MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 249
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 249 on November 15, 2000. An effort has been
made to set forth below each of the major changes and also to reflect the same
by blacklining the marked counterparts of the Prospectus submitted with the
Amendment.
Cover Page. The date of the Prospectus has been completed.
Pages 2-3. "The Summary of Essential Financial Information" section and "Fee
Table" have been completed.
Pages 4-5. The portfolio and the notes thereto have been completed.
Pages 6-8. The descriptions of the Securities issuers have been completed.
Pages 9-10. The Report of Independent Certified Public Accountants and
Statement of Condition have been completed.
<PAGE>
File No. 333-47548
CIK #1104605
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 249
B. Name of Depositor: VAN KAMPEN FUNDS INC.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
CHAPMAN AND CUTLER VAN KAMPEN FUNDS INC.
Attention: Mark J. Kneedy Attention: A. Thomas Smith III, General Counsel
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title of securities being registered: Units of proportionate interest
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT
/ X / Check box if it is proposed that this filing will become effective at
---- 8:00 a.m. on November 15, 2000 pursuant to Rule 487.
CENTRAL EQUITY TRUST
[CET LOGO]
DIVERSIFIED INCOME SERIES I
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Central Equity Trust, Diversified Income Series I (the "Trust") seeks capital
appreciation and dividend income by investing in a diversified portfolio of
shares of common stocks of electric utilities, natural gas utilities, water
utilities, telecommunications companies, real estate investment trusts and
banks. Of course, we cannot guarantee that the Trust will achieve its objective.
The Trust is a unit investment trust included in Van Kampen Focus Portfolios,
Series 249.
NOVEMBER 15, 2000
YOU SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
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The Securities and Exchange Commission has not approved or disapproved of
the Units or passed upon the adequacy or accuracy of this prospectus.
Any contrary representation is a criminal offense.
VAN KAMPEN
EDWARD D. JONES & CO., L.P. FOCUS PORTFOLIOS(SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
NOVEMBER 15, 2000
PUBLIC OFFERING PRICE
Aggregate value of Securities per Unit (1)................. $ 9.55
Sales charge .............................................. $ 0.45
Public offering price per Unit (2)......................... $ 10.00
TRUST INFORMATION
Initial number of Units (3)................................ 14,964
Aggregate value of Securities (1).......................... $ 142,904
Estimated initial distribution per Unit (March 2001) (4)... $ .12
Estimated annual dividends per Unit (4).................... $ .39726
Redemption price per Unit (5).............................. $ 9.55
GENERAL INFORMATION
Initial Date of Deposit................... November 15, 2000
Mandatory Termination Date................ November 14, 2008
Record Dates.............................. Tenth day of March, June,
September and December
Distribution Dates........................ Twenty-fifth day of March,
June, September and December
(1) Each Security is valued at the most recent closing sale price as of
the close of the New York Stock Exchange on the business day before
the Initial Date of Deposit. You will bear all or a portion of the
expenses incurred in organizing and offering the Trust. The Public
Offering Price includes the estimated amount of these costs. The
Trustee will deduct these expenses from the Trust at the end of the
initial offering period or six months following the Initial Date of
Deposit (whichever is earlier). The estimated amount is described on
the next page.
(2) The Public Offering Price will include any accumulated dividends or
cash in the Income or Capital Accounts.
(3) The number of Units may be adjusted so that the Public Offering Price
per Unit equals $10 as of the close of the New York Stock Exchange on
the Initial Date of Deposit. The number of Units and fractional
interest of each Unit will increase or decrease to the extent of any
adjustment.
(4) This estimate is based on the most recently declared quarterly
dividends or interim and final dividends accounting for any foreign
withholding taxes. Actual dividends may vary due to a variety of
factors. See "Risk Factors".
(5) The redemption price includes the estimated organizational and
offering costs. The redemption price will not include these costs
after the initial offering period. See "Rights of
Unitholders--Redemption of Units".
FEE TABLE
TRANSACTION FEES (AS % OF OFFERING PRICE)
Maximum sales charge (1).............................. 4.50%
==========
Maximum sales charge on reinvested dividends.......... 0.00%
==========
ESTIMATED ORGANIZATIONAL COSTS PER UNIT (2)........... $ 0.03247
==========
ESTIMATED ANNUAL EXPENSES PER UNIT
Trustee's fee and operating expenses.................. $ 0.01253
Evaluation fees....................................... $ 0.00250
Supervisory fees...................................... $ 0.00250
----------
Estimated annual expenses per Unit.................... $ 0.01753
==========
ESTIMATED COSTS OVER TIME
One year.............................................. $ 50
Three years........................................... $ 54
Five years............................................ $ 58
Ten years............................................. $ 70
This fee table is intended to assist you in understanding the costs that you
will bear and to present a comparison of fees. The "Estimated Costs Over Time"
example illustrates the expenses you would pay on a $1,000 investment assuming a
5% annual return and redemption at the end of each period. This example assumes
that you reinvest the Trust distributions at the end of each year. Of course,
you should not consider this example a representation of actual past or future
expenses or annual rate of return, all of which may differ from those assumed
for the purposes of this example. The sales charge and expenses are described
under "Public Offering" and "Trust Operating Expenses".
(1) The sales charge is equivalent to 4.712% of the aggregate value of the
Securities. A reduced sales charge applies to transactions involving
$25,000 or more.
(2) You will bear all or a portion of the expenses incurred in organizing
and offering the Trust. The Trustee will deduct the actual amount of
these expenses from the Trust at the end of the initial offering
period.
<TABLE>
<CAPTION>
PORTFOLIO
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CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) TO TRUST (2)
---------- ------------------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
229 AGL Resources, Inc. $ 20.813 5.19% $ 4,766.06
77 ALLTEL Corporation 61.750 2.14 4,754.75
149 American States Water Company 32.125 4.05 4,786.63
195 American Water Works Company, Inc. 24.250 3.71 4,728.75
203 Atmos Energy Corporation 24.250 4.78 4,922.75
99 Bank of America Corporation 45.875 4.88 4,541.63
107 CenterPoint Properties Corporation 44.563 4.51 4,768.19
169 DPL, Inc. 28.125 3.34 4,753.13
56 Duke Energy Corporation 84.625 2.60 4,739.00
208 Duke-Weeks Realty Corporation 22.875 7.52 4,758.00
159 Energen Corporation 29.688 2.29 4,720.31
60 Enron Corporation 79.563 0.63 4,773.75
99 Equity Residential Properties Trust 48.250 6.76 4,776.75
250 Firstar Corporation 18.875 3.44 4,718.75
139 KeySpan Corporation 34.625 5.14 4,812.88
120 Kimco Realty Corporation 39.938 6.81 4,792.50
195 NiSource, Inc. 24.813 4.35 4,838.44
115 ONEOK, Inc. 41.000 3.02 4,715.00
128 Peoples Energy Corporation 37.625 5.32 4,816.00
84 SBC Communications, Inc. 57.313 1.77 4,814.25
220 Sempra Energy 21.750 4.60 4,785.00
167 Southern Company 28.188 4.75 4,707.31
149 SouthTrust Corporation (4) 31.938 3.13 4,758.69
89 Spieker Properties, Inc. 53.750 5.21 4,783.75
172 TECO Energy, Inc. 27.625 4.85 4,751.50
127 TXU Corporation 37.125 6.46 4,714.88
173 UtiliCorp United, Inc. 27.500 4.36 4,757.50
204 Vectren Corporation 23.563 4.33 4,806.75
85 Verizon Communications 55.750 2.76 4,738.75
103 Wells Fargo & Company 46.625 2.06 4,802.38
---------- -------------
4,330 $ 142,904.03
========== =============
</TABLE>
NOTES TO PORTFOLIO
(1) The Securities are initially represented by "regular way" contracts
for the performance of which an irrevocable letter of credit has been
deposited with the Trustee. Contracts to acquire Securities were
entered into on November 14, 2000 and have a settlement date of
November 17, 2000 (see "The Trust").
(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
prior to the Initial Date of Deposit. Other information regarding the
Securities, as of the Initial Date of Deposit, is as follows:
PROFIT
COST TO (LOSS) TO
SPONSOR SPONSOR
-------------- --------------
$ 142,904 $ --
(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
prior to the Initial Date of Deposit. Estimated annual dividends per
share are calculated by annualizing the most recently declared
dividends or by adding the most recent interim and final dividends
declared and reflect any foreign withholding taxes.
(4) Edward D. Jones & Co., L.P. makes a market in this security.
THE SECURITIES. A brief description of each of the issuers of the
Securities is listed below.
AGL Resources, Inc. AGL Resources, Inc. primarily sells and distributes
natural gas to customers in Georgia and southeastern Tennessee. The company also
holds interests in other energy-related businesses, including natural gas and
electricity marketing, wholesale and retail propane sales, gas supply services,
and consumer products.
ALLTEL Corporation. ALLTEL Corporation provides wireline and wireless
communications and information services. The company, through its subsidiaries,
provides wireline, long-distance, network access and Internet services, wireless
communications, wide-area paging service, information processing management
services, and advanced applications software. ALLTEL also publishes telephone
directories.
American States Water Company. American States Water Company purchases,
produces, distributes, and sells water. The company also distributes electricity
in one community. American States operates within various customer service areas
in California.
American Water Works Company, Inc. American Water Works Company, Inc.,
through its utility subsidiaries, provides water to customers in 22 states. The
company is involved in water and wastewater system acquisition and contract
operation.
Atmos Energy Corporation. Atmos Energy Corporation distributes and sells
natural gas and propane to over one million residential, commercial, industrial,
agricultural, and other customers. The company supplies natural gas to customers
in 802 cities, towns, and communities located in Texas, Louisiana, Kentucky,
Kansas, Colorado, Illinois, Tennessee, Iowa, Virginia, Georgia, South Carolina,
and Missouri.
Bank of America Corporation. Bank of America Corporation is the holding
company for Bank of America and NationsBank. The company provides retail banking
services, asset management, financial products, corporate finance, specialized
finance, capital markets, and financial services. Bank of America operates
throughout the United States as well as throughout the world.
CenterPoint Properties Corporation. CenterPoint Properties Corporation is a
real estate investment trust (REIT). The company manages, invests, develops, and
redevelops warehouse and industrial facilities in the Chicago regional market.
DPL, Inc. DPL, Inc. is a holding company whose principal subsidiary is The
Dayton Power and Light Company (DP&L). DP&L sells electricity and natural gas to
residential, commercial, and government customers in west central Ohio.
Duke Energy Corporation. Duke Energy Corporation, is an integrated energy
company delivering both electricity and natural gas to customers throughout the
U.S. and abroad. The company is a domestic gatherer and processor of natural gas
and develops, constructs and operates energy facilities worldwide. Duke Energy
also actively trades and markets energy-related commodities around the globe.
Duke-Weeks Realty Corporation. Duke-Weeks Realty Corporation is a
self-administered and self-managed real estate investment trust. The company
owns interests in a diversified portfolio of industrial, office, and retail
properties. The properties are primarily located in midwestern cities.
Duke-Weeks also provides leasing, property and asset management, acquisition,
development, construction, build-to-suit, and other related services.
Energen Corporation. Energen Corporation is a holding company for its
energy subsidiaries. Alabama Gas Corporation distributes natural gas to
communities in central and north Alabama. Energen Resources Corporation
acquires, explores, and produces from oil and gas properties in North America.
Enron Corporation. Enron is one of the world's leading energy companies. The
company produces electricity and natural gas, develops, constructs, and operates
energy facilities worldwide, and delivers both physical commodities and
financial and risk management services to customers. The company also manages
telecommunications businesses and is developing an intelligent network platform
to facilitate online business.
Equity Residential Properties Trust. Equity Residential Properties Trust, a
self-administered and self-managed real estate investment trust, owns and
operates multifamily properties containing apartment units. Its properties are
located throughout the United States. The company also has property partnership
interests and investments in subordinated mortgages (collateralized by
properties).
Firstar Corporation. Firstar Corporation is a regional, multi-state bank
holding company headquartered in Milwaukee, Wisconsin. Firstar has recently
announced that it has signed a definitive agreement to merge with U.S. Bancorp
in a transaction that is expected to close in the first quarter of 2001, after
which time the combined entity will operate under the U.S. Bancorp name and will
be headquartered in Minneapolis, Minnesota. The transaction remains subject to
normal shareholder and regulatory approvals. Firstar provides banking services
throughout the midwestern United States including the acceptance of deposits and
the making of loans, trust and investment management services, and international
banking.
KeySpan Corporation. KeySpan Corporation, through its subsidiaries,
distributes natural gas to customers in New York City and on Long Island, New
York. The company also provides gas-marketing and energy services, generates
electricity, and provides electric transmission-and-distribution operating
services and customer-billing services.
Kimco Realty Corporation. Kimco Realty Corporation is a real estate
investment trust (REIT). The company owns and operates over 400 neighborhood and
community shopping centers. These shopping centers are generally anchored by
supermarkets, department stores or drugstores. The company also provides
management services for shopping centers owned by affiliated entities and
various real estate joint ventures.
NiSource, Inc. NiSource, Inc. is an utility/energy-based holding company
providing electric energy, natural gas, and water to the public. The company,
through its subsidiaries, markets and trades energy, generates power, transmits,
supplies, and stores gas, develops and manages energy projects, installs,
repairs, and maintains underground pipelines, and locates utility lines.
ONEOK, Inc. ONEOK, Inc. provides environmentally clean fuels and products.
The company purchases, gathers, compresses, transports, and stores natural gas
for distribution to consumers. ONEOK also drills for and produces oil and gas,
extracts and sells natural gas liquids, and markets gas. The company distributes
natural gas to customers in Oklahoma and Kansas.
Peoples Energy Corporation. Peoples Energy Corporation is a diversified
energy company. The company focuses on a variety of energy related facilities,
services, and investments. Peoples operates two natural gas utilities serving
approximately one million customers in Chicago and northeastern Illinois.
SBC Communications, Inc. SBC Communications, Inc. provides communications
services in the United States and in other countries. The company provides local
and long-distance phone service, wireless and data communications, paging,
Internet access and messaging, cable and satellite television, security
services, and telecommunications equipment. SBC also provides directory
advertising and publishing.
Sempra Energy. Sempra Energy is an energy services holding company with
operations throughout the United States, Canada, Mexico, and other countries in
Latin America. The company, through its subsidiaries, provides a variety of
value-added electric and natural gas products and services.
Southern Company. Southern Company is the parent company of Alabama Power,
Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric. The company
supplies electricity, as well as provides energy-related marketing, trading, and
technical services, and wireless telecommunications.
SouthTrust Corporation. SouthTrust Corporation, a bank holding company,
provides a full range of banking services. The company's offices are located in
Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina,
Tennessee, and Texas.
Spieker Properties, Inc. Spieker Properties, Inc. is a REIT that owns and
operates suburban commercial property in California and the Pacific Northwest.
The company's principal objective is to acquire, develop, and manage office and
industrial properties in selected western United States markets.
TECO Energy, Inc. TECO Energy, Inc. is a diversified, energy-related utility
holding company. The company, through various subsidiaries, provides retail
electric service to customers in west central Florida, as well as purchases,
distributes, and markets natural gas for residential, commercial, industrial,
and electric power generation customers.
TXU Corporation. TXU Corporation is an energy services company with
multinational operations. The company provides electric and gas services,
merchant trading, energy marketing, telecommunications services, and other
energy-related services. TXU delivers energy to customers primarily in the state
of Texas, the United Kingdom and continental Europe, and Australia.
UtiliCorp United, Inc. UtiliCorp United, Inc. is a multinational energy
solutions provider. The company's network segment includes network generation,
distribution and transmission businesses, as well as appliance repair. The
energy merchant segment includes energy marketing and trading businesses,
natural gas gathering, processing and transportation, and independent power
projects.
Vectren Corporation. Vectren Corporation provides gas and electricity to the
state of Indiana. The company's non-regulated subsidiaries provide
energy-related products and services, including energy marketing, fiber-optic
telecommunications services, and utility related services. Vectren services
include materials management, debt collection, locating, trenching and meter
reading services.
Verizon Communications. Verizon Communications provides wireline voice and
data services, wireless services, Internet services, and published directory
information. The company also provides network services for the federal
government including business phone lines, data services, telecommunications
equipment, and payphones. Verizon has operations worldwide.
Wells Fargo & Company. Wells Fargo & Company is a diversified financial
services company providing banking, insurance, investments, mortgage, and
consumer finance. The company operates through physical stores, the Internet and
other distribution channels across North America and elsewhere internationally.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of
Central Equity Trust, Diversified Income Series I (Van Kampen Focus Portfolios,
Series 249):
We have audited the accompanying statement of condition and the related
portfolio of Central Equity Trust, Diversified Income Series I (Van Kampen Focus
Portfolios, Series 249) as of November 15, 2000. The statement of condition and
portfolio are the responsibility of the Sponsor. Our responsibility is to
express an opinion on such financial statements based on our audit.
We conducted our audit in accordance with 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 Central Equity Trust,
Diversified Income Series I (Van Kampen Focus Portfolios, Series 249) as of
November 15, 2000, in conformity with accounting principles generally accepted
in the United States of America.
GRANT THORNTON LLP
Chicago, Illinois
November 15, 2000
STATEMENT OF CONDITION
AS OF NOVEMBER 15, 2000
INVESTMENT IN SECURITIES
Contracts to purchase Securities (1) $ 142,904
----------
Total $142,904
==========
LIABILITY AND INTEREST OF UNITHOLDERS
Liability--
Organizational costs (2) $ 486
Interest of Unitholders--
Cost to investors (3) 149,640
Less: Gross underwriting commission
and organizational costs (2)(3) 7,222
----------
Net interest to Unitholders (3) 142,418
----------
Total $ 142,904
==========
(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 an
irrevocable letter of credit which has been deposited with the
Trustee.
(2) A portion of the Public Offering Price represents an amount sufficient
to pay for all or a portion of the costs incurred in establishing the
Trust. The amount of these costs are set forth in the "Fee Table". A
distribution will be made as of the close of the initial offering
period or six months after the Initial Date of Deposit (whichever is
earlier) to an account maintained by the Trustee from which this
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".
THE TRUST
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The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the date of
this Prospectus (the "Initial Date of Deposit"), among Van Kampen Funds Inc., as
Sponsor, Van Kampen Investment Advisory Corp., as Supervisor, The Bank of New
York, as Trustee, and American Portfolio Evaluation Services, a division of Van
Kampen Investment Advisory Corp., as Evaluator.
The Trust offers the opportunity to purchase Units representing proportionate
interests in a portfolio of actively traded equity securities. The Trust may be
an appropriate medium for investors who desire to participate in a portfolio of
common stocks with greater diversification than they might be able to acquire
individually.
On the Initial Date of Deposit, the Sponsor deposited delivery statements
relating to contracts for the purchase of the Securities and an irrevocable
letter of credit in the amount required for these purchases with the Trustee. In
exchange for these contracts the Trustee delivered to the Sponsor documentation
evidencing the ownership of Units of the Trust. Unless otherwise terminated as
provided in the Trust Agreement, the Trust will terminate on the Mandatory
Termination Date and any remaining Securities will be liquidated or distributed
by the Trustee within a reasonable time. As used in this Prospectus the term
"Securities" means the securities (including contracts to purchase these
securities) listed in "Portfolio" and any additional securities deposited into
the Trust.
Additional Units may be issued at any time by depositing in the Trust (i)
additional Securities, (ii) contracts to purchase Securities together with cash
or irrevocable letters of credit or (iii) cash (or a letter of credit or the
equivalent) with instructions to purchase additional Securities. As additional
Units are issued by the Trust, the aggregate value of the Securities will be
increased and the fractional undivided interest represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits into the Trust
following the Initial Date of Deposit provided that the additional deposits will
be in amounts which will maintain, as nearly as practicable, the same percentage
relationship among the number of shares of each Security in the Trust's
portfolio that existed immediately prior to the subsequent deposit. Investors
may experience a dilution of their investments and a reduction in their
anticipated income because of fluctuations in the prices of the Securities
between the time of the deposit and the purchase of the Securities and because
the Trust will pay the associated brokerage or acquisition fees.
Each Unit initially offered represents an undivided interest in the Trust. To
the extent that any Units are redeemed by the Trustee or additional Units are
issued as a result of additional Securities being deposited by the Sponsor, the
fractional undivided interest in the Trust represented by each unredeemed Unit
will increase or decrease accordingly, although the actual interest in the Trust
will remain unchanged. Units will remain outstanding until redeemed upon tender
to the Trustee by Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
The Trust consists of (a) the Securities (including contracts for the
purchase thereof) listed under the "Portfolio" as may continue to be held from
time to time in the Trust, (b) any additional Securities acquired and held by
the Trust pursuant to the provisions of the Trust Agreement and (c) any cash
held in the related Income and Capital Accounts. Neither the Sponsor nor the
Trustee shall be liable in any way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
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The objective of the Trust is to provide capital appreciation and dividend
income by investing in a portfolio of stocks of United States domestic electric
utilities, natural gas utilities, water utilities, telecommunications companies,
real estate investment trusts and banks. The portfolio consists of securities
selected by research analysts at Edward D. Jones & Co., L.P. (the "Underwriter")
and approved by the Sponsor. In selecting the Securities, the following factors,
among others, were considered: dividend yield, geographic diversification,
earnings growth rates, regulatory climate and stock valuation. At the time the
Securities were selected, the Underwriter's research analysts were currently
covering all the issuers of the Securities and had published favorable
recommendations for each of them. There can be no assurance that such coverage
will continue for any issuer during the life of the Trust or that the report on
any such issuer will continue to be favorable. A downgrade in an analyst's
recommendation for an issuer, or the termination of such coverage, could
negatively affect the performance of the Trust.
You should note that the selection criteria were applied to the Securities
for inclusion in the Trust as of the Initial Date of Deposit. After this date,
the Securities may no longer meet the selection criteria. Should a Security no
longer meet the selection criteria, we will generally not remove the Security
from the portfolio.
UTILITIES. The environment of the utility industry appears to be adapting to
include recent changes in regulatory requirements as well as technological
changes. In the recent past, this industry was fraught with government mandated
monopolies. Today, many states are deregulating their utilities which may result
in lowering some of the barriers to competition. Additionally, utility companies
appear to be expanding their services and offerings to include other retail
services not traditionally offered. The growth and expansion occurring could
potentially continue as the utility industry continues through these
transformations.
TELECOMMUNICATIONS. The emergence of a global, networked economy appears to
be changing the face of the telecommunications industry. Telecommunications
companies provide local, long distance and wireless telephone, as well as cable
television and internet, services and information systems, manufacture
telecommunications products, and operate voice, data and telecommunications
networks. As the technology driving this industry group continues to develop and
evolve, telecommunications companies could continue to grow in both customer
base and services offered.
REAL ESTATE INVESTMENT TRUSTS. A real estate investment trust, or REIT, can
be a good way to invest in commercial real estate. Many believe that the
attractive features of property ownership and stock ownership are combined in
this investment vehicle. REITs can provide investors with current income and can
have the potential for attractive returns. They have historically had low
relative volatility and may provide inflation protection.
BANKS. Many banks have recently made changes in the products they offer. The
financial services industry has experienced a high level of consolidations,
mergers and acquisitions as well as other regulatory issues. This industry group
may be appealing for reasons such as deregulation of the banking industry, low
inflationary expectations and accelerated earnings growth. These changes can
potentially provide advantages to those investing in this industry group.
UNDERWRITER ACTIVITIES. The Underwriter may recommend or effect transactions
in the Securities in its day to day brokerage activities. This may have an
adverse effect on the prices of the Securities. This also may have an impact on
the price the Trust pays for the Securities and the price received upon Unit
redemptions or Trust termination.
The Underwriter, in its day to day activities, may act as a broker, agent,
principal or market maker in connection with the purchase and sale of equity
securities, including the Securities. The Underwriter may also provide
investment banking services to the issuers of, or issue reports and make
recommendations on, the Securities. For any of these brokerage, market-making or
investment banking activities, the Underwriter may receive additional
compensation. The Underwriter may also receive compensation based on commissions
generated by sales of Units in addition to its concession or agency commission.
See "Public Offering--Sponsor and Underwriter Compensation".
RISK FACTORS
--------------------------------------------------------------------------------
PRICE VOLATILITY. The Trust invests in common stocks. The value of Units will
fluctuate with the value of these stocks and may be more or less than the price
you originally paid for your Units. The market value of common stocks sometimes
moves up or down rapidly and unpredictably. Because the Trust is not actively
managed, the Trustee will not sell stocks in response to market fluctuations, as
is common in managed investments. As with any investment, we cannot guarantee
that the performance of the Trust will be positive over any period of time.
DIVIDENDS. Common stocks represent ownership interests in the issuers and are
not obligations of the issuers. Accordingly, common stockholders have a right to
receive dividends only after the company has provided for payment of its
creditors, bondholders and preferred stockholders. Common stocks do not assure
dividend payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
UTILITY ISSUERS. Many utility companies, especially electric and gas and
other energy related utility companies, are subject to various uncertainties,
including:
o risks of increases in fuel and other operating costs;
o restrictions on operations and increased costs and delays as a result
of environmental, nuclear safety and other regulations;
o coping with the general effects of energy conservation;
o technological innovations which may render existing plants, equipment
or products obsolete;
o the effects of local weather, maturing markets and difficulty in
expanding to new markets due to regulatory and other factors;
o the potential impact of natural or man-made disasters;
o difficulty obtaining adequate returns on invested capital, even if
frequent rate increases are approved by public service commissions;
o the high cost of obtaining financing during periods of inflation;
o difficulties of the capital markets in absorbing utility debt and
equity securities; and
o increased competition.
Any of these factors, or a combination of these factors, could affect the
supply of or demand for electricity, natural gas, water or other energy, which
could adversely affect the profitability of the issuers of the Securities and
the performance of the Trust.
Utility companies are subject to extensive regulation at the federal and
state levels in the United States. At the federal level, the Federal Energy
Regulatory Commission (the "FERC"), the Federal Trade Commission (the "FTC"),
the Securities and Exchange Commission (the "SEC"), and the Nuclear Regulatory
Commission (the "NRC") have authority to oversee electric and combination
electric and gas utilities. The value of utility company stocks may decline
because governmental regulation controlling the utilities industry can change.
This regulation may prevent or delay the utility company from passing along cost
increases to its customers. Furthermore, regulatory authorities, which may be
subject to political and other pressures, may not grant future rate increases,
or may impose accounting or operational policies, any of which could adversely
affect a company's profitability and its stock price. Mergers in the utility
industry may require approval from several federal and state regulatory
agencies, including FERC, the FTC, and the SEC. These regulatory authorities
could, as a matter of policy, reverse the trend toward deregulation and make
consolidation more difficult, or cause delay in the merger process, any of which
could cause the prices of these stocks to fall.
REAL ESTATE INVESTMENT TRUSTS. Many factors can have an adverse impact on the
performance of a particular REIT, including its cash available for distribution,
the credit quality of a particular REIT or the real estate industry generally.
The success of REITs depends on various factors, including the occupancy and
rent levels, appreciation of the underlying property and the ability to raise
rents on those properties. Economic recession, overbuilding, tax law changes,
higher interest rates or excessive speculation can all negatively impact REITs,
their future earnings and share prices.
Risks associated with the direct ownership of real estate include, among
other factors,
o general U.S. and global as well as local economic conditions,
o decline in real estate values,
o the financial health of tenants,
o overbuilding and increased competition for tenants,
o oversupply of properties for sale,
o changing demographics,
o changes in interest rates, tax rates and other operating expenses,
o changes in government regulations,
o faulty construction and the ongoing need for capital improvements,
o regulatory and judicial requirements, including relating to liability
for environmental hazards,
o changes in neighborhood values and buyer demand, and
o the unavailability of construction financing or mortgage loans at
rates acceptable to developers.
Variations in rental income and space availability and vacancy rates in terms
of supply and demand are additional factors affecting real estate generally and
REITs in particular. Properties owned by a REIT may not be adequately insured
against certain losses and may be subject to significant environmental
liabilities, including remediation costs.
You should also be aware that REITs may not be diversified and are subject to
the risks of financing projects. The real estate industry may be cyclical, and,
if the Portfolio acquires REIT Securities at or near the top of the cycle, there
is increased risk of a decline in value of the REIT Securities during the life
of the Portfolio. The recent increased demand for certain types of real estate
may have inflated the value of real estate. This may increase the risk of a
substantial decline in the value of such real estate and increase the risk of a
decline in the value of the Securities and therefore the value of the Units.
REITs are also subject to defaults by borrowers and the market's perception of
the REIT industry generally.
Because of their structure, and the legal requirement that they distribute at
least 95% of their taxable income to shareholders annually, REITs require
frequent amounts of new funding, through both borrowing money and issuing stock.
Thus, REITs historically have frequently issued substantial amounts of new
equity shares (or equivalents) to purchase or build new properties. This may
have adversely affected REIT equity share market prices. Both existing and new
share issuances may have an adverse effect on these prices in the future,
especially when REITs continue to issue stock when real estate prices are
relatively high and stock prices are relatively low.
Within the past two years, several unit investment trusts (UITs) acquired
significant amounts of REIT shares through underwriting arrangements between the
REIT issuers and the sponsors of the UITs. These UITs are scheduled to terminate
within the next 1-4 years. This may result in the sale of substantial quantities
of shares of individual REIT shares in the open market. These sales by other
UITs may adversely affect the value of the Securities in the Trust. When the
Trust sells Securities, these sales by other UITs may reduce the sales proceeds
that the Trust receives. The Sponsor is unable to predict the extent to which
REIT issuers will issue new equity shares or equivalents in the future. Any new
issuances and transactions could negatively affect REIT equity share prices,
including those shares that the Trust holds.
TELECOMMUNICATIONS ISSUERS. The Trust invests 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. Recent federal legislation
governing the United States telecommunications industry remains subject to
judicial review and additional interpretation, which may adversely affect the
companies whose securities are held by the Trust. 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.
BANKS. The Trust also invests significantly in banks and thrifts. Banks,
thrifts and their holding companies are especially subject to the adverse
effects of economic recession; volatile interest rates; portfolio concentrations
in geographic markets and in commercial and residential real estate loans; and
competition from new entrants in their fields of business. In addition, banks,
thrifts and their holding companies are extensively regulated at both the
federal and state level and may be adversely affected by increased regulations.
Banks and thrifts will face increased competition from nontraditional lending
sources as regulatory changes, such as the recently enacted Gramm-Leach-Bliley
financial services overhaul legislation, permit new entrants to offer various
financial products. Technological advances such as the Internet allow these
nontraditional lending sources to cut overhead and permit the more efficient use
of customer data. Banks are already facing tremendous pressure from mutual
funds, brokerage firms and other financial service providers in the competition
to furnish services that were traditionally offered by banks.
NO FDIC GUARANTEE. An investment in the Trust is not a deposit of any bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
PUBLIC OFFERING
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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 maximum sales charge assessed to each
Unitholder is 4.50% of the Public Offering Price (4.712% of the aggregate value
of the Securities). 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 the
Trust, including the cost of preparing documents relating to the Trust (such as
the prospectus, trust agreement and closing documents, federal and state
registration fees, the initial fees and expenses of the Trustee and legal and
audit expenses). Beginning on November 15, 2001, the secondary market sales
charge will be 4.00%. This sales charge will reduce by 0.5% on each following
November 15 to a minimum of 2.30%. The initial offering period sales charge is
reduced as follows:
AGGREGATE
DOLLAR AMOUNT
OF UNITS PURCHASED* SALES CHARGE
--------------------- ------------
Less than $25,000 4.50%
$25,000 - $249,999 3.50
$250,000 - $999,999 2.90
$1,000,000 or more 2.10
---------------
*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.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).
During the initial offering period of the Trust offered in this prospectus
unitholders of any other Van Kampen-sponsored unit investment trusts may utilize
their redemption or termination proceeds to purchase Units of the Trust offered
in this prospectus at the Public Offering Price per Unit less 1.00%.
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 Van Kampen Funds Inc. and its affiliates, the
Underwriter, 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 200 Units 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 Trust. The
initial price of the Securities was determined by Interactive Data Corporation,
a firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities. The Evaluator will generally determine the value of the
Securities as of the Evaluation Time on each business day and will adjust the
Public Offering Price of Units accordingly. This Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each business
day. The Evaluation Time is the close of the New York Stock Exchange on each
Trust business day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a business day,
will be held until the next determination of price. The term "business day", as
used herein and under of Unitholders--Redemption of Units", excludes Saturdays,
Sundays and holidays observed by the New York Stock Exchange. The term "business
day" also excludes any day on which more than 33% of the Securities are not
traded on their principal trading exchange due to a customary business holiday
on that exchange.
The aggregate underlying value of the Securities during the initial offering
period is determined on each business day by the Evaluator in the following
manner: If the Securities are listed on a national or foreign securities
exchange or The Nasdaq Stock Market 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 or, if so listed and the principal market therefor is
other than on the exchange or market, the evaluation shall generally be based on
the current asked price on the over-the-counter market (unless it is determined
that these prices are inappropriate as a basis for evaluation). If current asked
prices are unavailable, the evaluation is generally determined (a) on the basis
of current asked prices for comparable securities, (b) by appraising the value
of the Securities on the asked side of the market or (c) by any combination of
the above. The value of any foreign securities is based on the applicable
currency exchange rate in U.S. dollars as of the Evaluation Time. The value of
the Securities for purposes of secondary market transactions and redemptions is
described under "Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather the
entire pool of Securities, taken as a whole, which are represented by the Units.
UNIT DISTRIBUTION. Units will be distributed to the public by the Sponsor and
the Underwriter 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. The
Underwriter will be allowed a concession or agency commission in connection with
the distribution of Units as described under "Sponsor and Underwriter
Compensation".
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. Notwithstanding anything to the
contrary herein, in no case shall the total of any concessions, agency
commissions and any additional compensation allowed or paid to any broker,
dealer or other distributor of Units with respect to any individual transaction
exceed the total sales charge applicable to such transaction. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units and to change the amount of the concession or agency commission to dealers
and others from time to time.
Broker-dealers 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 Trust. Such payments are made by the
Sponsor out of its own assets, and not out of the assets of the Trust. These
programs will not change the price Unitholders pay for their Units or the amount
that the Trust will receive from the Units sold.
SPONSOR AND UNDERWRITER COMPENSATION. The Sponsor will receive a gross sales
commission equal to the total sales charge applicable to each transaction. The
Underwriter will be allowed a concession or agency commission in connection with
the distribution of Units during the initial offering period equal to 3.70% of
the public offering price per Unit. For transactions involving unitholders of
other Van Kampen unit investment trusts who use their redemption or termination
proceeds to purchase Units of the Trust offered in this prospectus, the total
Underwriter concession will amount to 2.70% per Unit. In connection with
secondary market transactions in Units, if any, the total concession will equal
65% of the sales charge applicable to the 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 the Trust on the Initial Date of Deposit as well as on subsequent deposits.
See "Notes to Portfolio". The Sponsor has not participated as sole underwriter
or as manager or as a member of the underwriting syndicates or as an agent in a
private placement for any of the Securities. The Underwriter may benefit from,
or receive compensation in connection with, activities described under
"Objectives and Securities Selection." 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
Underwriter. In maintaining a secondary market, the Underwriter 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, the Underwriter or an affiliate of either of them may have
participated in a public offering of one or more of the Securities. The Sponsor,
the Underwriter or an affiliate of either of them or their employees may have a
long or short position in these Securities or related securities. The Sponsor,
the Underwriter or an affiliate of either of them may act as a specialist or
market maker for these Securities. An officer, director or employee of the
Sponsor, the Underwriter or an affiliate of either of them may be an officer or
director for issuers of the Securities.
Purchases and sales of Securities by the Trust may impact the value of the
Securities. This may especially be the case during the initial offering of
Units, upon Trust termination and in the course of satisfying large Unit
redemptions. Any publication of a list of Securities, or a list of anticipated
Securities, to be included in the Trust may also cause increased buying activity
in certain Securities. Once this information becomes public, investors may
purchase individual Securities appearing in such a publication and may do so
during or prior to the initial offering of Units. It is possible that these
investors could include investment advisory and brokerage firms of the Sponsor,
the Underwriter or the affiliates of either of them or firms that are
distributing Units. This activity may cause the Trust to purchase stocks at a
higher price than those buyers who effect purchases prior to purchases by the
Trust.
MARKET FOR UNITS. Although it is not obligated to do so, the Underwriter may
maintain a market for Units and purchase Units at the secondary market
repurchase price (which is described under "Right of Unitholders--Redemption of
Units"). The Underwriter may discontinue purchases of Units or discontinue
purchases at this price at any time. In the event that a secondary market is not
maintained, a Unitholder will be able to dispose of Units by tendering them to
the Trustee for redemption at the Redemption Price. See "Rights of
Unitholders--Redemption of Units". Unitholders should contact their broker to
determine the best price for Units in the secondary market. The Trustee will
notify the Underwriter of any Units tendered for redemption. If the
Underwriter'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 Underwriter may sell repurchased Units at
the secondary market Public Offering Price per Unit.
RETIREMENT ACCOUNTS
--------------------------------------------------------------------------------
Units are available for purchase in connection with certain types of
tax-sheltered retirement plans, including Individual Retirement Accounts for
individuals, Simplified Employee Pension Plans for employees, qualified plans
for self-employed individuals, and qualified corporate pension and profit
sharing plans for employees. No plan may purchase 25% or more of the available
Units. The purchase of Units may be limited by the plans' provisions and does
not itself establish such plans.
RIGHTS OF UNITHOLDERS
--------------------------------------------------------------------------------
DISTRIBUTIONS. Dividends and any net proceeds from the sale of Securities
received by the Trust will generally be distributed to Unitholders on each
Distribution Date to Unitholders of record on the preceding Record Date. These
dates appear under "Summary of Essential Financial Information". A person
becomes a Unitholder of record on the date of settlement (generally three
business days after Units are ordered). Unitholders may elect to receive
distributions in cash or to have distributions reinvested into additional Units.
Dividends received by the Trust are credited to the Income Account of the
Trust. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds received on the
sale of any Securities, to the extent not used to meet redemptions of Units or
to pay fees or expenses, will be distributed to Unitholders. Proceeds received
from the disposition of any Securities after a record date and prior to the
following distribution date will be held in the Capital Account and not
distributed until the next distribution date. Any distribution to Unitholders
consists of each Unitholder's pro rata share of the available cash in the Income
and Capital Accounts as of the related Record Date.
REINVESTMENT OPTION. Unitholders may have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option (to the
extent Units may be lawfully offered for sale in the state in which the
Unitholder resides). To participate in this reinvestment option, a Unitholder
must file with the Trustee a written notice of election, together with any
certificate representing Units and other documentation that the Trustee may then
require, at least five days prior to the related Record Date. A Unitholder's
election will apply to all Units owned by the Unitholder and will remain in
effect until changed by the Unitholder. If Units are unavailable for
reinvestment, distributions will be paid in cash. Purchases of additional Units
made pursuant to the reinvestment plan will be made at the net asset value for
Units as of the Evaluation Time on the Distribution Date.
In addition, under the Guaranteed Reinvestment Option Unithholders may elect
to have distributions automatically reinvested in certain Van Kampen mutual
funds (the "Reinvestment Funds"). Each Reinvestment Fund has investment
objectives which differ from those of the Trust. The prospectus relating to each
Reinvestment Fund describes its investment policies and how to begin
reinvestment. A Unitholder may obtain a prospectus for the Reinvestment Funds
from the Sponsor. Purchases of shares of a Reinvestment Fund will be made at a
net asset value computed on the Distribution Date. Unitholders with an existing
Guaranteed Reinvestment Option account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new
account which allows purchases of Reinvestment Fund shares at net asset value.
A participant may elect to terminate his or her reinvestment plan and receive
future distributions in cash by notifying the Trustee in writing no later than
five days before a distribution date. The Sponsor, each Reinvestment Fund, and
its investment adviser shall have the right to suspend or terminate these
reinvestment plans at any time.
REDEMPTION OF UNITS. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286. Certificates must be tendered to the
Trustee, duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed (or by providing satisfactory indemnity in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. On the seventh day following the tender, the
Unitholder will be entitled to receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received by the Trustee after the Evaluation
Time or on a day which is not a Trust business day, the date of tender is deemed
to be the next business day.
Unitholders tendering 2,500 or more Units (or $25,000) of the Trust for
redemption may request an in-kind distribution of Securities equal to the
Redemption Price per Unit on the date of tender. An in-kind distribution will be
made by the Trustee through the distribution of each of the Securities in
book-entry form to the account of the Unitholder's broker-dealer at Depository
Trust Company. Amounts representing fractional shares will be distributed in
cash. The Trustee may adjust the number of shares of any Security included in a
Unitholder's in-kind distribution to facilitate the distribution of whole
shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in-kind or sold, the size of the Trust will be, and
the diversity of the Trust may be, reduced. Sales may be required at a time when
Securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. The price received upon redemption may be more or less
than the amount paid by the Unitholder, depending on the value of the Securities
at the time of redemption. Special federal income tax consequences will result
if a Unitholder requests an in-kind distribution. See "Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in the Trust, determined on
the basis of (i) the cash on hand in the Trust, (ii) the value of the Securities
in the Trust and (iii) dividends receivable on the Securities in the Trust
trading ex-dividend as of the date of computation, less (a) amounts representing
taxes or other governmental charges payable out of the Trust and (b) the accrued
expenses of the Trust. During the initial offering period, the redemption price
and the secondary market repurchase price will also include estimated
organizational costs. For these purposes, the Evaluator may determine the value
of the Securities in the following manner. If the Securities are listed on a
national or foreign securities exchange or The Nasdaq Stock Market, this
evaluation is generally based on the closing sale prices on that exchange or
market (unless it is determined that these prices are inappropriate as a basis
for valuation) or, if there is no closing sale price on that exchange or market,
at the closing bid prices. If the Securities are not so listed or, if so listed
and the principal market therefor is other than on the exchange or market, the
evaluation may be based on the current bid price on the over-the-counter market.
If current bid prices are unavailable or inappropriate, the evaluation may be
determined (a) on the basis of current bid prices for comparable securities, (b)
by appraising the Securities on the bid side of the market or (c) by any
combination of the above. The value of any foreign securities is based on the
applicable currency exchange rate in U.S. dollars as of the Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the SEC determines that
trading on that Exchange is restricted or an emergency exists, as a result of
which disposal or evaluation of the Securities is not reasonably practicable, or
for other periods as the SEC may permit.
CERTIFICATES. Ownership of Units is evidenced in book-entry form unless a
Unitholder makes a written request to the Trustee that ownership be in
certificate form. Units are transferable by making a written request to the
Trustee and, in the case of Units in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program accepted by the Trustee. In certain
instances the Trustee may require additional documents, including but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Fractional certificates
will not be issued. The Trustee may require a Unitholder to pay a reasonable fee
for each certificate reissued or transferred and to pay any governmental charge
that may be imposed in connection with each transfer or interchange. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
REPORTS PROVIDED. Unitholders will receive a statement of dividends and other
amounts received by the Trust for each distribution. Within a reasonable time
after the end of each year, each person who was a Unitholder during that year
will receive a statement describing dividends and capital received, actual Trust
distributions, Trust expenses, a list of the Securities and other Trust
information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
TRUST ADMINISTRATION
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PORTFOLIO ADMINISTRATION. The Trust is not an actively managed fund and,
except as provided in the Trust Agreement, Securities generally will not be sold
or replaced after the initial deposit. The Sponsor may, however, direct that
Securities be sold in certain limited circumstances to protect the Trust based
on advice from the Supervisor. These situations may include events such as the
issuer having defaulted on payment of any of its outstanding obligations or the
price of a Security has declined to such an extent or other credit factors exist
so that in the opinion of the Sponsor retention of the Security would be
detrimental to the Trust. If a public tender offer has been made for a Security
or a merger or acquisition has been announced affecting a Security, the Trustee
may either sell the Security or accept a tender offer for cash if the Supervisor
determines that the sale or tender is in the best interest of Unitholders. The
Trustee will distribute any cash proceeds to Unitholders. In addition, the
Trustee may sell Securities to redeem Units or pay Trust expenses. The Trustee
must reject any offer for securities or property other than cash in exchange for
the Securities. If securities or property are nonetheless acquired by the Trust,
the Sponsor may direct the Trustee to sell the securities or property and
distribute the proceeds to Unitholders or to accept the securities or property
for deposit in the Trust. Should any contract for the purchase of any of the
Securities fail, the Sponsor will (unless substantially all of the moneys held
in the Trust to cover the purchase are reinvested in substitute Securities in
accordance with the Trust Agreement) refund the cash and sales charge
attributable to the failed contract to all Unitholders on or before the next
distribution date.
The Sponsor may direct the reinvestment of proceeds of the sale of Securities
if the sale is the direct result of serious adverse credit factors which, in the
opinion of the Sponsor, would make retention of the Securities detrimental to
the Trust. In such a case, the Sponsor may, but is not obligated to, direct the
reinvestment of sale proceeds in any other securities that meet the criteria for
inclusion in the Trust on the Initial Date of Deposit. The Sponsor may also
instruct the Trustee to take action necessary to ensure that the Trust continues
to satisfy the qualifications of a regulated investment company and to avoid
imposition of tax on undistributed income of the Trust.
When the Trust sells Securities, the composition and diversity of the
Securities in the Trust may be altered. In order to obtain the best price for
the Trust, it may be necessary for the Supervisor to specify minimum amounts
(generally 100 shares) in which blocks of Securities are to be sold. In
effecting purchases and sales of the Trust's portfolio securities, the Sponsor
may direct that orders be placed with and brokerage commissions be paid to
brokers, including brokers which may be affiliated with the Trust, the Sponsor,
the Underwriter or dealers participating in the offering of Units. In addition,
in selecting among firms to handle a particular transaction, the Sponsor may
take into account whether the firm has sold or is selling units of unit
investment trusts which it sponsors.
AMENDMENT OF THE TRUST AGREEMENT. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
TERMINATION. The Trust will terminate on the Mandatory Termination Date or
upon the sale or other disposition of the last Security held in the Trust. The
Trust may be terminated at any time with consent of Unitholders representing
two-thirds of the outstanding Units or by the Trustee when the value of the
Trust is less than $500,000 ($3,000,000 if the value of the Trust has exceeded
$15,000,000) (the "Minimum Termination Value"). Unitholders will be notified of
any termination. The Trustee may begin to sell Securities in connection with a
Trust termination during a period beginning nine business days before, and no
later than, the Mandatory Termination Date. Approximately thirty days before
this date, the Trustee will notify Unitholders of the termination and provide a
form enabling qualified Unitholders to elect an in-kind distribution of
Securities. See "Rights of Unitholders--Redemption of Units". This form must be
returned at least five business days prior to the Mandatory Termination Date.
Unitholders will receive a final cash distribution within a reasonable time
after the Mandatory Termination Date. All distributions will be net of Trust
expenses and costs. Unitholders will receive a final distribution statement
following termination. The Information Supplement contains further information
regarding termination of the Trust. See "Additional Information".
LIMITATIONS ON LIABILITIES. The Sponsor, Underwriter, Evaluator, Supervisor
and Trustee are under no liability for taking any action or for refraining from
taking any action in good faith pursuant to the Trust Agreement, or for errors
in judgment, but shall be liable only for their own willful misfeasance, bad
faith or gross negligence (negligence in the case of the Trustee) in the
performance of their duties or by reason of their reckless disregard of their
obligations and duties hereunder. The Trustee is not liable for depreciation or
loss incurred by reason of the sale by the Trustee of any of the Securities. In
the event of the failure of the Sponsor to act under the Trust Agreement, the
Trustee may act thereunder and is not liable for any action taken by it in good
faith under the Trust Agreement. The Trustee is not liable for any taxes or
other governmental charges imposed on the Securities, on it as Trustee under the
Trust Agreement or on the Trust, which the Trustee may be required to pay under
any present or future law of the United States of America or of any other taxing
authority having jurisdiction. In addition, the Trust Agreement contains other
customary provisions limiting the liability of the Trustee. The Trustee,
Sponsor, Underwriter, and Supervisor may rely on any evaluation furnished by the
Evaluator and have no responsibility for the accuracy thereof. Determinations by
the Evaluator shall be made in good faith upon the basis of the best information
available to it.
SPONSOR. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of
the Trust. The Sponsor is an indirect subsidiary of Morgan Stanley Dean Witter &
Co. Van Kampen Funds Inc. specializes in the underwriting and distribution of
unit investment trusts and mutual funds with roots in money management dating
back to 1926. The Sponsor is a member of the National Association of Securities
Dealers, Inc. and has its principal office 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). The Information Supplement contains additional information about the
Sponsor.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
UNDERWRITER. Edward D. Jones & Co., L.P., a Missouri limited partnership,
is the Underwriter for the Units. The Underwriter is a member of the National
Association of Securities Dealers, Inc. and has its principal office at 12555
Manchester Road, St. Louis, Missouri, 63131, (314) 515-2000.
The Underwriter purchases the Units from the Trust at a discounted price on
the date they are issued by the Trust and sells them to the public at the Public
Offering Price described in this Prospectus. The Underwriter may also sell Units
to dealers who are members of the National Association of Securities Dealer,
Inc. Such dealers, if any, may be allowed a concession or agency commission by
the Underwriter. However, resales of Units by such dealers to the public will be
made at the Public Offering Price. The Underwriter reserves the right to reject,
in whole or in part, any order for the purchase of Units, and the Underwriter
reserves the right to change the amount of the concession to dealers from time
to time.
TRUSTEE. The Trustee is The Bank of New York, a trust company organized under
the laws of the State of New York. The Bank of New York has its unit investment
trust division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law. Additional information
regarding the Trustee is set forth in the Information Supplement, including the
Trustee's qualifications and duties, its ability to resign, the effect of a
merger involving the Trustee and the Sponsor's ability to remove and replace the
Trustee. See "Additional Information".
PERFORMANCE INFORMATION. The Sponsor may from time to time in its advertising
and sales materials compare the then current estimated returns on the Trust and
returns over specified time periods on other similar trusts (which may show
performance net of expenses and charges which the Trust would have charged) with
returns on other taxable investments such as the common stocks comprising the
Dow Jones Industrial Average, the S&P 500, other investment indices, corporate
or U.S. government bonds, bank CDs, money market accounts or money market funds,
or with performance data from Lipper Analytical Services, Inc., Morningstar
Publications, Inc. or various publications, each of which has characteristics
that may differ from those of the Trust. Information on percentage changes in
the dollar value of Units may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective Unitholders. Total return figures may not be averaged and may not
reflect deduction of the sales charge, which would decrease return. No provision
is made for any income taxes payable. Past performance may not be indicative of
future results. The Trust portfolio is not managed and Unit price and return
fluctuate with the value of common stocks in the portfolios, so there may be a
gain or loss when Units are sold. As with other performance data, performance
comparisons should not be considered representative of the Trust's relative
performance for any future period.
TAXATION
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The Trust intends to elect and qualify on a continuing basis for special
federal income tax treatment as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). If the Trust so
qualifies and timely distributes to Unitholders 90% or more of its taxable
income (without regard to its net capital gain, i.e., the excess of its net
long-term capital gain over its net short-term capital loss), it will not be
subject to federal income tax on the portion of its taxable income (including
any net capital gain) that it distributes to Unitholders. In addition, to the
extent the Trust timely distributes to Unitholders at least 98% of its taxable
income (including any net capital gain), it will not be subject to the 4% excise
tax on certain undistributed income of "regulated investment companies." Because
the Trust intends to timely distribute its taxable income (including any net
capital gain), it is anticipated that the Trust will not be subject to federal
income tax or the excise tax.
Distributions to Unitholders of the Trust's taxable income, other than
distributions which are designated as capital gain dividends, will be taxable as
ordinary income to Unitholders, except that to the extent that distributions to
a Unitholder in any year exceed the Trust's current and accumulated earnings and
profits, they will be treated as a return of capital and will reduce the
Unitholder's basis in his Units and, to the extent that they exceed his basis,
will be treated as a gain from the sale of his Units as discussed below.
Although distributions generally will be treated as distributed when paid,
distributions declared in October, November or December payable to Unitholders
of record on a specified date in one of those months and paid during January of
the following year will be treated as having been distributed by the Trust (and
received by the Unitholder) on December 31 of the year such distributions are
declared.
Distributions of the Trust's net capital gain which are properly designated
as capital gain dividends by the Trust will be taxable to Unitholders as
long-term capital gain, regardless of the length of time the Units have been
held by a Unitholder. A Unitholder may recognize a taxable gain or loss if the
Unitholder sells or redeems his Units. Any gain or loss arising from (or treated
as arising from) the sale or redemption of Units will generally be a capital
gain or loss, except in the case of a dealer or a financial institution. 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) is generally subject to a maximum marginal stated tax rate
of 20% (10% in the case of certain taxpayers in the lowest tax bracket).
However, capital gain realized from assets held more than one year that is
considered unrecaptured section 1250 gain is taxed at a maximum marginal stated
rate of 25%. 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. Note, however, that the 1998 Tax Act (and the
Taxpayer Relief Act of 1997 (the "1997 Tax Act")) provide for the application of
the rules described above in the base of pass-through entities such as the real
estate investment trusts will be prescibed in future Treasury Regulations. The
Internal Revenue Service has released preliminary guidance which provides that,
in general, pass-through entities such as the real estate investment trusts may
designate their capital gains dividends as either a 20% rate gain distribution
or an unrecaptured section 1250 gain distribution, or a 25% rate gain
distribution, depending on the nature of the gain received by the pass-through
entity. Unitholders should consult their own tax advisors as to the tax rate
applicable to capital gain dividends. Note that if a Unitholder holds Units for
six months or less and subsequently sells such Units at a loss, the loss will be
treated as a long-term capital loss to the extent that any long-term capital
gain distribution is made with respect to such Units during the six-month period
or less that the Unitholder owns the Units.
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. 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.
Generally, the tax basis of a Unitholder includes sales charges, and such
charges are not deductible. A portion of the sales charge for the Trust is
deferred. The income (or proceeds from redemption) a Unitholder must take into
account for federal income tax purposes is not reduced by amounts deducted to
pay the deferred sales charge.
Distributions which are taxable as ordinary income to Unitholders will
constitute dividends for federal income tax purposes. When Units are held by
corporate Unitholders, Trust distributions may qualify for the 70% dividends
received deduction, subject to limitations otherwise applicable to the
availability of the deduction, to the extent the distribution is attributable to
dividends received by the Trust from United States corporations (other than real
estate investment trusts) and is designated by the Trust as being eligible for
such deduction. To the extent dividends received by the Trust are attributable
to foreign corporations, a corporation that owns Units will not be entitled to
the dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations. The Trust will provide
each Unitholder with information annually concerning what part of the Trust
distributions are eligible for the dividends received deduction.
The Trust may elect to pass through to the Unitholders the foreign income and
similar taxes paid by the Trust in order to enable such Unitholders to take a
credit (or deduction) for foreign income taxes paid by the Trust. If such an
election is made, Unitholders of the Trust, because they are deemed to own a pro
rata portion of the foreign securities held by the Trust, must include in their
gross income, for federal income tax purposes, both their portion of dividends
received by the Trust and also their portion of the amount which the Trust deems
to be the Unitholders' portion of foreign income taxes paid with respect to, or
withheld from, dividends, interest or other income of the Trust from its foreign
investments. Unitholders may then subtract from their federal income tax the
amount of such taxes withheld, or else treat such foreign taxes as deductions
from gross income; however, as in the case of investors receiving income
directly from foreign sources, the above described tax credit or deduction is
subject to certain limitations. The 1997 Tax Act imposes a required holding
period for such credits. Unitholders should consult their tax advisers regarding
this election and its consequences to them.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Trust so long as the Units
are held by or for 500 or more persons at all times during the taxable year or
another exception is met. In the event the Units are held by fewer than 500
persons, additional taxable income may be realized by the individual (and other
noncorporate) Unitholders in excess of the distributions received from the
Trust.
Distributions reinvested into additional Units of the Trust will be taxed to
a Unitholder in the manner described above (i.e., as ordinary income, long-term
capital gain or as a return of capital).
The federal tax status of each year's distributions will be reported to
Unitholders and to the Internal Revenue Service. Each Unitholder will be
requested to provide the Unitholder's taxpayer identification number to the
Trustee and to certify that the Unitholder has not been notified that payments
to the Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
The foregoing discussion relates only to the federal income tax status of the
Trust and to the tax treatment of distributions by the Trust to United States
Unitholders.
A Unitholder who is a foreign investor (i.e., an investor other than a United
States citizen or resident or a United States corporation, partnership, estate
or trust) should be aware that, generally, subject to applicable tax treaties,
distributions from the Trust which constitute dividends for Federal income tax
purposes (other than dividends which the Trust designates as capital gain
dividends) will be subject to United States income taxes, including withholding
taxes. However, distributions received by a foreign investor from the Trust that
are designated by the Trust as capital gain dividends should not be subject to
United States Federal income taxes, including withholding taxes, if all of the
following conditions are met (i) the capital gain dividend is not effectively
connected with the conduct by the foreign investor of a trade or business within
the United States, (ii) the foreign investor (if an individual) is not present
in the United States for 183 days or more during his or her taxable year, and
(iii) the foreign investor provides all certification which may be required of
his status (foreign investors may contact the Sponsor to obtain a Form W-8BEN
which must be filed with the Trustee and refiled every three calendar years
thereafter). Foreign investors should consult their tax advisers with respect to
United States tax consequences of ownership of Units. Units in the Trust and
Trust distributions may also be subject to state and local taxation and
Unitholders should consult their tax advisers in this regard.
TRUST OPERATING EXPENSES
--------------------------------------------------------------------------------
GENERAL. The fees and expenses of the Trust will accrue on a daily basis. The
fees and expenses are generally paid out of the Capital Account of the Trust.
When these amounts are paid by or owing to the Trustee, they are secured by a
lien on the Trust. 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.
ORGANIZATION COSTS. You and the other Unitholders will bear all or a portion
of the organization costs and charges incurred in connection with the
establishment of the Trust. These costs and charges will include the cost of the
preparation, printing and execution of the trust agreement, registration
statement and other documents relating to the Trust, federal and state
registration fees and costs, the initial fees and expenses of the Trustee and
legal and auditing expenses. The public offering price of Units includes the
estimated amount of these costs. The Trustee will deduct these expenses from the
Trust's assets at the end of the initial offering period.
TRUSTEE'S FEE. For its services the Trustee will receive the fee from the
Trust set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Trust expenses). The Trustee benefits to the extent there are
funds in the Capital and Income Accounts since these Accounts are non-interest
bearing to Unitholders and the amounts earned by the Trustee are retained by the
Trustee. Part of the Trustee's compensation for its services to the Trust is
expected to result from the use of these funds.
COMPENSATION OF SPONSOR, SUPERVISOR AND EVALUATOR. The Supervisor and
Evaluator, which are affiliates of the Sponsor, will receive the annual fee for
portfolio supervisory and evaluation services set forth in the "Fee Table".
These fees may exceed the actual costs of providing these services to the Trust
but at no time will the total amount received for supervisory and evaluation
services rendered to all Van Kampen unit investment trusts in any calendar year
exceed the aggregate cost of providing these services in that year.
MISCELLANEOUS EXPENSES. The following additional charges are or may be
incurred by the Trust: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of the Trust,
(b) fees of the Trustee for extraordinary services, (c) expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the
Sponsor, (d) various governmental charges, (e) expenses and costs of any action
taken by the Trustee to protect the Trust and the rights and interests of
Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of the Trust without negligence, bad
faith or wilful misconduct on its part, (g) foreign custodial and transaction
fees, (h) costs associated with liquidating the securities held in the Trust,
(i) any offering costs incurred after the end of the initial offering period and
(j) expenditures incurred in contacting Unitholders upon termination of the
Trust. The Trust may pay the expenses of updating its registration statement
each year.
OTHER MATTERS
--------------------------------------------------------------------------------
LEGAL OPINIONS. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Bryan Cave LLP has acted as counsel to the Underwriter.
Winston & Strawn has acted as counsel to the Trustee and as special counsel for
New York tax matters.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The statement of condition and the
related portfolio included in this Prospectus have been audited by Grant
Thornton LLP, independent certified public accountants, as set forth in their
report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
This Prospectus does not contain all the information set forth in the
Registration Statement filed by the Trust with the SEC. The Information
Supplement, which has been filed with the SEC, includes more detailed
information concerning the Securities, investment risks and general information
about the Trust. Information about the Trust (including the Information
Supplement) can be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. You may obtain information about the Public Reference Room by
calling 1-202-942-8090. Reports and other information about the Trust are
available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of this information may be obtained, after paying a
duplication fee, by electronic request at the following e-mail address:
[email protected] or by writing the SEC's Public Reference Section, Washington,
D.C. 20549-0102.
TABLE OF CONTENTS
TITLE PAGE
Summary of Essential
Financial Information............................. 2
Fee Table............................................ 3
Portfolio............................................ 4
Notes to Portfolio................................... 5
The Securities....................................... 6
Report of Independent Certified
Public Accountants................................ 8
Statement of Condition .............................. 9
The Trust............................................ A-1
Objectives and Securities Selection.................. A-1
Risk Factors......................................... A-2
Public Offering...................................... A-4
Retirement Accounts.................................. A-6
Rights of Unitholders................................ A-6
Trust Administration................................. A-8
Taxation............................................. A-9
Trust Operating Expenses............................. A-11
Other Matters........................................ A-12
Additional Information............................... A-12
EMSPRO249
PROSPECTUS
--------------------------------------------------------------------------------
NOVEMBER 15, 2000
CENTRAL EQUITY TRUST
[CET LOGO]
DIVERSIFIED INCOME
SERIES I
VAN KAMPEN
FOCUS PORTFOLIOS(SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
EDWARD D. JONES & CO., L.P.
12555 Manchester Road
St. Louis, Missouri 63131
Please retain this prospectus for future reference.
INFORMATION SUPPLEMENT
CENTRAL EQUITY TRUST
DIVERSIFIED INCOME SERIES I
(VAN KAMPEN FOCUS PORTFOLIOS, SERIES 249)
--------------------------------------------------------------------------------
This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the Prospectus. This
Information Supplement should be read in conjunction with the Prospectus. This
Information Supplement is not a prospectus, does not include all of the
information that an investor should consider before investing in the Trust and
may not be used to offer or sell Units without the Prospectus. Copies of the
Prospectus can be obtained by contacting the Sponsor at 1 Parkview Plaza, P.O.
Box 5555, Oakbrook Terrace, Illinois 60181-5555 or by contacting your broker.
This Information Supplement is dated as of the date of the Prospectus and all
capitalized terms have been defined in the Prospectus.
TABLE OF CONTENTS
PAGE
Risk Factors 2
Sponsor Information 6
Trustee Information 6
Trust Termination 7
RISK FACTORS
PRICE VOLATILITY. Because the Trust invests in common stocks, you should
understand the risks of investing in common stocks before purchasing Units.
These risks include the risk that the financial condition of the company or the
general condition of the stock market may worsen and the value of the stocks
(and therefore Units) will fall. Common stocks are especially susceptible to
general stock market movements. The value of common stocks often rises or falls
rapidly and unpredictably as market confidence and perceptions of companies
change. These perceptions are based on factors including expectations regarding
government economic policies, inflation, interest rates, economic expansion or
contraction, political climates and economic or banking crises. The value of
Units will fluctuate with the value of the stocks in the Trust and may be more
or less than the price you originally paid for your Units. As with any
investment, we cannot guarantee that the performance of the Trust will be
positive over any period of time. Because the Trust is not actively managed, the
Trustee will not sell stocks in response to market fluctuations as is common in
managed investments.
DIVIDENDS. Common stocks represent ownership interests in a company and are
not obligations of the company. Accordingly, common stockholders have a right to
receive payments from the company that is subordinate to the rights of
creditors, bondholders or preferred stockholders of the company. This means that
common stockholders have a right to receive dividends only if a company's board
of directors declares a dividend and the company has provided for payment of all
of its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if the
company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.
UTILITY ISSUERS. An investment in Units of the Trust should be made with an
understanding of the characteristics of the public utility industry and the
risks which such an investment may entail. General problems of the public
utility industry include the difficulty in obtaining an adequate return on
invested capital despite frequent increases in rates which have been granted by
the public service commissions having jurisdiction, the difficulty in financing
large construction programs during an inflationary period, the restrictions on
operations and increased cost and delays attributable to environmental, nuclear
safety and other regulatory considerations, the difficulty of the capital
markets absorbing utility debt and equity securities, the difficulty in
obtaining fuel for electric generation at reasonable prices, and the effects of
energy conservation. There is no assurance that public service commissions will
grant rate increases in the future or that any such increases will be timely or
adequate to cover operating and other expenses and debt service requirements.
All of the public utilities which are issuers of the Securities have been
experiencing many of these problems in varying degrees. Furthermore, utility
stocks are particularly susceptible to interest rate risk, generally exhibiting
an inverse relationship to interest rates. As a result, electric utility stock
prices may be adversely affected as interest rates rise. Similarly, the success
of certain companies is tied to a relatively small concentration of products or
technologies with intense competition between companies. There can be no
assurance that these customers will place additional orders, or that an issuer
of Securities will obtain orders of similar magnitude as past orders from other
customers. Accordingly, a decline in demand of such products, technologies or
from such customers could have a material adverse impact on issuers of the
Securities.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged and the
appropriate rate of return on an approved asset base, which must be approved by
the state commissions. Certain utilities have had difficulty from time to time
in persuading regulators, who are subject to political pressures, to grant rate
increases necessary to maintain an adequate return on investment. Any unexpected
limitations could negatively affect the profitability of utilities whose budgets
are planned far in advance. In addition, gas pipeline and distribution companies
have had difficulties in adjusting to short and surplus energy supplies,
enforcing or being required to comply with long-term contracts and avoiding
litigation with their customers, on the one hand, or suppliers, on the other.
Certain of the issuers of the Securities may own or operate nuclear
generating facilities. Governmental authorities may from time to time review
existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. Nuclear generating projects
in the electric utility industry have experienced substantial cost increases,
construction delays and licensing difficulties. These have been caused by
various factors, including inflation, high financing costs, required design
changes and rework, allegedly faulty construction, objections by groups and
governmental officials, limits on the ability to finance, reduced forecasts of
energy requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties remain
present until completion and achievement of commercial operation of any nuclear
project. Also, nuclear generating units in service have experienced unplanned
outages or extensions of scheduled outages due to equipment problems or new
regulatory requirements sometimes followed by a significant delay in obtaining
regulatory approval to return to service. A major accident at a nuclear plant
anywhere could cause the imposition of limits or prohibitions on the operation,
construction or licensing of nuclear units.
In view of the uncertainties discussed above, there can be no assurance
that any utility company's share of the full cost of nuclear units under
construction ultimately will be recovered in rates or the extent to which a
company could earn an adequate return on its investment in such units. The
likelihood of a significantly adverse event occurring in any of the areas of
concern described above varies, as does the potential severity of any adverse
impact. It should be recognized, however, that one or more of such adverse
events could occur and individually or collectively could have a material
adverse impact on a company's financial condition, the results of its
operations, its ability to make interest and principal payments on its
outstanding debt or to pay dividends.
Other general problems of the electric, gas and water utility industries
(including state and local joint action power agencies) include rising costs of
rail transportation to transport fossil fuels, the uncertainty of transmission
service costs for both interstate and intrastate transactions, changes in tax
laws which adversely affect a utility's ability to operate profitably, increased
competition in service costs, recent reductions in estimates of future demand
for electricity and gas in certain areas of the country, restrictions on
operations and increased cost and delays attributable to environmental
considerations, uncertain availability and increased cost of capital,
unavailability of fuel for electric generation at reasonable prices, including
the steady rise in fuel costs and the costs associated with conversion to
alternate fuel sources such as coal, availability and cost of natural gas for
resale, technical and cost factors and other problems associated with
construction, licensing, regulation and operation of nuclear facilities for
electric generation, including, among other considerations, the problems
associated with the use of radioactive materials and the disposal of radioactive
wastes, and the effects of energy and environmental conservation efforts. Each
of the problems referred to could adversely affect the ability of the issuers of
any Securities to make dividend payments and the value of such Securities on
redemption of your Units.
REAL ESTATE INVESTMENT TRUSTS. The Trust will invest in shares issued by
REITs, domestic corporations or business trusts which invest primarily in income
producing real estate or real estate related loans or mortgages. REITs are
financial vehicles that have as their objective the pooling of capital from a
number of investors in order to participate directly in real estate ownership or
financing. Thus, an investment in the Trust will be subject to risks similar to
those associated with the direct ownership of real estate, in addition to
securities markets risks, because of the Trust's policy of concentration in the
securities of companies in the real estate industry. These risks include:
o declines in the value of real estate,
o illiquidity of real property investments,
o risks related to general U.S. and global as well as local economic
conditions,
o dependency on management skill,
o heavy cash flow dependency,
o possible lack of availability of mortgage funds,
o excessive levels of debt or overleveraged financial structure,
o overbuilding,
o extended vacancies, or obsolescence, of properties,
o increase in competition,
o increases in property taxes and operating expenses,
o changes in zoning laws,
o losses due to costs resulting from the clean-up of environmental
problems,
o liability to third parties for damages resulting from environmental
problems,
o casualty or condemnation losses,
o economic or regulatory impediments to raising rents,
o changes in neighborhood values and buyer demand,
o changes in the appeal of properties to tenants, and
o changes in interest rates, tax rates or operating expenses.
In addition to these risks, equity REITs may be more likely to be affected by
changes in the value of the underlying property owned by the trusts. Further,
REITs are dependent upon the management skills of the issuers and generally may
not be diversified.
The above factors may also adversely affect a borrower's or lessee's ability
to meet its obligations to the REIT. In the event of a default by a borrower or
lessee, the REIT may experience delays in enforcing its rights as a mortgagee or
lessor and may incur substantial costs associated with protecting its
investments.
A significant amount of the assets of a REIT may be invested in investments
in specific geographic areas or in specific property types, i.e., hotels,
shopping malls, residential complexes, and office buildings. The impact of
economic conditions on REITs also varies with geographic location and property
type. Variations in rental income and space availability and vacancy rates in
terms of supply and demand are additional factors affecting real estate
generally and REITs in particular. In addition, you should be aware that REITs
may not be diversified and are subject to the risks of financing projects. REITs
are also subject to
o defaults by borrowers,
o the market's perception of the REIT industry generally,
o the possibility of failing to qualify for tax-free pass-through of
income under the Internal Revenue Code, and
o the possibility of failing to maintain exemption from the Investment
Company Act of 1940.
A default by a borrower or lessee may cause the REIT to experience delays in
enforcing its rights as mortgagee or lessor and to incur significant costs
related to protecting its investments.
Some REITs in the Trust may be structured as UPREITs. An UPREIT owns an
interest in a partnership that owns real estate. This can result in a potential
conflict of interest between (1) shareholders of the REIT who may want to sell
an asset and (2) other partnership interest holders who would be subject to tax
liability if the REIT sells the property. In some cases, REITs have entered into
"no sell" agreements, which are designed to avoid taxing the holders of
partnership units by preventing the REIT from selling the property. This
arrangement may mean that the REIT would refuse a lucrative offer for an asset
or be forced to hold on to a poor asset. Since parties to "no sell" agreements
often do not disclose them, the Sponsor does not know whether any of the REITs
in the Trust have entered into this kind of arrangement.
A REIT generally maintains comprehensive insurance on presently owned and
subsequently acquired real property assets, including (1) liability, (2) fire
and (3) extended coverage. However, there are certain types of losses, generally
of a catastrophic nature, such as earthquakes and floods, that may be
uninsurable or not economically insurable, as to which the REIT's properties are
at risk in their particular locales. The management of a REIT uses its
discretion in determining (1) amounts, (2) coverage limits and (3) deductibility
provisions of insurance. They aim to acquire appropriate insurance on their
investments at reasonable costs and on suitable terms. This may result in
insurance coverage that, in the event of a substantial loss, would not be
sufficient to pay the full current market value or current replacement cost of
the lost investment. Inflation, changes in building codes and ordinances,
environmental considerations, and several other factors might make it unfeasible
to use insurance proceeds to replace a facility after it has been damaged or
destroyed. Under such circumstances, the insurance proceeds that a REIT receives
might not be adequate to restore its economic position with respect to that
property.
Under various federal, state, and local environmental laws, ordinances and
regulations, a current or previous owner or operator of real property may be
liable for the costs of removal or remediation of hazardous or toxic substances
on, under or in such property. Such laws often impose liability (1) whether or
not the owner or operator caused or knew of the presence of the hazardous or
toxic substances and (2) whether or not the storage of the substances was in
violation of a tenant's lease. In addition, (1) the presence of hazardous or
toxic substances, or (2) the failure to remediate the property properly, may
hinder the owner's ability to borrow using that real property as collateral. We
can not give any assurance that one or more of the REITs in the Trust may not be
currently liable or potentially liable for any of these costs in connection with
real estate assets they presently own or subsequently acquire while the shares
of those REITs are held in the Trust.
TELECOMMUNICATIONS ISSUERS. Because the Portfolio is also concentrated in
the telecommunications industry, the value of the Units 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. Recent federal
legislation governing the United States telecommunications industry remains
subject to judicial review and additional interpretation, which may adversely
affect the companies whose securities are held by the Trust. While a portfolio
concentrates on the securities of established suppliers of traditional
telecommunication products and services, the Trust may also invest in smaller
telecommunications companies which may benefit from the development of new
products and services. These smaller companies may present greater opportunities
for capital appreciation, and may also involve greater risk than large,
established issuers. Such smaller companies may have limited product lines,
market or financial resources, and their securities may trade less frequently
and in limited volume than the securities of larger, more established companies.
As a result, the prices of the securities of such smaller companies may
fluctuate to a greater degree than the prices of securities of other issuers.
BANKS. An investment in Units of the Trust should be made with an
understanding of the problems and risks inherent in the bank and financial
services sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates, portfolio
concentrations in geographic markets and in commercial and residential real
estate loans, and competition from new entrants in their fields of business.
Banks and thrifts are highly dependent on net interest margin. Recently, bank
profits have come under pressure as net interest margins have contracted, but
volume gains have been strong in both commercial and consumer products. There is
no certainty that such conditions will continue. Bank and thrift institutions
had received significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and refinancing
activity subsided as a result of increasing interest rates and other factors,
this income diminished. Economic conditions in the real estate markets, which
have been weak in the past, can have a substantial effect upon banks and thrifts
because they generally have a portion of their assets invested in loans secured
by real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-chartered, to
state regulation as well. Such regulations impose strict capital requirements
and limitations on the nature and extent of business activities that banks and
thrifts may pursue. Furthermore, bank regulators have a wide range of discretion
in connection with their supervisory and enforcement authority and may
substantially restrict the permissible activities of a particular institution if
deemed to pose significant risks to the soundness of such institution or the
safety of the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and thrifts
and increases in deposit insurance premiums required to be paid by banks and
thrifts to the Federal Deposit Insurance Corporation ("FDIC"), can negatively
impact earnings and the ability of a company to pay dividends. Neither federal
insurance of deposits nor governmental regulations, however, insures the
solvency or profitability of banks or their holding companies, or insures
against any risk of investment in the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of banks,
thrifts and their holding companies have increased significantly and have
undergone substantial change in recent years. To a great extent, these changes
are embodied in the Financial Institutions Reform, Recovery and Enforcement Act;
enacted in August 1989, the Federal Deposit Insurance Corporation Improvement
Act of 1991, the Resolution Trust Corporation Refinancing, Restructuring, and
Improvement Act of 1991 and the regulations promulgated under these laws. Many
of the regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and prospects of
the Securities in the Trust's portfolio cannot be predicted with certainty. The
recently enacted Gramm-Leach-Bliley financial-services overhaul legislation will
allow banks, securities firms and insurance companies to form one-stop financial
conglomerates marketing a wide range of financial service products to investors.
This legislation will likely result in increased merger activity and heightened
competition among existing and new participants in the field. Efforts to expand
the ability of federal thrifts to branch on an interstate basis have been
initially successful through promulgation of regulations, and legislation to
liberalize interstate banking has recently been signed into law. Under the
legislation, banks will be able to purchase or establish subsidiary banks in any
state, one year after the legislation's enactment. Since mid-1997, banks have
been allowed to turn existing banks into branches. Consolidation is likely to
continue. The Securities and Exchange Commission and the Financial Accounting
Standards Board require the expanded use of market value accounting by banks and
have imposed rules requiring market accounting for investment securities held in
trading accounts or available for sale. Adoption of additional such rules may
result in increased volatility in the reported health of the industry, and
mandated regulatory intervention to correct such problems. Additional
legislative and regulatory changes may be forthcoming. For example, the bank
regulatory authorities have proposed substantial changes to the Community
Reinvestment Act and fair lending laws, rules and regulations, and there can be
no certainty as to the effect, if any, that such changes would have on the
Securities in the Trust's portfolio. In addition, from time to time the deposit
insurance system is reviewed by Congress and federal regulators, and proposed
reforms of that system could, among other things, further restrict the ways in
which deposited moneys can be used by banks or reduce the dollar amount or
number of deposits insured for any depositor. Such reforms could reduce
profitability, as investment opportunities available to bank institutions become
more limited and as consumers look for savings vehicles other than bank
deposits. Banks and thrifts face significant competition from other financial
institutions such as mutual funds, credit unions, mortgage banking companies and
insurance companies, and increased competition may result from legislative
broadening of regional and national interstate banking powers. Among other
benefits, such legislation allows banks and bank holding companies to acquire
across previously prohibited state lines and to consolidate their various bank
subsidiaries into one unit. The Sponsor makes no prediction as to what, if any,
manner of bank and thrift regulatory actions might ultimately be adopted or what
ultimate effect such actions might have on the Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5% of the
outstanding shares of any class of voting securities of a bank or bank holding
company, (2) acquiring control of a bank or another bank holding company, (3)
acquiring all or substantially all the assets of a bank, or (4) merging or
consolidating with another bank holding company, without first obtaining Federal
Reserve Board ("FRB") approval. In considering an application with respect to
any such transaction, the FRB is required to consider a variety of factors,
including the potential anti-competitive effects of the transaction, the
financial condition and future prospects of the combining and resulting
institutions, the managerial resources of the resulting institution, the
convenience and needs of the communities the combined organization would serve,
the record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the prospective
availability to the FRB of information appropriate to determine ongoing
regulatory compliance with applicable banking laws. In addition, the federal
Change In Bank Control Act and various state laws impose limitations on the
ability of one or more individuals or other entities to acquire control of banks
or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends by
bank holding companies. In the policy statement, the FRB expressed its view that
a bank holding company experiencing earnings weaknesses should not pay cash
dividends which exceed its net income or which could only be funded in ways that
would weaken its financial health, such as by borrowing. The FRB also may impose
limitations on the payment of dividends as a condition to its approval of
certain applications, including applications for approval of mergers and
acquisitions. The Sponsor makes no prediction as to the effect, if any, such
laws will have on the Securities or whether such approvals, if necessary, will
be obtained.
LIQUIDITY. Whether or not the stocks in the Trust are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
ADDITIONAL UNITS. The Sponsor may create additional Units of the Trust by
depositing into the Trust additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Trust will pay brokerage fees.
VOTING. Only the Trustee may sell or vote the stocks in the Trust. While
you may sell or redeem your Units, you may not sell or vote the stocks in the
Trust. The Sponsor will instruct the Trustee how to vote the stocks. The Trustee
will vote the stocks in the same general proportion as shares held by other
shareholders if the Sponsor fails to provide instructions.
NO FDIC GUARANTEE. An investment in the Trust is not a deposit of any bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
SPONSOR INFORMATION
Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the Trust.
The Sponsor is an indirect subsidiary of Van Kampen Investments Inc. Van Kampen
Investments Inc. is a wholly owned subsidiary of MSAM Holdings II, Inc., which
in turn is a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.
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 Trust or
to any other Series thereof. The information is included herein only for the
purpose of informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
As of September 30, 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 offer more than 50 open-end mutual funds, 37 closed-end
funds and have sponsored over 2,700 series of fixed income and equity unit
investment trusts.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE INFORMATION
The Trustee is The Bank of New York, a trust company organized under the
laws of the State of New York. The Bank of New York has its unit investment
trust division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder. Such books and records shall be open to
inspection by any Unitholder at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute, rule or
regulation. The Trustee is required to keep a certified copy or duplicate
original of the Trust Agreement on file in its office available for inspection
at all reasonable times during the usual business hours by any Unitholder,
together with a current list of the Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
TRUST TERMINATION
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Trust then outstanding or by the
Trustee when the value of the Securities owned by the Trust, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of the Trust has
exceeded $15,000,000). The Trust will be liquidated by the Trustee in the event
that a sufficient number of Units of the Trust not yet sold are tendered for
redemption by the Sponsor, so that the net worth of such Trust would be reduced
to less than 40% of the value of the Securities at the time they were deposited
in the Trust. If the Trust is liquidated because of the redemption of unsold
Units by the Sponsor, the Sponsor will refund to each purchaser of Units the
entire sales charge paid by such purchaser. The Trust Agreement will terminate
upon the sale or other disposition of the last Security held thereunder, but in
no event will it continue beyond the Mandatory Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities may begin to be sold in
connection with the termination of the Trust. The Sponsor will determine the
manner, timing and execution of the sales of the Securities. The Sponsor shall
direct the liquidation of the Securities in such manner as to effectuate orderly
sales and a minimal market impact. In the event the Sponsor does not so direct,
the Securities shall be sold within a reasonable period and in such manner as
the Trustee, in its sole discretion, shall determine. At least 30 days before
the Mandatory Termination Date the Trustee will provide written notice of any
termination to all Unitholders of the appropriate Trust and in the case of a
Trust will include with such notice a form to enable Unitholders owning the
minimum number of Units described in the Prospectus to request an in-kind
distribution of the 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 Securities in the Trust to the account of the
broker-dealer or bank designated by the Unitholder at Depository Trust Company.
The value of the Unitholder's fractional shares of the Securities will be paid
in cash. Unitholders not requesting an in-kind distribution will receive a cash
distribution from the sale of the remaining Securities within a reasonable time
following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the Trust any accrued costs,
expenses, advances or indemnities provided by the Trust Agreement, including
estimated compensation of the Trustee, costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or other
governmental charges. Any sale of Securities in the Trust upon termination may
result in a lower amount than might otherwise be realized if such sale were not
required at such time. The Trustee will then distribute to each Unitholder of
each Trust his pro rata share of the balance of the Income and Capital Accounts.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
CONTENTS OF REGISTRATION STATEMENTS
This Amendment No. 1 to the Registration Statement comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
2.1 Form of Code of Ethics. Reference is made to Exhibit 2.1 to the Registration
Statement on Form S-6 of Van Kampen Focus Portfolios, Series 223
(File No. 333-34242) dated July 25, 2000.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Accountants.
SIGNATURES
The Registrant, Van Kampen Focus Portfolios, Series 249, hereby
identifies Van Kampen Merritt Equity Opportunity Trust, Series 1, Series 2,
Series 4 and Series 7; Van Kampen American Capital Equity Opportunity Trust,
Series 13, Series 14, Series 57 and Series 89; and Van Kampen Focus Portfolios,
Series 235 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 249 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 15th day of November, 2000.
Van Kampen Focus Portfolios, Series 249
By Van Kampen Funds Inc.
By /s/ 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 November
15, 2000 by the following persons who constitute a majority of the Board of
Directors of Van Kampen Funds Inc.
SIGNATURE TITLE
Richard F. Powers III Chairman and Chief Executive )
Officer )
John H. Zimmerman III President )
A. Thomas Smith III Executive Vice President, )
General Counsel and Secretary )
Michael H. Santo Executive Vice President and Chief )
Operations and Technology Officer )
/s/ 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.
