MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 256
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 256 on December 5, 2000. An effort has been made
to set forth below each of the major changes and also to reflect the same by
blacklining the marked counterparts of the Prospectus submitted with the
Amendment.
Cover Page. The date of the Prospectus has been completed.
Pages 2-3. "The Summary of Essential Financial Information" section and
"Fee Table" have been completed.
Pages 4-6. Revisions have been made and the portfolio has been completed.
Pages 7-9. The descriptions of the Securities issuers have been completed.
Pages 10-11. The Report of Independent Certified Public Accountants and
Statement of Condition have been completed.
<PAGE>
FILE NO. 333-49748
CIK #1123021
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 256
B. Name of Depositor: VAN KAMPEN FUNDS INC.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
CHAPMAN AND CUTLER VAN KAMPEN FUNDS INC.
Attention: Mark J. Kneedy Attention: A. Thomas Smith III, General Counsel
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title of securities being registered: Units of undivided beneficial interest
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT
/ X / Check box if it is proposed that this filing will become effective at
---- 8:00 a.m. on December 5, 2000 pursuant to Rule 487.
VAN KAMPEN
FOCUS PORTFOLIOS(SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
THE DOW 30SM INDEX PORTFOLIO, SERIES 11
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Van Kampen Focus Portfolios, Series 256 includes the unit investment trust
described above
(the "Portfolio"). The Portfolio seeks to increase the value of your investment
and provide dividend income by investing in stocks included in the Dow Jones
Industrial Average. Of course, we cannot guarantee that the Portfolio will
achieve its objective.
DECEMBER 5, 2000
YOU SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
--------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved of
the Units or passed upon the adequacy or accuracy of this prospectus.
Any contrary representation is a criminal offense.
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
DECEMBER 5, 2000
PUBLIC OFFERING PRICE
Aggregate value of Securities per Unit (1) $ 9.90
Sales charge 0.45
Less deferred sales charge 0.35
Public offering price per Unit (2) $ 10.00
PORTFOLIO INFORMATION
Initial number of Units (3) 15,120
Aggregate value of Securities (1) $ 149,688
Estimated initial distribution per Unit (4)(5) $ 0.18
Estimated annual dividends per Unit (4) $ 0.17186
Redemption price per Unit (6) $ 9.55
GENERAL INFORMATION
Initial Date of Deposit December 5, 2000
Mandatory Termination Date June 6, 2006
Record Dates (4) Tenth day of March, June, September
and December
Distribution Dates (4) Twenty-fifth day of March, June, September
and December
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(1)Each Security is valued at the most recent closing sale price as of the
close of the New York Stock Exchange on the business day before the Initial
Date of Deposit.
(2)You will bear all or a portion of the expenses incurred in organizing and
offering your Portfolio. The public offering price includes the estimated
amount of these costs. These costs include the cost of preparation and
printing of the trust agreement, registration statement and other documents
relating to the Portfolio, federal and state registration fees and costs,
initial fees and expenses of the Trustee, and legal and auditing expenses.
The Trustee will deduct these expenses from your Portfolio at the end of the
initial offering period (approximately six months). The estimated amount for
the Portfolio is described on the next page. The public offering price will
also include any accumulated dividends or cash in the Income or Capital
Accounts of the Portfolio.
(3)At the close of the New York Stock Exchange on the Initial Date of Deposit,
the number of Units may be adjusted so that the public offering price per
Unit equals $10. The number of Units and fractional interest of each Unit in
the Portfolio will increase or decrease to the extent of any adjustment.
(4)The initial Record Date is January 10, 2002 and the initial Distribution
Date is January 25, 2002. Thereafter the record and distribution dates will
occur on the dates shown above. Notwithstanding this, however, the Portfolio
may be required to make earlier distributions to comply with certain federal
income tax regulations applicable to the Portfolio.
(5)This estimate is based on the most recently declared quarterly dividends
or interim and final dividends accounting for any foreign withholding
taxes. Actual dividends may vary due to a variety of factors. See "Risk
Factors".
(6)The redemption price is reduced by any remaining deferred sales charge. See
"Rights of Unitholders--Redemption of Units". The redemption price includes
the estimated organizational and offering costs. The redemption price will
not include these costs after the initial offering period.
FEE TABLE
TRANSACTION FEES (AS % OF OFFERING PRICE)
Initial sales charge (1).............................. 1.00%
Deferred sales charge (2)............................. 3.50%
----------
Maximum sales charge.................................. 4.50%
----------
----------
Maximum sales charge on reinvested dividends.......... 0.00%
==========
ESTIMATED ORGANIZATIONAL COSTS PER UNIT (3)........... $ 0.02519
==========
ESTIMATED ANNUAL EXPENSES PER UNIT
Trustee's fee and operating expenses.................. $ 0.01441
Supervisory and evaluation fees....................... $ 0.00500
----------
Estimated annual expenses per Unit.................... $ 0.01941
==========
ESTIMATED COSTS OVER TIME
One year.............................................. $ 50
Three years........................................... $ 54
Five years............................................ $ 58
Ten years............................................. $ 71
This fee table is intended to assist you in understanding the costs that you
will bear and to present a comparison of fees. The "Estimated Costs Over Time"
example illustrates the expenses you would pay on a $1,000 investment assuming a
5% annual return and redemption at the end of each period. This example assumes
that you reinvest all distributions at the end of each year. Of course, you
should not consider this example a representation of actual past or future
expenses or annual rate of return which may differ from those assumed for this
example. The sales charge and expenses are described under "Public Offering" and
"Portfolio Operating Expenses".
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(1)The initial sales charge is the difference between the maximum sales charge
and the deferred sales charge.
(2)The deferred sales charge is actually equal to $0.35 per Unit. This amount
will exceed the percentages above if the public offering price per Unit falls
below $10 and will be less than the percentage above if the public offering
price per Unit exceeds $10. The deferred sales charge accrues daily from July
10, 2001 through December 9, 2001. Your Portfolio pays a proportionate amount
of this charge on the 10th day of each month beginning in the accrual period
until paid in full.
(3)You will bear all or a portion of the expenses incurred in organizing and
offering your Portfolio. The Trustee will deduct the actual amount of these
expenses from your Portfolio at the end of the initial offering period.
THE DOW 30SM INDEX PORTFOLIO
The Portfolio seeks to increase the value of your Units over time and provide
dividend income by investing in a portfolio of common stocks of the companies in
the Dow Jones Industrial AverageSM. These stocks are some of the most
widely-held and well-capitalized companies in the world. We believe that The Dow
30SM stocks have historically provided a consistent and more conservative source
of dividend income and capital appreciation than many other types of equity
securities. Van Kampen believes that the Portfolio may offer these
characteristics:
o Portfolio of "blue chip" stocks
o Cross section of American industrial companies
o May help outpace inflation
The Portfolio initially includes a portfolio that replicates the Dow Jones
Industrial AverageSM. During the Portfolio's life, we will change the portfolio
to reflect any change in the component stocks in The DowSM. We will not change
the portfolio to reflect any change in the weightings of the components within
The DowSM during the Portfolio's life. However, the Dow Jones Industrial
AverageSM has always been based on one share of each component stock.
[CHART APPEARS HERE]
As with any investment, we cannot guarantee that the Portfolio will achieve
its objective. The value of your Units may fall below the price you paid for the
Units. The performance of the Portfolio will differ from the performance of The
DowSM because the Portfolio includes expenses and a sales charge. You should
read the "Risk Factors" section before you invest.
THE DOW JONES INDUSTRIAL AVERAGESM. Charles H. Dow first unveiled his
industrial stock average on May 26, 1896. Dow Jones & Company, Inc. first
published the Dow Jones Industrial AverageSM in The Wall Street Journal on
October 7, 1896. Initially consisting of just 12 stocks, The DowSM expanded to
20 stocks in 1916 and its present size of 30 stocks on October 1, 1928. The most
recent change to The DowSM occurred November 1, 1999, when Dow Jones replaced
four companies in the index. The companies included in The DowSM have remained
relatively constant over time.
The DowSM stocks are all major factors in their industries and are widely
held by individuals and institutions. The stocks represent about one-fifth of
the market value of all U.S. stocks. The DowSM stocks currently trade on the New
York Stock Exchange and the Nasdaq Stock Market, Inc. The value of The DowSM at
the beginning of 1930 was 248.48.
The editors of The Wall Street Journal select the components of The DowSM.
The editors have traditionally considered all companies that are not in the
transportation or utilities sectors for inclusion in the index. In choosing a
new component, the editors look among substantial industrial companies with a
history of successful growth and wide interest among investors. They believe
that stability of composition enhances the index. Whenever the editors change
one stock, they typically review the other stocks. Of course, we cannot
guarantee that they will follow this process or consider these factors in the
future.
"Dow JonesSM", "Dow Jones Industrial AverageSM", "The Dow 30SM", "The DowSM"
and "DJIASM" are proprietary to and service marks of Dow Jones & Company, Inc.
and have been licensed for use for certain purposes by the Portfolio. The
Portfolio is not sponsored, endorsed, sold or promoted by Dow Jones and Dow
Jones makes no representation regarding the advisability of investing in the
Portfolio.
<TABLE>
<CAPTION>
PORTFOLIO
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CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES TO
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) PORTFOLIO (2)
---------- ----------------------------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
86 Alcoa, Inc. $ 31.000 1.61% $ 2,666.00
86 American Express Company 52.000 0.62 4,472.00
86 AT&T Corporation 19.750 4.46 1,698.50
86 Boeing Company 64.813 0.86 5,573.88
86 Caterpillar, Inc. 43.313 3.14 3,724.88
86 Citigroup, Inc. 47.813 1.17 4,111.88
86 Coca-Cola Company 62.750 1.08 5,396.50
86 DuPont (E.I.) de Nemours and Company 45.875 3.05 3,945.25
86 Eastman Kodak Company 41.625 4.23 3,579.75
86 Exxon Mobil Corporation 90.688 1.94 7,799.13
86 General Electric Company 51.625 1.06 4,439.75
86 General Motors Corporation 51.563 3.88 4,434.38
86 Hewlett-Packard Company 33.000 0.97 2,838.00
86 Home Depot, Inc. 40.750 0.39 3,504.50
86 Honeywell International, Inc. 50.625 1.48 4,353.75
86 Intel Corporation 32.938 0.24 2,832.63
86 International Business Machines Corporation 98.375 0.53 8,460.25
86 International Paper Company 37.313 2.68 3,208.88
86 J.P. Morgan & Company, Inc. 138.500 2.89 11,911.00
86 Johnson & Johnson 99.563 1.29 8,562.38
86 McDonald's Corporation 31.438 0.68 2,703.63
86 Merck & Company, Inc. 91.938 1.48 7,906.63
86 Microsoft Corporation 56.438 0.00 4,853.63
86 Minnesota Mining and Manufacturing Company 105.000 2.21 9,030.00
86 Philip Morris Companies,Inc. 37.688 5.63 3,241.13
86 Procter & Gamble Company 75.375 1.86 6,482.25
86 SBC Communications, Inc. 53.000 1.92 4,558.00
86 United Technologies Corporation 72.563 1.24 6,240.38
86 Wal-Mart Stores, Inc. 53.813 0.45 4,627.88
86 Walt Disney Company 29.438 0.71 2,531.63
---------- ------------
2,580 $ 149,688.45
========== ============
See "Notes to Portfolio".
</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 December 4,
2000 and have a settlement date of December 7, 2000 (see "The Portfolio").
(2) The market value of each Security is based on the most recent closing
sale price as of the close of the New York Stock Exchange on the business day
prior to the Initial Date of Deposit. Other information regarding the
Securities, as of the Initial Date of Deposit, is as follows:
PROFIT
COST TO (LOSS) TO
SPONSOR SPONSOR
-------------- --------------
$ 149,688 $ --
(3)Current Dividend Yield for each Security is based on the estimated annual
dividends per share and the Security's market value as of the most recent close
of trading on the New York Stock Exchange on the business day prior to the
Initial Date of Deposit. Estimated annual dividends per share are calculated by
annualizing the most recently declared dividends or by adding the most recent
interim and final dividends declared and reflect any foreign withholding taxes.
THE SECURITIES. A brief description of each of the issuers of the
Securities is listed below.
Alcoa, Inc. Alcoa, Inc. produces primary aluminum, fabricated aluminum, and
alumina, and participates in mining, refining, smelting, fabricating, and
recycling. The company serves customers worldwide primarily in the
transportation, packaging, building, and industrial markets with a wide variety
of fabricated and finished products.
American Express Company. American Express Company through its
subsidiaries, provides travel-related, financial advisory, and international
banking services around the world. The company's products include the American
Express Card, the Optima Card, and American Express Travelers Cheque.
AT&T Corporation. AT&T Corporation offers communication services and
products. The company provides voice, data, and video telecommunications
services to consumers, large and small businesses, and government entities. AT&T
and its subsidiaries furnish regional, domestic, international, and local
telecommunication services. The company also provides cellular telephone and
wireless services, as well as other services.
Boeing Company. Boeing Company, together with its subsidiaries, develops,
produces, and markets commercial jet aircraft, as well as provides related
support services to the commercial airline industry worldwide. The company also
researches, develops, produces, modifies, and supports information, space, and
defense systems, including military aircraft, helicopters, and space and missile
systems.
Caterpillar, Inc. Caterpillar, Inc designs, manufactures, and markets
construction, mining, agricultural, and forestry machinery. The company also
manufactures engines and other related parts for its equipment. Caterpillar
distributes its products through a worldwide organization of dealers.
Citigroup, Inc. Citigroup, Inc. is a diversified financial services holding
company that provides a broad range of financial services to consumer and
corporate customers around the world. The company's services include investment
banking, retail brokerage, corporate banking, and cash management products and
services.
Coca-Cola Company. Coca-Cola Company manufactures, markets, and distributes
soft drink concentrates and syrups. The company also distributes and markets
juice and juice-drink products. Coca-Cola distributes its products under brand
names such as Coca-Cola, Minute Maid, and Sprite to retailers and wholesalers in
the United States and internationally.
Du Pont (E.I.) de Nemours and Company. Du Pont (E.I.) de Nemours and
Company is a global chemical and life sciences company, with businesses in
high-performance materials, specialty chemicals, pharmaceuticals, and
biotechnology. The company sells its products to the transportation, textile,
construction, automotive, agricultural, hybrid seeds, nutrition and health,
pharmaceuticals, packaging, and electronics markets.
Eastman Kodak Company. Eastman Kodak Company develops, manufactures, and
markets consumer, professional, health, and other imaging products and services.
The company's imaging systems include films, photographic papers, processing
services, photographic chemicals, cameras, and projectors. Kodak also develops
digital camera systems which do not use silver halide film technology.
Exxon Mobil Corporation. Exxon Mobil Corporation operates petroleum and
petrochemicals businesses on a worldwide basis. The company's operations include
exploration and production of oil and gas, electric power generation, and coal
and minerals operations. Exxon Mobil also manufactures and markets fuels,
lubricants, and chemicals.
General Electric Company. General Electric Company develops, manufactures,
and markets products for the generation, distribution, and utilization of
electricity. The company, through General Electric Capital Services, Inc.,
offers a variety of financial services including mutual fund management,
financing, asset management, and insurance. General Electric also owns the
National Broadcasting Company.
General Motors Corporation. General Motors Corporation manufactures and
sells vehicles worldwide under the Chevrolet, Buick, Cadillac, Oldsmobile,
Pontiac, Saturn, and GMC names. The company also has financing and insurance
operations. In addition, General Motors produces products and provides services
in other industries such as satellite and wireless communications.
Hewlett-Packard Company. Hewlett-Packard Company provides imaging and
printing systems, computing systems, and information technology services for
business and home. The company's products include laser and inkjet printers,
scanners, copiers and faxes, personal computers, workstations, storage
solutions, and other computing and printing systems. Hewlett-Packard sells its
products worldwide.
Home Depot, Inc. Home Depot, Inc. sells building materials and home
improvement products. The company's stores sell plumbing, heating and electrical
supplies, lumber, floor and wall coverings, hardware, tools, paint, and lawn and
garden products. Home Depot operates in North and South America.
Honeywell International, Inc. Honeywell International, Inc. is a
diversified technology and manufacturing company with operations around the
world. The company provides aerospace products and services, control
technologies, automotive products, and power generation systems. Honeywell also
provides specialty chemicals, fibers, plastics, and electronic and advanced
materials.
Intel Corporation. Intel Corporation designs, manufactures, and sells
computer components and related products. The company's major products include
microprocessors, chipsets, embedded processors and microcontrollers, flash
memory products, graphics products, network and communications products, systems
management software, conferencing products, and digital imaging products.
International Business Machines Corporation (IBM). International Business
Machines Corporation (IBM) provides customer solutions through the use of
advanced information technology. The company's solutions include technologies,
systems, products, services, software, and financing. IBM offers its products
through its global sales and distribution organization, as well as through a
variety of third party distributors and resellers.
International Paper Company. International Paper Company produces and
distributes printing paper, packaging, forest products, and chemical products.
The company operates specialty businesses in global markets as well as a broadly
based distribution network. International Paper exports its products worldwide.
J.P. Morgan & Company, Inc. J.P. Morgan & Company, Inc. is a global
financial services firm that serves the financial needs of business enterprises,
governments, and individuals. The company advises on corporate strategy and
structure, raises capital, makes markets in financial instruments, and manages
investment assets while also committing its own capital in a variety of
investments.
Johnson & Johnson. Johnson & Johnson manufactures health care products and
provides related services. The company sells its products to the consumer,
pharmaceutical, and professional markets in countries around the world. Johnson
& Johnson's principal consumer products include BAND-AID adhesive bandages,
TYLENOL acetaminophen products, JOHNSON'S baby products, and STAYFREE sanitary
products, among others.
McDonald's Corporation. McDonald's Corporation develops, operates,
franchises and services a worldwide system of restaurants. These restaurants
prepare, assemble, package and sell a limited menu of quickly prepared,
moderately priced foods. The company operates restaurants in the United States
and worldwide. Food items include hamburgers, chicken, salads, breakfast foods,
and beverages.
Merck & Company, Inc. Merck & Company, Inc. is a global pharmaceutical
company that discovers, develops, manufactures, and markets a broad range of
human and animal health products. The company also provides pharmaceutical
benefit services. Merck's products include Zocor, a treatment for elevated
cholesterol, Pepcid anti-ulcerant, Primaxin antibiotic, and Propecia, a
treatment for male pattern hair loss.
Microsoft Corporation. Microsoft Corporation develops, manufactures,
licenses, sells, and supports software products. The company offers operating
system software, server application software, business and consumer applications
software, software development tools, and Internet and intranet software.
Microsoft also develops the MSN network of Internet products and services.
Minnesota Mining and Manufacturing Company (3M). Minnesota Mining and
Manufacturing Company (3M) is a diversified manufacturer of industrial,
commercial, and health care products. The company produces and markets more than
50,000 products worldwide. 3M's products include Post-it Notes, Flex circuits,
Scotchgard fabric, film, photo protectors, Thinsulate insulation products, and
Nexcare bandages.
Philip Morris Companies, Inc. Philip Morris Companies, Inc. through its
subsidiaries, manufactures and sells a variety of consumer products. The company
provides tobacco products, as well as packaged foods such as cheese, processed
meat products, coffee, and grocery products. Philip Morris also provides a
variety of beer and brewed non-alcoholic beverages. The company's products are
sold worldwide.
Procter & Gamble Company. Procter & Gamble Company manufactures and markets
consumer products in countries throughout the world. The company provides
products in the laundry and cleaning, paper, beauty care, food and beverage, and
health care segments. Procter & Gamble's products include Pampers diapers, Tide
laundry detergent, PUR drinking water systems, Crest toothpaste, and Vicks
cough/cold products.
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.
United Technologies Corporation. United Technologies Corporation provides
high-technology products and support services to customers in the aerospace and
building industries worldwide. The company's products include Pratt & Whitney
aircraft engines, Otis elevators and escalators, Carrier heating and air
conditioning, Sikorsky helicopters, Hamilton Sundstrand aerospace systems, and
International Fuel Cell systems.
Wal-Mart Stores, Inc. Wal-Mart Stores, Inc. operates discount stores and
Supercenters, as well as Sam's Clubs. The company's Wal-Mart discount stores and
Supercenters offer merchandise such as apparel, housewares, small appliances,
electronics, and hardware. Wal-Mart operates in the United States, Canada,
Argentina, Brazil, Germany, Mexico, and Puerto Rico, as well as joint ventures
in China and Korea.
Walt Disney Company. Walt Disney Company, an entertainment company,
conducts operations in media networks, studio entertainment, theme parks and
resorts, consumer products, and Internet and direct marketing. The company
produces motion pictures, television programs, and musical recordings, as well
as publishes books and magazines. Disney also operates ABC radio and television
and theme parks.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of
Van Kampen Focus Portfolios, Series 256:
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen Focus Portfolios, Series 256 as of December 5, 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 Van Kampen Focus Portfolios,
Series 256 as of December 5, 2000, in conformity with accounting principles
generally accepted in the United States of America.
GRANT THORNTON LLP
Chicago, Illinois
December 5, 2000
STATEMENT OF CONDITION
AS OF DECEMBER 5, 2000
INVESTMENT IN SECURITIES
Contracts to purchase Securities (1) $ 149,688
-----------
Total $ 149,688
===========
LIABILITY AND INTEREST OF UNITHOLDERS
Liabilities--
Organizational costs (2) $ 381
Deferred sales charge liability (3) 5,292
Interest of Unitholders--
Cost to investors (4) 151,200
Less: Gross underwriting commission
and organizational costs (2)(4)(5) 7,185
-----------
Net interest to Unitholders (4) 144,015
-----------
Total $ 149,688
===========
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(1) The value of the Securities is determined by Interactive Data Corporation
on the bases set forth under "Public Offering--Offering Price". The contracts
to purchase Securities are collateralized by separate irrevocable letters of
credit which have been deposited with the Trustee.
(2) A portion of the Public Offering Price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing the Portfolio.
The amount of these costs are set forth in the "Fee Table." A distribution
will be made as of the close of the initial offering period to an account
maintained by the Trustee from which this obligation of the investors will be
satisfied.
(3) Represents the amount of mandatory distributions from the Portfolio on the
bases set forth under "Public Offering".
(4) The aggregate public offering price and the aggregate sales charge are
computed on the bases set forth under "Public Offering--Offering Price".
(5) Assumes the maximum sales charge.
THE PORTFOLIO
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The Portfolio 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 Portfolio offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities. The
Portfolio may be an appropriate medium for investors who desire to participate
in a portfolio of stocks with greater diversification than they might be able to
acquire individually.
On the Initial Date of Deposit, the Sponsor deposited delivery statements
relating to contracts for the purchase of the Securities and an irrevocable
letter of credit in the amount required for these purchases with the Trustee. In
exchange for these contracts the Trustee delivered to the Sponsor documentation
evidencing the ownership of Units of the Portfolio. Unless otherwise terminated
as provided in the Trust Agreement, the Portfolio 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 the "Portfolio" and any additional securities
deposited into the Portfolio.
Additional Units of the Portfolio may be issued at any time by depositing in
the Portfolio (i) additional Securities, (ii) contracts to purchase Securities
together with cash or irrevocable letters of credit or (iii) cash (or a letter
of credit) with instructions to purchase additional Securities. As additional
Units are issued by the Portfolio, the aggregate value of the Securities will be
increased and the fractional undivided interest represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits into the
Portfolio following the Initial Date of Deposit provided that the additional
deposits will be in amounts which will maintain, as nearly as practicable, the
same percentage relationship among the number of shares of each Security in the
Portfolio that existed immediately prior to the subsequent deposit. Investors
may experience a dilution of their investments and a reduction in their
anticipated income because of fluctuations in the prices of the Securities
between the time of the deposit and the purchase of the Securities and because
the Portfolio will pay the associated brokerage or acquisition fees.
Each Unit of the Portfolio initially offered represents an undivided interest
in the Portfolio. To the extent that any Units are redeemed by the Trustee or
additional Units are issued as a result of additional Securities being deposited
by the Sponsor, the fractional undivided interest in the Portfolio represented
by each unredeemed Unit will increase or decrease accordingly, although the
actual interest in the Portfolio will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders, which may
include the Sponsor, or until the termination of the Trust Agreement.
The Portfolio consists of (a) the Securities (including contracts for the
purchase thereof) as may continue to be held from time to time in the Portfolio,
(b) any additional Securities acquired and held by the Portfolio pursuant to the
provisions of the Trust Agreement and (c) any cash held in the related Income
and Capital Accounts. Neither the Sponsor nor the Trustee shall be liable in any
way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
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The Portfolio seeks to increase the value of your investment by investing in
a portfolio of common stocks. We cannot guarantee that a Portfolio will achieve
its objective. We describe the objective and selection criteria for the
Portfolio on page 4.
The hypothetical average annual total returns for the Dow Jones Industrial
Average for certain years are shown in the table below.
1973 -13.16%
1974 -23.21%
1975 44.48%
1976 22.75%
1977 -12.70%
1978 2.69%
1979 10.52%
1980 21.41%
1981 -3.40%
1982 25.79%
1983 25.65%
1984 1.08%
1985 32.78%
1986 26.92%
1987 6.02%
1988 15.95%
1989 31.71%
1990 -0.58%
1991 23.93%
1992 7.35%
1993 16.74%
1994 4.95%
1995 36.49%
1996 28.58%
1997 24.78%
1998 18.13%
1999 27.01%
12/31/99 thru 11/30/00 -8.14%
The index is an unmanaged statistical composite and does not include payment
of any sales changes or fees an investor would pay to purchase the securities it
represents. If it had, results would have been less favorable. Futhermore, an
investment cannot be made in an index. The historical performance of this index
is shown for illustrative purposes only; it is not meant to forecast, imply or
guarantee the future performance of any particular investment or any actual
Portfolio, which wil vary. Securities in which the Portfolio invests may be
different from those in this illustration or in the index. The performance shown
is not that of any actual Portfolio itself because the Portfolio was not
available during this time period. The investment return and principal value of
the Portfolio will fuctuate with changes in market conditions. Units, when
redeemed, may be worth more or less than their original cost.
A balanced investment portfolio incorporates various style and capitalization
characteristics. We offer unit trusts with a variety of styles and
capitalizations to meet your needs. We determine style characteristics (growth
or value) based on the criteria used in selecting the Portfolio. Generally, a
growth portfolio includes companies in a growth phase of their business with
increasing earnings. A value portfolio generally includes companies with low
relative price-earnings ratios that we believe are undervalued. We determine
market capitalizations as follows based on the weighted median market
capitalization of a portfolio: Small-Cap -- less than $1.7 billion; Mid-Cap --
$1.7 billion to $10.5 billion; and Large-Cap -- over $10.5 billion. We determine
all style and capitalization characteristics as of the Initial Date of Deposit
and the characteristics may vary thereafter. We will not remove a Security from
a Portfolio as a result of any change in characteristics.
RISK FACTORS
--------------------------------------------------------------------------------
PRICE VOLATILITY. The Portfolio invests in stocks of U.S. and foreign
companies. The value of Units will fluctuate with the value of these stocks and
may be more or less than the price you originally paid for your Units. The
market value of stocks sometimes moves up or down rapidly and unpredictably.
Because the Portfolio is unmanaged, the Trustee will not sell stocks in response
to market fluctuations as is common in managed investments. In addition, because
the Portfolio holds a relatively small number of stocks, you may encounter
greater market risk than in a more diversified investment. As with any
investment, we cannot guarantee that the performance of the Portfolio will be
positive over any period of time.
DIVIDENDS. Common stocks represent ownership interests in the issuers and are
not obligations of the issuers. Accordingly, common stockholders have a right to
receive dividends only after the company has provided for payment of its
creditors, bondholders and preferred stockholders. Common stocks do not assure
dividend payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
INDEX CORRELATION. The Portfolio involves the risk that its performance will
not sufficiently correspond with the Dow Jones Industrial AverageSM. This can
happen for reasons such as:
o the impracticability of owning each of the index stocks with the exact
weightings at a given time.
o the possibility of index tracking errors,
o the time that elapses between a change in the index and a change in
the Portfolio, and
o fees and expenses of the Portfolio.
TECHNOLOGY INDUSTRY. The Portfolio invests significantly in companies in the
technology industry. You should understand the risks of the technology industry
before you invest. Technology companies may include companies that are involved
in computer and business services, enterprise software/technical software,
Internet and computer software, Internet-related services, networking and
telecommunications equipment, telecommunications services, electronics products,
server hardware, computer hardware and peripherals, semiconductor capital
equipment and semiconductors. These companies face risks related to rapidly
changing technology, rapid product obsolescence, cyclical market patterns,
evolving industry standards and frequent new product introductions. An
unexpected change in technology can have a significant negative impact on a
company. The failure of a company to introduce new products or technologies or
keep pace with rapidly changing technology, can have a negative impact on the
company's results. Technology stocks tend to experience substantial price
volatility and speculative trading. Announcements about new products,
technologies, operating results or marketing alliances can cause stock prices to
fluctuate dramatically. At times, however, extreme price and volume fluctuations
are unrelated to the operating performance of a company. This can impact your
ability to redeem your Units at a price equal to or greater than what you paid.
The market for certain products may have only recently begun to develop, is
rapidly evolving or is characterized by increasing suppliers. Key components of
some technology products are available only from limited sources. This can
impact the cost of and ability to acquire these components. Some technology
companies serve highly concentrated customer bases with a limited number of
large customers. Any failure to meet the standard of these customers can result
in a significant loss or reduction in sales. Many products and technologies are
incorporated into other products. As a result, some companies are highly
dependent on the performance of other technology companies. We cannot guarantee
that these customers will continue to place additional orders or will place
orders in similar quantities as in the past.
LEGISLATION/LITIGATION. From time to time, various legislative initiatives
are proposed in the United States and abroad which may have a negative impact on
certain of the companies represented in the Portfolio. In addition, litigation
regarding any of the issuers of the Securities, such as that concerning
Microsoft Corporation or Philip Morris Companies, Inc. or of the industries
represented by these issuers may negatively impact the share prices of these
Securities. No one can predict what impact any pending or threatened litigation
will have on the share prices of the Securities.
NO FDIC GUARANTEE. An investment in your Portfolio is not a deposit of any
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
PUBLIC OFFERING
--------------------------------------------------------------------------------
GENERAL. Units are offered at the Public Offering Price which includes
the underlying value of the Securities, the initial sales charge, and cash, if
any, in the Income and Capital Accounts. The "Fee Table" describes the sales
charges in detail. If any deferred sales charge payment date is not a business
day, we will charge the payment on the next business day. If you purchase Units
after the initial deferred sales charge payment, you will only pay that portion
of the payments not yet collected. A portion of the Public Offering Price
includes an amount of Securities to pay for all or a portion of the costs
incurred in establishing your Portfolio, including the cost of preparing
documents relating to the Portfolio (such as the prospectus, trust agreement and
closing documents, federal and state registration fees, the initial fees and
expenses of the Trustee and legal and audit expenses). Beginning on December 10,
2001, the secondary market sales charge for the Portfolio will be 4.00% and will
not include deferred payments. The sales charge will reduce by 0.5% on each
subsequent December 5 to a minimum of 3.00%. The initial offering period sales
charge is reduced as follows:
TRANSACTION
AMOUNT* SALES CHARGE
-------------- --------------
Less than $50,000 4.50%
$50,000 - $99,999 4.25
$100,000 - $249,999 4.00
$250,000 - $499,999 3.50
$500,000 - $999,999 2.50
$1,000,000 or more 1.50
---------------
*The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied on
whichever basis is more favorable to the investor.
Any sales charge reduction is the responsibility of the selling broker,
dealer or agent. An investor may aggregate purchases of Units of the Portfolio
for purposes of qualifying for volume purchase discounts listed above. The
reduced sales charge structure will also apply on all purchases by the same
person from any one dealer of units of Van Kampen-sponsored unit investment
trusts which are being offered in the initial offering period (a) on any one day
(the "Initial Purchase Date") or (b) on any day subsequent to the Initial
Purchase Date if the units purchased are of a unit investment trust purchased on
the Initial Purchase Date. In the event units of more than one trust are
purchased on the Initial Purchase Date, the aggregate dollar amount of such
purchases will be used to determine whether purchasers are eligible for a
reduced sales charge. Such aggregate dollar amount will be divided by the public
offering price per unit of each respective trust purchased to determine the
total number of units which such amount could have purchased of each individual
trust. Purchasers must then consult the applicable trust's prospectus to
determine whether the total number of units which could have been purchased of a
specific trust would have qualified for a reduced sales charge and the amount of
such reduction. To determine the applicable sales charge reduction it is
necessary to accumulate all purchases made on the Initial Purchase Date and all
purchases made in accordance with (b) above. Units purchased in the name of the
spouse of a purchaser or in the name of a child of such purchaser ("immediate
family members") will be deemed to be additional purchases by the purchaser for
the purposes of calculating the applicable sales charge. The reduced sales
charges will also be applicable to a trustee or other fiduciary purchasing
securities for one or more trust estate or fiduciary accounts. If you purchase
Units on more than one day to achieve the discounts described in this paragraph,
the discount allowed on any single day will apply only to Units purchased on
that day (a retroactive discount is not given on all prior purchases).
A portion of the sales charge is waived for certain accounts described in
this paragraph. Purchases by these accounts are subject only to the portion of
the deferred sales charge that is retained by the Sponsor. Please refer to the
section called "Wrap Fee and Advisory Accounts" for additional information on
these purchases. Units may be purchased in the primary or secondary market at
the Public Offering Price less the concession the Sponsor typically allows to
brokers and dealers for purchases by (1) investors who purchase Units through
registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for brokerage
services, financial planning, investment advisory or asset management service,
or provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who for at least 90 days, has been an officer,
director or bona fide employee of any firm offering Units for sale to investors
or their immediate family members (as described above) and (4) officers and
directors of bank holding companies that make Units available directly or
through subsidiaries or bank affiliates. Notwithstanding anything to the
contrary in this Prospectus, such investors, bank trust departments, firm
employees and bank holding company officers and directors who purchase Units
through this program will not receive sales charge reductions for quantity
purchases.
During the initial offering period of the Portfolio offered in this
prospectus, unitholders of any Van Kampen-sponsored unit investment trust may
utilize their redemption or termination proceeds to purchase Units of the
Portfolio offered in this prospectus at the Public Offering Price per Unit less
1%.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, and trustees, custodians or fiduciaries for the
benefit of such persons) of the Van Kampen Funds Inc. and its affiliates,
dealers and their affiliates and vendors providing services to the Sponsor may
purchase Units at the Public Offering Price less the applicable dealer
concession.
Your Portfolio will charge the deferred sales charge per Unit regardless of
any discounts. However, if you are eligible to receive a discount such that the
sales charge you must pay is less than the applicable deferred sales charge, you
will be credited the difference between your sales charge and the deferred sales
charge at the time you buy your Units. If you elect to have distributions
reinvested into additional Units of your Portfolio, in addition to the
reinvestment Units you receive you will also be credited additional Units with a
dollar value sufficient to cover the amount of any remaining deferred sales
charge to be collected on such Units at the time of reinvestment. The dollar
value of these Units will fluctuate over time.
The minimum purchase is 100 Units (25 Units for retirement accounts) but may
vary by selling firm. However, in connection with fully disclosed transactions
with the Sponsor, the minimum purchase requirement will be that number of Units
set forth in the contract between the Sponsor and the related broker or agent.
OFFERING PRICE. The Public Offering Price of Units will vary from the amounts
stated under "Summary of Essential Financial Information" in accordance with
fluctuations in the prices of the underlying Securities in the Portfolio. The
initial price of the Securities was determined by Interactive Data Corporation,
a firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities. The Evaluator will generally determine the value of the
Securities as of the Evaluation Time on each business day and will adjust the
Public Offering Price of Units accordingly. This Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each business
day. The Evaluation Time is the close of the New York Stock Exchange on each
Portfolio business day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a business day,
will be held until the next determination of price. The term "business day", as
used herein and under "Rights of Unitholders--Redemption of Units", excludes
Saturdays, Sundays and holidays observed by the New York Stock Exchange. The
term "business day" also excludes any day on which more than 33% of the
Securities are not traded on their principal trading exchange due to a customary
business holiday on that exchange.
The aggregate underlying value of the Securities during the initial offering
period is determined on each business day by the Evaluator in the following
manner: If the Securities are listed on a national or foreign securities
exchange or the Nasdaq Stock Market, Inc., this evaluation is generally based on
the closing sale prices on that exchange or market unless it is determined that
these prices are inappropriate as a basis for valuation) or, if there is no
closing sale price on that exchange or market, at the closing asked prices. If
the Securities are not listed on a national or foreign securities exchange or
the Nasdaq Stock Market, Inc. or, if so listed and the principal market therefor
is other than on the exchange or market, the evaluation shall generally be based
on the current asked price on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for evaluation). If
current asked prices are unavailable, the evaluation is generally determined (a)
on the basis of current asked prices for comparable securities, (b) by
appraising the value of the Securities on the asked side of the market or (c) by
any combination of the above. The value of any foreign securities is based on
the applicable currency exchange rate as of the Evaluation Time. The value of
the Securities for purposes of secondary market transactions and redemptions is
described under "Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather the
entire pool of Securities in the Portfolio, taken as a whole, which are
represented by the Units.
UNIT DISTRIBUTION. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. Units repurchased in the
secondary market, if any, may be offered by this Prospectus at the secondary
market Public Offering Price in the manner described above.
The Sponsor intends to qualify Units for sale in a number of states. Brokers,
dealers and others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period as
described below.
TRANSACTION
AMOUNT* CONCESSION
-------------- --------------
Less than $50,000 3.50%
$50,000 - $99,999 3.25
$100,000 - $249,999 3.00
$250,000 - $499,999 2.50
$500,000 - $999,999 1.50
$1,000,000 or more 0.75
---------------
*The breakpoint concessions or agency commissions are also applied on a Unit
basis using a breakpoint equivalent of $10 per Unit and are applied on whichever
basis is more favorable to the distributor.
In addition to the regular concession or agency commission earned by selling
firms, during the initial offering period any firm that distributes 500,000 -
999,999 Units will receive additional compensation of $.005 per Unit; any firm
that distributes 1,000,000 - 1,999,999 Units will receive $.01 per Unit; any
firm that distributes 2,000,000 - 2,999,999 Units will receive $.015 per Unit;
and any firm that distributes 3,000,000 Units or more will receive $.02 per
Unit.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For transactions involving unitholders
of other Van Kampen unit investment trusts who use their redemption or
termination proceeds to purchase Units of the Portfolio, the total concession or
agency commission will amount to 2.50% per Unit. For all secondary market
transactions the total concession or agency commission will amount to 70% of the
sales charge. Notwithstanding anything to the contrary herein, in no case shall
the total of any concessions, agency commissions and any additional compensation
allowed or paid to any broker, dealer or other distributor of Units with respect
to any individual transaction exceed the total sales charge applicable to such
transaction. The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units and to change the amount of the concession or
agency commission to dealers and others from time to time.
Broker-dealers, banks and/or others may be eligible to participate in a
program in which such firms receive from the Sponsor a nominal award for each of
their representatives who have sold a minimum number of units of unit investment
trusts created by the Sponsor during a specified time period. In addition, at
various times the Sponsor may implement other programs under which the sales
forces of brokers, dealers, banks and/or others may be eligible to win other
nominal awards for certain sales efforts, or under which the Sponsor will
reallow to such brokers, dealers, banks and/or others that sponsor sales
contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored by the Sponsor, an amount
not exceeding the total applicable sales charges on the sales generated by such
persons at the public offering price during such programs. Also, the Sponsor in
its discretion may from time to time pursuant to objective criteria established
by the Sponsor pay fees to qualifying entities for certain services or
activities which are primarily intended to result in sales of Units of the
Portfolio. Such payments are made by the Sponsor out of its own assets, and not
out of the assets of the Portfolio. These programs will not change the price
Unitholders pay for their Units or the amount that the Portfolio will receive
from the Units sold.
SPONSOR COMPENSATION. The Sponsor will receive a gross sales commission equal
to the total sales charge applicable to each transaction. Any sales charge
discount provided to investors will be borne by the selling dealer or agent. In
addition, the Sponsor will realize a profit or loss as a result of the
difference between the price paid for the Securities by the Sponsor and the cost
of the Securities to the Portfolio on the Initial Date of Deposit as well as on
subsequent deposits. See "Notes to Portfolio". The Sponsor has not participated
as sole underwriter or as manager or as a member of the underwriting syndicates
or as an agent in a private placement for any of the Securities. The Sponsor may
realize profit or loss as a result of the possible fluctuations in the market
value of the Securities, since all proceeds received from purchasers of Units
are retained by the Sponsor. In maintaining a secondary market, the Sponsor will
realize profits or losses in the amount of any difference between the price at
which Units are purchased and the price at which Units are resold (which price
includes the applicable sales charge) or from a redemption of repurchased Units
at a price above or below the purchase price. Cash, if any, made available to
the Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the Sponsor,
subject to the limitations of the Securities Exchange Act of 1934.
The Sponsor or an affiliate may have participated in a public offering of one
or more of the Securities. The Sponsor, an affiliate or their employees may have
a long or short position in these Securities or related securities. An affiliate
may act as a specialist or market maker for these Securities. An officer,
director or employee of the Sponsor or an affiliate may be an officer or
director for issuers of the Securities.
Purchases and sales of Securities by your Portfolio may impact the value of
the Securities. This may especially be the case during the initial offering of
Units, upon Portfolio termination and in the course of satisfying large Unit
redemptions. Any publication of a list of Securities, or a list of anticipated
Securities, to be included in the Portfolio may also cause increased buying
activity in certain Securities. Once this information becomes public, investors
may purchase individual Securities appearing in such a publication and may do so
during or prior to the initial offering of Units. It is possible that these
investors could include investment advisory and brokerage firms of the Sponsor
or its affiliates or firms that are distributing Units. This activity may cause
your Portfolio to purchase stocks at a higher price than those buyers who effect
purchases prior to purchases by your Portfolio.
MARKET FOR UNITS. Although it is not obligated to do so, the Sponsor
currently intends to maintain a market for Units and to purchase Units at the
secondary market repurchase price (which is described under "Right of
Unitholders--Redemption of Units"). The Sponsor may discontinue purchases of
Units or discontinue purchases at this price at any time. In the event that a
secondary market is not maintained, a Unitholder will be able to dispose of
Units by tendering them to the Trustee for redemption at the Redemption Price.
See "Rights of Unitholders--Redemption of Units". Unitholders should contact
their broker to determine the best price for Units in the secondary market.
Units sold prior to the time the entire deferred sales charge has been collected
will be assessed the amount of any remaining deferred sales charge at the time
of sale. The Trustee will notify the Sponsor of any tendered Units for
redemption. If the Sponsor's bid in the secondary market equals or exceeds the
Redemption Price per Unit, it may purchase the Units not later than the day on
which Units would have been redeemed by the Trustee. The Sponsor may sell
repurchased Units at the secondary market Public Offering Price per Unit.
RETIREMENT ACCOUNTS
--------------------------------------------------------------------------------
Units are available for purchase in connection with certain types of
tax-sheltered retirement plans, including Individual Retirement Accounts for the
individuals, Simplified Employee Pension Plans for employees, qualified plans
for self-employed individuals, and qualified corporate pension and profit
sharing plans for employees. The minimum purchase for these accounts is reduced
to 25 Units but may vary by selling firm. The purchase of Units may be limited
by the plans' provisions and does not itself establish such plans.
WRAP FEE AND ADVISORY ACCOUNTS
--------------------------------------------------------------------------------
Units may be available for purchase by investors who purchase Units through
registered investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for brokerage
services, financial planning, investment advisory or asset management service,
or provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed. You should
consult your financial professional to determine whether you can benefit from
these accounts. For these purchases you generally only pay the portion of the
sales charge that is retained by your Portfolio's Sponsor, Van Kampen Funds Inc.
For example, this table illustrates the transaction fees you will pay as a
percentage of the public offering price per Unit.
Fee paid on purchase 0.00%
Deferred sponsor retention 1.00
---------
Total 1.00%
=========
You should consult the "Public Offering--General" section for specific
information on this and other sales charge discounts. That section governs the
calculation of all sales charge discounts.
RIGHTS OF UNITHOLDERS
--------------------------------------------------------------------------------
DISTRIBUTIONS. Dividends and any net proceeds from the sale of Securities
received by the Portfolio will generally be distributed to Unitholders on each
Distribution Date to Unitholders of record on the preceding Record Date. These
dates are listed under "Summary of Essential Financial Information". A person
becomes a Unitholder of record on the date of settlement (generally three
business days after Units are ordered). Unitholders may elect to receive
distributions in cash or to have distributions reinvested into additional Units.
Distributions may also be reinvested into Van Kampen mutual funds. See "Rights
of Unitholders--Reinvestment Option".
Dividends received by the Portfolio are credited to the Income Account of the
Portfolio. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds received on the
sale of any Securities, to the extent not used to meet redemptions of Units or
pay deferred sales charges, fees or expenses, will be distributed to
Unitholders. Proceeds received from the disposition of any Securities after a
record date and prior to the following distribution date will be held in the
Capital Account and not distributed until the next distribution date. Any
distribution to Unitholders consists of each Unitholder's pro rata share of the
available cash in the Income and Capital Accounts as of the related Record Date.
REINVESTMENT OPTION. Unitholders may have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option without a
sales charge (to the extent Units may be lawfully offered for sale in the state
in which the Unitholder resides) through two options, if available. Brokers and
dealers can use the Dividend Reinvestment Service through Depository Trust
Company or purchase the Automatic Reinvestment Option CUSIP, if available. To
participate in this reinvestment option, a Unitholder must file with the Trustee
a written notice of election, together with any certificate representing Units
and other documentation that the Trustee may then require, at least five days
prior to the related Record Date. A Unitholder's election will apply to all
Units owned by the Unitholder and will remain in effect until changed by the
Unitholder. If Units are unavailable for reinvestment, distributions will be
paid in cash. Purchases of additional Units made pursuant to the reinvestment
plan will be made at the net asset value for Units as of the Evaluation Time on
the Distribution Date.
In addition, under the Guaranteed Reinvestment Option Unitholders may elect
to have distributions automatically reinvested in certain Van Kampen mutual
funds (the "Reinvestment Funds"). Each Reinvestment Fund has investment
objectives which differ from those of the Portfolio. The prospectus relating to
each Reinvestment Fund describes its investment policies and how to begin
reinvestment. A Unitholder may obtain a prospectus for the Reinvestment Funds
from the Sponsor. Purchases of shares of a Reinvestment Fund will be made at a
net asset value computed on the Distribution Date. Unitholders with an existing
Guaranteed Reinvestment Option account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new
account which allows purchases of Reinvestment Fund shares at net asset value.
A participant may elect to terminate his or her reinvestment plan and receive
future distributions in cash by notifying the Trustee in writing no later than
five days before a distribution date. The Sponsor, each Reinvestment Fund, and
its investment adviser shall have the right to suspend or terminate these
reinvestment plans at any time.
REDEMPTION OF UNITS. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286. Certificates must be tendered to the
Trustee, duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed (or by providing satisfactory indemnity in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. On the seventh day following the tender, the
Unitholder will be entitled to receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received by the Trustee after the Evaluation
Time or on a day which is not a Portfolio business day, the date of tender is
deemed to be the next business day.
Unitholders tendering 1,000 or more Units of the Portfolio for redemption may
request an in kind distribution of Securities equal to the Redemption Price per
Unit on the date of tender. Unitholders may not request an in kind distribution
during the five business days prior to the Portfolio's termination. The
Portfolio generally will not offer in kind distributions of portfolio securities
that are held in foreign markets. An in kind distribution will be made by the
Trustee through the distribution of each of the Securities in book-entry form to
the account of the Unitholder's broker-dealer at Depository Trust Company.
Amounts representing fractional shares will be distributed in cash. The Trustee
may adjust the number of shares of any Security included in a Unitholder's in
kind distribution to facilitate the distribution of whole shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in kind or sold, the size of the Portfolio will be,
and the diversity of the Portfolio may be, reduced. Sales may be required at a
time when Securities would not otherwise be sold and may result in lower prices
than might otherwise be realized. The price received upon redemption may be more
or less than the amount paid by the Unitholder depending on the value of the
Securities at the time of redemption. Special federal income tax consequences
will result if a Unitholder requests an in kind distribution. See "Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in the Portfolio determined on
the basis of (i) the cash on hand in the Portfolio, (ii) the value of the
Securities in the Portfolio and (iii) dividends receivable on the Securities in
the Portfolio trading ex-dividend as of the date of computation, less (a)
amounts representing taxes or other governmental charges payable out of the
Portfolio, (b) the accrued expenses of the Portfolio and (c) any unpaid deferred
sales charge payments. During the initial offering period, the redemption price
and the secondary market repurchase price will also include estimated
organizational costs. For these purposes, the Evaluator may determine the value
of the Securities in the following manner: If the Securities are listed on a
national or foreign securities exchange or the Nasdaq Stock Market, Inc., this
evaluation is generally based on the closing sale prices on that exchange or
market (unless it is determined that these prices are inappropriate as a basis
for valuation) or, if there is no closing sale price on that exchange or market,
at the closing bid prices. If the Securities are not so listed or, if so listed
and the principal market therefor is other than on the exchange or market, the
evaluation may be based on the current bid price on the over-the-counter market.
If current bid prices are unavailable or inappropriate, the evaluation may be
determined (a) on the basis of current bid prices for comparable securities, (b)
by appraising the Securities on the bid side of the market or (c) by any
combination of the above. The value of any foreign securities is based on the
applicable currency exchange rate as of the Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the SEC determines that
trading on that Exchange is restricted or an emergency exists, as a result of
which disposal or evaluation of the Securities is not reasonably practicable, or
for other periods as the SEC may permit.
CERTIFICATES. Ownership of Units is evidenced in book entry form unless a
Unitholder makes a written request to the Trustee that ownership be in
certificate form. Units are transferable by making a written request to the
Trustee and, in the case of Units in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not limited
to, trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Fractional certificates
will not be issued. The Trustee may require a Unitholder to pay a reasonable fee
for each certificate reissued or transferred and to pay any governmental charge
that may be imposed in connection with each transfer or interchange. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
REPORTS PROVIDED. Unitholders will receive a statement of dividends and other
amounts received by the Portfolio for each distribution. Within a reasonable
time after the end of each year, each person who was a Unitholder during that
year will receive a statement describing dividends and capital received, actual
Portfolio distributions, Portfolio expenses, a list of the Securities and other
Portfolio information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
PORTFOLIO ADMINISTRATION
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PORTFOLIO ADMINISTRATION. The Portfolio is not a managed fund and, except as
provided in the Trust Agreement, Securities generally will not be sold or
replaced. The Sponsor may, however, direct that Securities be sold in certain
limited circumstances to protect the Portfolio based on advice from the
Supervisor. These situations may include events such as the issuer having
defaulted on payment of any of its outstanding obligations or the price of a
Security has declined to such an extent or other credit factors exist so that in
the opinion of the Sponsor retention of the Security would be detrimental to the
Portfolio. If a public tender offer has been made for a Security or a merger or
acquisition has been announced affecting a Security, the Trustee may either sell
the Security or accept a tender offer for cash if the Supervisor determines that
the sale or tender is in the best interest of Unitholders. The Trustee will
distribute any cash proceeds to Unitholders. In addition, the Trustee may sell
Securities to redeem Units or pay Portfolio expenses or deferred sales charges.
If securities or property are acquired by the Portfolio, the Sponsor may direct
the Trustee to sell the securities or property and distribute the proceeds to
Unitholders or to accept the securities or property for deposit in the
Portfolio. Should any contract for the purchase of any of the Securities fail,
the Sponsor will (unless substantially all of the moneys held in the Portfolio
to cover the purchase are reinvested in substitute Securities in accordance with
the Trust Agreement) refund the cash and sales charge attributable to the failed
contract to all Unitholders on or before the next distribution date.
Purchases and sales of Securities will generally be made in an effort to
maintain, to the extent practical, a portfolio that reflects the current
components of the Dow Jones Industrial AverageSM. If the Portfolio receives any
securities or other property relating to the Securities in the Portfolio (such
as those acquired in a merger or spin-off), the Trustee will sell the securities
or other property and reinvest the proceeds in shares of the remaining
Securities. If a Security is removed from the Dow Jones Industrial AverageSM,
the Trustee will sell the Security and may reinvest the proceeds into any new
securities added as components of the Dow Jones Industrial AverageSM or into the
other Securities if a new component is not added.
In addition, 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 Portfolio. 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 Portfolio on the Initial Date of
Deposit. The Sponsor may also instruct the Trustee to take action necessary to
ensure that the Portfolio continue to satisfy the qualifications of a regulated
investment company and to avoid imposition of tax on undistributed income of the
Portfolio.
When your Portfolio sells Securities, the composition and diversity of the
Securities in the Portfolio may be altered. In order to obtain the best price
for a Security, 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 Portfolio's securities, the Sponsor may
direct that orders be placed with and brokerage commissions be paid to brokers,
including brokers which may be affiliated with the Portfolio, the Sponsor or
dealers participating in the offering of Units. In addition, in selecting among
firms to handle a particular transaction, the Sponsor may take into account
whether the firm has sold or is selling units of unit investment trusts which it
sponsors.
AMENDMENT OF THE TRUST AGREEMENT. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
TERMINATION. The Portfolio will terminate on the Mandatory Termination Date
or upon the sale or other disposition of the last Security held in the
Portfolio. The Portfolio may be terminated at any time with consent of
Unitholders representing two-thirds of the outstanding Units or by the Trustee
when the value of the Portfolio is less than $500,000 ($3,000,000 if the value
of the Portfolio has exceeded $15,000,000) (the "Minimum Termination Value").
Unitholders will be notified of any termination. The Trustee may begin to sell
Securities in connection with the Portfolio termination nine business days
before, and no later than, the Mandatory Termination Date. Approximately thirty
days before this date, the Trustee will notify Unitholders of the termination
and provide a form enabling qualified Unitholders to elect an in kind
distribution of Securities. See "Rights of Unitholders--Redemption of Units".
This form must be returned at least five business days prior to the Mandatory
Termination Date. Unitholders will receive a final cash distribution within a
reasonable time after the Mandatory Termination Date. All distributions will be
net of Portfolio expenses and costs. Unitholders will receive a final
distribution statement following termination. The Information Supplement
contains further information regarding termination of the Portfolio. See
"Additional Information".
LIMITATIONS ON LIABILITIES. The Sponsor, Evaluator, Supervisor and Trustee
are under no liability for taking any action or for refraining from taking any
action in good faith pursuant to the Trust Agreement, or for errors in judgment,
but shall be liable only for their own willful misfeasance, bad faith or gross
negligence (negligence in the case of the Trustee) in the performance of their
duties or by reason of their reckless disregard of their obligations and duties
hereunder. The Trustee is not liable for depreciation or loss incurred by reason
of the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act thereunder
and is not liable for any action taken by it in good faith under the Trust
Agreement. The Trustee is not liable for any taxes or other governmental charges
imposed on the Securities, on it as Trustee under the Trust Agreement or on the
Portfolio which the Trustee may be required to pay under any present or future
law of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee. The Trustee, Sponsor and
Supervisor may rely on any evaluation furnished by the Evaluator and have no
responsibility for the accuracy thereof. Determinations by the Evaluator shall
be made in good faith upon the basis of the best information available to it.
SPONSOR. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of
the Portfolio. The Sponsor is an indirect subsidiary of Morgan Stanley Dean
Witter & Co. Van Kampen Funds Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds with roots in money
management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has its principal offices at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, Illinois 60181-5555, (630)
684-6000. As of November 30, 1999, the total stockholders' equity of Van Kampen
Funds Inc. was $141,554,861 (audited). Van Kampen Funds Inc. and your Portfolio
have adopted a code of ethics requiring Van Kampen's employees who have access
to information on Portfolio transactions to report personal securities
transactions. The purpose of the code is to avoid potential conflicts of
interest and to prevent fraud, deception or misconduct with respect to your
Portfolio. The Information Supplement contains additional information about the
Sponsor.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Portfolio as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law. Additional information
regarding the Trustee is set forth in the Information Supplement, including the
Trustee's qualifications and duties, its ability to resign, the effect of a
merger involving the Trustee and the Sponsor's ability to remove and replace the
Trustee. See "Additional Information".
PERFORMANCE INFORMATION. The Sponsor may from time to time in its advertising
and sales materials compare the then current estimated returns on the Portfolio
and returns over specified time periods on other similar Van Kampen trusts
(which may show performance net of expenses and charges which the Portfolio
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 Portfolio.
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 Portfolio is not
managed and Unit price and return fluctuate with the value of common stocks in
the portfolio, so there may be a gain or loss when Units are sold. As with other
performance data, performance comparisons should not be considered
representative of the Portfolio's relative performance for any future period.
TAXATION
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The Portfolio 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 Portfolio 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 Portfolio 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 Portfolio intends to timely distribute its taxable
income (including any net capital gain), it is anticipated that the Portfolio
will not be subject to federal income tax or the excise tax.
Distributions to Unitholders of the Portfolio'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 Portfolio'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 Portfolio
(and received by the Unitholder) on December 31 of the year such distributions
are declared.
Distributions of the Portfolio's net capital gain which are properly
designated as capital gain dividends by the Portfolio 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). Capital gain or loss is long-term if the holding period for the asset
is more than one year, and is short-term if the holding period for the asset is
one year or less. The date on which a Unit is acquired (i.e., the "trade date")
is excluded for purposes of determining the holding period of the Unit. Capital
gains realized from assets held for one year or less are taxed at the same rates
as ordinary income. 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.
If you are an individual, the maximum marginal federal tax rate for net
capital gains is generally 20% (10% for certain taxpayers in the lowest tax
bracket). For tax years beginning after December 31, 2000, the 20% rate is
reduced to 18% and the 10% rate is reduced to 8% for long-term gains from most
property held for more than five years. However, the reduction of the 20% rate
to 18% applies only if the holding period for the property begins after December
31, 2000. Therefore, you will not be eligible for the 18% capital gain rate on
assets for which your holding period began before January 1, 2001. However, if
you are an individual, you may elect to treat certain assets you hold on January
1, 2001 as having been sold for their fair market value on the next business day
after January 1, 2001 for purposes of this holding period requirement. If you
make this election, you must recognize any gain from this deemed sale, but any
loss is not recognized. Net capital gain equals net long-term capital gain minus
net short-term capital loss for the taxable year. 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. You must
exclude the date you purchase your Units to determine the holding period of your
Units. The tax rates for capital gains realized from assets held for one year or
less are generally the same as for ordinary income. The Code may, however, treat
certain capital gains as ordinary income in special situations.
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 Taxpayer Relief Act of 1997 (the "1997 Tax Act")
includes provisions that treat certain transactions designed to reduce or
eliminate risk of loss and opportunities for gain (e.g. short sales, offsetting
notional principal contracts, futures or forward contracts or similar
transactions) as constructive sales for purposes of recognition of gain (but not
loss) and for purposes of determining the holding period.
Generally, the tax basis of a Unitholder includes sales charges, and such
charges are not deductible. A portion of the sales charge for the Portfolio is
deferred. The income (or proceeds from redemption) a Unitholder must take into
account for federal income tax purposes is not reduced by amounts deducted to
pay the deferred sales charge.
Distributions which are taxable as ordinary income to Unitholders will
constitute dividends for federal income tax purposes. When Units are held by
corporate Unitholders, Portfolio 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 Portfolio from United States corporations (other than
Real Estate Investment Trusts) and is designated by the Portfolio as being
eligible for such deduction. The Portfolio will provide each Unitholder with
information annually concerning what part of the Portfolio distributions are
eligible for the dividends received deduction.
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 Portfolio 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
Portfolio.
Distributions reinvested into additional Units of the Portfolio 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).
Under certain circumstances a Unitholder may be able to request an in kind
distribution upon redemption of Units or termination of the Portfolio.
Unitholders electing an in kind distribution of shares of Securities should be
aware that the exchange is subject to taxation and Unitholders will recognize
gain or loss (subject to various nonrecognition provisions of the Code) based on
the value of the Securities received. Investors electing an in kind distribution
should consult their own tax advisors with regard to such transaction.
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 Portfolio 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
Portfolio and to the tax treatment of distributions by the Portfolio 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 Portfolio which constitute dividends for Federal income
tax purposes (other than dividends which the Portfolio 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 Portfolio that are designated by the Portfolio 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 Portfolio and Portfolio distributions may also be subject
to state and local taxation and Unitholders should consult their tax advisers in
this regard.
PORTFOLIO OPERATING EXPENSES
--------------------------------------------------------------------------------
GENERAL. The fees and expenses of your Portfolio will generally accrue on a
daily basis. The deferred sales charge, fees and expenses are generally paid out
of the Capital Account of your Portfolio. When these amounts are paid by or
owing to the Trustee, they are secured by a lien on your Portfolio. It is
expected that Securities will be sold to pay these amounts which will result in
capital gains or losses to Unitholders. See "Taxation". The Supervisor's,
Evaluator's and Trustee's fees may be increased without approval of the
Unitholders by amounts not exceeding proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index or, if this
category is not published, in a comparable category.
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 your Portfolio. 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 your Portfolio, 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
your Portfolio's assets at the end of the initial offering period.
TRUSTEE'S FEE. For its services the Trustee will receive the fee from your
Portfolio set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Portfolio expenses). The Trustee benefits to the extent there are
funds in the Capital and Income Accounts since these Accounts are non-interest
bearing to Unitholders and the amounts earned by the Trustee are retained by the
Trustee. Part of the Trustee's compensation for its services to your Portfolio
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 your
Portfolio 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 your Portfolio: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of the
Portfolio, (b) fees of the Trustee for extraordinary services, (c) expenses of
the Trustee (including legal and auditing expenses) and of counsel designated by
the Sponsor, (d) various governmental charges, (e) expenses and costs of any
action taken by the Trustee to protect the Portfolio and the rights and
interests of Unitholders, (f) indemnification of the Trustee for any loss,
liability or expenses incurred in the administration of the Portfolio without
negligence, bad faith or wilful misconduct on its part, (g) foreign custodial
and transaction fees, (h) costs associated with liquidating the securities held
in the Portfolio, (i) any offering costs incurred after the end of the initial
offering period and (j) expenditures incurred in contacting Unitholders upon
termination of the Portfolio. The Portfolio will also pay a license fee to Dow
Jones & Company, Inc. for use of certain service marks. The Portfolio may pay
the expenses of updating its registration statement each year.
OTHER MATTERS
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LEGAL OPINIONS. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Winston & Strawn has acted as counsel to the Trustee
and as special counsel for New York tax matters.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The statement of condition and the
Portfolio included in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, as set forth in their report in this
Prospectus, and are included herein in reliance upon the authority of said firm
as experts in accounting and auditing.
ADDITIONAL INFORMATION
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This Prospectus does not contain all the information set forth in the
Registration Statement filed by your Portfolio with the SEC. The Information
Supplement, which has been filed with the SEC, includes more detailed
information concerning the Securities, investment risks and general information
about the Portfolio. Information about your Portfolio (including the Information
Supplement) can be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. You may obtain information about the Public Reference Room by
calling 1-202-942-8090. Reports and other information about your Portfolio are
available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of this information may be obtained, after paying a
duplication fee, by electronic request at the following e-mail address:
[email protected] or by writing the SEC's Public Reference Section, Washington,
D.C. 20549-0102.
TABLE OF CONTENTS
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TITLE PAGE
----- ----
Summary of Essential Financial Information.. 2
Fee Table................................... 3
The Dow 30SM Index Portfolio................ 4
Notes to the Portfolio...................... 6
The Securities.............................. 7
Report of Independent Certified
Public Accountants....................... 10
Statement of Condition ..................... 11
The Portfolio............................... A-1
Objectives and Securities Selection......... A-1
Risk Factors................................ A-2
Public Offering............................. A-3
Retirement Accounts......................... A-7
Wrap Fee and Advisory Accounts.............. A-8
Rights of Unitholders....................... A-8
Portfolio Administration.................... A-10
Taxation.................................... A-13
Portfolio Operating Expenses................ A-15
Other Matters............................... A-16
Additional Information...................... A-16
--------------
When Units of the Portfolio are no longer available this prospectus may be used
as a preliminary prospectus for a future Portfolio. If this prospectus is used
for future Portfolios you should note the following:
The information in this prospectus is not complete with respect to future
Portfolio series and may be changed. No person may sell Units of future
Portfolios until a registration statement is filed with the Securities and
Exchange Commission and is effective. This prospectus is not an offer to sell
Units and is not soliciting an offer to buy Units in any state where the offer
or sale is not permitted.
EMSPRO256
#36667
PROSPECTUS
--------------------------------------------------------------------------------
DECEMBER 5, 2000
VAN KAMPEN
FOCUS PORTFOLIOS(SM)
A DIVISION OF VAN KAMPEN FUNDS INC.
THE DOW 30SM INDEX PORTFOLIO, SERIES 11
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
Please retain this prospectus for future reference.
VAN KAMPEN
INFORMATION SUPPLEMENT
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 256
--------------------------------------------------------------------------------
This Information Supplement provides additional information concerning the
risks and operations of the Portfolio which is not described in the Prospectus.
This Information Supplement should be read in conjunction with the Prospectus.
This Information Supplement is not a prospectus, does not include all of the
information that an investor should consider before investing in the Portfolio
and may not be used to offer or sell Units without the Prospectus. Copies of the
Prospectus can be obtained by contacting the Sponsor at 1 Parkview Plaza, P.O.
Box 5555, Oakbrook Terrace, Illinois 60181-5555 or by contacting your broker.
This Information Supplement is dated as of the date of the Prospectus and all
capitalized terms have been defined in the Prospectus.
TABLE OF CONTENTS
PAGE
Risk Factors 2
The Portfolio 4
Sponsor Information 6
Trustee Information 6
Portfolio Termination 7
RISK FACTORS
PRICE VOLATILITY. Because the Portfolio invests in common stocks of U.S.
and foreign companies, you should understand the risks of investing in common
stocks before purchasing Units. These risks include the risk that the financial
condition of the company or the general condition of the stock market may worsen
and the value of the stocks (and therefore Units) will fall. Common stocks are
especially susceptible to general stock market movements. The value of common
stocks often rises or falls rapidly and unpredictably as market confidence and
perceptions of companies change. These perceptions are based on factors
including expectations regarding government economic policies, inflation,
interest rates, economic expansion or contraction, political climates and
economic or banking crises. The value of Units will fluctuate with the value of
the stocks in the Portfolio and may be more or less than the price you
originally paid for your Units. As with any investment, we cannot guarantee that
the performance of the Portfolio will be positive over any period of time.
Because the Portfolio is unmanaged, the Trustee will not sell stocks in response
to market fluctuations as is common in managed investments. In addition, because
the Portfolio holds a relatively small number of stocks, you may encounter
greater market risk than in a more diversified investment.
DIVIDENDS. Common stocks represent ownership interests in a company and are
not obligations of the company. Accordingly, common stockholders have a right to
receive payments from the company that is subordinate to the rights of
creditors, bondholders or preferred stockholders of the company. This means that
common stockholders have a right to receive dividends only if a company's board
of directors declares a dividend and the company has provided for payment of all
of its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if the
company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.
LIQUIDITY. Whether or not the stocks in the Portfolio are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
ADDITIONAL UNITS. The Sponsor may create additional Units of the Portfolio
by depositing into the Portfolio additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Portfolio will pay brokerage fees.
VOTING. Only the Trustee may sell or vote the stocks in the Portfolio.
While you may sell or redeem your Units, you may not sell or vote the stocks in
your Portfolio. The Sponsor will instruct the Trustee how to vote the stocks.
The Trustee will vote the stocks in the same general proportion as shares held
by other shareholders if the Sponsor fails to provide instructions.
TECHNOLOGY ISSUERS. The Portfolio invests significantly in issuers within the
technology industry. The Portfolio, and therefore Unitholders, may be
particularly susceptible to a negative impact resulting from adverse market
conditions or other factors affecting technology issuers. Accordingly, an
investment in Units should be made with an understanding of the characteristics
of the technology industry and the risks which such an investment may entail.
Technology companies generally include companies involved in the development,
design, manufacture and sale of computers, computer related equipment, computer
networks, communications systems, telecommunications products, electronic
products, and other related products, systems and services. The market for
technology products and services, especially those specifically related to the
Internet, is characterized by rapidly changing technology, rapid product
obsolescence, cyclical market patterns, evolving industry standards and frequent
new product introductions. The success of the issuers of the Securities depends
in substantial part on the timely and successful introduction of new products.
An unexpected change in one or more of the technologies affecting an issuer's
products or in the market for products based on a particular technology could
have a material adverse affect on an issuer's operating results. Furthermore,
there can be no assurance that the issuers of the Securities will be able to
respond timely to compete in the rapidly developing marketplace.
The market for certain technology products and services may have only
recently begun to develop, is rapidly evolving and is characterized by an
increasing number of market entrants. Additionally, certain technology companies
may have only recently commenced operations or offered equity securities to the
public. Such companies are in the early stage of development and have a limited
operating history on which to analyze future operating results. It is important
to note that following its initial public offering a security is likely to
experience substantial stock price volatility and speculative trading.
Accordingly, there can be no assurance that upon redemption of Units or
termination of a Portfolio a Unitholder will receive an amount greater than or
equal to the Unitholder's initial investment.
Based on trading history, factors such as announcements of new products or
development of new technologies and general conditions of the industry have
caused and are likely to cause the market price of technology common stocks to
fluctuate substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to the
operating performance of such companies. This market volatility may adversely
affect the market price of the Securities and therefore the ability of a
Unitholder to redeem units, or roll over Units into a new trust, at a price
equal to or greater than the original price paid for such Units.
Some key components of certain products of technology issuers are currently
available only from single sources. There can be no assurance that in the future
suppliers will be able to meet the demand for components in a timely and cost
effective manner. Accordingly, an issuer's operating results and customer
relationships could be adversely affected by either an increase in price for, or
and interruption or reduction in supply of, any key components. Additionally,
many technology issuers are characterized by a highly concentrated customer base
consisting of a limited number of large customers who may require product
vendors to comply with rigorous and constantly developing industry standards.
Any failure to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies are incorporated into
other related products, certain companies are often highly dependent on the
performance of other computer, electronics and communications companies. There
can be no assurance that these customers will place additional orders, or that
an issuer of Securities will obtain orders of similar magnitude as past orders
from other customers. Similarly, the success of certain companies is tied to a
relatively small concentration of products or technologies with intense
competition between companies. Accordingly, a decline in demand of such
products, technologies or from such customers could have a material adverse
impact on issuers of the Securities.
CONSUMER PRODUCT AND RETAIL ISSUERS. The Portfolio invests significantly in
issuers that manufacture or sell consumer products. The profitability of these
companies will be affected by various factors including the general state of the
economy and consumer spending trends. In the past, there have been major changes
in the retail environment due to the declaration of bankruptcy by some of the
major corporations involved in the retail industry, particularly the department
store segment. The continued viability of the retail industry will depend on the
industry's ability to adapt and to compete in changing economic and social
conditions, to attract and retain capable management, and to finance expansion.
Weakness in the banking or real estate industry, a recessionary economic climate
with the consequent slowdown in employment growth, less favorable trends in
unemployment or a marked deceleration in real disposable personal income growth
could result in significant pressure on both consumer wealth and consumer
confidence, adversely affecting consumer spending habits. In addition,
competitiveness of the retail industry will require large capital outlays for
investment in the installation of automated checkout equipment to control
inventory, to track the sale of individual items and to gauge the success of
sales campaigns. Increasing employee and retiree benefit costs may also have an
adverse effect on the industry. In many sectors of the retail industry,
competition may be fierce due to market saturation, converging consumer tastes
and other factors. Because of these factors and the recent increase in trade
opportunities with other countries, American retailers are now entering global
markets which entail added risks such as sudden weakening of foreign economies,
difficulty in adapting to local conditions and constraints and added research
costs.
LITIGATION. Pending or threatened legal proceedings against Philip Morris
cover a wide range of matters including product liability and consumer
protection. Damages claimed in many of the smoking and health cases alleging
personal injury (both individual and class actions), and in health cost recovery
cases brought by governments, unions and similar entities (the most recent suit
was filed by the Justice Department on September 22, 1999) seeking reimbursement
for healthcare expenditures, aggregate many billions of dollars.
On November 23, 1998, Philip Morris entered into a Master Settlement
Agreement with 46 state governments to settle the asserted and unasserted
healthcare cost recovery and certain other claims against them. The Agreement is
subject to final judicial approval in each of the settling states. As part of
the Agreement, Philip Morris and the three other major domestic tobacco
manufacturers have agreed to participate in the establishment of a $5.15 billion
trust fund. The trust is to be funded over 12 years beginning in 1999. PM Inc.
has agreed to pay $300 million into the trust in 1999. Philip Morris charged
approximately $3.1 billion as a pretax expense in 1998 as a result of the
settlement, and as of December 31, 1998, had accrued costs of its obligations
under the settlement and to tobacco growers aggregating $1.4 billion, payable
principally before the end of the year 2000. Philip Morris believes the
agreement will likely materially adversely affect the business, volume, cash
flows and/or operating income and financial position of the company in future
years. The degree of the adverse impact will depend, among other things, on the
rates of decline in United States cigarette sales in the premium and discount
segments, the company's share of the domestic premium and discount cigarette
segments, and the effect of any resulting cost advantage of manufacturers not
subject to the agreement.
Microsoft Corporation is currently engaged in litigation with Sun
Microsystems, Inc., the U.S. Department of Justice and several state Attorneys
General. The complaints against Microsoft include copyright infringement, unfair
competition and anti-trust violations. The claims seek injunctive relief and
monetary damages. The District Court handling the antitrust case recently held
that Microsoft exercised monopoly power in violation of the Sherman Antitrust
Act and various state antitrust laws. The court entered into a final judgment on
June 7, 2000 in which it called for Microsoft to be broken up into two separate
companies, one composed of the company's operating systems and the other
containing its applications software business. The court also called for
significant operating restrictions to be placed on the company until such time
as the separation was completed. Microsoft has stated that it will appeal the
rulings against it after the penalty phase and final decree. It is impossible to
predict what impact the penalties will have on Microsoft or the value of its
stock.
No one can predict the outcome of the litigation pending against this company
or how the current uncertainty concerning regulatory and legislative measures
will ultimately be resolved. No one can predict the impact that these and other
possible developments will have on the price of this stock or any Trust.
THE PORTFOLIO
In seeking the Portfolio's objectives, the Sponsor considered the ability
of the Securities to outpace inflation. While inflation is currently relatively
low, the United States has historically experienced periods of double-digit
inflation. While the prices of securities will fluctuate, over time securities
have outperformed the rate of inflation, and other less risky investments, such
as government bonds and U.S. Treasury bills. Past performance is, however, no
guarantee of future results.
Investors should note that the above criteria were applied to the
Securities for inclusion in the Portfolio prior to the Initial Date of Deposit.
Should a Security no longer meet the criteria used for selection for the
Portfolio, such Security will not as a result thereof be removed from the
portfolio except as provided in the Trust Agreement.
The Dow Jones Industrial Average ("DJIA") was first published in The Wall
Street Journal in 1896. Initially consisting of just 12 stocks, the DJIA
expanded to 20 stocks in 1916 and its present size of 30 stocks on October 1,
1928. The following is the list as it currently appears:
Alcoa, Inc.
American Express Company
AT&T Corporation
Boeing Company
Caterpillar, Inc.
Citigroup, Inc.
Coca-Cola Company
Eastman Kodak Company
E.I. du Pont de Nemours & Company
Exxon Mobil Corporation
General Electric Company
General Motors Corporation
Hewlett-Packard Company
Home Depot Inc.
Honeywell International Inc.
Intel Corporation
International Business Machines Corporation
International Paper Company
J.P. Morgan & Company, Inc.
Johnson & Johnson
McDonald's Corporation
Merck & Company, Inc.
Microsoft Corporation
Minnesota Mining & Manufacturing Company
Philip Morris Companies, Inc.
Procter & Gamble Company
SBC Communications Inc.
United Technologies Corporation
Wal-Mart Stores, Inc.
Walt Disney Company
"Dow JonesSM", "Dow Jones Industrial AverageSM", "The Dow 30SM", "The DowSM",
and "DJIASM" are proprietary to and service marks of Dow Jones & Company, Inc.
and have been licensed for use for certain purposes by the Portfolio. The
Portfolio is not sponsored, endorsed, sold or promoted by Dow Jones and Dow
Jones makes no representation regarding the avisability of investing in any
Portfolio.
The hypothetical average annual total returns for the Dow Jones Industrial
Average for certain years are shown in the table below.
1973 -13.16%
1974 -23.21%
1975 44.48%
1976 22.75%
1977 -12.70%
1978 2.69%
1979 10.52%
1980 21.41%
1981 -3.40%
1982 25.79%
1983 25.65%
1984 1.08%
1985 32.78%
1986 26.92%
1987 6.02%
1988 15.95%
1989 31.71%
1990 -0.58%
1991 23.93%
1992 7.35%
1993 16.74%
1994 4.95%
1995 36.49%
1996 28.58%
1997 24.78%
1998 18.13%
1999 27.01%
12/31/99 thru 11/30/00 -8.14%
The index is an unmanaged statistical composite and does not include payment of
any sales changes or fees an investor would pay to purchase the securities it
represents. If it had, results would have been less favorable. Futhermore, an
investment cannot be made in an index. The historical performance of this index
is shown for illustrative purposes only; it is not meant to forecast, imply or
guarantee the future performance of any particular investment or any actual
Portfolio, which wil vary. Securities in which the Portfolio invests may be
different from those in this illustration or in the index. The performance shown
is not that of any actual Portfolio itself because the Portfolio was not
available during this time period. The investment return and principal value of
the Portfolio will fuctuate with changes in market conditions. Units, when
redeemed, may be worth more or less than their original cost.
SPONSOR INFORMATION
Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the
Portfolio. The Sponsor is an indirect subsidiary of Van Kampen Investments Inc.
Van Kampen Investments Inc. is a wholly owned subsidiary of MSAM Holdings II,
Inc., which in turn is a wholly owned subsidiary of Morgan Stanley Dean Witter &
Co. ("MSDW").
MSDW, together with various of its directly and indirectly owned
subsidiaries, is engaged in a wide range of financial services through three
primary businesses: securities, asset management and credit services. These
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; credit
services; asset management; trading of futures, options, foreign exchange
commodities and swaps (involving foreign exchange, commodities, indices and
interest rates); and real estate advice, financing and investing.
Van Kampen Funds Inc. specializes in the underwriting and distribution of
unit investment trusts and mutual funds with roots in money management dating
back to 1926. The Sponsor is a member of the National Association of Securities
Dealers, Inc. and has its principal offices at 1 Parkview Plaza, P.O. Box 5555,
Oakbrook Terrace, Illinois 60181-5555, (630) 684-6000. As of November 30, 1999,
the total stockholders' equity of Van Kampen Funds Inc. was $141,554,861
(audited). (This paragraph relates only to the Sponsor and not to the Portfolio
or to any other Series thereof. The information is included herein only for the
purpose of informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
As of 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 Portfolio as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE INFORMATION
The Trustee is The Bank of New York, a trust company organized under the
laws of New York. The Bank of New York has its unit investment trust division
offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668. The Bank
of New York is subject to supervision and examination by the Superintendent of
Banks of the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did
not participate in the selection of Securities for the Portfolios. In accordance
with the Trust Agreement, the Trustee shall keep proper books of record and
account of all transactions at its office for the Portfolio. Such records shall
include the name and address of, and the number of Units of the Portfolio held
by, every Unitholder. Such books and records shall be open to inspection by any
Unitholder at all reasonable times during the usual business hours. The Trustee
shall make such annual or other reports as may from time to time be required
under any applicable state or federal statute, rule or regulation. The Trustee
is required to keep a certified copy or duplicate original of the Trust
Agreement on file in its office available for inspection at all reasonable times
during the usual business hours by any Unitholder, together with a current list
of the Securities held in the Portfolio.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
PORTFOLIO TERMINATION
The Portfolio may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of the Portfolio then outstanding or by the
Trustee when the value of the Securities owned by the Portfolio, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of the Portfolio has
exceeded $15,000,000). The Portfolio will be liquidated by the Trustee in the
event that a sufficient number of Units of the Portfolio not yet sold are
tendered for redemption by the Sponsor, so that the net worth of the Portfolio
would be reduced to less than 40% of the value of the Securities at the time
they were deposited in the Portfolio. If the Portfolio is liquidated because of
the redemption of unsold Units by the Sponsor, the Sponsor will refund to each
purchaser of Units the entire sales charge paid by such purchaser. The Trust
Agreement will terminate upon the sale or other disposition of the last Security
held thereunder, but in no event will it continue beyond the Mandatory
Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities will begin to be sold in
connection with the termination of the Portfolio. 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 Portfolio and will also include with such
notice a form to enable Unitholders owning 1,000 or more Units to request an in
kind distribution of the U.S.-traded Securities. To be effective, this request
must be returned to the Trustee at least five business days prior to the
Mandatory Termination Date. On the Mandatory Termination Date (or on the prior
business day if a holiday) the Trustee will deliver each requesting Unitholder's
pro rata number of whole shares of the U.S.-traded Securities in the Portfolio
to the account of the broker-dealer or bank designated by the Unitholder at
Depository Trust Company. The value of the Unitholder's fractional shares of the
Securities will be paid in cash. Unitholders with less than 1,000 Units,
Unitholders in the Portfolio with 1,000 or more Units not requesting an in kind
distribution will receive a cash distribution from the sale of the remaining
Securities within a reasonable time following the Mandatory Termination Date.
Regardless of the distribution involved, the Trustee will deduct from the funds
of the appropriate Portfolio any accrued costs, expenses, advances or
indemnities provided by the Trust Agreement, including estimated compensation of
the Trustee, costs of liquidation and any amounts required as a reserve to
provide for payment of any applicable taxes or other governmental charges. Any
sale of Securities in the Portfolio upon termination may result in a lower
amount than might otherwise be realized if such sale were not required at such
time. The Trustee will then distribute to each Unitholder of the Portfolio his
pro rata share of the balance of the Income and Capital Accounts of the
Portfolio.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
CONTENTS OF REGISTRATION STATEMENTS
This Amendment to the Registration Statement comprises the following
papers and documents:
The facing sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
2.1 Form of Code of Ethics. Reference is made to Exhibit 2.1 to the Registration
Statement on Form S-6 of Van kampen Focus Portfolios, Series 223
(File No. 333-34242) dated July 25, 2000.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Accountants.
SIGNATURES
The Registrant, Van Kampen Focus Portfolios, Series 256 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 256 has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago and State of
Illinois on the 5th day of December, 2000.
Van Kampen Focus Portfolios, Series 256
By Van Kampen Funds Inc.
By Christine K. Putong
---------------------------------------
Assistant Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on December 5,
2000 by the following persons who constitute a majority of the Board of
Directors of Van Kampen Funds Inc.
SIGNATURE TITLE
Richard F. Powers III Chairman and Chief Executive )
Officer )
John H. Zimmermann III President
A. Thomas Smith III Executive Vice President, )
General Counsel and Secretary )
Michael H. Santo Executive Vice President and Chief )
Operations and Technology Officer )
Christine K. Putong
----------------------------
(Attorney-in-fact*)
--------------------------------------------------------------------------------
*An executed copy of each of the related powers of attorney is filed
herewith or was filed with the Securities and Exchange Commission in connection
with the Registration Statement on Form S-6 of Van Kampen Focus Portfolios,
Series 136 (File No. 333-70897) and the same are hereby incorporated herein by
this reference.
