MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 247
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 247 on September 12, 2000. An effort has been
made to set forth below each of the major changes from the material previously
submitted 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 4-8. The portfolios have been completed and various information has
been updated.
Page 9. The descriptions of the issuers of the Securities have been
revised.
Pages 10-11. The Report of Independent Certified Public Accountants and
Statements of Condition have been completed.
FILE NO. 333-43724
CIK #1104602
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 247
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 undivided beneficial
interest
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
/ X / Check box if it is proposed that this filing will become effective at
8:00 a.m. on September 12, 2000 pursuant ---- to Rule 487.
VAN KAMPEN
FOCUS PORTFOLIOS(SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
THE DOWSM STRATEGIC 10 PORTFOLIO, SEPTEMBER 2000 TRADITIONAL SERIES
THE DOWSM STRATEGIC 5 PORTFOLIO, SEPTEMBER 2000 TRADITIONAL SERIES
--------------------------------------------------------------------------------
Van Kampen Focus Portfolios, Series 247 includes the unit investment trusts
described above (the "Portfolios"). Each Portfolio uses a refined indexing
strategy that seeks to identify a diversified portfolio of well-known,
undervalued stocks. Each Portfolio seeks to provide above-average total return
by increasing the value of your Units and providing dividend income. Of course,
we cannot guarantee that a Portfolio will achieve its objective.
SEPTEMBER 12, 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 contraryrepresentation is a criminal offense.
<TABLE>
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
SEPTEMBER 12, 2000
<CAPTION>
THE DOWSM THE DOWSM
STRATEGIC 10 STRATEGIC 5
PUBLIC OFFERING PRICE PORTFOLIO PORTFOLIO
------------ ------------
<S> <C> <C>
Aggregate value of Securities per Unit (1) $ 9.725 $ 9.725
Sales charge 0.275 0.275
Public offering price per Unit (2) $ 10.000 $ 10.000
PORTFOLIO INFORMATION
Initial number of Units (3) 14,977 14,905
Aggregate value of Securities (1) $ 145,651 $ 144,948
Estimated initial distribution per Unit (4) $ 0.23 $ 0.21
Estimated annual dividends per Unit (4) $ 0.32018 $ 0.29670
Redemption price per Unit (5) $ 9.725 $ 9.725
GENERAL INFORMATION
Initial Date of Deposit September 12, 2000
Mandatory Termination Date November 13, 2001
Record Date June 10, 2001
Distribution Date June 25, 2001
--------------------------------------------------------------------------------
(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 two
months). The estimated amount is described on the next page. The public
offering price will also include any accumulated dividends or cash in the
Income or Capital Accounts of a Portfolio.
(3) The number of Units may be adjusted so that the public offering price per
Unit equals $10 at the close of the New York Stock Exchange on the Initial
Date of Deposit. The number of Units and fractional interest of each Unit
in a Portfolio will increase or decrease to the extent of any adjustment.
(4) This estimate is based on the most recently declared quarterly dividends or
interim and final dividends accounting for any foreign withholding taxes.
Actual dividends may vary due to a variety of factors. See "Risk Factors".
(5) The redemption price includes the estimated organizational and offering
costs. The redemption price will not include these costs after the initial
offering period.
</TABLE>
<TABLE>
FEE TABLE
THE DOWSM THE DOWSM
STRATEGIC 10 STRATEGIC 5
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
TRANSACTION FEES (AS % OF OFFERING PRICE)
Maximum sales charge (1)............................................. 2.75% 2.75%
=========== ===========
ESTIMATED ORGANIZATIONAL COSTS PER UNIT (2).......................... $ 0.03012 $ 0.02430
=========== ===========
ESTIMATED ANNUAL EXPENSES PER UNIT
Trustee's fee and operating expenses................................. $ 0.01488 $ 0.02070
Evaluation fees...................................................... $ 0.00250 $ 0.00250
Supervisory fees..................................................... $ 0.00250 $ 0.00250
----------- -----------
Estimated annual expenses per Unit................................... $ 0.01988 $ 0.02570
=========== ===========
ESTIMATED COSTS OVER TIME
One year............................................................. $ 33 $ 33
Three years.......................................................... $ 80 $ 80
Five years........................................................... N/A N/A
Ten years............................................................ N/A N/A
This fee table is intended to assist you in understanding the costs that you
will bear and to present a comparison of fees. The "Estimated Costs Over Time"
example illustrates the expenses you would pay on a $1,000 investment assuming a
5% annual return and redemption at the end of each period. This example assumes
that you roll your investment into a new series of the Portfolio each year. Of
course, you should not consider this example a representation of actual past or
future expenses or annual rate of return which may differ from those assumed for
this example. The sales charge and expenses are described under "Public
Offering" and "Portfolio Operating Expenses".
--------------------------------------------------------------------------------
(1) The sales charge is equivalent to 2.828% of the aggregate value of the
Securities. A reduced sales charge applies to transactions involving
$50,000 or more.
(2) 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.
</TABLE>
THE DOWSM STRATEGIC 10 PORTFOLIO
The Portfolio follows a simple investment strategy: Buy the ten highest
dividend-yielding stocks in the Dow Jones Industrial Average and hold them for
about 14 months. When the Portfolio terminates, you can elect to follow the
strategy by redeeming your Units and reinvesting the proceeds in a new
portfolio, if available.
[INSERT CHART HERE]
The Portfolio is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
<TABLE>
<CAPTION>
PORTFOLIO
-----------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES TO
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) PORTFOLIO (2)
---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
472 AT&T Corporation $ 30.625 2.87% $ 14,455.00
381 Caterpillar, Inc. 38.313 3.55 14,597.06
353 Du Pont (E.I.) de Nemours and Company 40.500 3.46 14,296.50
234 Eastman Kodak Company 62.000 2.84 14,508.00
198 General Motors Corporation 74.500 2.68 14,751.00
458 International Paper Company 31.500 3.17 14,427.00
88 J.P. Morgan & Company, Inc. 169.000 2.37 14,872.00
161 Minnesota Mining and Manufacturing Company 88.938 2.61 14,318.94
496 Philip Morris Companies, Inc. 29.688 7.14 14,725.00
320 SBC Communications, Inc. 45.938 2.21 14,700.00
---------- -------------
3,161 $ 145,650.50
========== =============
See "Notes to Portfolios".
</TABLE>
HYPOTHETICAL STRATEGY PERFORMANCE
The table below compares the hypothetical total return of stocks selected
using the Portfolio's investment strategy (the "Strategy Stocks") with the
stocks in the Dow Jones Industrial Average ("The Dow 30SM"). Total return
includes any dividends paid on the stocks together with any increase or decrease
in the value of the stocks. The table illustrates a hypothetical investment in
the Strategy Stocks at the beginning of each year -- similar to buying Units of
the Portfolio, redeeming them after one year and reinvesting the proceeds in a
new portfolio each year.
These hypothetical returns are not actual past performance of the Portfolio
or prior series but do reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. You should note that the returns shown below
are annual returns based on a calendar year investment. The performance of the
Portfolio may differ because the Portfolio has a 14 month life that is not based
on a calendar year investment cycle. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
HYPOTHETICAL TOTAL RETURN
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR STRATEGY STOCKS THE DOW 30SM YEAR STRATEGY STOCKS THE DOW 30SM
----------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1973 0.58% (13.16)% 1987 3.66% 6.02%
1974 (3.00) (23.21) 1988 22.48 15.95
1975 54.24 44.48 1989 22.81 31.71
1976 32.65 22.75 1990 (9.84) (0.58)
1977 (4.03) (12.70) 1991 32.59 23.93
1978 (2.16) 2.69 1992 5.58 7.35
1979 10.09 10.52 1993 24.66 16.74
1980 24.95 21.41 1994 1.85 4.95
1981 5.24 (3.40) 1995 34.31 36.49
1982 23.75 25.79 1996 25.78 28.58
1983 36.47 25.65 1997 19.71 24.78
1984 9.54 1.08 1998 8.36 18.13
1985 27.17 32.78 1999 1.74 27.01
1986 33.50 26.92 Thru 8/31/00 (6.50) (1.50)
See "Notes to Hypothetical Performance Tables".
</TABLE>
THE DOWSM STRATEGIC 5 PORTFOLIO
The Portfolio follows a simple investment strategy: Select the ten highest
dividend-yielding stocks in the Dow Jones Industrial Average. Eliminate the
stock with the lowest share price. Of the remaining stocks, buy the five with
the lowest share price and hold them for about 14 months. When the Portfolio
terminates, you can elect to follow the strategy by redeeming your Units and
reinvesting the proceeds in a new portfolio, if available.
[INSERT CHART HERE]
The Portfolio is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
<TABLE>
<CAPTION>
PORTFOLIO
-----------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES TO
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) PORTFOLIO (2)
---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
941 AT&T Corporation $ 30.625 2.87% $ 28,818.13
764 Caterpillar, Inc. 38.313 3.55 29,270.75
709 Du Pont (E.I.) de Nemours and Company 40.500 3.46 28,714.50
914 International Paper Company 31.500 3.17 28,791.00
639 SBC Communications, Inc. 45.938 2.21 29,354.06
---------- -------------
3,967 $ 144,948.44
========== =============
See "Notes to Portfolios".
</TABLE>
HYPOTHETICAL STRATEGY PERFORMANCE
The table below compares the hypothetical total return of stocks selected
using the Portfolio's investment strategy (the "Strategy Stocks") with the
stocks in the Dow Jones Industrial Average ("The Dow 30SM"). Total return
includes any dividends paid on the stocks together with any increase or decrease
in the value of the stocks. The table illustrates a hypothetical investment in
the Strategy Stocks at the beginning of each year -- similar to buying Units of
the Portfolio, redeeming them after one year and reinvesting the proceeds in a
new trust portfolio each year.
These hypothetical returns are not actual past performance of the Portfolio
or prior series but do reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. You should note that the returns shown below
are annual returns based on a calendar year investment. The performance of the
Portfolio may differ because the Portfolio has a 14 month life that is not based
on a calendar year investment cycle. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
HYPOTHETICAL TOTAL RETURN
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR STRATEGY STOCKS THE DOW 30SM YEAR STRATEGY STOCKS THE DOW 30SM
----------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1973 14.62% (13.16)% 1987 (5.21)% 6.02%
1974 (1.91) (23.21) 1988 20.19 15.95
1975 62.07 44.48 1989 8.03 31.71
1976 36.83 22.75 1990 (23.17) (0.58)
1977 (7.28) (12.70) 1991 53.56 23.93
1978 (1.70) 2.69 1992 22.50 7.35
1979 17.40 10.52 1993 36.21 16.74
1980 29.87 21.41 1994 0.87 4.95
1981 0.69 (3.40) 1995 40.11 36.49
1982 45.65 25.79 1996 29.60 28.58
1983 41.04 25.65 1997 25.22 24.78
1984 9.14 1.08 1998 13.07 18.13
1985 34.54 32.78 1999 (3.18) 27.01
1986 33.64 26.92 Thru 8/31/00 (25.25) (1.50)
See "Notes to Hypothetical Performance Tables".
</TABLE>
NOTES TO HYPOTHETICAL PERFORMANCE TABLES
The stocks for each strategy for each period were identified by applying the
applicable strategy on the first trading day of the period on the principal
trading exchange. It should be noted that the stocks in any table are not the
same stocks from year to year and may not be the same stocks as those included
in any Portfolio. Total return for each period was calculated by (1) subtracting
the closing sale price of the stocks on the first trading day of the period from
the closing sale price of the stocks on the last trading day of the period, (2)
adding dividends paid during that period and (3) dividing the result by the
closing sale price of the stocks on the first trading day of the period and
reducing this amount by typical Portfolio expenses and sales charges.
Adjustments were made to reflect events such as stock splits and corporate
spin-offs. Total return does not take into consideration taxes that will be
incurred by Unitholders.
These tables represent hypothetical past performance of the strategies (not
the Portfolios) and are not guarantees or indications of future performance of
any Portfolio. Unitholders will not necessarily realize as high a total return
as the hypothetical returns in the tables for several reasons including, among
others: the total return figures in the tables do not reflect taxes; the
Portfolios are established at different times of the year; a Portfolio may not
be able to invest equally in the Securities and may not be fully invested at all
times; the Securities are often purchased or sold at prices different from the
closing prices used in buying and selling Units; and currency exchange rates
will be different. In addition, both stock prices (which may appreciate or
depreciate) and dividends (which may be increased, reduced or eliminated) will
affect actual returns. There can be no assurance that any Portfolio will
outperform the related stock index over its life or future rollover periods, if
available. The sources for the information contained in the tables are Barron's,
Bloomberg L.P., Dow Jones Corporation, Morgan Stanley Capital International,
Ibbotson Associates, Datastream International, Inc. and Extell Financial LTD.
The Sponsor has not independently verified the data obtained from these sources
but has no reason to believe that this data is incorrect in any material
respect.
NOTES TO 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 11, 2000 and have a settlement date of September 14, 2000 (see
"The Portfolios").
(2) The market value of each Security is based on the closing sale price as of
the close of the New York Stock Exchange on the business day before the
Initial Date of Deposit. Other information regarding the Securities, as of
the Initial Date of Deposit, is as follows:
PROFIT
COST TO (LOSS) TO
SPONSOR SPONSOR
-------------- -------------
The DowSM Strategic 10 Portfolio $ 145,651 $ --
The DowSM Strategic 5 Portfolio $ 144,948 $ --
(3) Current Dividend Yield for each Security is based on the estimated annual
dividends per share and the Security's market value as of the close of
trading on the New York Stock Exchange on the business day before the
Initial Date of Deposit. Estimated annual dividends per share are
calculated by annualizing the most recently declared regular dividends or
by adding the most recent regular interim and final dividends declared and
reflect any foreign withholding taxes.
THE SECURITIES. A brief description of each of the issuers of the
Securities is listed below. Please refer to each "Portfolio" for a list of the
Securities included in each Portfolio.
AT&T Corporation. AT&T Corporation offers communication services and
products. The company provides voice, data, and video telecommunication services
to consumers, large and small businesses, and government entities. AT&T and its
subsidiaries furnish regional, domestic, international, and local
telecommunication services. The company also provides cellular telephone and
wireless services, as well as other services.
Caterpillar, Inc. Caterpillar, Inc. designs, manufactures, and markets
construction, mining, agricultural, and forestry machinery. The company also
manufactures engines and other related parts for its equipment. Caterpillar
distributes its products through a worldwide organization of dealers.
Du Pont (E. I.) de Nemours and Company. Du Pont (E. I.) de Nemours and
Company is a global chemical and life sciences company, with businesses in
high-performance materials, specialty chemicals, pharmaceuticals, and
biotechnology. The company sells its products to the transportation, textile,
construction, automotive, agricultural, hybrid seeds, nutrition and health,
pharmaceuticals, packaging, and electronics markets.
Eastman Kodak Company. Eastman Kodak Company develops, manufactures, and
markets consumer, professional, health, and other imaging products and services.
The company's imaging systems include films, photographic papers, processing
services, photographic chemicals, cameras, and projectors. Kodak also develops
digital camera systems which do not use silver halide film technology.
General Motors Corporation. General Motors Corporation manufactures and sells
vehicles worldwide under the Chevrolet, Buick, Cadillac, Oldsmobile, Pontiac,
Saturn, and GMC names. The company also has financing and insurance operations.
In addition, General Motors produces products and provides services in other
industries such as satellite and wireless communications.
International Paper Company. International Paper Company produces and
distributes printing paper, packaging, forest products, and chemical products.
The company operates specialty businesses in global markets as well as a broadly
based distribution network. International Paper exports its products worldwide.
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.
Minnesota Mining and Manufacturing Company (3M). Minnesota Mining and
Manufacturing Company (3M) is a diversified manufacturer of industrial,
commercial, and health care products. The company produces and markets more than
50,000 products worldwide. 3M's products include Post-it Notes, Flex circuits,
Scotchgard fabric, film, photo protectors, Thinsulate insulation products, and
Nexcare bandages.
Philip Morris Companies, Inc. Philip Morris Companies, Inc., through its
subsidiaries, manufactures and sells a variety of consumer products. The company
provides tobacco products, as well as packaged foods such as cheese, processed
meat products, coffee, and grocery products. Philip Morris also provides a
variety of beer and brewed non-alcohol beverages. The company's products are
sold worldwide.
SBC Communications, Inc. SBC Communications, Inc. provides communication
services in the United States and in other countries. The company provides local
and long-distance phone service, wireless and data communications, paging,
Internet access and messaging, cable and satellite television, security
services, and telecommunications equipment. SBC also provides directory
advertising and publishing.
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 247:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen Focus Portfolios, Series 247 as of September 12,
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 247 as of September 12, 2000, in conformity with accounting principles
generally accepted in the United States of America.
GRANT THORNTON LLP
Chicago, Illinois
September 12, 2000\
<TABLE>
STATEMENTS OF CONDITION
AS OF SEPTEMBER 12, 2000
<CAPTION>
THE DOWSM THE DOWSM
STRATEGIC 10 STRATEGIC 5
TRADITIONAL TRADITIONAL
PORTFOLIO PORTFOLIO
--------------- --------------
<S> <C> <C>
INVESTMENT IN SECURITIES
Contracts to purchase Securities (1) $ 145,651 $ 144,948
--------------- --------------
Total $ 145,651 $ 144,948
=============== ==============
LIABILITY AND INTEREST OF UNITHOLDERS
Liability--
Organizational costs (2) $ 451 $ 362
Interest of Unitholders--
Cost to investors (3) 149,770 149,050
Less: Gross underwriting commission and organizational costs (2)(3)(4) 4,570 4,464
--------------- --------------
Net interest to Unitholders (3) 145,200 144,586
--------------- --------------
Total $ 145,651 $ 144,948
=============== ==============
--------------------------------------------------------------------------------
(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 under "Summary of Essential
Financial Information". A distribution will be made as of the close of the
initial offering period to an account maintained by the Trustee from which
the organizational expense obligation of the investors will be satisfied.
(3) The aggregate public offering price and the aggregate sales charge are
computed on the bases set forth under "Public Offering--Offering Price".
(4) Assumes the maximum sales charge.
</TABLE>
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 which
are components of the Dow Jones Industrial Average. 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 and who are seeking to achieve a better performance than the
related indexes through an investment in the highest dividend yielding stocks of
Dow Jones Industrial Average. An investment in approximately equal values of
such stocks each year has in most instances provided a higher total return than
investments in all of the stocks which are components of the index.
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 "Portfolio" for 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. 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
--------------------------------------------------------------------------------
The objective of each Portfolio is to provide an above average total return
through a combination of potential capital appreciation and dividend income,
consistent with the preservation of invested capital, by investing in a
portfolio of actively traded equity securities selected using the Portfolio's
investment strategy. We describe the investment strategy for each Portfolio in
the individual Portfolio sections beginning on page 4. There is no assurance
that a Portfolio will achieve its objective.
The publisher of the Dow Jones Industrial Average has not participated in any
way in the creation of the Portfolios or in the selection of stocks included in
the Trusts and has not approved any information herein relating thereto. The
publisher of the Dow Jones Industrial Average is not affiliated with the
Sponsor.
Each Portfolio is selected by implementing its strategy as of the close of
business three business days prior to the Initial Date of Deposit (the
"Selection Time"). The dividend yield is computed by annualizing the last
dividend declared and dividing the result by the market value at the Selection
Time.
The Portfolios seek to achieve better performance than the Dow Jones
Industrial Average through similar investment strategies. Investment in a number
of companies having high dividends relative to their stock prices or low price
to book ratios (because their stock prices may be undervalued) is designed to
increase the potential for higher returns over time. The Portfolio investment
strategies are designed to be implemented on an annual basis. Investors who hold
Units through Portfolio termination may have investment results that differ
significantly from a Unit investment that is reinvested into a new trust every
twelve months.
A balanced investment portfolio incorporates various style and capitalization
characteristics. The Sponsor offers unit trusts with a variety of styles and
capitalizations to meet your needs. The Sponsor determines style characteristics
(growth and value) based on the criteria used in selecting 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 the Sponsor believes are
undervalued. The Sponsor determines market capitalizations as follows based on
the weighted median market capitalization of a portfolio: Small-Cap -- less than
$1.7 billion; Mid-Cap -- $1.7 billion to $10.5 billion; and Large-Cap -- over
$10.5 billion. The Sponsor determines all style and capitalization
characteristics as of the Initial Date of Deposit and the characteristics may
vary thereafter. The Sponsor will not remove a Security from a Portfolio as a
result of any change in characteristics.
Investors should note that the above criteria were applied to the Securities
for inclusion in the Portfolios as of three business days prior to the Initial
Date of Deposit. Subsequent to this date, the Securities may no longer be
included in an index or meet the above criteria. Should a Security no longer be
included in these indexes or meet the selection criteria, the Security will not
as a result thereof be removed from its Portfolio.
RISK FACTORS
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PRICE VOLATILITY. The Portfolios invest in stocks of U.S. 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. Stocks represent ownership interests in the issuers and are not
obligations of the issuers. Common stockholders have a right to receive
dividends only after the company has provided for payment of its creditors,
bondholders and preferred stockholders. Common stocks do not assure dividend
payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
TELECOMMUNICATIONS ISSUERS. Your Portfolio may invest significantly in
telecommunications companies. These companies are subject to substantial
governmental regulation. For example, the United States government and state
governments regulate permitted rates of return and the kinds of services that a
company may offer. This industry has experienced substantial deregulation in
recent years. Deregulation may lead to fierce competition for market share and
can have a negative impact on certain companies. Competitive pressures are
intense and telecommunications stocks can experience rapid volatility. Certain
telecommunications products may become outdated very rapidly. A company's
performance can be hurt if the company fails to keep pace with technological
advances. Certain smaller companies in the portfolio may involve greater risk
than larger, established issuers. Smaller companies may have limited product
lines, markets or financial resources. Their securities may trade in lower
volumes than larger companies. As a result, the prices of these securities may
fluctuate more than the prices of other issuers. You should also review the
following section discussing technology companies because these companies may
involve similar risks.
CONSUMER PRODUCT AND RETAIL ISSUERS. Your Portfolio may invest significantly
in companies that manufacture or sell various consumer products. General risks
of these companies include the general state of the economy, intense competition
and consumer spending trends. A decline in the economy which results in a
reduction of consumers' disposable income can negatively impact spending habits.
Competitiveness in the retail industry will require large capital outlays for
the installation of automated checkout equipment to control inventory, track the
sale of items and gauge the success of sales campaigns. Retailers who sell their
products over the Internet have the potential to access more consumers, but will
require sophisticated technology to remain competitive.
LEGISLATION/LITIGATION. From time to time, various legislative initiatives
are proposed in the United States and abroad which may have a negative impact on
certain of the companies represented in the Portfolios. In addition, litigation
regarding any of the issuers of the Securities, such as that concerning Philip
Morris Companies, Inc., or of the industries represented by these issuers may
negatively impact the share prices of these Securities. No one can predict what
impact any pending or threatened litigation will have on the share prices of the
Securities.
NO FDIC GUARANTEE. An investment in your 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 sales charge, and cash, if any, in the
Income and Capital Accounts. The "Fee Table" describes the sales charge in
detail. 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. These costs include 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. The initial offering period sales charge
is reduced as follows:
AGGREGATE DOLLAR AMOUNT SALES CHARGE
OF UNITS PURCHASED* REDUCTION
--------------------- ----------------
$50,000 - $99,999 0.25%
$100,000 - $149,999 0.50
$150,000 - $999,999 0.85
$1,000,000 or more 1.75
---------------
*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 other Van Kampen-sponsored unit investment trusts
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%.
During the initial offering period of the Portfolios offered in this
prospectus, unitholders of unaffiliated unit investment trusts having an
investment strategy similar to the investment strategy of the Portfolios offered
in this prospectus may utilize proceeds received upon termination or upon
redemption immediately preceding termination of such unaffiliated trust to
purchase Units of a Portfolio offered in this prospectus at the Public Offering
Price per Unit less 1%.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, and trustees, custodians or fiduciaries for the
benefit of such persons) of the Van Kampen Funds Inc. and its affiliates,
dealers and their affiliates and vendors providing services to the Sponsor may
purchase Units at the Public Offering Price less the applicable dealer
concession.
The minimum purchase is 100 Units (25 Units for retirement accounts) but may
vary by selling firm. However, in connection with fully disclosed transactions
with the Sponsor, the minimum purchase requirement will be that number of Units
set forth in the contract between the Sponsor and the related broker or agent.
OFFERING PRICE. The Public Offering Price of Units will vary from the amounts
stated under "Summary of Essential Financial Information" in accordance with
fluctuations in the prices of the underlying Securities in the 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 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 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
set forth in the following table. A portion of the concessions or agency
commissions represents amounts paid by the Sponsor out of its own assets as
additional compensation.
AGGREGATE
DOLLAR AMOUNT OF
UNITS PURCHASED
-------------------------
Less than $50,000 2.25%
$50,000 - $99,999 2.00
$100,000 - $149,999 1.75
$150,000 - $999,999 1.40
$1,000,000 or more 0.65
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 unit investment trusts who use their redemption or termination proceeds
to purchase Units of the Portfolios, the total concession or agency commission
will equal 1.30% (or such lesser amount resulting from discounts). For all
secondary market transactions the total concession or agency commission will
amount to 2.10% per Unit. Notwithstanding anything to the contrary herein, in no
case shall the total of any concessions, agency commissions and any additional
compensation allowed or paid to any broker, dealer or other distributor of Units
with respect to any individual transaction exceed the total sales charge
applicable to such transaction. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units and to change the amount
of the concession or agency commission to dealers and others from time to time.
The breakpoint concessions or agency commissions are also applied on a Unit
basis utilizing a breakpoint equivalent of $10 per Unit and will be applied on
whichever basis is more favorable to the broker, dealer or agent.
Broker-dealers of the Portfolios, 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
Portfolio. 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. The Sponsor intends to
maintain a secondary market for Units only during the first six months following
the Initial Date of Deposit. 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. 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.
Fee paid to broker on purchase 0.00%
Sponsor retention 0.50
------
Total 0.50%
======
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 appear under "Summary of Essential Financial Information". A person
becomes a Unitholder of record on the date of settlement (generally three
business days after Units are ordered). Unitholders may elect to receive
distributions in cash or to have distributions reinvested into additional Units.
Distributions may also be reinvested into Van Kampen mutual funds. See "Rights
of Unitholders--Reinvestment Option".
Dividends received by 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 rata share of the
available cash in the Income and Capital Accounts as of the related Record Date.
REINVESTMENT OPTION. Unitholders may have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option without a
sales charge (to the extent Units may be lawfully offered for sale in the state
in which the Unitholder resides). 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.
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
of Securities during the five business days prior to a Portfolio's termination.
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 rata 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 and (b) the accrued expenses of the Portfolio. During the initial
offering period, the redemption price and the secondary market repurchase price
will include estimated organizational and offering costs. For these purposes,
the Evaluator may determine the value of the Securities in the following manner:
If the Securities are listed on a national or foreign securities exchange or the
Nasdaq Stock Market, Inc., this evaluation is generally based on the closing
sale prices on that exchange or market (unless it is determined that these
prices are inappropriate as a basis for valuation) or, if there is no closing
sale price on that exchange or market, at the closing bid prices. If the
Securities are not so listed or, if so listed and the principal market therefor
is other than on the exchange or market, the evaluation may be based on the
current bid price on the over-the-counter market. If current bid prices are
unavailable or inappropriate, the evaluation may be determined (a) on the basis
of current bid prices for comparable securities, (b) by appraising the
Securities on the bid side of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the SEC determines that
trading on that Exchange is restricted or an emergency exists, as a result of
which disposal or evaluation of the Securities is not reasonably practicable, or
for other periods as the SEC may permit.
SPECIAL REDEMPTION AND ROLLOVER. We currently intend to offer a subsequent
series of each Portfolio for a Rollover when the Portfolios terminate.
On the Mandatory Termination Date you will have the option to (1)
participate in the Rollover and have your Units reinvested into a subsequent
trust series, (2) receive an in kind distribution of Securities (if applicable)
or (3) receive a cash distribution.
If you elect to participate in the Rollover, your Units will be redeemed on
the Mandatory Termination Date. As the redemption proceeds become available, the
proceeds (including dividends) will be invested in a new trust series at the
public offering price for the new trust. The Trustee will attempt to sell
Securities to satisfy the redemption as quickly as practicable on the Mandatory
Termination Date. We do not anticipate that the sale period will be longer than
one day, however, certain factors could affect the ability to sell the
Securities and could impact the length of the sale period. The liquidity of any
Security depends on the daily trading volume of the Security and the amount
available for redemption and reinvestment on any day.
We intend to make subsequent trust series available for sale at various times
during the year. Of course, we cannot guarantee that a subsequent trust or
sufficient units will be available or that any subsequent trusts will offer the
same investment strategies or objectives as the current Portfolios. We cannot
guarantee that a Rollover will avoid any negative market price consequences
resulting from trading large volumes of securities. Market price trends may make
it advantageous to sell or buy securities more quickly or more slowly than
permitted by the Portfolio procedures. We may, in our sole discretion, modify a
Rollover or stop creating units of a trust at any time regardless of whether all
proceeds of Unitholders have been reinvested in a Rollover. If we decide not to
offer a subsequent series, Unitholders will be notified prior to the Mandatory
Termination Date. Cash which has not been reinvested in a Rollover will be
distributed to Unitholders shortly after the Mandatory Termination Date.
Rollover participants may receive taxable dividends or realize taxable capital
gains which are reinvested in connection with a Rollover but may not be entitled
to a deduction for capital losses due to the "wash sale" tax rules. Due to the
reinvestment in a subsequent trust, no cash will be distributed to pay any
taxes. See "Taxation".
CERTIFICATES. Ownership of Units is evidenced in book-entry form unless a
Unitholder makes a written request to the Trustee that ownership be in
certificate form. Units are transferable by making a written request to the
Trustee and, in the case of Units in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not limited
to, trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Fractional certificates
will not be issued. The Trustee may require a Unitholder to pay a reasonable fee
for each certificate reissued or transferred and to pay any governmental charge
that may be imposed in connection with each transfer or interchange. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
REPORTS PROVIDED. Unitholders will receive a statement of dividends and other
amounts received by 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
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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.
The Trustee must reject any offer for securities or property other than cash in
exchange for the Securities. If securities or property are nonetheless acquired
by a 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.
Pursuant to an exemptive order, each terminating Portfolio is permitted to
sell Securities to a new trust series if those Securities meet the investment
strategy of the new trust. The exemption enables each Portfolio to eliminate
commission costs on these transactions. The price for those securities will be
the closing sale price on the sale date on the exchange where the Securities are
principally traded, as certified by the Sponsor.
AMENDMENT OF THE TRUST AGREEMENT. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
TERMINATION. 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 (unless the Unitholder has elected an in
kind distribution or is a participant in the final Rollover). 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 be liable for depreciation or loss incurred by
reason of the sale by the Trustee of any of the Securities. In the event of the
failure of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and is not be liable for any action taken by it in good faith under
the Trust Agreement. The Trustee is not liable for any taxes or other
governmental charges imposed on the Securities, on it as Trustee under the Trust
Agreement or on a 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 or
investment strategies utilized by the Portfolios (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. 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
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GENERAL. The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as capital assets
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in a
Portfolio.
For purposes of the following discussion and opinions, it is assumed that
each Security is equity for federal income tax purposes. In the opinion of
Chapman and Cutler, special counsel for the Sponsor, under existing law:
1. Each 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 a Portfolio under the Code; and the income of
each 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 a Portfolio.
2. 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 considered to
be received by a Portfolio. Unitholders will be taxed in this manner regardless
of whether distributions from a Portfolio are actually received by the
Unitholder or are automatically reinvested (see "Rights of
Unitholders--Reinvestment Option").
3. Each Unitholder will have a taxable event when a 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 from a Portfolio 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
a Portfolio (in proportion to the fair market values thereof on the valuation
date closest to the date the Unitholder purchases his Units) in order to
determine his initial tax basis for his pro rata portion of each Security held
by a Portfolio. Unitholders should consult their own tax advisers with regard to
the calculation of basis. For federal income tax purposes, a Unitholder's pro
rata portion of the dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to a Security held by a Portfolio is taxable as
ordinary income to the extent of such corporation's current and accumulated
"earnings and profits". A Unitholder's pro rata portion of dividends paid on
such Security which exceed such current and accumulated earnings and profits
will first reduce a Unitholder's tax basis in such Security, and to the extent
that such dividends exceed a Unitholder's tax basis in such Security shall
generally be treated as capital gain. In general, the holding period for such
capital gain will be determined by the period of time a Unitholder has held his
Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by a 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 a Portfolio will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). In particular, a Rollover Unitholder should be aware
that a Rollover Unitholder's loss, if any, incurred in connection with the
exchange of Units for units in the next new series of the Portfolios (the "New
Fund") will generally be disallowed with respect to the disposition of any
Securities pursuant to such exchange to the extent that such Unitholder is
considered the owner of substantially identical securities under the wash sale
provisions of the Code taking into account such Unitholder's deemed ownership of
the securities underlying the Units in the New Fund in the manner described
above, if such substantially identical securities were acquired within a period
beginning 30 days before and ending 30 days after such disposition. However, any
gains incurred in connection with such an exchange by a Rollover Unitholder
would be recognized. Unitholders should consult their tax advisers regarding the
recognition of gains and losses for federal income tax purposes.
DIVIDENDS RECEIVED DEDUCTION. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by a 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 period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. Unitholders should consult with their
tax advisers with respect to the limitations on and possible modifications to
the dividends received deduction.
To the extent dividends received by a 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.
LIMITATIONS ON DEDUCTIBILITY OF PORTFOLIO EXPENSES BY UNITHOLDERS. Each
Unitholder's pro rata share of each expense paid by a 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 a Portfolio as
miscellaneous itemized deductions subject to this limitation.
RECOGNITION OF TAXABLE GAIN OR LOSS UPON DISPOSITION OF SECURITIES BY A
PORTFOLIO OR DISPOSITION OF UNITS. As discussed above, a Unitholder may
recognize taxable gain (or loss) when a Security is disposed of by a Portfolio
or if the Unitholder disposes of a Unit (although losses incurred by Rollover
Unitholders may be subject to disallowance, as discussed above). The Internal
Revenue Service Restructuring and Reform Act of 1998 (the "1998 Tax Act")
provides that for taxpayers other than corporations, net capital gain (which is
defined as net long-term capital gain over net short-term capital loss for the
taxable year) realized from property (with certain exclusions) is subject to a
maximum marginal stated tax rate of 20% (10% in the case of certain taxpayers in
the lowest tax bracket). Capital gain or loss is long-term if the holding period
for the asset is more than one year, and is short-term if the holding period for
the asset is one year or less. The date on which a Unit is acquired (i.e., the
"trade date") is excluded for purposes for determining the holding period of the
Unit. Capital gains realized from assets held for one year or less are taxed at
the same rates as ordinary income.
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 involved including
his pro rata portion of all Securities represented by a Unit.
The Taxpayer Relief Act of 1997 (the "1997 Tax Act") includes provisions that
treat certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their own
tax advisers with regard to any such constructive sales rules.
SPECIAL TAX CONSEQUENCES OF IN KIND DISTRI BUTIONS UPON REDEMPTION OF UNITS
OR TERMINATION OF A 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 of certain
Securities in a Portfolio. A Unitholder may also under certain circumstances
request an in kind distribution of certain Securities in a Portfolio upon the
termination of such Portfolio. A Unitholder will receive cash representing his
pro rata portion of the foreign Securities in a Portfolio. See "Rights of
Unitholders--Redemption of Units". The Unitholder requesting an in kind
distribution will be liable for expenses related thereto (the "Distribution
Expenses") and the amount of such in kind distribution will be reduced by the
amount of the Distribution Expenses. See "Rights of Unitholders--Redemption of
Units". As previously discussed, prior to the redemption of Units or the
termination of a Portfolio, a Unitholder is considered as owning a pro rata
portion of each of such Portfolio's assets for federal income tax purposes. The
receipt of an in kind distribution will result in a Unitholder receiving in
whole shares of stock plus, possibly, cash.
The potential tax consequences that may occur under an in kind distribution
with respect to each Security owned by a 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
a Portfolio. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security or for a foreign Security held by a 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 or such foreign Security held by such Portfolio.
Because each 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 such 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 such Portfolio. Unitholders who request an in kind
distribution are advised to consult their tax advisers in this regard.
ROLLOVER UNITHOLDERS. As discussed in "Rights of Unitholders--Special
Redemption and Rollover," a Unitholder may elect to become a Rollover
Unitholder. To the extent a Rollover Unitholder exchanges his Units for Units of
the New Fund in a taxable transaction, such Unitholder will recognize gains, if
any, but generally will not be entitled to a deduction for any losses recognized
upon the disposition of any Securities pursuant to such exchange to the extent
that such Unitholder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into account such
Unitholder's deemed ownership of the securities underlying the Units in the New
Fund in the manner described above, if such substantially identical securities
were acquired within a period beginning 30 days before and ending 30 days after
such disposition under the wash sale provisions contained in Section 1091 of the
Code. In the event a loss is disallowed under the wash sale provisions, special
rules contained in Section 1091(d) of the Code apply to determine the
Unitholder's tax basis in the securities acquired. Rollover Unitholders are
advised to consult their tax advisers.
COMPUTATION OF THE UNITHOLDER'S TAX BASIS. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder for
his Units. The cost of the Units is allocated among the Securities held in a
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 a 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 a Portfolio to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by a 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 corporation for a three-year period ending with the close
of its taxable year preceding payment was effectively connected to the conduct
of a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the United
States and a foreign country. Non-U.S. Unitholders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions from a
Portfolio.
It should be noted that payments to the Portfolios 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 Portfolios. 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 a Portfolio, the Trustee will furnish to each
Unitholder of such Portfolio a statement containing information relating to the
dividends received by such Portfolio on the Securities, the gross proceeds
received by such Portfolio from the disposition of any Security (resulting from
redemption or the sale of any Security), and the fees and expenses paid by such
Portfolio. The Trustee will also furnish annual information returns to
Unitholders and to the Internal Revenue Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel to the Portfolios for New York tax matters,
each Portfolio is not an association taxable as a corporation and the income of
the Portfolios will be treated as the income of the Unitholders under the
existing income tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal and certain aspects of
New York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit
in one of the Portfolios 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
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COMPENSATION OF SPONSOR, SUPERVISOR AND EVALUATOR. The Sponsor will not
receive any fees in connection with its activities relating to the 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. The Portfolios will also pay a license fee to Dow Jones & Company,
Inc. for use of certain service marks of Dow Jones & Company, Inc.
GENERAL. The expenses of a Portfolio will accrue on a daily basis. The 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
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LEGAL OPINIONS. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Winston & Strawn has acted as counsel to the Trustee
and as special counsel for New York tax matters.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The statements of condition and the
related portfolios included in this Prospectus have been audited by Grant
Thornton LLP, independent certified public accountants, as set forth in their
report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
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This Prospectus does not contain all the information set forth in the
Registration Statement filed by the Portfolios 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 Portfolios. 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
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TITLE PAGE
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Summary of Essential Financial Information.. 2
Fee Table................................... 3
The DowSM Strategic 10 Portfolio............ 4
The DowSM Strategic 5 Portfolio............. 6
Notes to Hypothetical Performance Tables.... 8
Notes to Portfolios......................... 8
The Securities.............................. 9
Report of Independent Certified
Public Accountants....................... 10
Statements of Condition .................... 11
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-7
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.
EMSPRO247
PROSPECTUS
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SEPTEMBER 12, 2000
VAN KAMPEN
FOCUS PORTFOLIOS(SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
THE DOWSM STRATEGIC 10 PORTFOLIO,
SEPTEMBER 2000 TRADITIONAL SERIES
THE DOWSM STRATEGIC 5 PORTFOLIO,
SEPTEMBER 2000 TRADITIONAL SERIES
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 247
--------------------------------------------------------------------------------
This Information Supplement provides additional information concerning the
risks and operations of the Portfolio which is not described in the Prospectus.
You should read this Information Supplement in conjunction with the Prospectus.
This Information Supplement is not a prospectus. It does not include all of the
information that you should consider before investing in a Portfolio. This
Information Supplement may not be used to offer or sell Units without the
Prospectus. You can obtain copies of the Prospectus by contacting the Sponsor at
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. All capitalized terms have been defined in the Prospectus.
TABLE OF CONTENTS
PAGE
Risk Factors 2
The Portfolio Strategies 4
The Indexes 4
Sponsor Information 5
Trustee Information 5
Portfolio Termination 6
RISK FACTORS
PRICE VOLATILITY. Because the Portfolios invest in stocks of U.S.
companies, you should understand the risks of investing in common stocks before
purchasing Units. These risks include the risk that the financial condition of
the company or the general condition of the stock market may worsen and the
value of the stocks (and therefore Units) will fall. Stocks are especially
susceptible to general stock market movements. The value of 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.
LITIGATION. Philip Morris Companies, Inc. common stock may represent a
signigicant portfion of the value of the Portfolios. Pending or threatened legal
proceedings against Philip Morris cover a wide range of matters including
product liability and consumer protection. Damages claimed in many of the
smoking and health cases alleging personal injury (both individual and class
actions), and in health cost recovery cases brought by governments, unions and
similar entities (the most recent suit was filed by the Justice Department on
September 22, 1999) seeking reimbursement for healthcare expenditures, aggregate
many billions of dollars.
On November 23, 1998, Philip Morris entered into a Master Settlement
Agreement with 46 state governments to settle the asserted and unasserted
healthcare cost recovery and certain other claims against them. The Agreement is
subject to final judicial approval in each of the settling states. As part of
the Agreement, Philip Morris and the three other major domestic tobacco
manufacturers have agreed to participate in the establishment of a $5.15 billion
trust fund. The trust is to be funded over 12 years beginning in 1999. PM Inc.
has agreed to pay $300 million into the trust in 1999. Philip Morris charged
approximately $3.1 billion as a pretax expense in 1998 as a result of the
settlement, and as of December 31, 1998, had accrued costs of its obligations
under the settlement and to tobacco growers aggregating $1.4 billion, payable
principally before the end of the year 2000. Philip Morris believes the
agreement will likely materially adversely affect the business, volume, cash
flows and/or operating income and financial position of the company in future
years. The degree of the adverse impact will depend, among other things, on the
rates of decline in United States cigarette sales in the premium and discount
segments, the company's share of the domestic premium and discount cigarette
segments, and the effect of any resulting cost advantage of manufacturers not
subject to the agreement.
No one can predict the outcome of the litigation pending against these
companies or how the current uncertainty concerning regulatory and legislative
measures will ultimately be resolved. No one can predict the impact that these
and other possible developments will have on the price of the stocks or any
Portfolio.
DIVIDENDS. Stocks represent ownership interests in a company and are not
obligations of the company. Common stockholders have a right to receive payments
from the company that is subordinate to the rights of creditors, bondholders or
preferred stockholders of the company. This means that common stockholders have
a right to receive dividends only if a company's board of directors declares a
dividend and the company has provided for payment of all of its creditors,
bondholders and preferred stockholders. If a company issues additional debt
securities or preferred stock, the owners of these securities will have a claim
against the company's assets before common stockholders if the company declares
bankruptcy or liquidates its assets even though the common stock was issued
first. As a result, the company may be less willing or able to declare or pay
dividends on its common stock.
TELECOMMUNICATIONS ISSUERS. Because certain Portfolios are concentrated in
the telecommunications industry, the value of the Units of these Portfolios may
be susceptible to factors affecting the telecommunications industry. The
telecommunications industry is subject to governmental regulation and the
products and services of telecommunications companies may be subject to rapid
obsolescence. These factors could affect the value of Units. Telephone companies
in the United States, for example, are subject to both state and federal
regulations affecting permitted rates of returns and the kinds of services that
may be offered. Certain types of companies represented in a portfolio are
engaged in fierce competition for a share of the market of their products. As a
result, competitive pressures are intense and the stocks are subject to rapid
price volatility. While a portfolio concentrates on the securities of
established suppliers of traditional telecommunication products and services, a
Portfolio may also invest in smaller telecommunications companies which may
benefit from the development of new products and services. These smaller
companies may present greater opportunities for capital appreciation, and may
also involve greater risk than large, established issuers. Such smaller
companies may have limited product lines, market or financial resources, and
their securities may trade less frequently and in limited volume than the
securities of larger, more established companies. As a result, the prices of the
securities of such smaller companies may fluctuate to a greater degree than the
prices of securities of other issuers.
CONSUMER PRODUCT AND RETAIL ISSUERS. Certain Portfolios may invest
significantly in issuers that manufacture or sell consumer products. The
profitability of these companies will be affected by various factors including
the general state of the economy and consumer spending trends. In the past,
there have been major changes in the retail environment due to the declaration
of bankruptcy by some of the major corporations involved in the retail industry,
particularly the department store segment. The continued viability of the retail
industry will depend on the industry's ability to adapt and to compete in
changing economic and social conditions, to attract and retain capable
management, and to finance expansion. Weakness in the banking or real estate
industry, a recessionary economic climate with the consequent slowdown in
employment growth, less favorable trends in unemployment or a marked
deceleration in real disposable personal income growth could result in
significant pressure on both consumer wealth and consumer confidence, adversely
affecting consumer spending habits. In addition, competitiveness of the retail
industry will require large capital outlays for investment in the installation
of automated checkout equipment to control inventory, to track the sale of
individual items and to gauge the success of sales campaigns. Increasing
employee and retiree benefit costs may also have an adverse effect on the
industry. In many sectors of the retail industry, competition may be fierce due
to market saturation, converging consumer tastes and other factors. Because of
these factors and the recent increase in trade opportunities with other
countries, American retailers are now entering global markets which entail added
risks such as sudden weakening of foreign economies, difficulty in adapting to
local conditions and constraints and added research costs.
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.
THE PORTFOLIO STRATEGIES
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.
The companies represented in the Portfolios are some of the most well-known
and highly capitalized companies in the world. The Portfolios seek to achieve
better performances than the related indexes through similar investment
strategies. Investment in a number of companies having high dividends relative
to their stock prices (usually because their stock prices are undervalued) is
designed to increase each Portfolio's potential for higher returns. There is, of
course, no assurance that a Portfolio (which includes expenses and sales
charges) will achieve its objective.
It should be noted that the foregoing yield comparisons do not take into
account any expenses or sales commissions which would arise from an investment
in Units of the Portfolios. The Portfolios seek to achieve better performances
than the related indexes through similar investment strategies. Investment in a
number of companies having high dividends relative to their stock prices
(usually because their stock prices are undervalued) is designed to increase
each Portfolio's potential for higher returns. There is, of course, no assurance
that a Portfolio (which includes expenses and sales charges) will achieve its
objective. The investment strategies utilized by the Portfolios are designed to
be implemented on an annual basis. Investors who hold Units through Portfolio
termination may have investment results that differ significantly from a Unit
investment that is reinvested into a new trust each year.
Investors should note that the above criteria were applied to the
Securities for inclusion in the Portfolios as of three business days prior to
the Initial Date of Deposit. Subsequent to this date, the Securities may no
longer be included in an index, may not be providing one of the ten highest
dividend yields within these indexes or may not have one of the 2nd through 6th
lowest per share prices within the relevant index. Should a Security no longer
be included in these indexes or meet the criteria used for selection for a
Portfolio, such Security will not as a result thereof be removed from a
Portfolio.
THE INDEXES
THE DOW JONES INDUSTRIAL AVERAGE. The Dow Jones Industrial Average ("DJIA")
was first published in The Wall Street Journal in 1896. Initially consisting of
just 12 stocks, the DJIA expanded to 20 stocks in 1916 and its present size of
30 stocks on October 1, 1928. The following is the list as it currently appears:
Alcoa, Inc.
American Express Company
AT&T Corporation
Boeing Company
Caterpillar, Inc.
Citigroup, Inc.
Coca-Cola Company
Eastman Kodak Company
E.I. du Pont de Nemours & Company
Exxon Mobil Corporation
General Electric Company
General Motors Corporation
Hewlett-Packard Company
Home Depot Inc.
Honeywell International Inc.
Intel Corporation
International Business Machines Corporation
International Paper Company
J.P. Morgan & Company, Inc.
Johnson & Johnson
McDonald's Corporation
Merck & Company, Inc.
Microsoft Corporation
Minnesota Mining & Manufacturing Company
Philip Morris Companies, Inc.
Procter & Gamble Company
SBC Communications Inc.
United Technologies Corporation
Wal-Mart Stores, Inc.
Walt Disney Company
"Dow JonesSM", "Dow Jones Industrial AverageSM", "The Dow 5SM", "The Dow
10SM", "The Dow 30SM", "The DowSM", and "DJIASM" are proprietary to and service
marks of Dow Jones & Company, Inc. and have been licensed for use for certain
purposes by the Portfolios. The Portfolios are not sponsored, endorsed, sold or
promoted by Dow Jones and Dow Jones makes no representation regarding the
avisability of investing in any Portfolio.
SPONSOR INFORMATION
Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of your
Portfolio. 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.
Morgan Stanley Dean Witter & Co., 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 Portfolio.
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 previous business day if a holiday) the
Trustee will deliver each requesting Unitholder's pro rata number of whole
shares of the U.S.-traded Securities in a Portfolio to the account of the
broker-dealer or bank designated by the Unitholder at Depository Trust Company.
A Unitholder electing an in kind distribution will not receive a distribution of
shares of the foreign exchange-traded Securities but will instead receive cash
representing his pro rata portion of such Securities. The value of the
Unitholder's fractional shares of the Securities will be paid in cash.
Unitholders with less than 1,000 Units, Unitholders in a Portfolio with 1,000 or
more Units not requesting an in kind distribution and Unitholders who do not
elect the Rollover Option will receive a cash distribution from the sale of the
remaining Securities within a reasonable time following the Mandatory
Termination Date. Regardless of the distribution involved, the Trustee will
deduct from the funds of the appropriate 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.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent series of the Portfolios pursuant to the Rollover Option.
There is, however, no assurance that units of any new series of the Portfolios
will be offered for sale at that time, or if offered, that there will be
sufficient units available for sale to meet the requests of any or all
Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
CONTENTS OF REGISTRATION STATEMENT
This Amendment No. 1 of Registration Statement comprises the following
papers and documents:
The facing sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
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 247, 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 247 has duly caused this
Amendment No. 1 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 12th day of September, 2000.
Van Kampen Focus Portfolios, Series 247
By Van Kampen Funds Inc.
By Christine K. Putong
--------------------------------------
Assistant Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below on September
12, 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.
