MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 245
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 245 on September 5, 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 4-9. Revisions have been made and the portfolios have been completed.
Pages 10-16. The descriptions of the Securities issuers have been
completed.
Pages 17-18. The Report of Independent Certified Public Accountants and
Statements of Condition have been completed.
FILE NO. 333-43720
CIK #1104599
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 245
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 September 5, 2000 pursuant to Rule 487.
VAN KAMPEN
FOCUS PORTFOLIOS(SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
FINANCIAL INSTITUTIONS PORTFOLIO, SERIES 6A
FINANCIAL INSTITUTIONS PORTFOLIO, SERIES 6B
GLOBAL ENERGY PORTFOLIO, SERIES 15
--------------------------------------------------------------------------------
Van Kampen Focus Portfolios, Series 245 includes the unit investment trusts
described above (the "Portfolios"). Each Portfolio seeks to increase the value
of your investment by investing in a diversified portfolio of stocks of
companies within a particular industry. Of course, we cannot guarantee that a
Portfolio will achieve its objective.
SEPTEMBER 5, 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
SEPTEMBER 5, 2000
FINANCIAL FINANCIAL
INSTITUTIONS INSTITUTIONS GLOBAL
PORTFOLIO PORTFOLIO ENERGY
PUBLIC OFFERING PRICE SERIES A SERIES B PORTFOLIO
------------ ------------ ------------
<S> <C> <C> <C>
Aggregate value of Securities per Unit (1) $ 9.900 $ 9.900 $ 9.900
Sales charge 0.295 0.450 0.295
Less deferred sales charge 0.195 0.350 0.195
Public offering price per Unit (2) $ 10.000 $ 10.000 $ 10.000
PORTFOLIO INFORMATION
Initial number of Units 14,988 14,988 15,103
Aggregate value of Securities (1) $ 148,375 $ 148,375 $ 149,511
Estimated initial distribution per Unit (4)(5) $ .15 $ .15 $ .15
Estimated annual distribution per Unit (5) $ .21313 $ .21313 $ .20750
Redemption price per Unit (6) $ 9.705 $ 9.550 $ 9.705
GENERAL INFORMATION
Initial Date of Deposit September 5, 2000
Mandatory Termination Date--Financial Institutions Portfolio Series B September 6, 2005
Mandatory Termination Date--Other Portfolios December 18, 2001
Record Dates--Financial Institutions Portfolio Series B (4) June 10 and December 10
Distribution Dates--Financial Institutions Portfolio Series B (4) June 25 and December 25
Record Date--Other Portfolios June 10, 2001
Distribution Date--Other Portfolios June 25, 2001
</TABLE>
--------------------------------------------------------------------------------
(1) Each Security is valued at the most recent closing sale price as of
the close of the New York Stock Exchange on the business day before
the Initial Date of Deposit.
(2) You will bear all or a portion of the expenses incurred in organizing
and offering your Portfolio. The public offering price includes the
estimated amount of these costs. The Trustee will deduct these
expenses from your Portfolio at the end of the initial offering period
(approximately three months). The estimated amount for each Portfolio
is described on the next page. The public offering price also will
include any accumulated dividends or cash in the Income or Capital
Accounts of a Portfolio.
(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 Portfolio will increase or decrease to the
extent of any adjustment.
(4) The initial Record Date for the Financial Institutions Portfolio
Series B is June 10, 2001 and the initial Distribution Date for such
Portfolio is June 25, 2001. Thereafter, the record and distribution
dates will occur inJune and December of each year.
(5) 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".
(6) 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
FINANCIAL FINANCIAL
INSTITUTIONS INSTITUTIONS GLOBAL
PORTFOLIO PORTFOLIO ENERGY
SERIES A SERIES B PORTFOLIO
---------- ----------- ----------
TRANSACTION FEES (AS % OF OFFERING PRICE)
<S> <C> <C> <C> <C>
Initial sales charge (1)......................................... 1.00% 1.00% 1.00%
Deferred sales charge (2)........................................ 1.95% 3.50% 1.95%
---------- ----------- ----------
Maximum sales charge............................................. 2.95% 4.50% 2.95%
========== =========== ===========
Maximum sales charge on reinvested dividends..................... 0.00% 0.00% 0.00%
========== =========== ===========
ESTIMATED ORGANIZATIONAL COSTS PER UNIT(3)....................... $ 0.01631 $ 0.02391 $ 0.03209
========== =========== ===========
ESTIMATED ANNUAL EXPENSES PER UNIT
Trustee's fee and operating expenses............................. $ 0.01002 $ 0.01253 $ 0.01153
Supervisory and evaluation fees.................................. $ 0.00500 $ 0.00500 $ 0.00500
---------- ----------- ----------
Estimated annual expenses per Unit............................... $ 0.01502 $ 0.01753 $ 0.01653
========== =========== ===========
ESTIMATED COSTS OVER TIME
One year......................................................... $ 33 $ 49 $ 34
Three years...................................................... $ 80 $ 53 $ 84
Five years....................................................... N/A $ 57 N/A
Ten years........................................................ N/A 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 Financial
Institutions Portfolio Series A and Global Energy Portfolio examples assume that
you reinvest your investment into a new portfolio when the Portfolio 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 "Portfolio 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 Global Energy Portfolio and the
Financial Institutions Portfolio Series A is actually equal to $0.195
per Unit. The deferred sales charge for Financial Institutions
Portfolio Series B 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 December 10, 2000 through May 9, 2001. Your
Portfolio pays a proportionate amount of this charge on the 10th day
of each month beginning in the accrual period until paid in full.
(3) You will bear all or a portion of the expenses incurred in organizing
and offering your Portfolio. The Trustee will deduct the actual amount
of these expenses from your Portfolio at the end of the initial
offering period.
FINANCIAL INSTITUTIONS PORTFOLIOS
Each Portfolio seeks to provide capital appreciation through an investment in
a portfolio of common stocks issued by financial institutions. Financial
institutions generally include insurance companies, money center banks, regional
banks, savings and loans, consumer and industrial finance companies, securities
brokerage companies, real estate investment companies, investment managers and
leasing companies. Each Trust may invest in some or all of these sectors. The
boundaries separating different financial sectors have become blurred. Banks are
not the only institutions offering checking and savings accounts, insurance
companies are not the only companies offering insurance and brokerage firms are
not the only companies offering investment products. As financial institutions
continue to consolidate, the boundaries become even more faint.
The Sponsor believes that trends may suggest that the financial institutions
industry is seeking to consolidate all financial related products and services.
A consolidated financial industry may offer one-stop financial service
supermarkets. The biggest impediment to a consolidated financial environment had
been legislation. However, recent financial reform legislation has passed that
may break down many of the historical barriers that have plagued the financial
industry. As a result, the financial institutions industry may be far less
dependent on interest rate spreads for its profitability in the future and more
dependent on fees charged for products and services. This may lead to a more
efficient and more profitable industry.
Certain factors may suggest that bank and thrift stocks offer a potential for
growth over the longer term, such as:
o An increased number of consolidations and mergers
o Low inflationary expectations
o Expansion of lending products
o Consumer confidence
o Growth in consumer spending
o Strong credit quality
o Increase in transaction volume due to improvements in technology
Of course, no one can guarantee that these trends will continue.
As with any investment, we cannot guarantee that your Portfolio 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 Portfolio may differ, although the
Sponsor does not believe that the composition of the portfolios will differ
materially.
<TABLE>
<CAPTION>
SERIES A PORTFOLIO
--------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES TO
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) PORTFOLIO (2)
------------- ----------------------------------- --------------- ----------- --------------
<S> <C> <C> <C> <C>
FINANCE/RENTAL/LEASING
116 Household International, Inc. $ 47.375 1.60% $ 5,495.50
48 Providian Financial Corporation 114.625 0.17 5,502.00
FINANCIAL CONGLOMERATES
95 Citigroup, Inc. 57.688 0.97 5,480.31
INSURANCE BROKERS/SERVICES
46 Marsh & McLennan Companies, Inc. 119.063 1.68 5,476.88
INVESTMENT BANKS/BROKERS
100 A.G. Edwards, Inc. 54.375 1.18 5,437.50
80 Bear Stearns Companies, Inc. 69.313 0.87 5,545.00
43 Goldman Sachs Group, Inc. 129.625 0.37 5,573.88
37 Lehman Brothers Holdings, Inc. 148.625 0.30 5,499.13
INVESTMENT MANAGERS
143 Franklin Resources, Inc. 38.813 0.62 5,550.19
120 T. Rowe Price Associates, Inc. 45.875 1.13 5,505.00
LIFE/HEALTH INSURANCE
103 AFLAC, Inc. 53.438 0.64 5,504.06
77 American General Corporation 71.250 2.47 5,486.25
MAJOR BANKS
104 Bank of America Corporation 52.500 3.81 5,460.00
157 Bank One Corporation 34.938 2.40 5,485.19
208 BB&T Corporation 26.688 3.45 5,551.00
99 Chase Manhattan Corporation 56.313 2.27 5,574.94
98 Comerica, Inc. 55.875 2.86 5,475.75
193 First Union Corporation 28.438 6.75 5,488.44
135 FleetBoston Financial Corporation 41.500 2.89 5,602.50
34 J.P. Morgan & Company, Inc. 159.563 2.51 5,425.13
93 PNC Financial Services Group 59.000 3.05 5,487.00
256 U.S. Bancorp 21.563 3.99 5,520.00
127 Wells Fargo & Company 42.938 2.05 5,453.06
PROPERTY/CASUALTY INSURANCE
156 ACE Limited 34.750 1.50 5,421.00
116 St. Paul Companies, Inc. 46.813 2.31 5,430.25
REGIONAL BANKS
335 Banknorth Group, Inc. 16.438 3.04 5,506.56
SAVINGS BANKS
154 Washington Mutual, Inc. 35.313 3.28 5,438.13
---------- -------------
3,273 $ 148,374.65
========== =============
<CAPTION>
See "Notes to Portfolios".
SERIES B PORTFOLIO
--------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES TO
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) PORTFOLIO (2)
---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
FINANCE/RENTAL/LEASING
116 Household International, Inc. $ 47.375 1.60% $ 5,495.50
48 Providian Financial Corporation 114.625 0.17 5,502.00
FINANCIAL CONGLOMERATES
95 Citigroup, Inc. 57.688 0.97 5,480.31
INSURANCE BROKERS/SERVICES
46 Marsh & McLennan Companies, Inc. 119.063 1.68 5,476.88
INVESTMENT BANKS/BROKERS
100 A.G. Edwards, Inc. 54.375 1.18 5,437.50
80 Bear Stearns Companies, Inc. 69.313 0.87 5,545.00
43 Goldman Sachs Group, Inc. 129.625 0.37 5,573.88
37 Lehman Brothers Holdings, Inc. 148.625 0.30 5,499.13
INVESTMENT MANAGERS
143 Franklin Resources, Inc. 38.813 0.62 5,550.19
120 T. Rowe Price Associates, Inc. 45.875 1.13 5,505.00
LIFE/HEALTH INSURANCE
103 AFLAC, Inc. 53.438 0.64 5,504.06
77 American General Corporation 71.250 2.47 5,486.25
MAJOR BANKS
104 Bank of America Corporation 52.500 3.81 5,460.00
157 Bank One Corporation 34.938 2.40 5,485.19
208 BB&T Corporation 26.688 3.45 5,551.00
99 Chase Manhattan Corporation 56.313 2.27 5,574.94
98 Comerica, Inc. 55.875 2.86 5,475.75
193 First Union Corporation 28.438 6.75 5,488.44
135 FleetBoston Financial Corporation 41.500 2.89 5,602.50
34 J.P. Morgan & Company, Inc. 159.563 2.51 5,425.13
93 PNC Financial Services Group 59.000 3.05 5,487.00
256 U.S. Bancorp 21.563 3.99 5,520.00
127 Wells Fargo & Company 42.938 2.05 5,453.06
PROPERTY/CASUALTY INSURANCE
156 ACE Limited 34.750 1.50 5,421.00
116 St. Paul Companies, Inc. 46.813 2.31 5,430.25
REGIONAL BANKS
335 Banknorth Group, Inc. 16.438 3.04 5,506.56
SAVINGS BANKS
154 Washington Mutual, Inc. 35.313 3.28 5,438.13
---------- -------------
3,273 $ 148,374.65
========== =============
</TABLE>
See "Notes to Portfolios".
GLOBAL ENERGY PORTFOLIO
The Portfolio seeks to increase the value of your investment and provide
dividend income by investing in stocks of energy companies throughout the world.
We selected stocks for a variety of reasons including industry position, growth
potential and valuation. The energy industry consists of companies active in the
production of natural resources worldwide. Within the industry, the crude
petroleum and natural gas sectors are made up of companies that operate oil and
gas field properties, including the extraction of oil, and the production of gas
and hydrocarbon liquids. The portfolio primarily includes exploration and
development companies, distributors and large multinational firms in both oil
and natural gas industries.
Oil and natural gas are leading sources of energy worldwide. Recent
developments in the industry and global economic growth may increase the future
demand for these natural resources. The industry's dedication to research,
exploration and technology has improved exploration and extraction techniques.
From new drilling methods to three-dimensional seismographic mapping, oil and
natural gas companies are better able to target potential sites and benefit from
them.
The modern global economy may also provide growth potential for the energy
industry. Oil and natural gas companies from around the world are forming joint
ventures and exploration partnerships that were unheard of less than a decade
ago. From Eastern Europe to the Pacific Rim, such ventures provide important
production opportunities. While political uncertainty and other factors can
affect such development projects, the potential reserves available in this area
of the world may provide significant earnings momentum for energy companies.
The United States represents the largest market for energy products. The
U.S. economy is currently characterized, in relative historical terms, by low
inflation and moderate growth. As the world's largest energy product consumer,
the United States provides stability for energy prices. A more dramatic change
in energy usage may come from the former Soviet Union, Eastern European
countries and the Pacific Rim. As economies grow and modernize, there is an
essential demand for energy resources for both industries and consumers. With
more efficient exploration and production techniques and new reserve potential,
the supply of oil and other energy products appears promising. Global growth may
help keep demand growing, providing price support for energy products and
ultimately benefiting oil and natural gas companies.
As with any investment, we cannot guarantee that the Portfolio will achieve
its objective. The value of your Units may fall below the price you paid for the
Units. You should read the "Risk Factors" section before you invest.
<TABLE>
<CAPTION>
PORTFOLIO
--------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES TO
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) PORTFOLIO (2)
---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
CONTRACT DRILLING
83 Diamond Offshore Drilling, Inc. $ 45.063 1.11% $ 3,740.19
94 Santa Fe International Corporation 40.125 0.32 3,771.75
62 Transocean Sedco Forex, Inc. 59.938 0.20 3,716.13
INTEGRATED OIL
54 Amerada Hess Corporation 70.000 0.86 3,780.00
+ 267 BP Amoco Plc 56.188 2.13 15,002.06
174 Chevron Corporation 85.500 3.04 14,877.00
584 Conoco, Inc. 25.813 2.94 15,074.50
181 Exxon Mobil Corporation 82.313 2.14 14,898.56
240 Phillips Petroleum Company 62.938 2.16 15,105.00
+ 242 Royal Dutch Petroleum Company 62.125 1.88 15,034.25
284 Texaco, Inc. 52.188 3.45 14,821.25
220 Unocal Corporation 33.938 2.36 7,466.25
OIL & GAS PRODUCTION
56 Anadarko Petroleum Corporation 66.000 0.30 3,696.00
187 Burlington Resources, Inc. 39.500 1.39 7,386.50
95 EOG Resources, Inc. 38.500 0.36 3,657.50
OILFIELD SERVICES / EQUIPMENT
101 Baker Hughes, Inc. 36.938 1.25 3,730.69
70 Halliburton Company 53.625 0.93 3,753.75
---------- -------------
2,994 $ 149,511.38
========== =============
See "Notes to Portfolios".
</TABLE>
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 September 1, 2000 and have a settlement date of
September 7, 2000 (see "The Portfolios").
(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
-------------- --------------
Financial Institutions Portfolio Series A $148,367 $ 8
Financial Institutions Portfolio Series B $148,367 $ 8
Global Energy Portfolio $149,511 $ --
"+" indicates that the stock is held in the form American Depositary Receipts
or similar receipts.
"^" indicates that the stock is a foreign common stock traded on a U.S.
securities exchange.
(3) Current Dividend Yield for each Security is based on the estimated
annual dividends per share and the Security's market value as of the
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.
FINANCIAL INSTITUTIONS PORTFOLIOS
A.G. Edwards, Inc. A.G. Edwards, Inc., through its subsidiaries, provides
securities and commodities brokerage services. The company also offers asset
management, insurance trust, investment banking, and other related financial
services. A.G. Edwards markets its services to individual, corporate,
government, and institutional clients throughout the United States.
ACE Limited. ACE Limited is the holding company for the ACE Group of
Companies, a property and casualty insurance business. The Group provides a
diversified range of products and services to clients through operations in
countries around the world. ACE provides specialty insurance and reinsurance
products such as agri-business, information technology, marine, and property
catastrophe insurance.
AFLAC, Inc. AFLAC, Inc. provides supplemental insurance to individuals in
the United States and Japan. The company's products help fill gaps in consumers'
primary insurance coverage. AFLAC's products include cancer expense insurance,
care plans, supplemental general medical expense plans, and living benefit
plans.
American General Corporation. American General Corporation, a diversified
financial services organization, provides retirement services, life insurance,
and consumer loans. The company offers retail financing programs through a
network of merchants in the United States.
Bank of America Corporation. Bank of America Corporation is the holding
company for Bank of America and NationsBank. The company provides retail banking
services, asset management, financial products, corporate finance, specialized
finance, capital markets, and financial services. Bank of America operates
throughout the United States as well as throughout the world.
Bank One Corporation. Bank One Corporation, a bank holding company, provides
a full range of consumer and commercial banking-related financial services. The
company is also involved in credit card and merchant processing, consumer and
education finance, mortgage banking, and insurance. Bank One operates throughout
the United States.
Banknorth Group, Inc. Banknorth Group, Inc. is a multi-bank holding company
with offices located throughout Maine, New Hampshire, Vermont, Massachusetts,
and Connecticut. The banks offer commercial and consumer banking services and
products, as well as trust and investment advisory services.
BB&T Corporation. BB&T Corporation is a multi-bank holding company. The bank
has offices in the Carolinas, Virginia, West Virginia, Kentucky, Georgia,
Maryland, and Washington D.C. BB&T also provides insurance products and
services, as well as other non-bank financial services.
Bear Stearns Companies, Inc. Bear Stearns Companies, Inc., through its Bear
Stearns & Co. Inc. subsidiary, offers investment banking and securities trading
and brokerage services. The company's business includes corporate finance and
mergers and acquisitions, institutional equities and fixed income sales and
trading, and private client services.
Chase Manhattan Corporation. Chase Manhattan Corporation is a bank holding
company that conducts domestic and international financial services through
various bank and non-bank subsidiaries. The company provides corporate finance,
wholesale banking, and investment services, as well as emphasizes originations,
underwriting, distribution, risk management products, and private banking.
Citigroup, Inc. Citigroup, Inc. is a diversified financial services holding
company that provides a broad range of financial services to consumer and
corporate customers around the world. The company's services include investment
banking, retail brokerage, corporate banking, and cash management products and
services.
Comerica, Inc. Comerica, Inc. is the holding company for business,
individual, and investment banks. The company operates banking offices in
Michigan, Texas, California, and Florida. Comerica's operations include middle
market lending, corporate banking, trust services, consumer lending, annuities,
mutual funds, life insurance, investment banking, and advisory services.
First Union Corporation. First Union Corporation is a multi-bank holding
company operating in the eastern United States. The company provides a wide
range of commercial and retail banking and trust services. First Union also
provides other financial services, including mortgage banking, credit card,
investment banking, investment advisory, home equity lending, leasing,
insurance, and securities brokerage.
FleetBoston Financial Corporation. FleetBoston Financial Corporation
provides commercial and investment banking services in the United States and in
other countries around the world. The company operates a retail banking
franchise in the Northeast, as well as Internet banking. FleetBoston also
provides investment management services for individuals and institutional
clients.
Franklin Resources, Inc. Franklin Resources, Inc., through its subsidiaries,
provides investment management, marketing, distribution, transfer agency, and
administrative services to open-end and closed-end investment companies. The
company also provides various other financial services, including retail
banking, advisory services, dealer auto loans, and credit cards.
Goldman Sachs Group, Inc. Goldman Sachs Group, Inc. is a global investment
banking and securities firm specializing in investment banking, trading and
principal investments, and asset management and securities services. The company
provides services to corporations, financial institutions, governments, and
high-net worth individuals.
Household International, Inc. Household International, Inc. provides consumer
financial services. The company offers home equity loans, auto finance loans,
and other unsecured loans, as well as private label credit cards. Household
International operates in the United States, the United Kingdom, and Canada.
J.P. Morgan & Company, Inc. J.P. Morgan & Company, Inc. is a leading global
financial services firm that serves the financial needs of business enterprises,
governments, and individuals. The company advises on corporate strategy and
structure, raises capital, makes markets in financial instruments, and manages
investment assets while also committing its own capital in a variety of
investments.
Lehman Brothers Holdings, Inc. Lehman Brothers Holdings, Inc. is an
investment banking firm. The company's activities include capital raising for
clients through securities underwriting and direct placements, corporate
finance, merchant banking, securities sales and trading and research services.
Lehman Brothers operates worldwide.
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc. is a global
professional services firm. It is the parent company of Marsh, a risk and
insurance services firm, Putnam Investments, an investment management company,
and Mercer Consulting Group, a global provider of consulting services. The
company provides analysis, advice, and transactional capabilities to clients
worldwide.
PNC Financial Services Group. PNC Financial Services Group is a diversified
financial services organization. The company provides regional banking,
wholesale banking and asset management services nationally and in the company's
primary regional markets in Pennsylvania, New Jersey, Delaware, Ohio and
Kentucky.
Providian Financial Corporation. Providian Financial Corporation is a
diversified consumer lender. The company offers a variety of loan products,
including credit cards, revolving lines of credit, home loans, secured credit
cards, and fee-based products. Providian operates in the United States.
St. Paul Companies, Inc. St. Paul Companies, Inc., through its subsidiaries,
provides property-liability insurance, reinsurance, and life insurance products
and services. The company also has a presence in the asset management industry
through its majority ownership of The John Nuveen Company. St. Paul has
operations worldwide.
T. Rowe Price Associates, Inc. T. Rowe Price Associates, Inc. and its
subsidiaries serve as investment advisor to the T. Rowe Price Mutual Funds,
other sponsored investment products, and private accounts of other institutional
and individual investors. The company also provides related administrative
services, including mutual fund transfer agent, accounting, and shareholder
services, discount brokerage, and trust services.
U.S. Bancorp. U.S. Bancorp is a bank holding company that operates offices in
the Midwest and West. The company provides banking, trust, investment, and
payment systems products and services to consumers, businesses, and
institutions. U.S. Bancorp also offers full-service brokerage services through
U.S. Bancorp Piper Jaffray.
Wells Fargo & Company. Wells Fargo & Company is a diversified financial
services company providing banking, insurance, investments, mortgage, and
consumer finance. The company operates through physical stores, the Internet and
other distribution channels across North America and elsewhere internationally.
Washington Mutual, Inc. Washington Mutual, Inc. is a financial services
company that provides a diversified line of products and services to consumers
and small to mid-sized businesses. The company offers consumer banking, mortgage
lending, commercial banking, and consumer finance throughout the United States.
GLOBAL ENERGY PORTFOLIO
Amerada Hess Corporation. Amerada Hess Corporation and its subsidiaries
explore for, produce, purchase, transport, and sell crude oil and natural gas.
The company also manufactures, purchases, transports, and markets refined
petroleum products. Amerada Hess' exploration and production activities are
located primarily in the United States, United Kingdom, Norway, and Gabon.
Anadarko Petroleum Corporation. Anadarko Petroleum Corporation is an
independent oil and gas exploration and production company. The company explores
for oil in Kansas, Oklahoma, and Texas, as well as offshore in the Gulf of
Mexico and in Alaska. Anadarko also owns and operates gas gathering systems in
its United States core producing areas. The company develops crude oil reserves
in Algeria.
Baker Hughes, Inc. Baker Hughes, Inc. supplies reservoir-centered products,
services, and systems to the worldwide oil and gas industry. The company
provides products and services for oil and gas exploration, drilling,
completion, and production. Baker also manufactures and markets a variety of
roller cutter bits and fixed cutter diamond bits.
BP Amoco Plc. BP Amoco Plc is an oil and petrochemicals company. The company
explores for and produces oil and natural gas, refines, markets, and supplies
petroleum products, and manufactures and markets chemicals. BP Amoco's chemicals
include acetic acid, acrylonitrile, ethylene and polyethylene. The company has
operations in more than 70 countries.
Burlington Resources, Inc. Burlington Resources, Inc., through its principal
subsidiaries, explores for, produces, and markets oil and gas. The company's
properties are primarily located in the United States. Burlington's operations
are conducted through several divisions located in New Mexico and Texas, as well
as in Canada.
Chevron Corporation. Chevron Corporation explores for, develops, and produces
crude oil and natural gas. The company also refines crude oil into finished
petroleum products, as well as markets and transports crude oil, natural gas,
and petroleum products. Chevron manufactures and markets a variety of chemicals
for industrial use and mines for coal. The company operates in the US and
throughout the world.
Conoco, Inc. Conoco, Inc. explores for, produces, and sells crude oil,
natural gas, and natural gas liquids. The company's downstream activities
include refining crude oil and other feedstocks into petroleum products, buying
and selling crude oil and refined products, and transporting, distributing, and
marketing petroleum products. Conoco operates in countries throughout the world.
Diamond Offshore Drilling, Inc. Diamond Offshore Drilling, Inc. drills
offshore oil and gas wells on a contract basis. The company is a world-wide deep
water driller with a fleet of offshore rigs, consisting of semisubmersibles,
jack-ups, and drillships.
EOG Resources, Inc. EOG Resources, Inc. is an oil and gas company with a
prospect portfolio and a three dimensional seismic program in place. The company
is active in Wyoming, New Mexico, Texas, California, and the Gulf of Mexico in
the United States, as well as in Canada. EOG is also pursuing development
activities in Trinidad and India.
Exxon Mobil Corporation. Exxon Mobil Corporation operates petroleum and
petrochemicals businesses on a worldwide basis. The company's operations include
exploration and production of oil and gas, electric power generation, and coal
and minerals operations. Exxon Mobil also manufactures and markets fuels,
lubricants, and chemicals.
Halliburton Company. Halliburton Company provides energy services and
engineering and construction services, as well as manufactures products for the
energy industry. The company offers discrete services and products and
integrated solutions to customers in the exploration, development, and
production of oil and natural gas.
Phillips Petroleum Company. Phillips Petroleum Company is an integrated oil
company which operates in several business segments. The company explores for
and produces petroleum world-wide, gathers and processes natural gas,
manufactures and markets petrochemicals and plastics, and refines, markets, and
transports petroleum products.
Royal Dutch Petroleum Company. Royal Dutch Petroleum Company owns 60% of the
Royal Dutch/Shell Group of companies. Through this interest, the company
explores for, produces, refines, and markets petroleum products, manufactures
chemicals, mines coal and non-ferrous metals, and produces solar cells. Royal
Dutch operates in approximately 135 countries.
Santa Fe International Corporation. Santa Fe International Corporation is an
international offshore and land contract driller. The company owns and operates
a fleet consisting of marine and land drilling rigs located in various countries
throughout the world. Santa Fe also provides drilling related services to the
petroleum industry, including third-party rig operations, incentive drilling,
and management services.
Texaco, Inc. Texaco, Inc. and its subsidiaries explore for, produce,
transport, refine and market crude oil, natural gas liquids, natural gas, and
petroleum products. The company owns, leases, or has interests in extensive
production, manufacturing, marketing, transportation, and other facilities
throughout the world.
Transocean Sedco Forex, Inc. Transocean Sedco Forex, Inc. is an offshore
drilling contractor. The company's fleet of rigs is located throughout the
world's major oil and gas drilling regions, including the United States Gulf of
Mexico, Canada, Brazil, the United Kingdom, Norway, Africa, the Middle East, and
Asia. Transocean Sedco Forex specializes in deepwater and harsh environment
drilling services.
Unocal Corporation. Unocal Corporation is an oil and gas exploration and
production company with operations in Asia and the United States Gulf of Mexico
and interests in Canada. The company also supplies steam for the generation of
electricity to power plants, conducts oil and natural gas commodity trading, and
has mining operations. In addition, Unocal provides fertilizers and green
petroleum coke.
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 245:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen Focus Portfolios, Series 245 as of September 5, 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of 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
245 as of September 5, 2000, in conformity with accounting principles generally
accepted in the United States of America.
GRANT THORNTON LLP
Chicago, Illinois
September 5, 2000
<TABLE>
<CAPTION>
STATEMENTS OF CONDITION
AS OF SEPTEMBER 5, 2000
FINANCIAL FINANCIAL
INSTITUTIONS INSTITUTIONS GLOBAL
PORTFOLIO PORTFOLIO ENERGY
SERIES A SERIES B PORTFOLIO
-------------- -------------- --------------
INVESTMENT IN SECURITIES
<S> <C> <C> <C>
Contracts to purchase Securities (1) $ 148,375 $ 148,375 $ 149,511
-------------- ------------- -------------
Total $ 148,375 $ 148,375 $ 149,511
LIABILITIES AND INTEREST
OF UNITHOLDERS
Liabilities--
Organizational costs (2) $ 245 $ 358 $ 485
Deferred sales charge liability (3) 2,923 5,246 2,945
Interest of Unitholders--
Cost to investors (4) 149,880 149,880 151,030
Less: Gross underwriting commission and
organizational costs (2)(4)(5) 4,673 7,109 4,949
-------------- ------------- -------------
Net interest to Unitholders (4) 145,207 142,771 146,081
-------------- ------------- -------------
Total $ 148,375 $ 148,375 $ 149,511
</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
Portfolio. 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 Portfolio 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 PORTFOLIOS
--------------------------------------------------------------------------------
The Portfolios 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 Portfolios offer investors the opportunity to purchase Units representing
proportionate interests in portfolios of actively traded equity securities. A
Portfolio may be an appropriate medium for investors who desire to participate
in a portfolio of stocks with greater diversification than they might be able to
acquire individually.
On the Initial Date of Deposit, the Sponsor deposited delivery statements
relating to contracts for the purchase of the Securities and an irrevocable
letter of credit in the amount required for these purchases with the Trustee. In
exchange for these contracts the Trustee delivered to the Sponsor documentation
evidencing the ownership of Units of the Portfolios. Unless otherwise terminated
as provided in the Trust Agreement, the Portfolios 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 each "Portfolio" and any additional securities
deposited into each Portfolio.
Additional Units of a Portfolio may be issued at any time by depositing in
the Portfolio (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 Portfolio, 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 Portfolio
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 Portfolio that
existed immediately prior to the subsequent deposit (such deposits will be in
amounts which will maintain, as nearly as practicable, an equal dollar amount of
each Security for the Financial Institutions Portfolios for the first 90 days of
such Portfolios). 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 Portfolios will pay the associated brokerage or
acquisition fees.
Each Unit of a Portfolio initially offered represents an undivided interest
in that Portfolio. 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 Portfolio represented
by each unredeemed Unit will increase or decrease accordingly, although the
actual interest in the Portfolio 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 Portfolio 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 Portfolio, (b) any additional Securities acquired
and held by the Portfolio 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 Portfolio seeks to increase the value of your investment by investing in
a portfolio of stocks. We cannot guarantee that a Portfolio will achieve its
objective. We describe the objective and selection criteria for each Portfolio
in the individual Portfolio sections beginning on page 4.
You should note that we applied the selection criteria to the Securities for
inclusion in the Portfolios 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 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 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 $1.7 billion; Mid-Cap --
$1.7 billion to $10.5 billion; and Large-Cap -- over $10.5 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 Portfolio as a result of any change in characteristics.
RISK FACTORS
--------------------------------------------------------------------------------
PRICE VOLATILITY. The Portfolios invest in stocks of U.S. and foreign
companies. The value of Units will fluctuate with the value of these stocks and
may be more or less than the price you originally paid for your Units. The
market value of stocks sometimes moves up or down rapidly and unpredictably.
Because the Portfolios are unmanaged, the Trustee will not sell stocks in
response to market fluctuations as is common in managed investments. In
addition, because some Portfolios 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 Portfolio will be
positive over any period of time.
DIVIDENDS. Common stocks represent ownership interests in the issuers and are
not obligations of the issuers. Accordingly, 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.
SINGLE INDUSTRY. Each Portfolio invests in a single industry. Any negative
impact on the related industry will have a greater impact on the value of Units
than on a portfolio diversified over several industries. You should understand
the risks of these industries before you invest.
Financial Services. The Financial Institutions Portfolios invest
significantly in banks and thrifts, insurance companies and investment firms.
Banks, thrifts and their holding companies are especially subject to the adverse
effects of economic recession; volatile interest rates; portfolio concentrations
in geographic markets and in commercial and residential real estate loans; and
competition from new entrants in their fields of business. In addition, banks,
thrifts and their holding companies are extensively regulated at both the
federal and state level and may be adversely affected by increased regulations.
Banks and thrifts will face increased competition from nontraditional lending
sources as regulatory changes, such as the recently enacted financial services
overhaul legislation, permit new entrants to offer various financial products.
Technological advances such as the Internet allow these nontraditional lending
sources to cut overhead and permit the more efficient use of customer data.
Banks are already facing tremendous pressure from mutual funds, brokerage firms
and other financial service providers in the competition to furnish services
that were traditionally offered by banks.
Brokerage firms, broker/dealers, investment banks, finance companies and
mutual fund companies compete with banks and thrifts to provide traditional
financial service products, in addition to their traditional services, such as
brokerage and investment advice. In addition, all financial service companies
face shrinking profit margins due to new competitors, the cost of new technology
and the pressure to compete globally.
Companies involved in the insurance industry underwrite, sell or distribute
property and casualty, life or health insurance. Many factors affect insurance
company profits, including interest rate movements, the imposition of premium
rate caps, competition and pressure to compete globally. Property and casualty
insurance profits may also be affected by weather catastrophes and other
disasters. Life and health insurance profits may be affected by mortality rates.
Already extensively regulated, insurance companies' profits may also be
adversely affected by increased government regulations or tax law changes.
Energy Issuers. The Global Energy Portfolio invests in energy companies.
Energy companies face risks related to political conditions in oil producing
regions (such as the Middle East), the actions of the Organization of Petroleum
Exporting Countries (OPEC), the price and worldwide supply of oil and natural
gas, the price and availability of alternative fuels, the ability to find and
acquire oil and gas reserves that are economically recoverable, operating
hazards, government regulation and the level of consumer demand. Political
conditions of some oil producing regions have been unstable in the past.
Political instability or war in these regions could have a negative impact on
your investment. Oil and natural gas prices can be extremely volatile. OPEC
controls a substantial portion of world oil production. OPEC may take actions to
increase or suppress the price or availability of oil. Various domestic and
foreign government authorities and international cartels also impact these
prices. Any substantial decline in these prices could have an adverse effect on
energy companies. Energy companies depend on their ability to find and acquire
additional energy reserves. The exploration and recovery process involves
significant operating hazards and can be very costly. A company has no assurance
that it will find reserves or that any reserves will be economically
recoverable. The industry also faces substantial government regulation,
including environmental regulation. These regulations have increased costs and
limited production and usage of certain fuels. All of these factors could
adversely impact your investment.
NO FDIC GUARANTEE. An investment in your Portfolio is not a deposit of any
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
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 Portfolio, including the cost of preparing documents relating
to the Portfolio (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 May 10, 2001, the secondary
market sales charge for Financial Institutions Portfolio Series B will be 4.50%
and will not include deferred payments. The sales charge for this Portfolio will
reduce by 0.5% on each subsequent September 5 to a minimum of 3.00%. The initial
offering period sales charge is reduced as follows:
GLOBAL
ENERGY
PORTFOLIO
AND
FINANCIAL FINANCIAL
INSTITUTIONS INSTITUTIONS
PORTFOLIO PORTFOLIO
TRANSACTION SERIES A SERIES B
AMOUNT* SALES CHARGE SALES CHARGE
-------------- -------------- --------------
Less than $50,000 2.95% 4.50%
$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 Portfolios
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
services, financial planning, investment advisory or asset management service,
or provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who for at least 90 days, has been an officer,
director or bona fide employee of any firm offering Units for sale to investors
or their 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 Portfolios 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
Portfolios 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.
Your Portfolio will charge the deferred sales charge per Unit regardless of
any discounts. However, if you are eligible to receive a discount such that the
sales charge you must pay is less than the applicable deferred sales charge, you
will be credited the difference between your sales charge and the deferred sales
charge at the time you buy your Units. If you elect to have distributions
reinvested into additional Units of your Portfolio, in addition to the
reinvestment Units you receive you will also be credited additional Units with a
dollar value sufficient to cover the amount of any remaining deferred sales
charge to be collected on such Units at the time of reinvestment. The dollar
value of these Units will fluctuate over time.
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 Portfolios. 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
Portfolio 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 Portfolio, 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.
GLOBAL
ENERGY
PORTFOLIO
AND
FINANCIAL FINANCIAL
INSTITUTIONS INSTITUTIONS
PORTFOLIO PORTFOLIO
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 a Series A Portfolio and a Series B
Portfolio of the same industry sector type to qualify for these compensation
levels but may not aggregate among different sectors.
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 Portfolios, the total concession
or agency commission will amount to 1.30% per Unit for the Global Energy
Porfolio and Financial Institutions Portfolio Series A and 2.50% per Unit for
the Financial Institutions Portfolio Series B. 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, 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
Portfolios. Such payments are made by the Sponsor out of its own assets, and not
out of the assets of any Portfolio. These programs will not change the price
Unitholders pay for their Units or the amount that a Portfolio 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 Portfolio 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 Portfolio may impact the value of
the Securities. This may especially be the case during the initial offering of
Units, upon Portfolio 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 Portfolio 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 Portfolio to purchase stocks at a higher price than those buyers who effect
purchases prior to purchases by your Portfolio.
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
services, financial planning, investment advisory or asset management service,
or provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed. 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 Portfolio's Sponsor, Van Kampen Funds Inc.
For example, this table illustrates the transaction fees you will pay as a
percentage of the public offering price per Unit.
GLOBAL
ENERGY
PORTFOLIO
AND
FINANCIAL FINANCIAL
INSTITUTIONS INSTITUTIONS
PORTFOLIO PORTFOLIO
SERIES A SERIES B
---------- ----------
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. That section governs the
calculation of all sales charge discounts.
RIGHTS OF UNITHOLDERS
--------------------------------------------------------------------------------
DISTRIBUTIONS. Dividends and any net proceeds from the sale of Securities
received by a Portfolio 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 Portfolio are credited to the Income Account of the
Portfolio. 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 without a
sales charge (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. 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 Portfolios. 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 Portfolio business day, the date of tender is
deemed to be the next business day.
Unitholders tendering 1,000 or more Units of a Portfolio for redemption may
request an in kind distribution of Securities equal to the Redemption Price per
Unit on the date of tender. Unitholders may not request an in kind distribution
during the five business days prior to a Portfolio's termination. Portfolios
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 Portfolio will be,
and the diversity of a Portfolio 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 Portfolio determined
on the basis of (i) the cash on hand in the Portfolio, (ii) the value of the
Securities in the Portfolio and (iii) dividends receivable on the Securities in
the Portfolio trading ex-dividend as of the date of computation, less (a)
amounts representing taxes or other governmental charges payable out of the
Portfolio, (b) the accrued expenses of the Portfolio 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 Portfolio 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
Portfolio distributions, Portfolio expenses, a list of the Securities and other
Portfolio information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
PORTFOLIO ADMINISTRATION
--------------------------------------------------------------------------------
PORTFOLIO ADMINISTRATION. The Portfolios 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 Portfolio 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
Portfolio. 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 Portfolio expenses or deferred sales charges.
If securities or property are acquired by a Portfolio, 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
Portfolio. Should any contract for the purchase of any of the Securities fail,
the Sponsor will (unless substantially all of the moneys held in the Portfolio
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 Portfolio sells Securities, the composition and diversity of the
Securities in the Portfolio may be altered. In order to obtain the best price
for a Portfolio, 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 Portfolio's 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 Portfolios, 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 Portfolio will terminate on the Mandatory Termination Date
or upon the sale or other disposition of the last Security held in the
Portfolio. A Portfolio 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 Portfolio is less than $500,000 ($3,000,000 if the value of the
Portfolio 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 Portfolio 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 Portfolio
expenses and costs. Unitholders will receive a final distribution statement
following termination. The Information Supplement contains further information
regarding termination of the Portfolios. 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 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 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
Portfolio 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 Portfolio. 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 its principal offices at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, Illinois 60181-5555, (630)
684-6000. As of November 30, 1999, the total stockholders' equity of Van Kampen
Funds Inc. was $141,554,861 (audited). Van Kampen Funds Inc. and your Portfolio
have adopted a code of ethics requiring Van Kampen's employees who have access
to information on Portfolio transactions to report personal securities
transactions. The purpose of the code is to avoid potential conflicts of
interest and to prevent fraud, deception or misconduct with respect to your
Portfolio. 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 Portfolios 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 Portfolios
and returns over specified time periods on other similar Van Kampen trusts
(which may show performance net of expenses and charges which the Portfolios
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 Portfolios.
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 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 a Portfolio's relative performance for any future period.
TAXATION
--------------------------------------------------------------------------------
The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of the Units of each
Portfolios. 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
your Portfolio. For purposes of the following discussion and opinion, it is
assumed that each Security in your Portfolio is equity for federal income tax
purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. Your Portfolio 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 Portfolio under the Code; and the income of
the Portfolio 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 Portfolio.
2. Each Unitholder will have a taxable event when the Portfolio 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
Portfolio (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
Portfolio. 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 Portfolio 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 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio
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 Portfolio (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 Portfolio 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 PORTFOLIO EXPENSES BY UNITHOLDERS. Each
Unitholder's pro rata share of each expense paid by the Portfolio 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
Portfolio as miscellaneous itemized deductions subject to this limitation.
Unitholders should consult with their own tax advisers regarding the
deductibility of Portfolio expenses.
RECOGNITION OF TAXABLE GAIN OR LOSS UPON DISPOSITION OF SECURITIES BY THE
PORTFOLIO OR DISPOSITION OF UNITS. As discussed above, a Unitholder may
recognize taxable gain (or loss) when a Security is disposed of by the Portfolio
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 Portfolio 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 PORTFOLIO. 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 Portfolio. See "Rights of Unitholders--Redemption of Units". As previously
discussed, prior to the redemption of Units or the termination of the Portfolio,
a Unitholder is considered as owning a pro rata portion of each of the
Portfolio'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 Portfolio 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 Portfolio. However, if a Unitholder also receives cash in exchange for a
fractional share of such Security held by the Portfolio, 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 Portfolio.
Because the Portfolio 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 Portfolio. 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 Portfolio. 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
Portfolio 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 Portfolio will be reduced to the extent dividends paid with respect
to such Security are received by the Portfolio 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 Portfolio to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Portfolio (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
Portfolio.
It should be noted that payments to the Portfolio 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 Portfolio. 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 Portfolio, the Trustee will furnish to each
Unitholder of the Portfolio a statement containing information relating to the
dividends received by the Portfolio on the Securities, the gross proceeds
received by the Portfolio from the disposition of any Security (resulting from
redemption or the sale of any Security), and the fees and expenses paid by the
Portfolio. The Trustee will also furnish annual information returns to
Unitholders and to the Internal Revenue Service.
In the opinion of special counsel to the Portfolio for New York tax matters,
the Portfolio is not an association taxable as a corporation and the income of
the Portfolio 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 Portfolio 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.
PORTFOLIO OPERATING EXPENSES
--------------------------------------------------------------------------------
COMPENSATION OF SPONSOR, SUPERVISOR AND EVALUATOR. The Sponsor will not
receive any fees in connection with its activities relating to the Portfolios.
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 Portfolios 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
Portfolio set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Portfolio 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 Portfolio
is expected to result from the use of these funds.
MISCELLANEOUS EXPENSES. The following additional charges are or may be
incurred by a Portfolio: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of such
Portfolio, (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 Portfolio and the rights and interests
of Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of a Portfolio 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 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
Portfolio. Each Portfolio 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 Portfolio will accrue on a daily basis.
The deferred sales charge, fees and expenses are generally paid out of the
Capital Account of the related Portfolio. When these amounts are paid by or
owing to the Trustee, they are secured by a lien on the related 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
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
This Prospectus does not contain all the information set forth in the
Registration Statement filed by your Portfolio 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 Portfolio. Information about your Portfolio (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 Portfolio 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
--------------------------------------------------------------------------------
TITLE PAGE
----- ----
Summary of Essential Financial Information.. 2
Fee Table................................... 3
Financial Institutions Portfolios........... 4
Global Energy Portfolio..................... 7
Notes to Portfolios......................... 9
The Securities.............................. 10
Report of Independent Certified
Public Accountants....................... 15
Statements of Condition .................... 16
The Portfolios.............................. A-1
Objectives and Securities Selection......... A-1
Risk Factors................................ A-2
Public Offering............................. A-3
Retirement Accounts......................... A-7
Wrap Fee and Advisory Accounts.............. A-7
Rights of Unitholders....................... A-8
Portfolio Administration.................... A-10
Taxation.................................... A-12
Portfolio Operating Expenses................ A-16
Other Matters............................... A-17
Additional Information...................... A-17
--------------
When Units of the Portfolios are no longer available this prospectus may be used
as a preliminary prospectus for a future Portfolio. If this prospectus is used
for future Portfolios you should note the following:
The information in this prospectus is not complete with respect to future
Portfolio series and may be changed. No person may sell Units of future
Portfolios 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.
EMSPRO245
#36664
#37244
PROSPECTUS
--------------------------------------------------------------------------------
SEPTEMBER 5, 2000
VAN KAMPEN
FOCUS PORTFOLIOS(SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
FINANCIAL INSTITUTIONS PORTFOLIO, SERIES 6A
FINANCIAL INSTITUTIONS PORTFOLIO, SERIES 6B
GLOBAL ENERGY PORTFOLIO, SERIES 15
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
Please retain this prospectus for future reference.
VAN KAMPEN
INFORMATION SUPPLEMENT
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 245
--------------------------------------------------------------------------------
This Information Supplement provides additional information concerning the
risks and operations of the Portfolio 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 Portfolio 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 1 Parkview Plaza, P.O.
Box 5555, Oakbrook Terrace, Illinois 60181-5555 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 Portfolios 9
Sponsor Information 10
Trustee Information 11
Portfolio Termination 12
RISK FACTORS
PRICE VOLATILITY. Because the Portfolios invest in common stocks of U.S.
and foreign companies, you should understand the risks of investing in common
stocks before purchasing Units. These risks include the risk that the financial
condition of the company or the general condition of the stock market may worsen
and the value of the stocks (and therefore Units) will fall. 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 Portfolio 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 Portfolio will be positive over any period of time. Because the
Portfolios are unmanaged, the Trustee will not sell stocks in response to market
fluctuations as is common in managed investments. In addition, because some
Portfolios 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 Portfolios 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 Portfolio, 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 Portfolios 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 Portfolio'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 Portfolio might obtain had the Trustee sold the currency in the market at that
time.
LIQUIDITY. Whether or not the stocks in a Portfolio 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 Portfolio by
depositing into the Portfolio 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 Portfolio will pay brokerage fees.
VOTING. Only the Trustee may sell or vote the stocks in a Portfolio. While
you may sell or redeem your Units, you may not sell or vote the stocks in your
Portfolio. 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.
FINANCIAL SERVICES ISSUERS. An investment in Units of certain Portfolios
should be made with an understanding of the problems and risks inherent in the
bank and financial services sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates, portfolio
concentrations in geographic markets and in commercial and residential real
estate loans, and competition from new entrants in their fields of business.
Banks and thrifts are highly dependent on net interest margin. Recently, bank
profits have come under pressure as net interest margins have contracted, but
volume gains have been strong in both commercial and consumer products. There is
no certainty that such conditions will continue. Bank and thrift institutions
had received significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and refinancing
activity subsided, this income diminished. Economic conditions in the real
estate markets, which have been weak in the past, can have a substantial effect
upon banks and thrifts because they generally have a portion of their assets
invested in loans secured by real estate. Banks, thrifts and their holding
companies are subject to extensive federal regulation and, when such
institutions are state- chartered, to state regulation as well. Such regulations
impose strict capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their supervisory
and enforcement authority and may substantially restrict the permissible
activities of a particular institution if deemed to pose significant risks to
the soundness of such institution or the safety of the federal deposit insurance
fund. Regulatory actions, such as increases in the minimum capital requirements
applicable to banks and thrifts and increases in deposit insurance premiums
required to be paid by banks and thrifts to the Federal Deposit Insurance
Corporation ("FDIC"), can negatively impact earnings and the ability of a
company to pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or their
holding companies, or insures against any risk of investment in the securities
issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly and have
undergone substantial change in recent years. To a great extent, these changes
are embodied in the Financial Institutions Reform, Recovery and Enforcement Act;
enacted in August 1989, the Federal Deposit Insurance Corporation Improvement
Act of 1991, the Resolution Trust Corporation Refinancing, Restructuring, and
Improvement Act of 1991 and the regulations promulgated under these laws. Many
of the regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and prospects of
the Securities cannot be predicted with certainty. The recently enacted
financial-services overhaul legislation will allow banks, securities firms and
insurance companies to form one-stop financial conglomerates marketing a wide
range of financial service products to investors. This legislation will likely
result in increased merger activity and heightened competition among existing
and new participants in the field. Efforts to expand the ability of federal
thrifts to branch on an interstate basis have been initially successful through
promulgation of regulations, and legislation to liberalize interstate banking
has recently been signed into law. Under the legislation, banks will be able to
purchase or establish subsidiary banks in any state, one year after the
legislation's enactment. Since mid-1997, banks have been allowed to turn
existing banks into branches. Consolidation is likely to continue. The
Securities and Exchange Commission and the Financial Accounting Standards Board
require the expanded use of market value accounting by banks and have imposed
rules requiring market accounting for investment securities held in trading
accounts or available for sale. Adoption of additional such rules may result in
increased volatility in the reported health of the industry, and mandated
regulatory intervention to correct such problems. Additional legislative and
regulatory changes may be forthcoming. For example, the bank regulatory
authorities have proposed substantial changes to the Community Reinvestment Act
and fair lending laws, rules and regulations, and there can be no certainty as
to the effect, if any, that such changes would have on the Securities. In
addition, from time to time the deposit insurance system is reviewed by Congress
and federal regulators, and proposed reforms of that system could, among other
things, further restrict the ways in which deposited moneys can be used by banks
or reduce the dollar amount or number of deposits insured for any depositor.
Such reforms could reduce profitability as investment opportunities available to
bank institutions become more limited and as consumers look for savings vehicles
other than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions, mortgage
banking companies and insurance companies, and increased competition may result
from legislative broadening of regional and national interstate banking powers
as has been recently enacted. Among other benefits, the legislation allows banks
and bank holding companies to acquire across previously prohibited state lines
and to consolidate their various bank subsidiaries into one unit. The Sponsor
makes no prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions might
have on a portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5% of the
outstanding shares of any class of voting securities of a bank or bank holding
company, (2) acquiring control of a bank or another bank holding company, (3)
acquiring all or substantially all the assets of a bank, or (4) merging or
consolidating with another bank holding company, without first obtaining Federal
Reserve Board ("FRB") approval. In considering an application with respect to
any such transaction, the FRB is required to consider a variety of factors,
including the potential anti-competitive effects of the transaction, the
financial condition and future prospects of the combining and resulting
institutions, the managerial resources of the resulting institution, the
convenience and needs of the communities the combined organization would serve,
the record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the prospective
availability to the FRB of information appropriate to determine ongoing
regulatory compliance with applicable banking laws. In addition, the federal
Change In Bank Control Act and various state laws impose limitations on the
ability of one or more individuals or other entities to acquire control of banks
or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends by
bank holding companies. In the policy statement, the FRB expressed its view that
a bank holding company experiencing earnings weaknesses should not pay cash
dividends which exceed its net income or which could only be funded in ways that
would weaken its financial health, such as by borrowing. The FRB also may impose
limitations on the payment of dividends as a condition to its approval of
certain applications, including applications for approval of mergers and
acquisitions. The Sponsor makes no prediction as to the effect, if any, such
laws will have on the Securities or whether such approvals, if necessary, will
be obtained.
Companies involved in the insurance industry are engaged in underwriting,
reinsuring, selling, distributing or placing of property and casualty, life or
health insurance. Other growth areas within the insurance industry include
brokerage, reciprocals, claims processors and multiline insurance companies.
Insurance company profits are affected by interest rate levels, general economic
conditions, and price and marketing competition. Property and casualty insurance
profits may also be affected by weather catastrophes and other disasters. Life
and health insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers. Insurance
companies are subject to extensive governmental regulation, including the
imposition of maximum rate levels, which may not be adequate for some lines of
business. Proposed or potential tax law changes may also adversely affect
insurance companies' policy sales, tax obligations, and profitability. In
addition to the foregoing, profit margins of these companies continue to shrink
due to the commoditization of traditional businesses, new competitors, capital
expenditures on new technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including those
applicable to regulated insurance companies, such as: (i) the inherent
uncertainty in the process of establishing property-liability loss reserves,
particularly reserves for the cost of environmental, asbestos and mass tort
claims, and the fact that ultimate losses could materially exceed established
loss reserves which could have a material adverse effect on results of
operations and financial condition; (ii) the fact that insurance companies have
experienced, and can be expected in the future to experience, catastrophe losses
which could have a material adverse impact on their financial condition, results
of operations and cash flow; (iii) the inherent uncertainty in the process of
establishing property-liability loss reserves due to changes in loss payment
patterns caused by new claims settlement practices; (iv) the need for insurance
companies and their subsidiaries to maintain appropriate levels of statutory
capital and surplus, particularly in light of continuing scrutiny by rating
organizations and state insurance regulatory authorities, and in order to
maintain acceptable financial strength or claims-paying ability rating; (v) the
extensive regulation and supervision to which insurance companies' subsidiaries
are subject, various regulatory initiatives that may affect insurance companies,
and regulatory and other legal actions; (vi) the adverse impact that increases
in interest rates could have on the value of an insurance company's investment
portfolio and on the attractiveness of certain of its products; (vii) the need
to adjust the effective duration of the assets and liabilities of life insurance
operations in order to meet the anticipated cash flow requirements of its
policyholder obligations; and (vii) the uncertainty involved in estimating the
availability of reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have considered
or enacted laws that alter and, in many cases, increase state authority to
regulate insurance companies and insurance holding company systems. Further, the
National Association of Insurance Commissioners ("NAIC") and state insurance
regulators are re-examining existing laws and regulations, specifically focusing
on insurance companies, interpretations of existing laws and the development of
new laws. In addition, Congress and certain federal agencies have investigated
the condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is unable to
predict whether any state or federal legislation will be enacted to change the
nature or scope of regulation of the insurance industry, or what effect, if any,
such legislation would have on the industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the amount of
investments in certain investment categories. Failure to comply with these laws
and regulations would cause non-conforming investments to be treated as
non-admitted assets for purposes of measuring statutory surplus and, in some
instances, would require divestiture.
Environmental pollution clean-up is the subject of both federal and state
regulation. By some estimates, there are thousands of potential waste sites
subject to clean up. The insurance industry is involved in extensive litigation
regarding coverage issues. The Comprehensive Environmental Response Compensation
and Liability Act of 1980 ("Superfund") and comparable state statutes
("mini-Superfund") govern the clean-up and restoration by "Potentially
Responsible Parties" ("PRP's"). Superfund and the mini-Superfunds
("Environmental Clean-up Laws" or "ECLs") establish a mechanism to pay for
clean-up of waste sites if PRP's fail to do so, and to assign liability to
PRP's. The extent of liability to be allocated to a PRP is dependent on a
variety of factors. The extent of clean-up necessary and the assignment of
liability has not been fully established. The insurance industry is disputing
many such claims. Key coverage issues include whether Superfund response costs
are considered damages under the policies, when and how coverage is triggered,
applicability of pollution exclusions, the potential for joint and several
liability and definition of an occurrence. Similar coverage issues exist for
clean up and waste sites not covered under Superfund. To date, courts have been
inconsistent in their rulings on these issues. An insurer's exposure to
liability with regard to its insureds which have been, or may be, named as PRPs
is uncertain. Superfund reform proposals have been introduced in Congress, but
none have been enacted. There can be no assurance that any Superfund reform
legislation will be enacted or that any such legislation will provide for a
fair, effective and cost-efficient system for settlement of Superfund related
claims.
While current federal income tax law permits the tax-deferred accumulation
of earnings on the premiums paid by an annuity owner and holders of certain
savings-oriented life insurance products, no assurance can be given that future
tax law will continue to allow such tax deferrals. If such deferrals were not
allowed, consumer demand for the affected products would be substantially
reduced. In addition, proposals to lower the federal income tax rates through a
form of flat tax or otherwise could have, if enacted, a negative impact on the
demand for such products.
Companies engaged in investment banking/brokerage and investment management
include brokerage firms, broker/dealers, investment banks, finance companies and
mutual fund companies. Earnings and share prices of companies in this industry
are quite volatile, and often exceed the volatility levels of the market as a
whole. Recently, ongoing consolidation in the industry and the strong stock
market has benefited stocks which investors believe will benefit from greater
investor and issuer activity. Major determinants of future earnings of these
companies are the direction of the stock market, investor confidence, equity
transaction volume, the level and direction of long-term and short-term interest
rates, and the outlook for emerging markets. Negative trends in any of these
earnings determinants could have a serious adverse effect on the financial
stability, as well as the stock prices, of these companies. Furthermore, there
can be no assurance that the issuers of the Securities included in a Trust will
be able to respond in a timely manner to compete in the rapidly developing
marketplace. In addition to the foregoing, profit margins of these companies
continue to shrink due to the commoditization of traditional businesses, new
competitors, capital expenditures on new technology and the pressures to compete
globally.
ENERGY INDUSTRY. The Global Energy Portfolio is concentrated in issuers
within the energy industry. A portfolio concentrated in a single industry may
present more risk than a portfolio of more broadly diversified investments. The
Portfolio, and therefore Unitholders, may be particularly susceptible to a
negative impact resulting from adverse market conditions or other factors
affecting issuers in the energy industry because any negative impact on the
energy industry will not be diversified among issuers within other unrelated
industries. Accordingly, an investment in Units should be made with an
understanding of the risks inherent in the energy industry.
These factors include political conditions in oil producing regions,
including the Middle East, the actions of the Organization of Petroleum
Exporting Countries (OPEC), the domestic and foreign supply of oil and gas, the
level of consumer demand, weather conditions, the price and availability of
alternative fuels and overall economic conditions. In addition, various factors,
including the capacity and availability of oil and gas gathering systems and
pipelines, changes in supply due to drilling by other producers and changes in
demand, may have an adverse impact on the issuers of Securities. An issuer's
revenues, profitability and liquidity are substantially dependent upon
prevailing prices for oil and natural gas which can be extremely volatile and in
past years have been depressed by excess total domestic and imported supplies.
There can be no assurance that current price levels can be sustained. Prices
also are affected by actions of state and local agencies, the United States and
foreign governments, and international cartels. Any substantial or extended
decline in the price of oil and/or natural gas would have a material adverse
effect on the financial condition and results of operations of the issuers of
the Securities, including reduced cash flow and borrowing capacity. If market
factors were to change dramatically, the financial impact on an issuer could be
substantial. The nature of the oil and gas business also involves a variety of
risks, including the risks of operating hazards such as fires, explosions,
cratering, blow-outs, and encountering formations with abnormal pressures, the
occurrence of any of which could have a material adverse impact on the issuers
of the Securities. Companies generally maintain insurance against some, but not
all, of these risks. The occurrence of a significant event, however, that is not
fully insured could have a material adverse effect on a issuer's financial
position. In addition, the issuers may engage in oil and gas hedging activities
to help reduce exposure to the volatility of oil and gas prices by hedging a
portion of its production. These hedging arrangements may have an adverse impact
on the financial condition of the issuers under certain circumstances and may
limit potential gains by an issuer if the market prices for oil and gas were to
rise substantially over the price established by the hedge.
The future performance of oil and gas issuers is dependent upon the ability
to find or acquire additional oil and gas reserves that are economically
recoverable. Unless an issuer successfully replaces the reserves that it
produces, reserves will decline, resulting eventually in a decrease in oil and
gas production and lower revenues and cash flow from operations. There can be no
assurance that any issuer will be able to acquire, at acceptable costs,
producing oil and gas properties that contain economically recoverable reserves
or that it will make such acquisitions at acceptable prices. In addition,
exploitation, development and exploration involve numerous risks, including
depositional or trapping uncertainties or other conditions that may result in
dry holes, the failure to produce oil and gas in commercial quantities and the
inability to fully produce discovered reserves.
The production and sale of oil and gas are subject to a variety of federal,
state, local and foreign government regulations, including regulations
concerning the prevention of waste, the discharge of materials in the
environment, the conservation of oil and natural gas, pollution, permits for
drilling operations, drilling bonds, reports concerning operations, the spacing
of wells, the unitization and pooling of properties, and various other matters.
Such laws and regulations have increased the costs of planning designing,
drilling, installing, operating and abandoning oil and gas facilities. Many
jurisdictions have imposed limitations on the production of oil and gas by
restricting the rate of flow for oil and gas wells below their actual capacity
to produce. During recent years there has been significant discussion by
legislators concerning a variety of energy tax proposals. May states have raised
state taxes on energy sources and additional increases may occur. There can be
no assurance that significant costs for compliance will not be incurred by any
issuer in the future.
International investments may represent a significant portion of an issuer's
total assets or reserves. Foreign properties, operations or investments may be
adversely affected by local political and economic developments, exchange
controls, currency fluctuations, royalty and tax increases, retroactive tax
claims, expropriation, import and export regulations and other foreign laws or
policies as well as by laws and policies of the United States affecting foreign
trade, taxation and investment. In addition, in the event of a dispute arising
from foreign operations, an issuer may be subject to the exclusive jurisdiction
of foreign courts or may not be successful in subjecting foreign person to the
jurisdiction of the courts in the United States.
UTILITY ISSUERS. An investment in Units of certain Portfolios should be made
with an understanding of the characteristics of the public utility industry and
the risks which such an investment may entail. General problems of the public
utility industry include the difficulty in obtaining an adequate return on
invested capital despite frequent increases in rates which have been granted by
the public service commissions having jurisdiction, the difficulty in financing
large construction programs during an inflationary period, the restrictions on
operations and increased cost and delays attributable to environmental and other
regulatory considerations, the difficulty of the capital markets absorbing
utility debt and equity securities, the difficulty in obtaining fuel for
electric generation at reasonable prices, and the effects of energy
conservation. There is no assurance that public service commissions will grant
rate increases in the future or that any such increases will be adequate to
cover operating and other expenses and debt service requirements. All of the
public utilities which are issuers of the Securities have been experiencing many
of these problems in varying degrees. Furthermore, utility stocks are
particularly susceptible to interest rate risk, generally exhibiting an inverse
relationship to interest rates. As a result, electric utility stock prices may
be adversely affected as interest rates rise. 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.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged and the
appropriate rate of return on an approved asset base, which must be approved by
the state commissions. Certain utilities have had difficulty from time to time
in persuading regulators, who are subject to political pressures, to grant rate
increases necessary to maintain an adequate return on investment. Any unexpected
limitations could negatively affect the profitability of utilities whose budgets
are planned far in advance. In addition, gas pipeline and distribution companies
have had difficulties in adjusting to short and surplus energy supplies,
enforcing or being required to comply with long-term contracts and avoiding
litigation from their customers, on the one hand, or suppliers, on the other.
Certain of the issuers of the Securities may own or operate nuclear
generating facilities. Governmental authorities may from time to time review
existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. Nuclear generating projects
in the electric utility industry have experienced substantial cost increases,
construction delays and licensing difficulties. These have been caused by
various factors, including inflation, high financing costs, required design
changes and rework, allegedly faulty construction, objections by groups and
governmental officials, limits on the ability to finance, reduced forecasts of
energy requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties remain
present until completion and achievement of commercial operation of any nuclear
project. Also, nuclear generating units in service have experienced unplanned
outages or extensions of scheduled outages due to equipment problems or new
regulatory requirements sometimes followed by a significant delay in obtaining
regulatory approval to return to service. A major accident at a nuclear plant
anywhere, such as the accident at a plant in Chernobyl, could cause the
imposition of limits or prohibitions on the operation, construction or licensing
of nuclear units.
In view of the uncertainties discussed above, there can be no assurance that
any company's share of the full cost of nuclear units under construction
ultimately will be recovered in rates or the extent to which a company could
earn an adequate return on its investment in such units. The likelihood of a
significantly adverse event occurring in any of the areas of concern described
above varies, as does the potential severity of any adverse impact. It should be
recognized, however, that one or more of such adverse events could occur and
individually or collectively could have a material adverse impact on a company's
financial condition, the results of its operations, its ability to make interest
and principal payments on its outstanding debt or to pay dividends.
Other general problems of the gas, water, telephone and electric utility
industries (including state and local joint action power agencies) include
difficulty in obtaining timely and adequate rate increases, difficulty in
financing large construction programs to provide new or replacement facilities
during an inflationary period, rising costs of rail transportation to transport
fossil fuels, the uncertainty of transmission service costs for both interstate
and intrastate transactions, changes in tax laws which adversely affect a
utility's ability to operate profitably, increased competition in service costs,
recent reductions in estimates of future demand for electricity and gas in
certain areas of the country, restrictions on operations and increased cost and
delays attributable to environmental considerations, uncertain availability and
increased cost of capital, unavailability of fuel for electric generation at
reasonable prices, including the steady rise in fuel costs and the costs
associated with conversion to alternate fuel sources such as coal, availability
and cost of natural gas for resale, technical and cost factors and other
problems associated with construction, licensing, regulation and operation of
nuclear facilities for electric generation, including, among other
considerations, the problems associated with the use of radioactive materials
and the disposal of radioactive wastes, and the effects of energy conservation.
Each of the problems referred to could adversely affect the ability of the
issuers of any Securities to make dividend payments.
THE PORTFOLIOS
In seeking the Portfolios' 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 above criteria were applied to the
Securities for inclusion in the Portfolios as of the Initial Date of Deposit.
Should a Security no longer meet the criteria used for selection for a
Portfolio, such Security will not as a result thereof be removed from a
Portfolio.
Hypothetical annual total returns for the Standard & Poor's 500 Index and
the Standard & Poor's Financials Index are shown in the following table.
S&P
FINANCIAL
YEAR S&P 500 INDEX
---- -------- --------
1989 27.25% 27.81%
1990 (3.12)% (21.27)%
1991 30.41% 50.06%
1992 7.40% 22.91%
1993 10.22% 10.71%
1994 1.30% (3.52)%
1995 37.57% 53.25%
1996 33.37% 34.69%
1997 31.01% 47.67%
1998 28.58% 11.34%
1999 21.04% 3.97%
Thru 5/31/00 (2.82%) 5.71%
Source: Bloomberg and FactSet. Total return is calculated by taking year-end
prices, subtracting them from the prices at the end of the following year
(adjusting for any stock splits that might have occurred during the year) and
adding dividends received for the period divided by starting price. The S&P 500
Index consists of 500 stocks chosen for market size, liquidity, and industry
group representation by the Standard & Poor's Corporation. The Standard & Poor's
Financials Index is a capitalization-weighted index of all stocks designed to
measure the performance of the financial sector of the Standard & Poor's 500
Index. Past performance, shown on chart, does not guarantee future results and
the results are not a Portfolio's total returns nor are they suggestive of past
performance, since the Portfolio was not in existence during this period.
Indices are unmanaged, statistical composites and do not include payment of any
sales charges or fees an investor would pay to purchase the securities they
represent. If they had, results would have been less favorable. Furthermore, an
investment cannot be made in an index. 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 or a
Portfolio, which will vary. Securities in which a Portfolio invests will be
different from those in the indices.
When reviewing any historical performance information, you should keep in
mind that past performance cannot guarantee future results. Many stocks,
especially those issued by technology companies, have exhibited above-average
price appreciation and extreme volatility in recent years during a period of a
generally rising stock market. No one can assure you that this will continue or
that the performance of stocks will replicate the performance exhibited in the
past.
SPONSOR INFORMATION
Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the
Portfolios. The Sponsor is an indirect subsidiary of Van Kampen Investments Inc.
Van Kampen Investments Inc. is a wholly owned subsidiary of MSAM Holdings II,
Inc., which in turn is a wholly owned subsidiary of Morgan Stanley Dean Witter &
Co. ("MSDW").
MSDW, together with various of its directly and indirectly owned
subsidiaries, is engaged in a wide range of financial services through three
primary businesses: securities, asset management and credit services. These
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; credit
services; asset management; trading of futures, options, foreign exchange
commodities and swaps (involving foreign exchange, commodities, indices and
interest rates); and real estate advice, financing and investing.
Van Kampen Funds Inc. specializes in the underwriting and distribution of
unit investment trusts and mutual funds with roots in money management dating
back to 1926. The Sponsor is a member of the National Association of Securities
Dealers, Inc. and has its principal offices at 1 Parkview Plaza, P.O. Box 5555,
Oakbrook Terrace, Illinois 60181-5555, (630) 684-6000. As of November 30, 1999,
the total stockholders' equity of Van Kampen Funds Inc. was $141,554,861
(audited). (This paragraph relates only to the Sponsor and not to the Portfolio
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 March 31, 2000, the Sponsor and its Van Kampen affiliates managed or
supervised more than $100 billion of investment products. The Sponsor and its
Van Kampen affiliates managed $84.2 billion of assets for more than 63 open-end
mutual funds, 39 closed-end funds and more than 2,700 unit trusts as of March
31, 2000. 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 Portfolios 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 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 Portfolio. Such
records shall include the name and address of, and the number of Units of each
Portfolio 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 Portfolio.
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.
PORTFOLIO TERMINATION
A Portfolio may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Portfolio then outstanding or by the
Trustee when the value of the Securities owned by a Portfolio, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of the Portfolio has
exceeded $15,000,000). A Portfolio will be liquidated by the Trustee in the
event that a sufficient number of Units of such Portfolio not yet sold are
tendered for redemption by the Sponsor, so that the net worth of such Portfolio
would be reduced to less than 40% of the value of the Securities at the time
they were deposited in such Portfolio. If a Portfolio 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 Portfolios. 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 Portfolio and in the case
of a Portfolio 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 Portfolio to the account of the
broker-dealer or bank designated by the Unitholder at Depository Trust Company.
The value of the Unitholder's fractional shares of the Securities will be paid
in cash. Unitholders with less than 1,000 Units, Unitholders in a Portfolio 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 Portfolio
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 Portfolio 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 Portfolio his pro rata share of the balance of the
Income and Capital Accounts of such Portfolio.
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.
2.1 Form of Code of Ethics. Reference is made to Exhibit 2.1 to the
Registration Statement on Form S-6 of Van Kampen Focus Portfolios,
Series 223 (File No. 333-34242) dated July 25, 2000.
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.
<PAGE>
SIGNATURES
The Registrant, Van Kampen Focus Portfolios, Series 245, 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 245 has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago and State of
Illinois on the 5th day of September 2000.
Van Kampen Focus Portfolios, Series 245
By Van Kampen Funds Inc.
By Christine K. Putong
Assistant Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on September 5,
2000 by the following persons who constitute a majority of the Board of
Directors of Van Kampen Funds Inc.
SIGNATURE TITLE
Richard F. Powers III Chairman and Chief Executive )
Officer )
John H. Zimmermann III President
A. Thomas Smith III Executive Vice President, )
General Counsel and Secretary )
Michael H. Santo Executive Vice President and Chief )
Operations and Technology Officer
Christine K. Putong
-----------------------
(Attorney-in-fact*)
--------------------------------------------------------------------------------
*An executed copy of each of the related powers of attorney is filed
herewith or was filed with the Securities and Exchange Commission in connection
with the Registration Statement on Form S-6 of Van Kampen Focus Portfolios,
Series 136 (File No. 333-70897) and the same are hereby incorporated herein by
this reference.
