimated Costs Over Time
One year............................................................. $ 36 $ 52
Three years.......................................................... $ 89 $ 62
Five years........................................................... N/A $ 74
Ten years............................................................ N/A N/A
</TABLE>
This fee table is intended to assist you in understanding the costs that you
will bear and to present a comparison of fees. The "Estimated Costs Over Time"
example illustrates the expenses you would pay on a $1,000 investment assuming a
5% annual return and redemption at the end of each period. This example assumes
that you reinvest all distributions at the end of each year. The Series A Trust
example assumes that you reinvest your investment into a new trust when the
Trust terminates at the end of each 15-month period. 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 deferred sales charge for the Series A Trust is actually equal to
$0.195 per Unit. The deferred sales charge for the Series B Trust is
actually equal to $0.35 per Unit. These amounts will exceed the percentages
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 July 10, 2000
through March 9, 2001. Your Trust pays a proportionate amount of this
charge on the 10th day of each month beginning in the accrual period until
paid in full.
Morgan Stanley Euro-Technology 20 Indexsm Trusts
Each Trust seeks to provide capital appreciation through an investment in a
fixed portfolio of the stocks included in the Morgan Stanley EuroTec Indexsm on
the Initial Date of Deposit. In creating the index, Morgan Stanley sought to
design a European benchmark that provides broad industry representation of
equally-weighted, highly liquid, pure technology companies that is rebalanced
annually. The index is the exclusive property and is a service mark of Morgan
Stanley. We believe that the Trusts offer a unique opportunity to increase your
exposure to a strong foreign sector. The technological revolution has been under
way in America for some time, but Europe is just beginning to benefit from many
of these technological trends. Wireless phones, Internet usage, and computers
are beginning to change the way Europeans live and work in much the same was as
they appear to be changing the way Americans live and work. Consider these
factors:
o The European Information Observatory (EITO) estimates that half of the
European Union's population will be Internet users by 2003 compared to
20% as of December 31, 1999. EITO also believes that web firms could
contribute up to 80% of the European Union's gross domestic product.
o The European personal computer market sold 30 million units last year
and is expanding at an annual rate of more than 20%. In Germany, 45%
of adults have access to a personal computer at home, but fewer than
40% do in Britain, and barely 30% in Italy and France. (Source:
Fortune Magazine 2/21/2000).
o The three largest European mobile communications developers (Nokia,
Siemens, and Ericsson) are now cooperating on the third generation of
mobile phones. Current mobile communications are generally limited to
a data transmission speed of 28.8 kilobits per second. Third
generation phones will generally be able to send and receive data at
broadband speed. (Source: Fortune Magazine 1/24/2000).
o One quarter of Western Europeans now have access to the Internet and
5% of those have made online purchases, according to a new report
called "European Internet and eCommerce: Ready for 2000?" (Source: IDC
Research).
Morgan Stanley set the beginning index value to 200 as of the close of
trading on June 21, 1996. The index includes 20 European electronics-based
technology companies representing a wide range of technology industry segments.
These segments include Computer Services, Computer Software, Enterprise
Software, Technical Software, Electronics, Telecommunications Equipment,
Semiconductors, Semiconductor Capital Equipment, and Diversied Technology
Conglomerates. The index attempts to include bellwether stocks that provide a
balanced representation of these sub-industries within the European market. The
index includes only electronics-based technology companies and excludes
biotechnology, medical, test and instrumentation companies. The index currently
includes five United Kingdom, five French, four Dutch, two German, two Swedish
and two Finnish companies.
There is no assurance that the trends discussed above will continue or that
expectations will actually occur. Your investment could be negatively impacted
if these trends do not continue or if current expectations are not realized.
Stocks of technology companies often experience above-average price volatility
and speculative trading. No one can guarantee that a Trust will achieve its
objective. The value of your Units may fall below the price you paid for the
Units. You should read the "Risk Factors" section before you invest.
Two Maturity Options. Because different investors have different investment
horizons, we offer two portfolios with different maturities that invest in the
same companies. You should consider Series A if you intend to hold your
investment for 15 months or less. You should consider Series B if you intend to
hold your investment for approximately five years. In either case, you should
consider the impact of price volatility when selecting the appropriate Series.
While Series A and Series B invest in the same companies, they are separate
portfolios and have different sales charges and expenses. As a result, the
performance and exact composition of each Trust may differ.
<TABLE>
<CAPTION>
Series A 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>
57 Alcatel $ 228.018 0.80% $ 12,997.05
90 ASM Lithography Holding N.V. 138.252 0.00 12,442.68
82 Atos SA 149.059 0.00 12,222.84
2,477 Baan Company, N.V. 5.180 0.00 12,829.82
46 Cap Gemini SA 276.699 0.25 12,728.14
153 CMG Plc 86.128 0.16 13,177.65
131 Dassault Systemes S.A. 101.255 0.18 13,264.40
157 Getronics NV 80.809 0.24 12,687.05
71 Koninklijke (Royal) Philips Electronics N.V. 183.671 0.54 13,040.62
351 Logica Plc 36.554 0.15 12,830.32
922 Misys Plc 13.727 0.39 12,656.49
63 Nokia Oyj 203.493 0.33 12,820.08
965 Sage Group Plc 12.864 0.04 12,414.11
19 SAP AG 702.943 0.20 13,355.92
578 SEMA Group Plc 20.708 0.21 11,969.50
79 Siemens AG 169.407 0.52 13,383.18
69 STMicroelectronics 196.571 0.02 13,563.40
133 Telefonaktiebolaget LM Ericsson 98.621 0.20 13,116.58
187 Tietoenator Oyj 73.459 0.55 13,736.75
216 WM-Data AB 57.365 0.43 12,390.78
- ---------- ------------
6,846 $ 257,627.36
========== ============
</TABLE>
See "Notes to Portfolios".
<TABLE>
<CAPTION>
Series B 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>
57 Alcatel $ 228.018 0.80% $ 12,997.05
90 ASM Lithography Holding N.V. 138.252 0.00 12,442.68
82 Atos SA 149.059 0.00 12,222.84
2,477 Baan Company, N.V. 5.180 0.00 12,829.82
46 Cap Gemini SA 276.699 0.25 12,728.14
153 CMG Plc 86.128 0.16 13,177.65
131 Dassault Systemes S.A. 101.255 0.18 13,264.40
157 Getronics NV 80.809 0.24 12,687.05
71 Koninklijke (Royal) Philips Electronics N.V. 183.671 0.54 13,040.62
351 Logica Plc 36.554 0.15 12,830.32
922 Misys Plc 13.727 0.39 12,656.49
63 Nokia Oyj 203.493 0.33 12,820.08
965 Sage Group Plc 12.864 0.04 12,414.11
19 SAP AG 702.943 0.20 13,355.92
578 SEMA Group Plc 20.708 0.21 11,969.50
79 Siemens AG 169.407 0.52 13,383.18
69 STMicroelectronics 196.571 0.02 13,563.40
133 Telefonaktiebolaget LM Ericsson 98.621 0.20 13,116.58
187 Tietoenator Oyj 73.459 0.55 13,736.75
216 WM-Data AB 57.365 0.43 12,390.78
- ---------- ------------
6,846 $ 257,627.36
========== ============
</TABLE>
See "Notes to Portfolios".
Notes to Portfolios
(1) The Securities are initially represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited
with the Trustee. Contracts to acquire Securities were entered into on
March 20, 2000 and have settlement dates ranging from March 22, 2000 to
March 31, 2000 (see "The Trusts").
(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
prior to 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
-------------- --------------
Series A Trust $258,127 $ (500)
Series B Trust $258,127 $ (500)
(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 most recent
close of trading on the New York Stock Exchange on the business day prior
to the Initial Date of Deposit. Estimated annual dividends per share are
calculated by annualizing the most recently declared dividends or by adding
the most recent interim and final dividends declared and reflect any
foreign withholding taxes.
The Securities. A brief description of each of the issuers of the Securities
is listed below.
Alcatel. Alcatel develops, produces and distributes telecommunications
equipment and cables and offers telecommunications services. The company
manufactures and markets mobile telephones, microwave radio systems, switching
equipment and underwater networks, printed circuit boards, inductive components,
converters and optronics and solutions for utilities, cable TV operators and the
Internet.
ASM Lithography Holding N.V. ASM Lithography Holding N.V. develops,
manufactures, markets and services photolithography projection systems, known as
wafer steppers and step and scan. The company supplies its products to
integrated circuit manufacturers that use them to produce semiconductors. ASM's
customers are located in the United States, Asia and Western Europe.
Atos SA. Atos SA offers computer data services. The company processes,
transmits and stores data, verifies credit, offers software solutions, installs
computer networks and manages and markets mailing lists.
Baan Company, N.V. Baan Company, N.V. provides business management software.
The company's software integrates sales forecasting, component procurement,
inventory management, manufacturing control, project management, distribution,
transportation and finance. Baan's software is an open system which can be
reconfigured in response to changes in production and operational processes.
Cap Gemini SA. Cap Gemini SA offers computer consulting services. The
company offers software products and information systems management, project
management and education and training services. Cap Gemini serves customers in
the petroleum, financial services, automotive, aerospace and telecommunications
industries in Europe and the United States.
CMG Plc. CMG Plc is an information technology (IT) company, which provides
consultancy systems and services to clients worldwide. The company's system
development/IT consultancy area provides services for
systems development, integration, project management. Their processing
services/facilities management includes payroll processing, personnel
administration and share registration processing.
Dassault Systemes S.A. Dassault Systemes S.A. develops computer-aided design,
manufacturing and engineering software products. The company markets and sells
through a relationship with International Business Machines, Inc. Dassault's
product, "Catia," provides designers and engineers with a fully integrated
three-dimensional computer modeling system.
Getronics N.V. Getronics N.V. provides computer products and computer
services around the world. The company and its subsidiaries offer computer
system solutions, maintenance and installation services and market computer
products and components, data communications equipment and network systems.
Koninklijke (Royal) Philips Electronics N.V. Koninklijke (Royal) Philips
Electronics N.V. manufactures lighting, consumer electronics, music and films,
multi-media devices, domestic appliances and personal care items,
semi-conductors, medical devices, communication systems and industrial
electronics. The company sells its products worldwide.
Logica Plc. Logica Plc is a computer software and service company. Through
its subsidiaries, the group designs, produces, markets, integrates, supplies and
maintains custom-built software and hardware systems. Logica also offers
consulting and project management services in the information technology
markets. The group supplies its services to the financial, government,
transportation and utilities markets.
Misys Plc. Misys Plc develops and licenses a variety of application software
products to customers in the Financial Services, Telecommunication, Healthcare
and Insurance sectors. The group also provides transaction processing, in
addition to data and support services.
Nokia Oyj. Nokia Oyj is an international telecommunications company. The
company develops and manufactures mobile phones, networks and systems for
cellular and fixed networks. Nokia also develops and supplies access networks,
multimedia equipment and other telecom related products. The company provides
its products and services worldwide.
Sage Group Plc. Sage Group Plc is a software publishing company. The group
develops, publishes and distributes accounting and payroll software for personal
computer systems. Via its subsidiaries, Sage also maintains a registered user
database which provides a market for their related products and services,
including computer forms, software support contracts, program upgrades and
customer training.
SAP AG (Systeme, Anwendungen, Produkte in der Datenverarbeitung). SAP AG
(Systeme, Anwendungen, Produkte in der Datenverarbeitung) is a multinational
software company headquartered in Walldorf, Germany. SAP develops business
software, consults on organizational usage of its applications software and
provides training services. SAP markets its products and services through
subsidiaries, distributors and other business partners worldwide.
SEMA Group Plc. SEMA Group Plc is an information technology company. The
company provides facilities management, standard software products and systems
integration products, including consulting and outsourcing. SEMA provides
products and services to customers in the defense, energy, banking, transport,
telecommunications. industrial and government sectors. Sema supplies its
products internationally.
Siemens AG. Siemens AG manufactures a wide range of industrial and consumer
products. The company builds locomotives, traffic control systems, and
automotive electronics and engineers electrical power plants. Siemens also
provides public and private communications networks, computers, building control
systems, medical equipment, household appliances and electrical components. The
company operates worldwide.
STMicroelectronics. STMicroelectronics designs, develops, manufactures and
markets semiconductor integrated circuits and discrete devices. The company's
products are used in the telecommunications, consumer electronics, automotive,
computer and industrial sectors. Geographically, customers are located in North
America, Europe, Asia/Pacific and Japan.
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 product 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.
Tietoenator Oyj. Tietoenator Oyj is an information technology service
company. The company specializes in the developing, integration, maintenance and
operation of advanced information systems. Tietoenator provides its services to
banking and insurance companies, as well as to companies within the
telecommunications, media, energy, trade, forest and manufacturing industries in
Europe.
WM-Data AB. WM-Data AB is a computer consulting company. The company provides
solutions involving studies and analysis, project management, development,
maintenance and software, as well as training and data processing services for
administrative systems. WM-Data sells its services to major companies,
organizations and public sector agencies in the Nordic Countries.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of Van
Kampen Focus Portfolios, Series 217:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen Focus Portfolios, Series 217 as of March 21, 2000. The
statements of condition and portfolios are the responsibility of the Sponsor.
Our responsibility is to express an opinion on such financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of an irrevocable letter of credit deposited to purchase securities
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen Focus Portfolios, Series
217 as of March 21, 2000, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Chicago, Illinois
March 21, 2000
<TABLE>
<CAPTION>
STATEMENTS OF CONDITION
As of March 21, 2000
Series A Series B
Trust Trust
--------------- --------------
INVESTMENT IN SECURITIES
<S> <C> <C>
Contracts to purchase Securities (1) $ 257,627 $ 257,627
--------------- --------------
Total $ 257,627 $ 257,627
=============== ==============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Organizational costs (2) $ 537 $ 487
Deferred sales charge liability (3) 5,074 9,108
Interest of Unitholders--
Cost to investors (4) 260,230 260,230
Less: Gross underwriting commission and organizational costs (2)(4)(5) 8,214 12,198
--------------- --------------
Net interest to Unitholders (4) 252,016 248,032
--------------- --------------
Total $ 257,627 $ 257,627
=============== ==============
</TABLE>
- --------------------------------------------------------------------------------
(1) The value of the Securities is determined by Interactive Data Corporation
on the bases set forth under "Public Offering--Offering Price". The
contracts to purchase Securities are collateralized by separate irrevocable
letters of credit which have been deposited with the Trustee.
(2) A portion of the Public Offering Price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing a Trust. The
amount of these costs are set forth in the "Fee Table." A distribution will
be made as of the close of the initial offering period to an account
maintained by the Trustee from which this obligation of the investors will
be satisfied.
(3) Represents the amount of mandatory distributions from a Trust on the bases
set forth under "Public Offering".
(4) The aggregate public offering price and the aggregate sales charge are
computed on the bases set forth under "Public Offering-- Offering Price".
(5) Assumes the maximum sales charge.
THE TRUSTS
- --------------------------------------------------------------------------------
The Trusts were created under the laws of the State of New York pursuant to a
Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the date of
this Prospectus (the "Initial Date of Deposit"), among Van Kampen Funds Inc., as
Sponsor, Van Kampen Investment Advisory Corp., as Supervisor, The Bank of New
York, as Trustee, and American Portfolio Evaluation Services, a division of Van
Kampen Investment Advisory Corp., as Evaluator.
The Trusts offer investors the opportunity to purchase Units representing
proportionate interests in portfolios of actively traded equity securities. A
Trust may be an appropriate medium for investors who desire to participate in a
portfolio of common 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 Trusts. Unless otherwise terminated as
provided in the Trust Agreement, the Trusts will terminate on the Mandatory
Termination Date and any remaining Securities will be liquidated or distributed
by the Trustee within a reasonable time. As used in this Prospectus the term
"Securities" means the securities (including contracts to purchase these
securities) listed in "Portfolio" for each Trust and any additional securities
deposited into each Trust.
Additional Units of a Trust may be issued at any time by depositing in the
Trust (i) additional Securities, (ii) contracts to purchase Securities together
with cash or irrevocable letters of credit or (iii) cash (or a letter of credit)
with instructions to purchase additional Securities. As additional Units are
issued by a Trust, the aggregate value of the Securities will be increased and
the fractional undivided interest represented by each Unit will be decreased.
The Sponsor may continue to make additional deposits into a Trust following the
Initial Date of Deposit provided that the additional deposits will be in amounts
which will maintain, as nearly as practicable, the same percentage relationship
among the number of shares of each Security in the Trustportfolio that existed
immediately prior to the subsequent deposit. Investors may experience a dilution
of their investments and a reduction in their anticipated income because of
fluctuations in the prices of the Securities between the time of the deposit and
the purchase of the Securities and because the Trusts will pay the associated
brokerage or acquisition fees.
Each Unit of a Trust initially offered represents an undivided interest in
that Trust. To the extent that any Units are redeemed by the Trustee or
additional Units are issued as a result of additional Securities being deposited
by the Sponsor, the fractional undivided interest in that Trust represented by
each unredeemed Unit will increase or decrease accordingly, although the actual
interest in the Trust will remain unchanged. Units will remain outstanding until
redeemed upon tender to the Trustee by Unitholders, which may include the
Sponsor, or until the termination of the Trust Agreement.
Each Trust consists of (a) the Securities (including contracts for the
purchase thereof) listed under the applicable "Portfolio" as may continue to be
held from time to time in the Trust, (b) any additional Securities acquired and
held by the Trust pursuant to the provisions of the Trust Agreement and (c) any
cash held in the related Income and Capital Accounts. Neither the Sponsor nor
the Trustee shall be liable in any way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------------
Each Trust seeks to increase the value of your investment by investing in a
portfolio of stocks of European technology companies included in the Morgan
Stanley EuroTec IndexSM on the Initial Date of Deposit. We cannot guarantee that
a Trust will achieve its objective.
You should note that we applied the selection criteria to the Securities for
inclusion in the Trusts as of the Initial Date of Deposit. After this date, the
Securities may no longer meet the selection criteria. Should a Security no
longer meet the selection criteria, we will generally not remove the Security
from its Trust portfolio.
A balanced investment portfolio incorporates various style and capitalization
characteristics. We offer unit trusts with a variety of styles and
capitalizations to meet your needs. We determine style characteristics (growth
or value) based on the criteria used in selecting the Trust portfolio.
Generally, a growth portfolio includes companies in a growth phase of their
business with increasing earnings. A value portfolio generally includes
companies with low relative price-earnings ratios that we believe are
undervalued. We determine market capitalizations as follows based on the
weighted median market capitalization of a portfolio: Small-Cap -- less than
$1.6 billion; Mid-Cap -- $1.6 billion to $9.5 billion; and Large-Cap -- over
$9.5 billion. We determine all style and capitalization characteristics as of
the Initial Date of Deposit and the characteristics may vary thereafter. We will
not remove a Security from a Trust as a result of any change in characteristics.
RISK FACTORS
- --------------------------------------------------------------------------------
Price Volatility. The Trusts invest in stocks of foreign companies. The value
of Units will fluctuate with the value of these stocks and may be more or less
than the price you originally paid for your Units. The market value of stocks
sometimes moves up or down rapidly and unpredictably. Because the Trusts are
unmanaged, the Trustee will not sell stocks in response to market fluctuations
as is common in managed investments. In addition, because some Trusts hold 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 a Trust will be positive over any period of time.
Dividends. Stocks represent ownership interests in the issuers and are not
obligations of the issuers. Common stockholders have a right to receive
dividends only after the company has provided for payment of its creditors,
bondholders and preferred stockholders. Common stocks do not assure dividend
payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
Foreign Stocks. Because the Trusts invest in stocks of foreign companies,
each Trust involves additional risks that differ from an investment in domestic
stocks. These risks include the risk of losses due to future political and
economic developments, international trade conditions, foreign withholding taxes
and restrictions on foreign investments and exchange of securities. The Trusts
also involve the risk that fluctuations in exchange rates between the U.S.
dollar and foreign currencies may negatively affect the value of the stocks. The
Trusts involve the risk that information about the stocks is not publicly
available or is inaccurate due to the absence of uniform accounting and
financial reporting standards. In addition, some foreign securities markets are
less liquid than U.S. markets. This could cause a Trust to buy stocks at a
higher price or sell stocks at a lower price than would be the case in a highly
liquid market. Foreign securities markets are often more volatile and involve
higher trading costs than U.S. markets, and foreign companies, securities
markets and brokers are also generally not subject to the same level of
supervision and regulation as in the U.S. Certain stocks may be held in the form
of American Depositary Receipts or other similar receipts ("ADRs"). ADRs
represent receipts for foreign common stock deposited with a custodian (which
may include the Trustee). The ADRs in a Trust, if any, trade in the U.S. in U.S.
dollars and are registered with the Securities and Exchange Commission. ADRs
generally involve the same types of risks as foreign common stock held directly.
Some ADRs may experience less liquidity than the underlying common stocks traded
in their home market.
Europe. The Trusts invest in stocks principally traded in Europe. These
Trusts involve additional risks that differ from an investment in United States
companies. In recent years, many European countries have participated in the
European Economic and Monetary Union (EMU) seeking to develop a unified European
economy. For this reason and others, many European countries have experienced
significant political, social and economic change in recent years. Any negative
consequences resulting from these changes could affect the value of your Trust.
On January 1, 1999, eleven EMU member countries introduced a new European
currency called the Euro. This may result in uncertainties for European
securities markets and operation of your Trust. This introduction requires the
redenomination of European debt and equity securities over a period of time.
This could result in various accounting differences and/or tax treatments that
otherwise would not likely occur. As part of the Euro conversion, participating
countries will no longer control their own monetary policies by directing
independent interest rates or currency transactions. Instead, a new European
Central Bank has authority to direct monetary policy, including money supply of
the national currencies of the participating countries to the Euro. Certain EMU
members, including the United Kingdom, are not implementing the Euro at this
time. This could raise additional questions and complications within European
markets. European markets could face significant difficulties if the Euro
introduction does not take place as planned. These difficulties could include
such things as severe currency fluctuations and market disruptions. No one can
predict whether all phases of the conversion will take place as scheduled or
whether future difficulties will occur. No one can predict the impact of the
conversion. All of these issues could have a negative impact on the value of
your Units.
Technology Issuers. The Trusts invest 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.
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 Trusts do not
properly process date-related information after December 31, 1999, the resulting
difficulties could adversely impact the Trusts. This is commonly known as the
"Year 2000 Problem." The Sponsor, Evaluator, Supervisor and Trustee are taking
steps to address this problem and to obtain reasonable assurances that other
service providers to the Trusts are taking comparable steps. We cannot guarantee
that these steps will be sufficient to avoid any adverse impact on the Trusts.
This problem may impact corporations to varying degrees based on factors such as
industry sector and degree of technological sophistication. We cannot predict
what impact, if any, this problem will have on the issuers of the Securities.
In addition, computer failures throughout the financial services industry
beginning January 1, 2000 could have a detrimental effect 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 the Trusts.
PUBLIC OFFERING
- --------------------------------------------------------------------------------
General. Units are offered at the Public Offering Price which includes the
underlying value of the Securities, the initial sales charge, and cash, if any,
in the Income and Capital Accounts. The "Fee Table" describes the sales charges
in detail. If any deferred sales charge payment date is not a business day, we
will charge the payment on the next business day. If you purchase Units after
the initial deferred sales charge payment, you will only pay that portion of the
payments not yet collected. 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, including the cost of preparing documents relating to
the 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). Beginning on March 21, 2001, the
secondary market sales charge for the Series B Trust will be 4.00% and will not
include deferred payments. The sales charge for the Series B Trust will reduce
by 0.5% on each subsequent March 21 to a minimum of 3.00%. The initial offering
period sales charge is reduced as follows:
Transaction Series A Series B
Amount* Sales Charge Sales Charge
-------------- -------------- --------------
$50,000 - $99,999 2.70% 4.25%
$100,000 - $249,999 2.50 4.00
$250,000 - $499,999 2.25 3.50
$500,000 - $999,999 2.00 2.50
$1,000,000 or more 1.50 1.50
- ---------------
*The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied on
whichever basis is more favorable to the investor.
Any sales charge reduction is the responsibility of the selling broker,
dealer or agent. An investor may aggregate purchases of Units of the Trusts for
purposes of qualifying for volume purchase discounts listed above. The reduced
sales charge structure will also apply on all purchases by the same person from
any one dealer of units of Van Kampen-sponsored unit investment trusts which are
being offered in the initial offering period (a) on any one day (the "Initial
Purchase Date") or (b) on any day subsequent to the Initial Purchase Date if the
units purchased are of a unit investment trust purchased on the Initial Purchase
Date. In the event units of more than one trust are purchased on the Initial
Purchase Date, the aggregate dollar amount of such purchases will be used to
determine whether purchasers are eligible for a reduced sales charge. Such
aggregate dollar amount will be divided by the public offering price per unit of
each respective trust purchased to determine the total number of units which
such amount could have purchased of each individual trust. Purchasers must then
consult the applicable trust's prospectus to determine whether the total number
of units which could have been purchased of a specific trust would have
qualified for a reduced sales charge and the amount of such reduction. To
determine the applicable sales charge reduction it is necessary to accumulate
all purchases made on the Initial Purchase Date and all purchases made in
accordance with (b) above. Units purchased in the name of the spouse of a
purchaser or in the name of a child of such purchaser ("immediate family
members") will be deemed to be additional purchases by the purchaser for the
purposes of calculating the applicable sales charge. The reduced sales charges
will also be applicable to a trustee or other fiduciary purchasing securities
for one or more trust estate or fiduciary accounts. 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 brokerage,
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 Trusts offered in this prospectus,
unitholders of any Van Kampen-sponsored unit investment trust may utilize their
redemption or termination proceeds to purchase Units of all Trusts 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 in the Trusts. The
initial price of the Securities was determined by Interactive Data Corporation,
a firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities. The Evaluator will generally determine the value of the
Securities as of the Evaluation Time on each business day and will adjust the
Public Offering Price of Units accordingly. This Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each business
day. The Evaluation Time is the close of the New York Stock Exchange on each
Trust business day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a business day,
will be held until the next determination of price. The term "business day", as
used herein and under "Rights of Unitholders--Redemption of Units", excludes
Saturdays, Sundays and holidays observed by the New York Stock Exchange. The
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 a Trust, taken as a whole, which are represented by
the Units.
Unit Distribution. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. Units repurchased in the
secondary market, if any, may be offered by this Prospectus at the secondary
market Public Offering Price in the manner described above.
The Sponsor intends to qualify Units for sale in a number of states. Brokers,
dealers and others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period as
described below.
Transaction Series A Series B
Amount* Concession Concession
-------------- -------------- --------------
Less than $50,000 2.25% 3.50%
$50,000 - $99,999 2.00 3.25
$100,000 - $249,999 1.75 3.00
$250,000 - $499,999 1.50 2.50
$500,000 - $999,999 1.25 1.50
$1,000,000 or more 0.75 0.75
- ---------------
*The breakpoint concessions or agency commissions are also applied on a Unit
basis using a breakpoint equivalent of $10 per Unit and are applied on whichever
basis is more favorable to the distributor.
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 will receive additional compensation of $.005 per Unit; any firm
that distributes 1,000,000 - 1,999,999 Units will receive $.01 per Unit; any
firm that distributes 2,000,000 - 2,999,999 Units will receive $.015 per Unit;
and any firm that distributes 3,000,000 Units or more will receive $.02 per
Unit. A firm may aggregate Units of the Series A Trust and the Series B Trust
offered in this prospectus to qualify for these compensation levels.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For transactions involving unitholders
of other Van Kampen unit investment trusts who use their redemption or
termination proceeds to purchase Units of the Trusts, the total concession or
agency commission will amount to 1.30% per Unit for the Series A Trust and 2.50%
per Unit for the Series B Trust. For all secondary market transactions the total
concession or agency commission will amount to 70% of the sales charge.
Notwithstanding anything to the contrary herein, in no case shall the total of
any concessions, agency commissions and any additional compensation allowed or
paid to any broker, dealer or other distributor of Units with respect to any
individual transaction exceed the total sales charge applicable to such
transaction. The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units and to change the amount of the concession or
agency commission to dealers and others from time to time.
Broker-dealers of the Trusts, banks and/or others may be eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their representatives who have sold a minimum number of units
of unit investment trusts created by the Sponsor during a specified time period.
In addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, banks and/or others may be eligible
to win other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to such brokers, dealers, banks and/or others that sponsor
sales contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by such
persons at the public offering price during such programs. Also, the Sponsor in
its discretion may from time to time pursuant to objective criteria established
by the Sponsor pay fees to qualifying entities for certain services or
activities which are primarily intended to result in sales of Units of the
Trusts. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of any Trust. These programs will not change the price Unitholders
pay for their Units or the amount that a Trust will receive from the Units sold.
Sponsor Compensation. The Sponsor will receive a gross sales commission equal
to the total sales charge applicable to each transaction. Any sales charge
discount provided to investors will be borne by the selling dealer or agent. In
addition, the Sponsor will realize a profit or loss as a result of the
difference between the price paid for the Securities by the Sponsor and the cost
of the Securities to each Trust on the Initial Date of Deposit as well as on
subsequent deposits. See "Notes to Portfolios". The Sponsor has not participated
as sole underwriter or as manager or as a member of the underwriting syndicates
or as an agent in a private placement for any of the Securities. The Sponsor may
realize profit or loss as a result of the possible fluctuations in the market
value of the Securities, since all proceeds received from purchasers of Units
are retained by the Sponsor. In maintaining a secondary market, the Sponsor will
realize profits or losses in the amount of any difference between the price at
which Units are purchased and the price at which Units are resold (which price
includes the applicable sales charge) or from a redemption of repurchased Units
at a price above or below the purchase price. Cash, if any, made available to
the Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the Sponsor,
subject to the limitations of the Securities Exchange Act of 1934.
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 and to purchase Units at the
secondary market repurchase price (which is described under "Right of
Unitholders--Redemption of Units"). The Sponsor may discontinue purchases of
Units or discontinue purchases at this price at any time. In the event that a
secondary market is not maintained, a Unitholder will be able to dispose of
Units by tendering them to the Trustee for redemption at the Redemption Price.
See "Rights of Unitholders--Redemption of Units". Unitholders should contact
their broker to determine the best price for Units in the secondary market.
Units sold prior to the time the entire deferred sales charge has been collected
will be assessed the amount of any remaining deferred sales charge at the time
of sale. The Trustee will notify the Sponsor of any tendered of Units for
redemption. If the Sponsor's bid in the secondary market equals or exceeds the
Redemption Price per Unit, it may purchase the Units not later than the day on
which Units would have been redeemed by the Trustee. The Sponsor may sell
repurchased Units at the secondary market Public Offering Price per Unit.
RETIREMENT ACCOUNTS
- --------------------------------------------------------------------------------
Units are available for purchase in connection with certain types of
tax-sheltered retirement plans, including Individual Retirement Accounts for the
individuals, Simplified Employee Pension Plans for employees, qualified plans
for self-employed individuals, and qualified corporate pension and profit
sharing plans for employees. The minimum purchase for these accounts is reduced
to 25 Units but may vary by selling firm. The purchase of Units may be limited
by the plans' provisions and does not itself establish such plans.
WRAP FEE AND ADVISORY ACCOUNTS
- --------------------------------------------------------------------------------
Units may be available for purchase by investors who purchase Units through
registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for brokerage,
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. 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. This table
illustrates the transaction fees you will pay as a percentage of the public
offering price per Unit.
Series A Series B
Trust Trust
--------- ---------
Fee paid on purchase 0.00% 0.00%
Deferred sponsor retention 0.70 1.00
--------- ---------
Total 0.70% 1.00%
========= =========
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 a Trust will generally be distributed to Unitholders on each
Distribution Date to Unitholders of record on the preceding Record Date. These
dates are listed under "Summary of Essential Financial Information". A person
becomes a Unitholder of record on the date of settlement (generally three
business days after Units are ordered). Unitholders may elect to receive
distributions in cash or to have distributions reinvested into additional Units.
Distributions may also be reinvested into Van Kampen mutual funds. See "Rights
of Unitholders--Reinvestment Option".
Dividends received by a Trust are credited to the Income Account of the
Trust. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds received on the
sale of any Securities, to the extent not used to meet redemptions of Units or
pay deferred sales charges, fees or expenses, will be distributed to
Unitholders. Proceeds received from the disposition of any Securities after a
record date and prior to the following distribution date will be held in the
Capital Account and not distributed until the next distribution date. Any
distribution to Unitholders consists of each Unitholder's pro rate share of the
available cash in the Income and Capital Accounts as of the related Record Date.
Reinvestment Option. Unitholders may have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option (to the
extent Units may be lawfully offered for sale in the state in which the
Unitholder resides) through two options, if available. 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 Trusts. The prospectus relating to
each Reinvestment Fund describes its investment policies and how to begin
reinvestment. A Unitholder may obtain a prospectus for the Reinvestment Funds
from the Sponsor. Purchases of shares of a Reinvestment Fund will be made at a
net asset value computed on the Distribution Date. Unitholders with an existing
Guaranteed Reinvestment Option account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new
account which allows purchases of Reinvestment Fund shares at net asset value.
A participant may elect to terminate his or her reinvestment plan and receive
future distributions in cash by notifying the Trustee in writing no later than
five days before a distribution date. The Sponsor, each Reinvestment Fund, and
its investment adviser shall have the right to suspend or terminate these
reinvestment plans at any time.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286. Certificates must be tendered to the
Trustee, duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed (or by providing satisfactory indemnity in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. On the seventh day following the tender, the
Unitholder will be entitled to receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received by the Trustee after the Evaluation
Time or on a day which is not a Trust business day, the date of tender is deemed
to be the next business day.
Unitholders tendering 1,000 or more Units of a Trust for redemption may
request an in kind distribution of Securities equal to the Redemption Price per
Unit on the date of tender. Trusts generally do not offer in kind distributions
of portfolio securities that are held in foreign markets. An in kind
distribution will be made by the Trustee through the distribution of each of the
Securities in book-entry form to the account of the Unitholder's broker-dealer
at Depository Trust Company. Amounts representing fractional shares will be
distributed in cash. The Trustee may adjust the number of shares of any Security
included in a Unitholder's in kind distribution to facilitate the distribution
of whole shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in kind or sold, the size of a Trust will be, and
the diversity of a Trust may be, reduced. Sales may be required at a time when
Securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. The price received upon redemption may be more or less
than the amount paid by the Unitholder depending on the value of the Securities
at the time of redemption. Special federal income tax consequences will result
if a Unitholder requests an in kind distribution. See "Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rate share of each Unit in each Trust determined on
the basis of (i) the cash on hand in the Trust, (ii) the value of the Securities
in the Trust and (iii) dividends receivable on the Securities in the Trust
trading ex-dividend as of the date of computation, less (a) amounts representing
taxes or other governmental charges payable out of the Trust, (b) the accrued
expenses of the Trust and (c) any unpaid deferred sales charge payments. During
the initial offering period, the redemption price and the secondary market
repurchase price will also include estimated organizational costs. For these
purposes, the Evaluator may determine the value of 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.
Certificates. Ownership of Units is evidenced in book entry form unless a
Unitholder makes a written request to the Trustee that ownership be in
certificate form. Units are transferable by making a written request to the
Trustee and, in the case of Units in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not limited
to, trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Fractional certificates
will not be issued. The Trustee may require a Unitholder to pay a reasonable fee
for each certificate reissued or transferred and to pay any governmental charge
that may be imposed in connection with each transfer or interchange. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Reports Provided. Unitholders will receive a statement of dividends and other
amounts received by a Trust for each distribution. Within a reasonable time
after the end of each year, each person who was a Unitholder during that year
will receive a statement describing dividends and capital received, actual Trust
distributions, Trust expenses, a list of the Securities and other Trust
information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
TRUST ADMINISTRATION
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Portfolio Administration. The Trusts are not managed funds and, except as
provided in the Trust Agreement, Securities generally will not be sold or
replaced. The Sponsor may, however, direct that Securities be sold in certain
limited circumstances to protect the Trust based on advice from the Supervisor.
These situations may include events such as the issuer having defaulted on
payment of any of its outstanding obligations or the price of a Security has
declined to such an extent or other credit factors exist so that in the opinion
of the Sponsor retention of the Security would be detrimental to the Trust. 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 a Trust, the
Sponsor may direct the Trustee to sell the securities or property and distribute
the proceeds to Unitholders or to accept the securities or property for deposit
in the Trust. Should any contract for the purchase of any of the Securities
fail, the Sponsor will (unless substantially all of the moneys held in the Trust
to cover the purchase are reinvested in substitute Securities in accordance with
the Trust Agreement) refund the cash and sales charge attributable to the failed
contract to all Unitholders on or before the next distribution date.
When your Trust sells Securities, the composition and diversity of the
Securities in the Trust may be altered. In order to obtain the best price for a
Trust, it may be necessary for the Supervisor to specify minimum amounts
(generally 100 shares) in which blocks of Securities are to be sold. In
effecting purchases and sales of a Trust's portfolio securities, the Sponsor may
direct that orders be placed with and brokerage commissions be paid to brokers,
including brokers which may be affiliated with the Trusts, the Sponsor or
dealers participating in the offering of Units. In addition, in selecting among
firms to handle a particular transaction, the Sponsor may take into account
whether the firm has sold or is selling units of unit investment trusts which it
sponsors.
Amendment of the Trust Agreement. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
Termination. Each Trust will terminate on the Mandatory Termination Date or
upon the sale or other disposition of the last Security held in the Trust. A
Trust may be terminated at any time with consent of Unitholders representing
two-thirds of the outstanding Units or by the Trustee when the value of the
Trust is less than $500,000 ($3,000,000 if the value of the Trust has exceeded
$15,000,000) (the "Minimum Termination Value"). Unitholders will be notified of
any termination. The Trustee may begin to sell Securities in connection with a
Trust termination nine business days before, and no later than, the Mandatory
Termination Date. Approximately thirty days before this date, the Trustee will
notify Unitholders of the termination and provide a form enabling qualified
Unitholders to elect an in kind distribution of Securities. See "Rights of
Unitholders--Redemption of Units". This form must be returned at least five
business days prior to the Mandatory Termination Date. Unitholders will receive
a final cash distribution within a reasonable time after the Mandatory
Termination Date. All distributions will be net of Trust expenses and costs.
Unitholders will receive a final distribution statement following termination.
The Information Supplement contains further information regarding termination of
the Trusts. See "Additional Information".
Limitations on Liabilities. The Sponsor, Evaluator, Supervisor and Trustee
are under no liability for taking any action or for refraining from taking any
action in good faith pursuant to the Trust Agreement, or for errors in judgment,
but shall be liable only for their own willful misfeasance, bad faith or gross
negligence (negligence in the case of the Trustee) in the performance of their
duties or by reason of their reckless disregard of their obligations and duties
hereunder. The Trustee is not be liable for depreciation or loss incurred by
reason of the sale by the Trustee of any of the Securities. In the event of the
failure of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and is not be liable for any action taken by it in good faith under
the Trust Agreement. The Trustee is not liable for any taxes or other
governmental charges imposed on the Securities, on it as Trustee under the Trust
Agreement or on a Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other taxing
authority having jurisdiction. In addition, the Trust Agreement contains other
customary provisions limiting the liability of the Trustee. The Trustee, Sponsor
and Supervisor may rely on any evaluation furnished by the Evaluator and have no
responsibility for the accuracy thereof. Determinations by the Evaluator shall
be made in good faith upon the basis of the best information available to it.
Sponsor. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the
Trust. The Sponsor is an indirect subsidiary of Morgan Stanley Dean Witter & Co.
Van Kampen Funds Inc. specializes in the underwriting and distribution of unit
investment trusts and mutual funds with roots in money management dating back to
1926. The Sponsor is a member of the National Association of Securities Dealers,
Inc. and has offices at One Parkview Plaza, Oakbrook Terrace, Illinois 60181,
(630) 684-6000 and 2800 Post Oak Boulevard, Houston, Texas 77056, (713)
993-0500. As of November 30, 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 Trusts and
returns over specified time periods on other similar Van Kampen trusts (which
may show performance net of expenses and charges which the Trusts would have
charged) with returns on other taxable investments such as the common stocks
comprising the Dow Jones Industrial Average, the S&P 500, other investment
indices, corporate or U.S. government bonds, bank CDs, money market accounts or
money market funds, or with performance data from Lipper Analytical Services,
Inc., Morningstar Publications, Inc. or various publications, each of which has
characteristics that may differ from those of the Trusts. Information on
percentage changes in the dollar value of Units may be included from time to
time in advertisements, sales literature, reports and other information
furnished to current or prospective Unitholders. Total return figures may not be
averaged and may not reflect deduction of the sales charge, which would decrease
return. No provision is made for any income taxes payable. Past performance may
not be indicative of future results. The Trust portfolios are not managed and
Unit price and return fluctuate with the value of common stocks in the
portfolios, so there may be a gain or loss when Units are sold. As with other
performance data, performance comparisons should not be considered
representative of the Trust's relative performance for any future period.
TAXATION
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The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of the Units of your
Trust. The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment within the meaning of Section
1221 of the Internal Revenue Code of 1986 (the "Code")). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust. For purposes of the following discussion and opinion, it is assumed
that each Security in the Trust is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Security when such income is considered to be received by the
Trust.
2. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent an
in kind distribution of stock is received by such Unitholder as described
below). The price a Unitholder pays for his Units, generally including sales
charges, is allocated among his pro rata portion of each Security held by the
Trust (in proportion to the fair market values thereof on the valuation date
nearest the date the Unitholder purchase his Units) in order to determine his
initial tax basis for his pro rata portion of each Security held by the Trust.
Unitholders should consult their own tax advisers with regard to calculation of
basis. For federal income tax purposes, a Unitholder's pro rata portion of
dividends as defined by Section 316 of the Code paid by a corporation with
respect to a Security held by the Trust are taxable as ordinary income to the
extent of such corporation's current and accumulated "earnings and profits". A
Unitholder's pro rata portion of dividends paid on such Security which exceeds
such current and accumulated earnings and profits will first reduce a
Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Equity Security shall generally be
treated as capital gain. In general, the holding period for such capital gain
will be determined by the period of time a Unitholder has held his Units.
3. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain, except in the case of a dealer or a financial
institution. A Unitholder's portion of loss, if any, upon the sale or redemption
of Units or the disposition of Securities held by the Trust will generally be
considered a capital loss (except in the case of a dealer or a financial
institution). Unitholders should consult their tax advisers regarding the
recognition of such capital gains and losses for federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trust is deferred. The income (or proceeds from redemption) a
Unitholder must take into account for federal income tax purposes is not reduced
by amounts deducted to pay the deferred sales charge. Unitholders should consult
their own tax advisers as to the income tax consequences of the deferred sales
charge.
Dividends Received Deduction. A Unitholder will be considered to have
received all of the dividends paid on his pro rata portion of each Security when
such dividends are received by the Trust regardless of whether such dividends
are used to pay a portion of a deferred sales charge. Unitholders will be taxed
in this manner regardless of whether distributions from the Trust are actually
received by the Unitholder or are automatically reinvested. A corporation that
owns Units will generally be entitled to a 70% dividends received deduction with
respect to such Unitholder's pro rata portion of dividends received by the Trust
(to the extent such dividends are taxable as ordinary income, as discussed
above, and are attributable to domestic corporations) in the same manner as if
such corporation directly owned the Securities paying such dividends (other than
corporate Unitholders, such as "S" corporations, which are not eligible for the
deduction because of their special characteristics and other than for purposes
of special taxes such as the accumulated earnings tax and the personal holding
corporation tax). However, a corporation owning Units should be aware that
Sections 246 and 246A of the Code impose additional limitations on the
eligibility of dividends for the 70% dividends received deduction. These
limitations include a requirement that stock (and therefore Units) must
generally be held at least 46 days (as determined under Section 246(c) of the
Code). Final regulations have been issued which address special rules that must
be considered in determining whether the 46 day holding requirement is met.
Moreover, the allowable percentage of the deduction will be reduced from 70% if
a corporate Unitholder owns certain stock (or Units) the financing of which is
directly attributable to indebtedness incurred by such corporation.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations. 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 the Trust as
miscellaneous itemized deductions subject to this limitation. Unitholders should
consult with their own tax advisers regarding the deductibility of Trust
expenses.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the
Trust or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. The Internal Revenue Service Restructing and
Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers other than
corporations, net capital gain (which is defined as net long-term capital gain
over net short-term capital loss for the taxable year) realized from property
(with certain exclusions) is subject to a maximum marginal stated tax rate of
20% (10% in the case of certain taxpayers in the lowest tax bracket). Capital
gain or loss is long-term if the holding period for the asset is more than one
year, and is short-term if the holding period for the asset is one year or less.
The date on which a Unit is acquired (i.e., the "trade date") is excluded for
purposes of determining the holding period of the Unit. Capital gains realized
from assets held for one year or less are taxed at the same rates as ordinary
income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust including his pro rata
portion of all Securities represented by a Unit.
The Taxpayer Relief Act of 1997 (the "1997 Tax Act") includes provisions that
treat certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts or similar transactions) as constructive
sales for purposes of recognition of gain (but not of loss) and for purposes of
determining the holding period. Unitholders should consult their own tax
advisers with regard to any such constructive sales rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of Unitholders--Redemption of
Units", under certain circumstances a Unitholder tendering Units for redemption
may request an in kind distribution. A Unitholder may also under certain
circumstances request an in kind distribution upon the termination of the Trust.
See "Rights of Unitholders--Redemption of Units. As previously discussed, prior
to the redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust's assets for
federal income tax purposes. The receipt of an in kind distribution will result
in a Unitholder receiving whole shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an in kind distribution
with respect to each Security held by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion in the Securities held by
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of such Security held by the Trust, such Unitholder will
generally recognize gain or loss based upon the difference between the amount of
cash received by the Unitholder and his tax basis in such fractional share of a
Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an in
kind distribution will have to analyze the tax consequences with respect to each
Security owned by the Trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by the Trust. Unitholders who request an in kind distribution are advised
to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder of his
Units. The cost of the Units is allocated among the Securities held in the Trust
in accordance with the proportion of the fair market values of such Securities
on the valuation date nearest the date the Units are purchased in order to
determine such Unitholder's tax basis for his pro rata portion of each Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
as described above.
Other Matters. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust (other than those
that are not treated as United States source income, if any) will generally be
subject to United States income taxation and withholding in the case of Units
held by non-resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporations 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.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unitholders under the existing income tax
laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal and certain aspects of
New York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit
of the Trust that (a) is (i) for United States federal income tax purposes a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unitholder in paragraph (a) but whose
income from a Unit is effectively connected with such Unitholder's conduct of a
United States trade or business. The term also includes certain former citizens
of the United States whose income and gain on the Units will be taxable.
Unitholders should consult their tax advisers regarding potential foreign, state
or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
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Compensation of Sponsor, Supervisor and Evaluator. The Sponsor will not
receive any fees in connection with its activities relating to the Trusts.
However, the Supervisor and Evaluator, which are affiliates of the Sponsor, will
receive the annual fee for portfolio supervisory and evaluation services set
forth in the "Fee Table". These fees may exceed the actual costs of providing
these services to the Trusts but at no time will the total amount received for
supervisory and evaluation services rendered to all Van Kampen unit investment
trusts in any calendar year exceed the aggregate cost of providing these
services in that year.
Trustee's Fee. For its services the Trustee will receive the fee from each
Trust set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Trust expenses). The Trustee benefits to the extent there are
funds in the Capital and Income Accounts since these Accounts are non-interest
bearing to Unitholders and the amounts earned by the Trustee are retained by the
Trustee. Part of the Trustee's compensation for its services to each Trust is
expected to result from the use of these funds.
Miscellaneous Expenses. The following additional charges are or may be
incurred by a Trust: (a) normal expenses (including the cost of mailing reports
to Unitholders) incurred in connection with the operation of such Trust, (b)
fees of the Trustee for extraordinary services, (c) expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the
Sponsor, (d) various governmental charges, (e) expenses and costs of any action
taken by the Trustee to protect a Trust and the rights and interests of
Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of a Trust without negligence, bad faith
or wilful misconduct on its part, (g) foreign custodial and transaction fees,
(h) costs associated with liquidating the securities held in a Trust portfolio,
(i) any offering costs incurred after the end of the initial offering period and
(j) expenditures incurred in contacting Unitholders upon termination of a Trust.
Each Trust may pay the expenses of updating its registration statement each
year. Unit investment trust sponsors have historically paid these expenses.
General. The fees and expenses of a Trust will accrue on a daily basis. The
deferred sales charge, fees and expenses are generally paid out of the Capital
Account of the related Trust. When these amounts are paid by or owing to the
Trustee, they are secured by a lien on the related 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 statements of condition and the
related portfolios included in this Prospectus have been audited by Grant
Thornton LLP, independent certified public accountants, as set forth in their
report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
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This Prospectus does not contain all the information set forth in the
Registration Statement filed by the 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
Morgan Stanley Euro-Technology
20 IndexSM Trusts........................ 4
Notes to Portfolios......................... 8
The Securities.............................. 9
Report of Independent Certified
Public Accountants....................... 10
Statements of Condition .................... 11
The Trusts.................................. A-1
Objectives and Securities Selection......... A-1
Risk Factors................................ A-2
Public Offering............................. A-4
Retirement Accounts......................... A-8
Wrap Fee and Advisory Accounts.............. A-8
Rights of Unitholders....................... A-8
Trust Administration........................ A-10
Taxation.................................... A-12
Trust Operating Expenses.................... A-16
Other Matters............................... A-16
Additional Information...................... A-17
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When Units of the Trusts 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.
EMSPRO217
#37738
PROSPECTUS
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MARCH 21, 2000
Van Kampen
Focus Portfolios(SM)
Morgan Stanley Euro-Technology
20 Index TrustSM, Series 3A
Morgan Stanley Euro-Technology
20 Index TrustSM, Series 3B
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 217
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This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the Prospectus. This
Information Supplement should be read in conjunction with the Prospectus. This
Information Supplement is not a prospectus, does not include all of the
information that an investor should consider before investing in a Trust and may
not be used to offer or sell Units without the Prospectus. Copies of the
Prospectus can be obtained by contacting the Sponsor at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 or by contacting your broker. This Information
Supplement is dated as of the date of the Prospectus and all capitalized terms
have been defined in the Prospectus.
Table of Contents
Page
Risk Factors 2
The Trusts 5
Sponsor Information 6
Trustee Information 7
Trust Termination 8
RISK FACTORS
Price Volatility. Because the Trusts invest in common stocks of foreign
companies, you should understand the risks of investing in common stocks before
purchasing Units. These risks include the risk that the financial condition of
the company or the general condition of the stock market may worsen and the
value of the stocks (and therefore Units) will fall. Common 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. Common stocks represent ownership interests in a company and are
not obligations of the company. Accordingly, common stockholders have a right to
receive payments from the company that is subordinate to the rights of
creditors, bondholders or preferred stockholders of the company. This means that
common stockholders have a right to receive dividends only if a company's board
of directors declares a dividend and the company has provided for payment of all
of its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if the
company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.
Foreign Stocks. Because certain Trusts invest in foreign common stocks,
they involve additional risks that differ from an investment in domestic stocks.
Investments in foreign securities may involve a greater degree of risk than
those in domestic securities. There is generally less publicly available
information about foreign companies in the form of reports and ratings similar
to those that are published about issuers in the United States. Also, foreign
issuers are generally not subject to uniform accounting, auditing and financial
reporting requirements comparable to those applicable to United States issuers.
With respect to certain foreign countries, there is the possibility of adverse
changes in investment or exchange control regulations, expropriation,
nationalization or confiscatory taxation, limitations on the removal of funds or
other assets of a Trust, political or social instability, or diplomatic
developments which could affect United States investments in those countries.
Moreover, industrial foreign economies may differ favorably or unfavorably from
the United States' economy in terms of growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. Foreign securities markets are generally not as developed or
efficient as those in the United States. While growing in volume, they usually
have substantially less volume than the New York Stock Exchange, and securities
of some foreign issuers are less liquid and more volatile than securities of
comparable United States issuers. Fixed commissions on foreign exchanges are
generally higher than negotiated commissions on United States exchanges. There
is generally less government supervision and regulation of securities exchanges,
brokers and listed issuers than in the United States.
Foreign Currencies. Certain Trusts also involve the risk that fluctuations
in exchange rates between the U.S. dollar and foreign currencies may negatively
affect the value of the stocks. For example, if a foreign stock rose 10% in
price but the U.S. dollar gained 5% against the related foreign currency, a U.S.
investor's return would be reduced to about 5%. This is because the foreign
currency would "buy" fewer dollars or, conversely, a dollar would buy more of
the foreign currency. Many foreign currencies have fluctuated widely against the
U.S. dollar for a variety of reasons such as supply and demand of the currency,
investor perceptions of world or country economies, political instability,
currency speculation by institutional investors, changes in government policies,
buying and selling of currencies by central banks of countries, trade balances
and changes in interest rates. A Trust's foreign currency transactions will be
conducted with foreign exchange dealers acting as principals on a spot (i.e.,
cash) buying basis. These dealers realize a profit based on the difference
between the price at which they buy the currency (bid price) and the price at
which they sell the currency (offer price). The Evaluator will estimate the
currency exchange rates based on current activity in the related currency
exchange markets, however, due to the volatility of the markets and other
factors, the estimated rates may not be indicative of the rate a Trust might
obtain had the Trustee sold the currency in the market at that time.
Liquidity. Whether or not the stocks in a Trust are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
Additional Units. The Sponsor may create additional Units of a Trust by
depositing into the Trust additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Trust will pay brokerage fees.
Voting. Only the Trustee may sell or vote the stocks in a Trust. While you
may sell or redeem your Units, you may not sell or vote the stocks in your
Trust. The Sponsor will instruct the Trustee how to vote the stocks. The Trustee
will vote the stocks in the same general proportion as shares held by other
shareholders if the Sponsor fails to provide instructions.
Year 2000. The Trusts could be negatively impacted if computer systems used
by the Sponsor, Evaluator, Supervisor or Trustee or other service providers to
the Trusts do not properly process date-related information after January 1,
2000. This is commonly known as the "Year 2000 Problem". The Sponsor, Evaluator,
Supervisor and Trustee are taking steps to address this problem and to obtain
reasonable assurances that other service providers to the Trusts are taking
comparable steps. We cannot guarantee that these steps will be sufficient to
avoid any adverse impact on the Trusts. This problem is expected to impact
corporations to varying degrees based on factors such as industry sector and
degree of technological sophistication. We cannot predict what impact, if any,
this problem will have on the issuers of stocks in the Trusts.
Technology Issuers. Certain Trusts are concentrated 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. These
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.
Telecommunications Issuers. Because certain Trusts are concentrated in the
telecommunications industry, the value of the Units of these Trusts may be
susceptible to factors affecting the telecommunications industry. The
telecommunications industry is subject to governmental regulation and the
products and services of telecommunications companies may be subject to rapid
obsolescence. These factors could affect the value of Units. Telephone companies
in the United States, for example, are subject to both state and federal
regulations affecting permitted rates of returns and the kinds of services that
may be offered. Certain types of companies represented in a Trust portfolio are
engaged in fierce competition for a share of the market of their products. As a
result, competitive pressures are intense and the stocks are subject to rapid
price volatility. While a Trust portfolio concentrates on the securities of
established suppliers of traditional telecommunication products and services, a
Trust may also invest in smaller telecommunications companies which may benefit
from the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, and may also involve
greater risk than large, established issuers. Such smaller companies may have
limited product lines, market or financial resources, and their securities may
trade less frequently and in limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of securities of
other issuers.
THE TRUSTS
In seeking the Trusts' objectives, the Sponsor considered the ability of
the Securities to outpace inflation. While inflation is currently relatively
low, the United States has historically experienced periods of double-digit
inflation. While the prices of securities will fluctuate, over time securities
have outperformed the rate of inflation, and other less risky investments, such
as government bonds and U.S. Treasury bills. Past performance is, however, no
guarantee of future results.
Investors should note that the selection criteria were applied to the
Securities for inclusion in the Trusts as of the Initial Date of Deposit. Should
a Security no longer meet the criteria used for selection for a Trust, such
Security will not as a result thereof be removed from a Trust portfolio.
Hypothetical annual total returns for the Morgan Stanley EuroTec Index
("EuroTec Index"), Morgan Stanley High-Technology 35 Index ("High-Tech 35
Index") and the Morgan Stanley Capital International Europe Index ("MSCI Europe
Index") are shown in the following table.
High- MSCI
EuroTec Tech 35 Europe
Year Index Index Index
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Inception
thru 12/31/96 30.12% 17.84% 12.55%
1997 43.88 16.83 21.58
1998 61.90 95.40 26.53
1999 117.42 110.59 14.12
This is not the past performance of any Trust or a previous series of any
Trust and does not indicate the future performance of any Trust. The performance
figures for the EuroTec Index reflect hypothetical Trust sales charges and
expenses. The performance of any Trust will differ from the index because a
Trust includes a sales charge and expenses. In addition, a Trust may not be able
to exactly replicate the index and will not necessarily change if the index
changes. The Morgan Stanley High-Technology 35 Index was developed in December
1994 by the Morgan Stanley Research Group and consists of 35 technology
companies representing the full breadth of the technology industry. The Morgan
Stanley Capital International Europe Index is a common benchmark used to compare
investments in Europe. Created in 1969, the Europe Index currently includes
nearly 600 stocks from 15 developed European countries. The 1998 and 1999 year
returns for the Morgan Stanley High-Technology 35 Index and the Morgan Stanley
Euro-Technology 20 Index were primarily attributable to the performance of the
composition of high technology companies which have performed extremely well
over the past few years. There is no guarantee that the circumstances leading to
this performance will continue in the future.
The historical performance of these indices is shown for illustrative
purposes only; it is not meant to forecast, imply or guarantee the future
performance of any particular investment vehicle or the Trust. Securities in
which the Trust invests will be different from those in these indices. Common
stocks involve greater risks than government bonds and CDs, as they are more
volatile and have greater potential for loss of principal.
The EuroTec index is an equal weighted index that includes large and small
industry bellwether stocks. The EuroTec index seeks to minimize the pitfalls of
market capitalization indexes. Morgan Stanley believes that market
capitalization indexes fail to accommodate the wide range of market
capitalizations and revenue bases common to the technology industry.
Morgan Stanley rebalances the EuroTec index to an equal weighting per company
on the third Friday of each June. This allows stocks that appreciate during the
year to command increasing influence in the index while guarding against the
long-term negatives of a market-capitalization weighted index. Morgan Stanley
also evaluates the index twice a year, on the close of the last trading days of
May and November. Morgan Stanley evaluates index changes based on nature of
business, market capitalization and liquidity. Morgan Stanley announces any
changes the following week and changes take effect at the close of the third
Friday of the month. We will not rebalance the Trust portfolios during their
lives. Changes in the index will not result in changes in the portfolios.
However, we may offer additional portfolios each year that include the current
index components and weightings.
The Morgan Stanley indices (the "Indices") are the exclusive property of
Morgan Stanley and is a service mark of Morgan Stanley and has been licensed for
use by the Trusts and Van Kampen Funds Inc.
This fund is not sponsored, endorsed, sold or promoted by Morgan Stanley.
Morgan Stanley makes no representation or warranty, express or implied, to the
owners of this fund or any member of the public regarding the advisability of
investing in funds generally or in this fund particularly or the ability of the
Indices to track general stock market performance. Morgan Stanley is the
licensor of certain trademarks, service marks and trade names of Morgan Stanley
and of the Indices which are determined, composed and calculated by Morgan
Stanley without regard to the issuer of this fund or this fund. Morgan Stanley
has no obligation to take the needs of the issuer of this fund or the owners of
this fund into consideration in determining, composing or calculating the
Indices. Morgan Stanley is not responsible for and has not participated in the
determination of or the timing of, prices at, or quantities of this fund to be
issued or in the determination or calculation of the equation by which Units of
this fund is redeemable for cash. Morgan Stanley has no obligation or liability
to owners of this fund in connection with the administration, marketing or
trading of this fund.
ALTHOUGH MORGAN STANLEY SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE
IN THE CALCULATION OF THE INDICES FROM SOURCES WHICH MORGAN STANLEY CONSIDERS
RELIABLE, NEITHER MORGAN STANLEY NOR ANY OTHER PARTY GUARANTEES THE ACCURACY
AND/OR THE COMPLETENESS OF THE INDICES OR ANY DATA INCLUDED THEREIN. NEITHER
MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES,
OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDICES OR
ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR
FOR ANY OTHER USE. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY EXPRESS
OR IMPLIED WARRANTIES, AND MORGAN STANLEY HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO THE INDICES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL MORGAN STANLEY OR ANY OTHER PARTY HAVE ANY
LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY
OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES.
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 prior 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. The value of the
Unitholder's fractional shares of the Securities will be paid in cash.
Unitholders with less than 1,000 Units, Unitholders in a Trust with 1,000 or
more Units not requesting an in kind distribution will receive a cash
distribution from the sale of the remaining Securities within a reasonable time
following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the appropriate Trust any
accrued costs, expenses, advances or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee, costs of liquidation
and any amounts required as a reserve to provide for payment of any applicable
taxes or other governmental charges. Any sale of Securities in a Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder of each Trust his pro rata share of the balance of the Income
and Capital Accounts of such Trust.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
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 217, 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 217 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 21st day of March 2000.
Van Kampen Focus Portfolios, Series 217
By Van Kampen Funds Inc.
By Christine K. Putong
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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 21, 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
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(Attorney-in-fact*)
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*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 217
TRUST AGREEMENT
Dated: March 21, 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 August 10, 2000 and continuing
through March 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
American Portfolio Evaluation Services,
a division of Van Kampen Investment Advisory Corp.
By James J. Boyne
- --------------------------------------
Senior Vice President
Van Kampen Investment Advisory Corp.
By James J. Boyne
- ---------------------------------------
Senior Vice President
The Bank of New York
By Linda Bommer
- -----------------------------------
Vice President
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED IN
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 217
(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 21, 2000
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Van Kampen Focus Portfolios, Series 217
---------------------------------------
Gentlemen:
We have served as counsel for Van Kampen Funds Inc. as Sponsor and
Depositor of Van Kampen Focus Portfolios, Series 217 (hereinafter referred to as
the "Trust"), in connection with the preparation, execution and delivery of a
Trust Agreement dated March 21, 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. 333-31328) 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 21, 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 217
---------------------------------------
Gentlemen:
We have acted as counsel for Van Kampen Funds Inc., Depositor of Van
Kampen Focus Portfolios, Series 217 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a Trust
Agreement dated March 21, 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 separate unit investment trusts: Morgan Stanley
Euro-Technology 20 Index Trust, Series 3A and Morgan Stanley Euro-Technology 20
Index Trust, Series 3B (each a "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
EXHIBIT 3.3
WINSTON & STRAWN
200 Park Avenue
New York, New York 10166-4193
March 21, 2000
Van Kampen Focus Portfolios, Series 217
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 217 (the "Fund") consisting of Morgan Stanley Euro-Technology 20 Index
Trust, Series 3A and Morgan Stanley Euro-Technology 20 Index Trust, Series 3B
(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 333-31328), the objectives of the Fund
are to provide the potential for dividend income and capital appreciation
through investment in a fixed portfolio of actively traded equity securities of
companies engaged in, providing services to companies in, the industry
identified in the Trust, or are the type of securities identified in the name of
the Trust.. 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 Trust, and, upon the receipt thereof, will deliver to the
Depositor a registered certificate for the number of Units representing the
entire capital of the Trust as more fully set forth in the Prospectus. The
Units, which are represented by certificates ("Certificates"), will be offered
to the public upon the effectiveness of the Registration Statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash dividends
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 Trust may be removed therefrom
by the Trustee at the direction of the Depositor upon the occurrence of certain
specified events which adversely affect the sound investment character of the
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(1) 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)(2).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that where a
trustee merely invests funds and collects and distributes the income therefrom,
the trust is not engaged in business and is not subject to the franchise tax.
Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171 (3rd Dept. 1948), order
resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd Dept. 1949).
In an Opinion of the Attorney General of the State of New York, 47 N.Y.
Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee of an
unincorporated investment trust was without authority to reinvest amounts
received upon the sales of securities and could dispose of securities making up
the trust only upon the happening of certain specified events or the existence
of certain specified conditions, the trust was not subject to the franchise tax.
See also Fibreboard Asbestos Compensation Trust (Advisory Opinion) Commission of
Taxation and Finance, TSB-A-97(3)(C) and TSB-A-97(1)I, January 21, 1997, CCH NY
St. Tax Rep.P. 402-649; and Petition of Richards, TSB-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
March 20, 2000
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Morgan Stanley Euro-Technology 20 Index Trust, Series 3A Morgan Stanley
Euro-Technology 20 Index Trust, Series 3B (A Unit Investment Trust)
Registered Under the Securities Act of 1933, File No. 333-31328
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 21, 2000 on the statements of
condition and related securities portfolios of Van Kampen Focus Portfolios,
Series 217 as of March 21, 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 21, 2000
