MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 262
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 262 on October 31, 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.
Pages 2-3. The "Summary of Essential Financial Information" and
"Fee Table" sections have been completed.
Pages 4-6. Certain revisions have been made and the "Portfolio" and
the notes thereto have been completed.
Pages 7-9. The descriptions of the portfolio securities have been
completed.
Pages 10-11. The Report of Independent Certified Public Accountants
and Statement of Condition have been completed.
FILE NO. 333-47636
CIK #1123027
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 262
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 October 31, 2000 pursuant to Rule 487.
TD WATERHOUSE
TD WATERHOUSE FINANCIAL INSTITUTIONS TRUST, SERIES 1
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Van Kampen Focus Portfolios, Series 262 includes the unit investment trust
described above (the "Trust"). The Trust seeks to increase the value of your
investment by investing in a diversified portfolio of stocks of financial
institutions. Of course, we cannot guarantee that the Trust will achieve its
objective.
OCTOBER 31, 2000
YOU SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
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The Securities and Exchange Commission has not approved or disapproved of the
Units or passed upon the adequacy or accuracy of this prospectus.
Any contrary representation is a criminal offense.
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
OCTOBER 31, 2000
PUBLIC OFFERING PRICE
Aggregate value of Securities per Unit (1) $ 9.900
Sales charge 0.325
Less deferred sales charge 0.225
Public offering price per Unit (2) $ 10.000
TRUST INFORMATION
Initial number of Units (3) 15,196
Aggregate value of Securities (1) $ 150,432
Estimated initial distribution per Unit (4)(5) $ 0.17
Estimated annual dividends per Unit (5) $ 0.19607
Redemption price per Unit (6) $ 9.675
GENERAL INFORMATION
Initial Date of Deposit October 31, 2000
Mandatory Termination Date October 31, 2002
Record Dates June 10 and December 10
Distribution Dates June 25 and December 25
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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 Trust. 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 Trust, 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 Trust at the end of the initial offering
period (approximately three months). The estimated amount is described on the
next page. The Public Offering Price will also include any accumulated
dividends or cash in the Income or Capital Accounts.
(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
will increase or decrease to the extent of any adjustment.
(4)The initial Record Date is September 10, 2001 and the initial Distribution
Date is September 25, 2001. Thereafter, the record and distribution dates
will occur in June and December of each year.
(5)This estimate is based on the most recently declared dividends. Actual
distributions will vary due to a variety of factors, including changes in
Trust expenses. See "Risk Factors".
(6)The redemption price is reduced by any remaining deferred sales charge. The
redemption price includes the estimated organizational and offering costs.
The redemption price will not include these costs after the initial offering
period. See "Rights of Unitholders--Redemption of Units".
FEE TABLE
TRANSACTION FEES (AS % OF OFFERING PRICE)
Initial sales charge (1).............................. 1.00%
Deferred sales charge (2)............................. 2.25%
----------
Maximum sales charge ................................. 3.25%
==========
ESTIMATED ORGANIZATIONAL COSTS PER UNIT (3)........... $ 0.02584
==========
ESTIMATED ANNUAL EXPENSES PER UNIT
Trustee's fee and operating expenses.................. $ 0.01155
Evaluation fees....................................... $ 0.00250
Supervisory fees...................................... $ 0.00250
----------
Estimated annual expenses per Unit.................... $ 0.01655
==========
ESTIMATED COSTS OVER TIME
One year.............................................. $ 37
Three years........................................... $ 41
Five years............................................ N/A
Ten years............................................. N/A
This fee table is intended to assist you in understanding the costs that you
will bear and to present a comparison of fees. The "Estimated Costs Over Time"
example illustrates the expenses you would pay on a $1,000 investment assuming a
5% annual return and redemption at the end of each period. This example assumes
that you reinvest distributions at the end of each year. Of course, you should
not consider this example as 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
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 $0.225 per Unit. This amount
will exceed the percentage 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
March 10, 2001 through August 9, 2001. Your Trust pays a proportionate amount
of this charge on the 10th day of each month beginning in the accrual period
until paid in full.
(3)You will bear all or a portion of the expenses incurred in organizing and
offering your Trust. The Trustee will deduct the actual amount of these
expenses from your Trust at the end of the initial offering period.
FINANCIAL INSTITUTIONS TRUST
The Trust seeks to provide capital appreciation through an investment in a
portfolio of common stocks issued by financial institutions. Financial
institutions generally include insurance companies, money center banks, regional
banks, savings and loans, consumer and industrial finance companies, securities
brokerage companies, real estate investment companies, investment managers and
leasing companies. The Trust may invest in some or all of these sectors. The
boundaries separating different financial sectors have become blurred. Banks are
not the only institutions offering checking and savings accounts, insurance
companies are not the only companies offering insurance and brokerage firms are
not the only companies offering investment products. As financial institutions
continue to consolidate, the boundaries may become even more faint.
TD Waterhouse believes that trends may suggest that the financial
institutions industry is seeking to consolidate all financial related products
and services. A consolidated financial industry may offer one-stop financial
service supermarkets. The biggest impediment to a consolidated financial
environment had been legislation. However, recent financial reform legislation
has passed that may break down many of the historical barriers that have plagued
the financial industry. As a result, the financial institutions industry may be
less dependent on interest rate spreads for its profitability in the future and
more dependent on fees charged for products and services. This may lead to a
more efficient and more profitable industry.
Certain factors may suggest that bank and thrift stocks offer a potential for
growth over the longer term, such as:
o An increased number of consolidations and mergers
o Low inflationary expectations
o Expansion of lending products
o Consumer confidence
o Growth in consumer spending
o Strong credit quality
o Increase in transaction volume due to improvements in technology
Hypothetical annual total returns for the Standard & Poor's 500 Index and
the Standard & Poor's Financials Index are shown in the following table.
S&P
FINANCIALS
YEAR S&P 500 INDEX
---- -------- --------
1989 31.21% 27.81%
1990 (3.13) (21.63)
1991 30.00 50.84
1992 7.43 23.38
1993 9.92 11.13
1994 1.28 (3.55)
1995 37.11 54.08
1996 22.68 35.23
1997 33.10 48.13
1998 28.58 11.34
1999 20.89 3.97
Thru 9/30/00 (1.39) 23.06
Source: Bloomberg and FactSet. Past performance does not guarantee future
results and the results are not the Trust's total returns nor are they
suggestive of past performance, since the Trust was not in existence during this
period. Indices are unmanaged, statistical composites and do not include payment
of any sales charges or fees an investor would pay to purchase the securities
they represent. If they had, results would have been less favorable. The
historical performance of these indices is shown for illustrative purposes only.
Securities in which the Trust invests are different from those in the indices.
As with any investment, no one can guarantee that the Trust will achieve its
objective. There is no assurance that the trends discussed above will continue,
that expectations will actually occur or that they will occur during the Trust's
life. Your investment could be negatively impacted if these trends do not
continue or if current expectations are not realized. The value of your Units
may fall below the price you paid for the Units. You should read the "Risk
Factors" section before you invest.
<TABLE>
<CAPTION>
PORTFOLIO
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) TO TRUST (2)
------------ -------------------------- ------------- ---------- --------------
FINANCE/RENTAL/LEASING
<S> <C> <C> <C> <C>
92 Freddie Mac $ 60.500 1.12% $ 5,566.00
56 Providian Financial Corporation 99.250 0.24 5,558.00
FINANCIAL CONGLOMERATES
106 Citigroup, Inc. 51.563 1.09 5,465.63
FINANCIAL PUBLISHING/SERVICES
64 SEI Investments Company 87.063 0.18 5,572.00
INVESTMENT BANKS/BROKERS
89 Bear Stearns Companies, Inc. 59.813 1.00 5,323.31
57 Goldman Sachs Group, Inc. 96.500 0.50 5,500.50
86 Lehman Brothers Holdings, Inc. 64.438 0.34 5,541.63
INVESTMENT BROKERS/SERVICES
42 Marsh & McLennan Companies, Inc. 131.625 1.52 5,528.25
INVESTMENT MANAGERS
136 Franklin Resources, Inc. 41.640 0.58 5,663.04
127 T. Rowe Price Associates, Inc. 44.375 1.17 5,635.63
LIFE/HEALTH INSURANCE
68 American General Corporation 81.000 2.17 5,508.00
MAJOR BANKS
121 Bank of America Corporation 47.000 4.77 5,687.00
157 Bank One Corporation 35.875 2.34 5,632.38
176 BB&T Corporation 31.438 2.93 5,533.00
126 Chase Manhattan Corporation 43.750 2.93 5,512.50
92 Comerica, Inc. 60.313 2.65 5,548.75
188 First Union Corporation 29.813 6.44 5,604.75
153 FleetBoston Financial Corporation 36.813 3.59 5,632.31
83 PNC Financial Services Group 66.938 2.87 5,555.81
45 State Street Corporation 124.180 0.55 5,588.10
237 U.S. Bancorp 23.750 3.62 5,628.75
123 Wells Fargo & Company 45.813 2.10 5,634.94
MULTI-LINE INSURANCE
56 American International Group 99.000 0.15 5,544.00
118 Nationwide Financial Services, Inc. 47.875 1.00 5,649.25
PROPERTY/CASUALTY INSURANCE
108 St. Paul Companies, Inc. 51.563 2.09 5,568.75
REGIONAL BANKS
314 Banknorth Group, Inc. 18.125 2.76 5,691.25
SAVINGS BANKS
121 Washington Mutual, Inc. 45.938 2.61 5,558.44
------------ ------------
3,141 $ 150,431.97
============ ============
</TABLE>
See "Notes to Portfolio".
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 October 30,
2000 and have a settlement date of November 2, 2000 (see "The Trust").
(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
before the Initial Date of Deposit. Other information regarding the Securities,
as of the Initial Date of Deposit, is as follows:
PROFIT
COST TO (LOSS) TO
SPONSOR SPONSOR
------------ ------------
$ 150,432 $ --
(3) Current Dividend Yield for each Security is based on the estimated annual
dividends per share and the Security's market value as of the close of trading
on the New York Stock Exchange on the business day prior to the Initial Date of
Deposit. Estimated annual dividends per share are calculated by annualizing the
most recently declared dividends or by adding the most recent interim and final
dividends declared and reflect any foreign withholding taxes.
THE SECURITIES. A brief description of each of the issuers of the Securities
is listed below.
American General Corporation. American General Corporation, a diversified
financial services organization, provides retirement services, life insurance,
and consumer loans. The company offers retail financing programs through a
network of merchants in the United States.
American International Group, Inc. American International Group, Inc.,
through its subsidiaries, provides a variety of insurance and insurance-related
services in the United States and overseas. The company writes property and
casualty and life insurance, as well as provides financial services.
Bank of America Corporation. Bank of America Corporation is the holding
company for Bank of America and NationsBank. The company provides retail banking
services, asset management, financial products, corporate finance, specialized
finance, capital markets, and financial services. Bank of America operates
throughout the United States as well as throughout the world.
Bank One Corporation. Bank One Corporation, a bank holding company, provides
a full range of consumer and commercial banking-related financial services. The
company is also involved in credit card and merchant processing, consumer and
education finance, mortgage banking, and insurance. Bank One operates throughout
the United States.
Banknorth Group, Inc. Banknorth Group, Inc. is a multi-bank holding company
with offices located throughout Maine, New Hampshire, Vermont, Massachusetts,
and Connecticut. The banks offer commercial and consumer banking services and
products, as well as trust and investment advisory services.
BB&T Corporation. BB&T Corporation is a multi-bank holding company. The Bank
has offices in the Carolinas, Virginia, West Virginia, Kentucky, Georgia,
Maryland, and Washington D.C. BB&T also provides insurance products and
services, as well as other non-bank financial services.
Bear Stearns Companies, Inc. Bear Stearns Companies, Inc., through its Bear
Stearns & Co. Inc. subsidiary, offers investment banking and securities trading
and brokerage services. The company's business includes corporate finance,
mergers and acquisitions, institutional equities and fixed income sales and
trading, and private client services.
Chase Manhattan Corporation. Chase Manhattan Corporation is a bank holding
company that conducts domestic and international financial services through
various bank and non-bank subsidiaries. The company provides corporate finance,
wholesale banking, and investment services, as well as emphasizes originations,
underwriting, distribution, risk management products, and private banking.
Citigroup, Inc. Citigroup, Inc. is a diversified financial services holding
company that provides a broad range of financial services to consumer and
corporate customers around the world. The company's services include investment
banking, retail brokerage, corporate banking, and cash management products and
services.
Comerica, Inc. Comerica, Inc. is the holding company for business,
individual, and investment banks. The company operates banking offices in
Michigan, Texas, California, and Florida. Comerica's operations include middle
market lending, corporate banking, trust services, consumer lending, annuities,
mutual funds, life insurance, investment banking, and advisory services.
Freddie Mac. Freddie Mac is a stockholder-owned corporation established by
the United States Congress to create a continuous flow of funds to mortgage
lenders. The corporation supplies lenders with the money to make mortgages and
packages the mortgages into marketable securities. The system is designed to
create a stable mortgage credit system and reduce the rates paid by homebuyers.
First Union Corporation. First Union Corporation is a multi-bank holding
company operating in the eastern United States. The company provides a wide
range of commercial and retail banking and trust services. First Union also
provides other financial services, including mortgage banking, credit card,
investment banking, investment advisory, home equity lending, leasing,
insurance, and securities brokerage.
FleetBoston Financial Corporation. FleetBoston Financial Corporation
provides commercial and investment banking services in the United States and in
other countries around the world. The company operates a retail banking
franchise in the Northeast, as well as Internet banking. FleetBoston also
provides investment management services for individuals and institutional
clients.
Franklin Resources, Inc. Franklin Resources, Inc., through its subsidiaries,
provides investment management, marketing, distribution, transfer agency, and
administrative services to open-end and closed-end investment companies. The
company also provides various other financial services, including retail
banking, advisory services, dealer auto loans, and credit cards.
Goldman Sachs Group, Inc. Goldman Sachs Group, Inc. is a global investment
banking and securities firm specializing in investment banking, trading and
principal investments, and asset management and securities services. The company
provides services to corporations, financial institutions, governments, and
high-net worth individuals.
Lehman Brothers Holdings, Inc. Lehman Brothers Holdings, Inc. is an
investment banking firm. The company's activities include capital raising for
clients through securities underwriting and direct placements, corporate
finance, merchant banking, securities sales and trading and research services.
Lehman Brothers operates worldwide.
Marsh & McLennan Companies, Inc. Marsh & McLennan Companies, Inc. is a
global professional services firm. It is the parent company of Marsh, a risk and
insurance services firm, Putnam Investments, an investment management company,
and Mercer Consulting Group, a global provider of consulting services. The
company provides analysis, advice, and transactional capabilities to clients
worldwide.
Nationwide Financial Services, Inc. Nationwide Financial Services, Inc. is
the holding company for the long-term savings operations of Nationwide Insurance
Enterprise. Nationwide Insurance is a diversified financial services
organization led by Nationwide Mutual, which owns 81.5% of Nationwide Financial.
Through its primary subsidiary, the company provides retirement and long-term
savings insurance products in the US.
PNC Financial Services Group. PNC Financial Services Group is a diversified
financial services organization. The company provides regional banking,
wholesale banking and asset management services nationally and in the company's
primary regional markets in Pennsylvania, New Jersey, Delaware, Ohio and
Kentucky.
Providian Financial Corporation. Providian Financial Corporation is a
diversified consumer lender. The company offers a variety of loan products,
including credit cards, revolving lines of credit, home loans, secured credit
cards, and fee-based products. Providian operates in the United States.
SEI Investments Company. SEI Investments Company provides global investment
solutions and business solutions. The company integrates technology, research,
information services, financial products, and asset management advice to serve
banks, mutual fund and pension plan sponsors, insurance companies, money
managers, and individual investors.
State Street Corporation. State Street Corporation services institutional
investors and manages financial assets worldwide. The company's products and
services include custody, accounting, daily pricing, international exchange
services, cash management, financial asset management, and lending activities.
St. Paul Companies, Inc. St. Paul Companies, Inc., through its subsidiaries,
provides property-liability insurance, reinsurance, and life insurance products
and services. The company also has a presence in the asset management industry
through its majority ownership of The John Nuveen Company. St. Paul has
operations worldwide.
T. Rowe Price Associates, Inc. T. Rowe Price Associates, Inc. and its
subsidiaries serve as investment advisor to the T. Rowe Price Mutual Funds,
other sponsored investment products, and private accounts of other institutional
and individual investors. The company also provides related administrative
services, including mutual fund transfer agent, accounting and shareholder
services, discount brokerage, and trust services.
U.S. Bancorp. U.S. Bancorp is a bank holding company that operates offices in
the Midwest and West. The company provides banking, trust, investment, and
payment systems products and services to consumers, businesses, and
institutions. U.S. Bancorp also offers full-service brokerage services through
U.S. Bancorp Piper Jaffray.
Washington Mutual, Inc. Washington Mutual, Inc. is a financial services
company that provides a diversified line of products and services to consumers
and small to mid-sized businesses. The company offers consumer banking, mortgage
lending, commercial banking, and consumer finance throughout the United States.
Wells Fargo & Company. Wells Fargo & Company is a diversified financial
services company providing banking, insurance, investments, mortgage, and
consumer finance. The company operates through physical stores, the Internet and
other distribution channels across North America and elsewhere internationally.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of Van
Kampen Focus Portfolios, Series 262:
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen Focus Portfolios, Series 262 as of October 31, 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 262 as of October 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.
GRANT THORNTON LLP
Chicago, Illinois
October 31, 2000
STATEMENT OF CONDITION
AS OF OCTOBER 31, 2000
INVESTMENT IN SECURITIES
Contracts to purchase Securities (1) $ 150,432
-----------
Total $ 150,432
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Organizational costs (2) $ 393
Deferred sales charge liability (3) 3,419
Interest of Unitholders--
Cost to investors (4) 151,960
Less: Gross underwriting commission
and organizational costs (2)(4)(5) 5,340
-----------
Net interest to Unitholders (4) 146,620
-----------
Total $ 150,432
===========
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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 an irrevocable letter of credit
which has been deposited with the Trustee.
(2)A portion of the Public Offering Price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing the Trust. The
amount of these costs are set forth in the "Fee Table". A distribution will
be made as of the close of the initial offering period 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 Trust on the bases
set forth under "Public Offering".
(4)The aggregate public offering price and the aggregate sales charge are
computed on the bases set forth under "Public Offering--Offering Price".
(5)Assumes the maximum sales charge.
THE TRUST
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The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the date of
this Prospectus (the "Initial Date of Deposit"), among Van Kampen Funds Inc., as
Sponsor, Van Kampen Investment Advisory Corp. as Supervisor, The Bank of New
York, as Trustee, and American Portfolio Evaluation Services, a division of Van
Kampen Investment Advisory Corp., as Evaluator.
The Trust offers the opportunity to purchase Units representing proportionate
interests in a portfolio of stocks. The Trust 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 Trust. Unless otherwise terminated as
provided in the Trust Agreement, the Trust will terminate on the Mandatory
Termination Date and any remaining Securities will be liquidated or distributed
by the Trustee within a reasonable time. As used in this prospectus the term
"Securities" means the securities (including contracts to purchase these
securities) listed in "Portfolio" and any additional securities deposited into
the Trust.
Additional Units may be issued at any time by depositing in the Trust (i)
additional Securities, (ii) contracts to purchase Securities together with cash
or irrevocable letters of credit or (iii) cash (or a letter of credit or the
equivalent) with instructions to purchase additional Securities. As additional
Units are issued by the Trust, the aggregate value of the Securities will be
increased and the fractional undivided interest represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits into the Trust
following the Initial Date of Deposit provided that the additional deposits will
be in amounts which will maintain, as nearly as practicable, an equal dollar
amount of each Security in the Trust's portfolio for the first 90 days of the
Trust's life. Thereafter, additional deposits will be in amounts which will
maintain, as nearly as practicable, the same proportionate relationship among
the number of shares of each Security in the Trust's portfolio that existed
immediately prior to the subsequent deposit. Investors may experience a dilution
of their investments and a reduction in their anticipated income because of
fluctuations in the prices of the Securities between the time of the deposit and
the purchase of the Securities and because the Trust will pay the associated
brokerage or acquisition fees.
Each Unit initially offered represents an undivided interest in the Trust. To
the extent that any Units are redeemed by the Trustee or additional Units are
issued as a result of additional Securities being deposited by the Sponsor, the
fractional undivided interest in the Trust represented by each unredeemed Unit
will increase or decrease accordingly, although the actual interest in the Trust
will remain unchanged. Units will remain outstanding until redeemed upon tender
to the Trustee by Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
The Trust consists of (a) the Securities (including contracts for the
purchase thereof) listed under the "Portfolio" as may continue to be held from
time to time in the Trust, (b) any additional Securities acquired and held by
the Trust pursuant to the provisions of the Trust Agreement and (c) any cash
held in the Income and Capital Accounts. Neither the Sponsor nor the Trustee
shall be liable in any way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
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The objective of the Trust is to increase the value of your investment by
investing in a diversified portfolio of stocks selected by TD Waterhouse (the
"Underwriter"). We cannot guarantee that the Trust will achieve its objective.
In selecting the Securities, the Underwriter considered the factors described
under "Financial Institutions Trust".
The Underwriter may use the list of Securities in its independent capacity as
a broker-dealer and investment adviser to various individuals and entities. The
Underwriter may also distribute this information to various individuals and
entities. The Underwriter may recommend or effect transactions in the
Securities. This may have an adverse effect on the prices of the Securities.
This also may have an impact on the price the Trust pays for the Securities and
the price received upon Unit redemptions or Trust termination.
The Underwriter acts as agent or principal in connection with the purchase
and sale of equity securities, including the Securities, and may act as a market
maker in the Securities. The Underwriter may also issue reports and make
recommendations on the Securities. The Underwriter's research department may
receive compensation based on commissions generated by research and/or sales of
Units.
You should note that the Underwriter applied the selection criteria to the
Securities for inclusion in the Trust prior to the date of the Trust's
formation. After the initial selection, the Securities may no longer meet the
selection criteria. Should a Security no longer meet the selection criteria, we
will generally not remove the Security from the portfolio.
RISK FACTORS
--------------------------------------------------------------------------------
PRICE VOLATILITY. The Trust invests in common stocks. The value of Units will
fluctuate with the value of these stocks and may be more or less than the price
you originally paid for your Units. The market value of common stocks sometimes
moves up or down rapidly and unpredictably. Because the Trust is unmanaged, the
Trustee will not sell stocks in response to market fluctuations as is common in
managed investments. As with any investment, we cannot guarantee that the
performance of the Trust will be positive over any period of time.
DIVIDENDS. Common stocks represent ownership interests in the issuers and are
not obligations of the issuers. Accordingly, common stockholders have a right to
receive dividends only after the company has provided for payment of its
creditors, bondholders and preferred stockholders. Common stocks do not assure
dividend payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
FINANCIAL SERVICES ISSUERS. The Trust invests in banks and thrifts, insurance
companies and investment firms. Any negative impact on the financial services
industry will have a greater impact on the value of Units than on a portfolio
diversified over several industries. You should understand the risks of these
companies before you invest. Banks, thrifts and their holding companies are
especially subject to the adverse effects of economic recession; volatile
interest rates; portfolio concentrations in geographic markets and in commercial
and residential real estate loans; and competition from new entrants in their
fields of business. In addition, banks, thrifts and their holding companies are
extensively regulated at both the federal and state level and may be adversely
affected by increased regulations.
Banks and thrifts will face increased competition from nontraditional lending
sources as regulatory changes, such as the recently enacted financial services
overhaul legislation, permit new entrants to offer various financial products.
Technological advances such as the Internet allow these nontraditional lending
sources to cut overhead and permit the more efficient use of customer data.
Banks are already facing tremendous pressure from mutual funds, brokerage firms
and other financial service providers in the competition to furnish services
that were traditionally offered by banks.
Brokerage firms, broker/dealers, investment banks, finance companies and
mutual fund companies compete with banks and thrifts to provide traditional
financial service products, in addition to their traditional services, such as
brokerage and investment advice. In addition, all financial service companies
face shrinking profit margins due to new competitors, the cost of new technology
and the pressure to compete globally.
Companies involved in the insurance industry underwrite, sell or distribute
property and casualty, life or health insurance. Many factors affect insurance
company profits, including interest rate movements, the imposition of premium
rate caps, competition and pressure to compete globally. Property and casualty
insurance profits may also be affected by weather catastrophes and other
disasters. Life and health insurance profits may be affected by mortality rates.
Already extensively regulated, insurance companies' profits may also be
adversely affected by increased government regulations or tax law changes.
NO FDIC GUARANTEE. An investment in your Trust is not a deposit of any bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.
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 charge
in detail. If any deferred sales charge payment date is not a business day, we
will charge the payment to the Trust on the next business day. If you purchase
Units after the initial deferred sales charge payment, you will only pay the
remaining portion of the deferred sales charge. On October 31, 2001, the
secondary market sales charge will reduce to 2.75% and will not include deferred
payments. A portion of the Public Offering Price includes an amount of
Securities to pay for all or a portion of the organizational costs incurred in
establishing your Trust. These costs include the cost of preparing documents
relating to the Trust (such as the prospectus, trust agreement and closing
documents), federal and state registration fees, the initial fees and expenses
of the Trustee and legal and audit expenses. The initial offering period sales
charge is reduced as follows:
AGGREGATE
DOLLAR AMOUNT
OF UNITS PURCHASED* SALES CHARGE
--------------------- ----------------
Up to $49,999 3.25%
$50,000 - $99,999 3.00
$100,000 - $249,999 2.75
$250,000 - $499,999 2.50
$500,000 - $999,999 2.25
$1,000,000 or more 1.75
---------------
*The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied on
whichever basis is more favorable to the investor.
Any sales charge reduction is borne by the selling broker, dealer or
agent.The reduced sales charge structure will also apply on all purchases by the
same person from any one dealer of units of Van Kampen-sponsored unit investment
trusts which are being offered in the initial offering period (a) on any one day
(the "Initial Purchase Date") or (b) on any day subsequent to the Initial
Purchase Date if the units purchased are of a unit investment trust purchased on
the Initial Purchase Date. In the event units of more than one trust are
purchased on the Initial Purchase Date, the aggregate dollar amount of such
purchases will be used to determine whether purchasers are eligible for a
reduced sales charge. Such aggregate dollar amount will be divided by the public
offering price per unit of each respective trust purchased to determine the
total number of units which such amount could have purchased of each individual
trust. Purchasers must then consult the applicable trust's prospectus to
determine whether the total number of units which could have been purchased of a
specific trust would have qualified for a reduced sales charge and the amount of
such reduction. To determine the applicable sales charge reduction it is
necessary to accumulate all purchases made on the Initial Purchase Date and all
purchases made in accordance with (b) above. Units purchased in the name of the
spouse of a purchaser or in the name of a child of such purchaser ("immediate
family members") will be deemed to be additional purchases by the purchaser for
the purposes of calculating the applicable sales charge. The reduced sales
charges will also be applicable to a trustee or other fiduciary purchasing
securities for one or more trust estate or fiduciary accounts. If you purchase
Units on more than one day to achieve the discounts described in this paragraph,
the discount allowed on any single day will apply only to Units purchased on
that day (a retroactive discount is not given on all prior purchases).
During the initial offering period of the Trust offered in this prospectus,
unitholders of any other Van Kampen-sponsored unit investment trusts may utilize
their redemption or termination proceeds to purchase Units of the Trust offered
in this prospectus at the Public Offering Price per Unit less 1%.
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 spouses or children under 21 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.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, and trustees, custodians or fiduciaries for the
benefit of such persons) of Van Kampen Funds Inc. and its affiliates, 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 Trust 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 Trust, 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 (or $1,000) but may vary by selling firm.
However, in connection with fully disclosed transactions with the Sponsor, the
minimum purchase requirement will be that number of Units set forth in the
contract between the Sponsor and the related broker or agent.
OFFERING PRICE. The Public Offering Price of Units will vary from the amounts
stated under "Summary of Essential Financial Information" in accordance with
fluctuations in the prices of the underlying Securities in the Trust. The
initial price of the Securities was determined by Interactive Data Corporation,
a firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities. The Evaluator will generally determine the value of the
Securities as of the Evaluation Time on each business day and will adjust the
Public Offering Price of Units accordingly. This Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each business
day. The Evaluation Time is the close of the New York Stock Exchange on each
Trust business day. Orders received by the Trustee or Sponsor for purchases,
sales or redemptions after that time, or on a day which is not a business day,
will be held until the next determination of price. The term "business day", as
used herein and under of Unitholders--Redemption of Units", excludes Saturdays,
Sundays and holidays observed by the New York Stock Exchange.
The 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 in U.S. dollars as of the Evaluation Time.
The value of the Securities for purposes of secondary market transactions and
redemptions is described under "Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather the
entire pool of Securities, taken as a whole, which are represented by the Units.
UNIT DISTRIBUTION. Units will be distributed to the public by the Sponsor,
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.
AGGREGATE CONCESSION
DOLLAR AMOUNT OR AGENCY
OF UNITS DISTRIBUTED* COMMISSION
--------------------- ----------------
Up to $49,999 2.45%
$50,000 - $99,999 2.20
$100,000 - $249,999 1.95
$250,000 - $499,999 1.70
$500,000 - $999,999 1.45
$1,000,000 or more 0.95
---------------
*The breakpoint concessions or agency commissions are also applied on a Unit
basis using a breakpoint equivalent of $10 per Unit and will be applied on
whichever basis is more favorable to the distributor.
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 Trust offered in this prosectus,
the total concession or agency commission will amount to 1.45% per Unit. For all
secondary market transactions the total concession or agency commission will
amount to 65% of the applicable sales charge. Notwithstanding anything to the
contrary herein, in no case shall the total of any concessions, agency
commissions and any additional compensation allowed or paid to any broker,
dealer or other distributor of Units with respect to any individual transaction
exceed the total sales charge applicable to such transaction. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units and to change the amount of the concession or agency commission to dealers
and others from time to time.
Broker-dealers of the Trust, 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
Trust. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of the Trust. These programs will not change the price Unitholders
pay for their Units or the amount that the Trust will receive from the Units
sold.
SPONSOR AND UNDERWRITER COMPENSATION. The Underwriter will receive a gross
sales commission equal to the total sales charge applicable to each transaction.
The Sponsor will receive from the Underwriter the difference between the gross
sales commission and an amount equal to the 2.45% of the Public Offering Price
per Unit. In addition, the Underwriter will receive additional compensation
during the initial offering period of 0.10% of the Public Offering Price per
Unit if it distributes at least $10 million and 0.15% of the Public Offering
Price per Unit if it distributes at least $20 million. Any sales charge discount
provided to investors will be borne by the selling dealer or agent. In addition,
the Sponsor or Underwriter will realize a profit or loss as a result of the
difference between the price paid for the Securities by the Sponsor or
Underwriter and the cost of the Securities to the Trust on the Initial Date of
Deposit as well as on subsequent deposits. See "Notes to Portfolio". The Sponsor
has not participated as sole underwriter or as manager or as a member of the
underwriting syndicates or as an agent in a private placement for any of the
Securities. The Sponsor or Underwriter 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 or
Underwriter. In maintaining a secondary market, the Underwriter will realize
profits or losses in the amount of any difference between the price at which
Units are purchased and the price at which Units are resold (which price
includes the applicable sales charge) or from a redemption of repurchased Units
at a price above or below the purchase price. Cash, if any, made available to
the Sponsor or Underwriter prior to the date of settlement for the purchase of
Units may be used in the Sponsor's or Underwriter'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 affilliate 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. An affiliate may act as a
specialist or market marker for these Securities. An officer, director or
employee of the Sponsor or an affiliate may be an officer or director for
issuers of the Securities.
Purchases and sales of Securities by your Trust may impact the value of the
Securities. This may especially be the case during the initial offering of
Units, upon Trust termination and in the course of satisfying large Unit
redemptions. Any publication of a list of Securities, or a list of anticipated
Securities, to be included in a Trust may also cause increased buying activity
in certain Securities. Once this information becomes public, investors may
purchase individual Securities appearing in such a publication and may do so
during or prior to the initial offering of Units. It is possible that these
investors could include investment advisory and brokerage firms of the Sponsor
or its affiliates or firms that are distributing Units. This activity may cause
your Trust to purchase stocks at a higher price than those buyers who effect
purchases prior to purchases by your Trust.
MARKET FOR UNITS. Although it is not obligated to do so, the Underwriter
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 Underwriter may discontinue purchases of
Units or discontinue purchases at this price at any time. In the event that a
secondary market is not maintained, a Unitholder will be able to dispose of
Units by tendering them to the Trustee for redemption at the Redemption Price.
See "Rights of Unitholders--Redemption of Units". Unitholders should contact
their broker to determine the best price for Units in the secondary market.
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 Underwriter of any Units tendered for
redemption. If the Underwriter's bid in the secondary market equals or exceeds
the Redemption Price per Unit, it may purchase the Units not later than the day
on which Units would have been redeemed by the Trustee. The Underwriter may sell
repurchased Units at the secondary market Public Offering Price per Unit.
RETIREMENT ACCOUNTS
--------------------------------------------------------------------------------
Units are available for purchase in connection with certain types of
tax-sheltered retirement plans, including Individual Retirement Accounts for 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 purchase of Units may be limited by the plans'
provisions and does not itself establish such plans. The minimun investment for
these accounts is 50 Units or $500.
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 pay the portion of the sales
charge that is retained by your Trust'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 0.80
------
Total 0.80%
======
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 Trust will generally be distributed to Unitholders on the
Distribution Dates to Unitholders of record on the preceding Record Dates. These
dates appear under "Summary of Essential Financial Information". A person
becomes a Unitholder of record on the date of settlement (generally three
business days after Units are ordered). Unitholders may elect to receive
distributions in cash or to have distributions reinvested into additional Units.
You may also reinvest distributions in certain Van Kampen mutual funds. See
"Rights of Unitholders--Reinvestment Option".
Dividends and interest received by the Trust are credited to the Income
Account of the Trust. Other receipts (e.g., capital gains, proceeds from the
sale of Securities, etc.) are credited to the Capital Account. Proceeds received
on the sale of any Securities, to the extent not used to meet redemptions of
Units or 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
estimated annual income to be received by the Trust and any available amounts in
the Capital Account as of the related Record Date.
REINVESTMENT OPTION. Unitholders may have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option (to the
extent Units may be lawfully offered for sale in the state in which the
Unitholder resides) through two options. Brokers and dealers can use the
Dividend Reinvestment Service through Depository Trust Company or purchase the
Automatic Reinvestment Option CUSIP. Unitholders will be subject to any
remaining deferred sales charge payments due on Units. To participate in this
reinvestment option, a Unitholder must file with the Trustee a written notice of
election, together with any certificate representing Units and other
documentation that the Trustee may then require, at least five days prior to the
related Record Date. A Unitholder's election will apply to all Units owned by
the Unitholder and will remain in effect until changed by the Unitholder. If
Units are unavailable for reinvestment, distributions will be paid in cash.
Purchases of additional Units made pursuant to the reinvestment plan will be
made at the net asset value for Units as of the Evaluation Time on the
Distribution Date.
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 Trust. The prospectus relating to each Reinvestment
Fund describes its investment policies and how to begin reinvestment. A
Unitholder may obtain a prospectus for the Reinvestment Funds from the Sponsor.
Purchases of shares of a Reinvestment Fund will be made at a net asset value
computed on the Distribution Date. Unitholders with an existing Guaranteed
Reinvestment Option account (whereby a sales charge is imposed on distribution
reinvestments) may transfer their existing account into a new account which
allows purchases of Reinvestment Fund shares at net asset value.
A participant may elect to terminate his or her reinvestment plan and receive
future distributions in cash by notifying the Trustee in writing no later than
five days before a distribution date. The Sponsor, each Reinvestment Fund, and
its investment adviser shall have the right to suspend or terminate the
reinvestment plan at any time.
REDEMPTION OF UNITS. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286. Certificates must be tendered to the
Trustee, duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed (or by providing satisfactory indemnity in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. On the seventh day following the tender, the
Unitholder will be entitled to receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received by the Trustee after the Evaluation
Time or on a day which is not a Trust business day, the date of tender is deemed
to be the next business day.
Unitholders tendering 1,000 or more Units (or $10,000) of the Trust for
redemption may request an in kind distribution of equity 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 Trust's
termination. An in kind distribution will be made by the Trustee through the
distribution of each of the equity 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 of whole shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in-kind or sold, the size of the Trust will be, and
the diversity of the Trust may be, reduced. Sales may be required at a time when
Securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. The price received upon redemption may be more or less
than the amount paid by the Unitholder depending on the value of the Securities
at the time of redemption.
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in the Trust determined on the
basis of (i) the cash on hand in the Trust, (ii) the value of the Securities in
the Trust and (iii) dividends receivable on the Securities in the Trust trading
ex-dividend as of the date of computation, less (a) amounts representing taxes
or other governmental charges payable out of the Trust and (b) the accrued
expenses and sales charges of the Trust. During the initial offering period, the
redemption price and the secondary market repurchase price will also include
estimated organizational costs. For these purposes, the Evaluator may determine
the value of the Securities in the following manner: If the Securities are
listed on a national or foreign securities exchange or the Nasdaq Stock Market,
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 in U.S. dollars as
of the Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the SEC determines that
trading on that Exchange is restricted or an emergency exists, as a result of
which disposal or evaluation of the Securities is not reasonably practicable, or
for other periods as the SEC may permit.
CERTIFICATES. Ownership of Units is evidenced in book entry form unless a
Unitholder makes a written request to the Trustee that ownership be in
certificate form. Units are transferable by making a written request to the
Trustee and, in the case of Units in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not limited
to, trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Fractional Units 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, interest
and other amounts received by the Trust for each distribution. Within a
reasonable time after the end of each year, each person who was a Unitholder
during that year will receive a statement describing dividends, interest and
capital received, actual Trust distributions, Trust expenses, a list of the
Securities and other Trust information. Unitholders may obtain the Evaluator's
evaluations of the Securities upon request.
TRUST ADMINISTRATION
--------------------------------------------------------------------------------
PORTFOLIO ADMINISTRATION. The Trust 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 Trust based on advice from the Supervisor.
These situations may include events such as the issuer having defaulted on
payment of any of its outstanding obligations or the price of a Security has
declined to such an extent or other credit factors exist so that in the opinion
of the Sponsor retention of the Security would be detrimental to the Trust. If a
public tender offer has been made for a Security or a merger or acquisition has
been announced affecting a Security, the Trustee may either sell the Security or
accept a tender offer for cash if the Supervisor determines that the sale or
tender is in the best interest of Unitholders. The Trustee will distribute any
cash proceeds to Unitholders. In addition, the Trustee may sell Securities to
redeem Units or pay Trust expenses or deferred sales charges. If securities or
property are acquired by the Trust, the Sponsor may direct the Trustee to sell
the securities or property and distribute the proceeds to Unitholders or to
accept the securities or property for deposit in the Trust. Should any contract
for the purchase of any of the Securities fail, the Sponsor will (unless
substantially all of the moneys held in the Trust to cover the purchase are
reinvested in substitute Securities in accordance with the Trust Agreement)
refund the cash and sales charge attributable to the failed contract to all
Unitholders on or before the next distribution date.
When your Trust sells Securities, the composition and diversity of the
Securities in the Trust may be altered. In order to obtain the best price for
the Trust, it may be necessary for the Supervisor to specify minimum amounts
(generally 100 shares) in which blocks of Securities are to be sold. In
effecting purchases and sales of the Trust's portfolio securities, the Sponsor
may direct that orders be placed with and brokerage commissions be paid to
brokers, including brokers which may be affiliated with the Trust, the Sponsor
or dealers participating in the offering of Units. In addition, in selecting
among firms to handle a particular transaction, the Sponsor may take into
account whether the firm has sold or is selling units of unit investment trusts
which it sponsors.
AMENDMENT OF THE TRUST AGREEMENT. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
TERMINATION. The Trust will terminate on the Mandatory Termination Date or
upon the sale or other disposition of the last Security held in the Trust. The
Trust may be terminated at any time with consent of Unitholders representing
two-thirds of the outstanding Units or by the Trustee when the value of the
Trust is less than $500,000 ($3,000,000 if the value of the Trust has exceeded
$15,000,000) (the "Minimum Termination Value"). Unitholders will be notified of
any termination. The Trustee may begin to sell Securities in connection with a
Trust termination during a period beginning nine business days before, and no
later than, the Mandatory Termination Date. Approximately thirty days before
this date, the Trustee will notify Unitholders of the termination. Unitholders
will receive a final cash distribution within a reasonable time after the
Mandatory Termination Date. All distributions will be net of Trust expenses and
costs. Unitholders will receive a final distribution statement following
termination. The Information Supplement contains further information regarding
termination of the Trust. See "Additional Information".
LIMITATIONS ON LIABILITIES. The Sponsor, Evaluator, Supervisor and Trustee
are under no liability for taking any action or for refraining from taking any
action in good faith pursuant to the Trust Agreement, or for errors in judgment,
but shall be liable only for their own willful misfeasance, bad faith or gross
negligence (negligence in the case of the Trustee) in the performance of their
duties or by reason of their reckless disregard of their obligations and duties
hereunder. The Trustee is not be liable for depreciation or loss incurred by
reason of the sale by the Trustee of any of the Securities. In the event of the
failure of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and is not be liable for any action taken by it in good faith under
the Trust Agreement. The Trustee is not liable for any taxes or other
governmental charges imposed on the Securities, on it as Trustee under the Trust
Agreement or on the Trust which the Trustee may be required to pay under any
present or future law of the United States of America or of any other taxing
authority having jurisdiction. In addition, the Trust Agreement contains other
customary provisions limiting the liability of the Trustee. The Trustee, Sponsor
and Supervisor may rely on any evaluation furnished by the Evaluator and have no
responsibility for the accuracy thereof. Determinations by the Evaluator shall
be made in good faith upon the basis of the best information available to it.
SPONSOR. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor
of the Trust. The Sponsor is an indirect subsidiary of Morgan Stanley Dean
Witter & Co. Van Kampen Funds Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds with roots in money
management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has its principal 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 Trust have
adopted a code of ethics requiring Van Kampen's employees who have access to
information on Trust 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 Trust. The
Information Supplement contains additional information about the Sponsor.
If the Sponsor fails to perform any of its duties under the Trust Agreement
or becomes incapable of acting or declares bankruptcy or its affairs are taken
over by public authorities, then the Trustee may (i) appoint a successor Sponsor
at rates of compensation deemed by the Trustee to be reasonable and not
exceeding amounts prescribed by the Securities and Exchange Commission, (ii)
terminate the Trust Agreement and liquidate the Trust as provided therein or
(iii) continue to act as Trustee without terminating the Trust Agreement.
TRUSTEE. 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 and Underwriter may from time to time in
advertising and sales materials compare the current returns on the Trust and
returns over specified time periods on other similar trusts (which may show
performance net of expenses and charges which the Trust would have charged) with
returns on other investments such as the common stocks comprising the Dow Jones
Industrial Average, the S&P 500, other investment indices, corporate or U.S.
government bonds, bank CDs, money market accounts or money market funds, or with
performance data from Lipper Analytical Services, Inc., Morningstar
Publications, Inc. or various publications, each of which has characteristics
that may differ from those of the Trust. Information on percentage changes in
the dollar value of Units may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective Unitholders. Total return figures may not be averaged and may not
reflect deduction of the sales charge, which would decrease return. No provision
is made for any income taxes payable. Past performance may not be indicative of
future results. The Trust portfolio is not managed and Unit price and return
fluctuate with the value of the securities 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 Trust's relative
performance for any future period.
TAXATION
--------------------------------------------------------------------------------
GENERAL. The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as capital assets
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust.
For purposes of the following discussion and opinions, it is assumed that
each Security is equity for federal income tax purposes. In the opinion of
Chapman and Cutler, special counsel for the Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Security when such income is considered to be received by the
Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his pro rata portion of each Security when such dividends are considered to
be received by the Trust regardless of whether such dividends are used to pay a
portion of any deferred sales charge imposed. Unitholders will be taxed in this
manner regardless of whether distributions from the Trust are actually received
by the Unitholder or are automatically reinvested (see "Rights of
Unitholders--Reinvestment Option").
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent an
in kind distribution of stock is received by such Unitholder from the Trust as
described below). The price a Unitholder pays for his Units, generally including
sales charges, is allocated among his pro rata portion of each Security held by
the Trust (in proportion to the fair market values thereof on the valuation date
closest to the date the Unitholder purchases his Units) in order to determine
his initial tax basis for his pro rata portion of each Security held by the
Trust. Unitholders should consult their own tax advisers with regard to the
calculation of basis. For federal income tax purposes, a Unitholder's pro rata
portion of the dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to a Security held by the Trust is taxable as ordinary
income to the extent of such corporation's current and accumulated "earnings and
profits". A Unitholder's pro rata portion of dividends paid on such Security
which exceed such current and accumulated earnings and profits will first reduce
a Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Security shall generally be treated as
capital gain. In general, the holding period for such capital gain will be
determined by the period of time a Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution).
DEFERRED SALES CHARGE. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trust is deferred. The income (or proceeds from redemption) a
Unitholder must take into account for federal income tax purposes is not reduced
by amounts deducted to pay the deferred sales charge. Unitholders should consult
their own tax advisers as to the income tax consequences of any deferred sales
charge imposed.
DIVIDENDS RECEIVED DEDUCTION. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. Unitholders should consult with their
tax advisers with respect to the limitations on and possible modifications to
the dividends received deduction.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
LIMITATIONS ON DEDUCTIBILITY OF TRUST EXPENSES BY UNITHOLDERS. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. As a result of the Tax Reform Act of 1986, certain miscellaneous
itemized deductions, such as investment expenses, tax return preparation fees
and employee business expenses will be deductible by an individual only to the
extent they exceed 2% of such individual's adjusted gross income. Unitholders
may be required to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation.
RECOGNITION OF TAXABLE GAIN OR LOSS UPON
DISPOSITION OF SECURITIES BY A TRUST OR DISPOSITION OF UNITS. As discussed
above, a Unitholder may recognize taxable gain (or loss) when a Security is
disposed of by a Trust or if the Unitholder disposes of a Unit (although losses
incurred by Rollover Unitholders may be subject to disallowance, as discussed
above). The Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Tax Act") provides that for taxpayers other than corporations, net capital
gain (which is defined as net long-term capital gain over net short-term capital
loss for the taxable year) realized from property (with certain exclusions) is
subject to a maximum marginal stated tax rate of 20% (10% in the case of certain
taxpayers in the lowest tax bracket). Capital gain or loss is long-term if the
holding period for the asset is more than one year, and is short-term if the
holding period for the asset is one year or less. The date on which a Unit is
acquired (i.e., the "trade date") is excluded for purposes of determining the
holding period of the Unit. Capital gains realized from assets held for one year
or less are taxed at the same rates as ordinary income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust involved including his
pro rata portion of all Securities represented by a Unit. The Taxpayer Relief
Act of 1997 (the "1997 Tax Act") includes provisions that treat certain
transactions designed to reduce or eliminate risk of loss and opportunities for
gain (e.g., short sales, offsetting notional principal contracts, futures or
forward contracts, or similar transactions) as constructive sales for purposes
of recognition of gain (but not loss) and for purposes of determining the
holding period. Unitholders should consult their own tax advisers with regard to
any such constructive sales rules.
SPECIAL TAX CONSEQUENCES OF IN KIND DISTRIBUTIONS UPON REDEMPTION OF UNITS OR
TERMINATION OF THE TRUST. As discussed in "Rights of Unitholders--Redemption of
Units," under certain circumstances a Unitholder tendering Units for redemption
may request an in kind distribution of certain Securities in the Trust. A
Unitholder may also under certain circumstances request an in kind distribution
of certain Securities in the Trust upon the termination of the Trust. A
Unitholder will receive cash representing his pro rata portion of the foreign
Securities in the Trust. See "Rights of Unitholders--Redemption of UnitsThe
Unitholder requesting an in kind distribution will be liable for expenses
related thereto (the "Distribution Expenses") and the amount of such in kind
distribution will be reduced by the amount of the Distribution Expenses. See
"Rights of Unitholders--Redemption of Units". As previously discussed, prior to
the redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust's assets for
federal income tax purposes. The receipt of an in kind distribution will result
in a Unitholder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an in kind distribution
with respect to each Security owned by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion in the Securities held by
a Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security or for a foreign Security held by a Trust, such
Unitholder will generally recognize gain or loss based upon the difference
between the amount of cash received by the Unitholder and his tax basis in such
fractional share of a Security or such foreign Security held by such Trust.
Because each Trust will own many Securities, a Unitholder who requests an in
kind distribution will have to analyze the tax consequences with respect to each
Security owned by such Trust. The amount of taxable gain (or loss) recognized
upon such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by such Trust. Unitholders who request an in kind distribution are advised
to consult their tax advisers in this regard.
COMPUTATION OF THE UNITHOLDER'S TAX BASIS. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder for
his Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
as described above.
OTHER MATTERS. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust (other than those
that are not treated as United States source income, if any) will generally be
subject to United States income taxation and withholding in the case of Units
held by non-resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporation for a three-year period ending with the close
of its taxable year preceding payment was effectively connected to the conduct
of a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the United
States and a foreign country. Non-U.S. Unitholders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions from the
Trust.
It should be noted that payments to the Trust of dividends on Securities that
are attributable to foreign corporations may be subject to foreign withholding
taxes and Unitholders should consult their tax advisers regarding the potential
tax consequences relating to the payment of any such withholding taxes by the
Trust. Any dividends withheld as a result thereof will nevertheless be treated
as income to the Unitholders. Because, under the grantor trust rules, an
investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect to such taxes.
The 1997 Tax Act imposes a required holding period for such credits. Investors
should consult their tax advisers with respect to foreign withholding taxes and
foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of the Trust a statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security (resulting from redemption or the
sale of any Security), and the fees and expenses paid by the Trust. The Trustee
will also furnish annual information returns to Unitholders and to the Internal
Revenue Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel to the Fund for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unitholders under the existing income tax
laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal and certain aspects of
New York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a Unit
in one of the Trust that (a) is (i) for United States federal income tax
purposes a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unitholder in
paragraph (a) but whose income from a Unit is effectively connected with such
Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable. Unitholders should consult their tax advisers
regarding potential foreign, state or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
--------------------------------------------------------------------------------
GENERAL. The fees and expenses of the Trust will generally accrue on a daily
basis. The fees and expenses are generally paid out of the Capital Account of
the Trust. When these amounts are paid by or owing to the Trustee, they are
secured by a lien on the Trust. It is expected that Securities will be sold to
pay these amounts which will result in capital gains or losses to Unitholders.
See "Taxation". The Supervisor's, Evaluator's and Trustee's fees may be
increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index or, if this category is not published, in a
comparable category.
ORGANIZATION COSTS. You and the other Unitholders will bear all or a portion
of the organization costs and charges incurred in connection with the
establishment of the Trust. These costs and charges will include the cost of the
preparation, printing and execution of the trust agreement, registration
statement and other documents relating to the Trust, federal and state
registration fees and costs, the initial fees and expenses of the Trustee and
legal and auditing expenses. The public offering price of Units includes the
estimated amount of these costs. The Trustee will deduct these expenses from the
Trust's assets at the end of the initial offering period.
TRUSTEE'S FEE. For its services the Trustee will receive the fee from the
Trust set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Trust expenses). The Trustee benefits to the extent there are
funds in the Capital and Income Accounts since these Accounts are non-interest
bearing to Unitholders and the amounts earned by the Trustee are retained by the
Trustee. Part of the Trustee's compensation for its services to the Trust is
expected to result from the use of these funds.
COMPENSATION OF SPONSOR, SUPERVISOR AND EVALUATOR. The Supervisor and
Evaluator, which are affiliates of the Sponsor, will receive the annual fee for
portfolio supervisory and evaluation services set forth in the "Fee Table".
These fees may exceed the actual costs of providing these services to the Trust
but at no time will the total amount received for supervisory and evaluation
services rendered to all Van Kampen unit investment trusts in any calendar year
exceed the aggregate cost of providing these services in that year.
MISCELLANEOUS EXPENSES. The following additional charges are or may be incurred
by the Trust: (a) normal expenses (including the cost of mailing reports to
Unitholders) incurred in connection with the operation of the Trust, (b) fees of
the Trustee for extraordinary services, (c) expenses of the Trustee (including
legal and auditing expenses) and of counsel designated by the Sponsor, (d)
various governmental charges, (e) expenses and costs of any action taken by the
Trustee to protect the Trust and the rights and interests of Unitholders, (f)
indemnification of the Trustee for any loss, liability or expenses incurred in
the administration of the Trust without negligence, bad faith or wilful
misconduct on its part, (g) foreign custodial and transaction fees, (h) costs
associated with liquidating the securities held in the Trust, (i) any offering
costs incurred after the end of the initial offering period and (j) expenditures
incurred in contacting Unitholders upon termination of the Trust. The Trust may
pay the expenses of updating its registration statement each year.
OTHER MATTERS
--------------------------------------------------------------------------------
LEGAL OPINIONS. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Winston & Strawn has acted as counsel to the Trustee
and as special counsel for New York tax matters.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The statement of condition and the
related portfolio included in this Prospectus have been audited by Grant
Thornton LLP, independent certified public accountants, as set forth in their
report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
This Prospectus does not contain all the information set forth in the
Registration Statement filed by the Trust with the SEC. The Information
Supplement, which has been filed with the SEC, includes more detailed
information concerning the Securities, investment risks and general information
about the Trust. Information about your Trust (including the Information
Supplement) can be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. You may obtain information about the Public Reference Room by
calling 1-202-942-8090. Reports and other information about your Trust are
available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of this information may be obtained, after paying a
duplication fee, by electronic request at the following e-mail address:
[email protected] or by writing the SEC's Public Reference Section, Washington,
D.C. 20549-0102.
TABLE OF CONTENTS
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TITLE PAGE
----- ----
Summary of Essential Financial Information.. 2
Fee Table................................... 3
Financial Institutions Trust................ 4
Notes to Portfolio.......................... 6
The Securities.............................. 7
Report of Independent Certified
Public Accountants....................... 10
Statement of Condition ..................... 11
The Trust................................... A-1
Objectives and Securities Selection......... A-1
Risk Factors................................ A-2
Public Offering............................. A-3
Retirement Accounts......................... A-7
Wrap Fee and Advisory Accounts.............. A-7
Rights of Unitholders....................... A-7
Trust Administration........................ A-9
Taxation.................................... A-11
Trust Operating Expenses.................... A-15
Other Matters............................... A-16
Additional Information...................... A-16
PROSPECTUS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
TD WATERHOUSE
FINANCIAL INSTITUTIONS TRUST,
SERIES 1
TD WATERHOUSE
www.tdwaterhouse.com
(800) 934-4448
Please retain this prospectus for future reference.
INFORMATION SUPPLEMENT
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 262
--------------------------------------------------------------------------------
This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the Prospectus. This
Information Supplement should be read in conjunction with the Prospectus. This
Information Supplement is not a prospectus, does not include all of the
information that an investor should consider before investing in the Trust and
may not be used to offer or sell Units without the Prospectus. Copies of the
Prospectus can be obtained by contacting the Sponsor at 1 Parkview Plaza, P.O.
Box 5555, Oakbrook Terrace, Illinois 60181-5555 or by contacting your broker.
This Information Supplement is dated as of the date of the Prospectus and all
capitalized terms have been defined in the Prospectus.
TABLE OF CONTENTS
PAGE
Risk Factors 2
The Trust 6
Sponsor Information 7
Trustee Information 7
Trust Termination 8
RISK FACTORS
PRICE VOLATILITY. Because the Trust invests in common stocks, you should
understand the risks of investing in common stocks before purchasing Units.
These risks include the risk that the financial condition of the company or the
general condition of the stock market may worsen and the value of the stocks
(and therefore Units) will fall. Common stocks are especially susceptible to
general stock market movements. The value of common stocks often rises or falls
rapidly and unpredictably as market confidence and perceptions of companies
change. These perceptions are based on factors including expectations regarding
government economic policies, inflation, interest rates, economic expansion or
contraction, political climates and economic or banking crises. The value of
Units will fluctuate with the value of the stocks in a Trust and may be more or
less than the price you originally paid for your Units. As with any investment,
we cannot guarantee that the performance of a Trust will be positive over any
period of time. Because the Trust is unmanaged, the Trustee will not sell stocks
in response to market fluctuations as is common in managed investments. In
addition, because some Trusts hold a relatively small number of stocks, you may
encounter greater market risk than in a more diversified investment.
DIVIDENDS. Common stocks represent ownership interests in a company and are
not obligations of the company. Accordingly, common stockholders have a right to
receive payments from the company that is subordinate to the rights of
creditors, bondholders or preferred stockholders of the company. This means that
common stockholders have a right to receive dividends only if a company's board
of directors declares a dividend and the company has provided for payment of all
of its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if the
company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.
FINANCIAL SERVICES ISSUERS. An investment in Units should be made with an
understanding of the problems and risks inherent in the bank and financial
services sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates, portfolio
concentrations in geographic markets and in commercial and residential real
estate loans, and competition from new entrants in their fields of business.
Banks and thrifts are highly dependent on net interest margin. Recently, bank
profits have come under pressure as net interest margins have contracted, but
volume gains have been strong in both commercial and consumer products. There is
no certainty that such conditions will continue. Bank and thrift institutions
had received significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and refinancing
activity subsided, this income diminished. Economic conditions in the real
estate markets, which have been weak in the past, can have a substantial effect
upon banks and thrifts because they generally have a portion of their assets
invested in loans secured by real estate. Banks, thrifts and their holding
companies are subject to extensive federal regulation and, when such
institutions are state- chartered, to state regulation as well. Such regulations
impose strict capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their supervisory
and enforcement authority and may substantially restrict the permissible
activities of a particular institution if deemed to pose significant risks to
the soundness of such institution or the safety of the federal deposit insurance
fund. Regulatory actions, such as increases in the minimum capital requirements
applicable to banks and thrifts and increases in deposit insurance premiums
required to be paid by banks and thrifts to the Federal Deposit Insurance
Corporation ("FDIC"), can negatively impact earnings and the ability of a
company to pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or their
holding companies, or insures against any risk of investment in the securities
issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly and have
undergone substantial change in recent years. To a great extent, these changes
are embodied in the Financial Institutions Reform, Recovery and Enforcement Act;
enacted in August 1989, the Federal Deposit Insurance Corporation Improvement
Act of 1991, the Resolution Trust Corporation Refinancing, Restructuring, and
Improvement Act of 1991 and the regulations promulgated under these laws. Many
of the regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and prospects of
the Securities cannot be predicted with certainty. The recently enacted
financial-services overhaul legislation will allow banks, securities firms and
insurance companies to form one-stop financial conglomerates marketing a wide
range of financial service products to investors. This legislation will likely
result in increased merger activity and heightened competition among existing
and new participants in the field. Efforts to expand the ability of federal
thrifts to branch on an interstate basis have been initially successful through
promulgation of regulations, and legislation to liberalize interstate banking
has recently been signed into law. Under the legislation, banks will be able to
purchase or establish subsidiary banks in any state, one year after the
legislation's enactment. Since mid-1997, banks have been allowed to turn
existing banks into branches. Consolidation is likely to continue. The
Securities and Exchange Commission and the Financial Accounting Standards Board
require the expanded use of market value accounting by banks and have imposed
rules requiring market accounting for investment securities held in trading
accounts or available for sale. Adoption of additional such rules may result in
increased volatility in the reported health of the industry, and mandated
regulatory intervention to correct such problems. Additional legislative and
regulatory changes may be forthcoming. For example, the bank regulatory
authorities have proposed substantial changes to the Community Reinvestment Act
and fair lending laws, rules and regulations, and there can be no certainty as
to the effect, if any, that such changes would have on the Securities. In
addition, from time to time the deposit insurance system is reviewed by Congress
and federal regulators, and proposed reforms of that system could, among other
things, further restrict the ways in which deposited moneys can be used by banks
or reduce the dollar amount or number of deposits insured for any depositor.
Such reforms could reduce profitability as investment opportunities available to
bank institutions become more limited and as consumers look for savings vehicles
other than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions, mortgage
banking companies and insurance companies, and increased competition may result
from legislative broadening of regional and national interstate banking powers
as has been recently enacted. Among other benefits, the legislation allows banks
and bank holding companies to acquire across previously prohibited state lines
and to consolidate their various bank subsidiaries into one unit. The Sponsor
makes no prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions might
have on a portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5% of the
outstanding shares of any class of voting securities of a bank or bank holding
company, (2) acquiring control of a bank or another bank holding company, (3)
acquiring all or substantially all the assets of a bank, or (4) merging or
consolidating with another bank holding company, without first obtaining Federal
Reserve Board ("FRB") approval. In considering an application with respect to
any such transaction, the FRB is required to consider a variety of factors,
including the potential anti-competitive effects of the transaction, the
financial condition and future prospects of the combining and resulting
institutions, the managerial resources of the resulting institution, the
convenience and needs of the communities the combined organization would serve,
the record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the prospective
availability to the FRB of information appropriate to determine ongoing
regulatory compliance with applicable banking laws. In addition, the federal
Change In Bank Control Act and various state laws impose limitations on the
ability of one or more individuals or other entities to acquire control of banks
or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends by
bank holding companies. In the policy statement, the FRB expressed its view that
a bank holding company experiencing earnings weaknesses should not pay cash
dividends which exceed its net income or which could only be funded in ways that
would weaken its financial health, such as by borrowing. The FRB also may impose
limitations on the payment of dividends as a condition to its approval of
certain applications, including applications for approval of mergers and
acquisitions. The Sponsor makes no prediction as to the effect, if any, such
laws will have on the Securities or whether such approvals, if necessary, will
be obtained.
Companies involved in the insurance industry are engaged in underwriting,
reinsuring, selling, distributing or placing of property and casualty, life or
health insurance. Other growth areas within the insurance industry include
brokerage, reciprocals, claims processors and multiline insurance companies.
Insurance company profits are affected by interest rate levels, general economic
conditions, and price and marketing competition. Property and casualty insurance
profits may also be affected by weather catastrophes and other disasters. Life
and health insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers. Insurance
companies are subject to extensive governmental regulation, including the
imposition of maximum rate levels, which may not be adequate for some lines of
business. Proposed or potential tax law changes may also adversely affect
insurance companies' policy sales, tax obligations, and profitability. In
addition to the foregoing, profit margins of these companies continue to shrink
due to the commoditization of traditional businesses, new competitors, capital
expenditures on new technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including those
applicable to regulated insurance companies, such as: (i) the inherent
uncertainty in the process of establishing property-liability loss reserves,
particularly reserves for the cost of environmental, asbestos and mass tort
claims, and the fact that ultimate losses could materially exceed established
loss reserves which could have a material adverse effect on results of
operations and financial condition; (ii) the fact that insurance companies have
experienced, and can be expected in the future to experience, catastrophe losses
which could have a material adverse impact on their financial condition, results
of operations and cash flow; (iii) the inherent uncertainty in the process of
establishing property-liability loss reserves due to changes in loss payment
patterns caused by new claims settlement practices; (iv) the need for insurance
companies and their subsidiaries to maintain appropriate levels of statutory
capital and surplus, particularly in light of continuing scrutiny by rating
organizations and state insurance regulatory authorities, and in order to
maintain acceptable financial strength or claims-paying ability rating; (v) the
extensive regulation and supervision to which insurance companies' subsidiaries
are subject, various regulatory initiatives that may affect insurance companies,
and regulatory and other legal actions; (vi) the adverse impact that increases
in interest rates could have on the value of an insurance company's investment
portfolio and on the attractiveness of certain of its products; (vii) the need
to adjust the effective duration of the assets and liabilities of life insurance
operations in order to meet the anticipated cash flow requirements of its
policyholder obligations; and (vii) the uncertainty involved in estimating the
availability of reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have considered
or enacted laws that alter and, in many cases, increase state authority to
regulate insurance companies and insurance holding company systems. Further, the
National Association of Insurance Commissioners ("NAIC") and state insurance
regulators are re-examining existing laws and regulations, specifically focusing
on insurance companies, interpretations of existing laws and the development of
new laws. In addition, Congress and certain federal agencies have investigated
the condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is unable to
predict whether any state or federal legislation will be enacted to change the
nature or scope of regulation of the insurance industry, or what effect, if any,
such legislation would have on the industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the amount of
investments in certain investment categories. Failure to comply with these laws
and regulations would cause non-conforming investments to be treated as
non-admitted assets for purposes of measuring statutory surplus and, in some
instances, would require divestiture.
Environmental pollution clean-up is the subject of both federal and state
regulation. By some estimates, there are thousands of potential waste sites
subject to clean up. The insurance industry is involved in extensive litigation
regarding coverage issues. The Comprehensive Environmental Response Compensation
and Liability Act of 1980 ("Superfund") and comparable state statutes
("mini-Superfund") govern the clean-up and restoration by "Potentially
Responsible Parties" ("PRP's"). Superfund and the mini-Superfunds
("Environmental Clean-up Laws" or "ECLs") establish a mechanism to pay for
clean-up of waste sites if PRP's fail to do so, and to assign liability to
PRP's. The extent of liability to be allocated to a PRP is dependent on a
variety of factors. The extent of clean-up necessary and the assignment of
liability has not been fully established. The insurance industry is disputing
many such claims. Key coverage issues include whether Superfund response costs
are considered damages under the policies, when and how coverage is triggered,
applicability of pollution exclusions, the potential for joint and several
liability and definition of an occurrence. Similar coverage issues exist for
clean up and waste sites not covered under Superfund. To date, courts have been
inconsistent in their rulings on these issues. An insurer's exposure to
liability with regard to its insureds which have been, or may be, named as PRPs
is uncertain. Superfund reform proposals have been introduced in Congress, but
none have been enacted. There can be no assurance that any Superfund reform
legislation will be enacted or that any such legislation will provide for a
fair, effective and cost-efficient system for settlement of Superfund related
claims.
While current federal income tax law permits the tax-deferred accumulation
of earnings on the premiums paid by an annuity owner and holders of certain
savings-oriented life insurance products, no assurance can be given that future
tax law will continue to allow such tax deferrals. If such deferrals were not
allowed, consumer demand for the affected products would be substantially
reduced. In addition, proposals to lower the federal income tax rates through a
form of flat tax or otherwise could have, if enacted, a negative impact on the
demand for such products.
Companies engaged in investment banking/brokerage and investment management
include brokerage firms, broker/dealers, investment banks, finance companies and
mutual fund companies. Earnings and share prices of companies in this industry
are quite volatile, and often exceed the volatility levels of the market as a
whole. Recently, ongoing consolidation in the industry and the strong stock
market has benefited stocks which investors believe will benefit from greater
investor and issuer activity. Major determinants of future earnings of these
companies are the direction of the stock market, investor confidence, equity
transaction volume, the level and direction of long-term and short-term interest
rates, and the outlook for emerging markets. Negative trends in any of these
earnings determinants could have a serious adverse effect on the financial
stability, as well as the stock prices, of these companies. Furthermore, there
can be no assurance that the issuers of the Securities included in a Trust will
be able to respond in a timely manner to compete in the rapidly developing
marketplace. In addition to the foregoing, profit margins of these companies
continue to shrink due to the commoditization of traditional businesses, new
competitors, capital expenditures on new technology and the pressures to compete
globally.
LIQUIDITY. Whether or not the stocks in the Trust are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
ADDITIONAL UNITS. The Sponsor may create additional Units of a Trust by
depositing into the Trust additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Trust will pay brokerage fees.
VOTING. Only the Trustee may sell or vote the stocks in a Trust. While you
may sell or redeem your Units, you may not sell or vote the stocks in your
Trust. The Sponsor will instruct the Trustee how to vote the stocks. The Trustee
will vote the stocks in the same general proportion as shares held by other
shareholders if the Sponsor fails to provide instructions.
THE TRUST
Investors should note that the selection criteria were applied to the
Securities for inclusion in the Trust prior to the Trust's formation. Should a
Security no longer meet the criteria used for selection for a Trust, such
Security will not as a result thereof be removed from the Trust.
Hypothetical annual total returns for the Standard & Poor's 500 Index and
the Standard & Poor's Financials Index are shown in the following table.
S&P
FINANCIAL
YEAR S&P 500 INDEX
---- -------- --------
1989 31.21% 27.81%
1990 (3.13) (21.63)
1991 30.00 50.84
1992 7.43 23.38
1993 9.92 11.13
1994 1.28 (3.55)
1995 37.11 54.08
1996 22.68 35.23
1997 33.10 48.13
1998 28.58 11.34
1999 20.89 3.97
Thru 9/30/00 (1.39) 23.06
Source: Bloomberg and FactSet. Total return is calculated by taking year-end
prices, subtracting them from the prices at the end of the following year
(adjusting for any stock splits that might have occurred during the year) and
adding dividends received for the period divided by starting price. The S&P 500
Index consists of 500 stocks chosen for market size, liquidity, and industry
group representation by the Standard & Poor's Corporation. The Standard & Poor's
Financials Index is a capitalization-weighted index of all stocks designed to
measure the performance of the financial sector of the Standard & Poor's 500
Index. Past performance, shown on chart, does not guarantee future results and
the results are not the Trust total returns nor are they suggestive of past
performance, since the Trust was not in existence during this period. Indices
are unmanaged, statistical composites and do not include payment of any sales
charges or fees an investor would pay to purchase the securities they represent.
If they had, results would have been less favorable. Furthermore, an investment
cannot be made in an index. The historical performance of these indices is shown
for illustrative purposes only; it is not meant to forecast, imply or guarantee
the future performance of any particular investment or the Trust, which will
vary. Securities in which the Trust invests will be different from those in the
indices.
When reviewing any historical performance information, you should keep in
mind that past performance cannot guarantee future results. Many stocks,
especially those issued by technology companies, have exhibited above-average
price appreciation and extreme volatility in recent years during a period of a
generally rising stock market. No one can assure you that this will continue or
that the performance of stocks will replicate the performance exhibited in the
past.
SPONSOR INFORMATION
Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the Trust.
The Sponsor is an indirect subsidiary of Van Kampen Investments Inc. Van Kampen
Investments Inc. is a wholly owned subsidiary of MSAM Holdings II, Inc., which
in turn is a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.
("MSDW").
MSDW, together with various of its directly and indirectly owned
subsidiaries, is engaged in a wide range of financial services through three
primary businesses: securities, asset management and credit services. These
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; credit
services; asset management; trading of futures, options, foreign exchange
commodities and swaps (involving foreign exchange, commodities, indices and
interest rates); and real estate advice, financing and investing.
Van Kampen Funds Inc. specializes in the underwriting and distribution of
unit investment trusts and mutual funds with roots in money management dating
back to 1926. The Sponsor is a member of the National Association of Securities
Dealers, Inc. and has its principal offices at 1 Parkview Plaza, P.O. Box 5555,
Oakbrook Terrace, Illinois 60181-5555, (630) 684-6000. As of November 30, 1999,
the total stockholders' equity of Van Kampen Funds Inc. was $141,554,861
(audited). (This paragraph relates only to the Sponsor and not to the Trust or
to any other Series thereof. The information is included herein only for the
purpose of informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
As of September 30, 2000, the Sponsor and its Van Kampen affiliates managed
or supervised more than $100 billion of investment products. The Sponsor and its
Van Kampen affiliates offer more than 50 open-end mutual funds, 37 closed-end
funds and have sponsored over 2,700 series of fixed income and equity unit
investment trusts.
If the Sponsor fails to perform any of its duties under the Trust Agreement
or becomes incapable of acting or becomes bankrupt or its affairs are taken over
by public authorities, then the Trustee may (i) appoint a successor Sponsor at
rates of compensation deemed by the Trustee to be reasonable and not exceeding
amounts prescribed by the Securities and Exchange Commission, (ii) terminate the
Trust Agreement and liquidate the Trust as provided therein or (iii) continue to
act as Trustee without terminating the Trust Agreement.
TRUSTEE INFORMATION
The Trustee is The Bank of New York, a trust company organized under the
laws of New York. The Bank of New York has its unit investment trust division
offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668. The Bank
of New York is subject to supervision and examination by the Superintendent of
Banks of the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder. Such books and records shall be open to
inspection by any Unitholder at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute, rule or
regulation. The Trustee is required to keep a certified copy or duplicate
original of the Trust Agreement on file in its office available for inspection
at all reasonable times during the usual business hours by any Unitholder,
together with a current list of the Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
TRUST TERMINATION
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Trust then outstanding or by the
Trustee when the value of the Securities owned by the Trust, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of the Trust has
exceeded $15,000,000). The Trust will be liquidated by the Trustee in the event
that a sufficient number of Units of the Trust not yet sold are tendered for
redemption by the Sponsor, so that the net worth of such Trust would be reduced
to less than 40% of the value of the Securities at the time they were deposited
in the Trust. If the Trust is liquidated because of the redemption of unsold
Units by the Sponsor, the Sponsor will refund to each purchaser of Units the
entire sales charge paid by such purchaser. The Trust Agreement will terminate
upon the sale or other disposition of the last Security held thereunder, but in
no event will it continue beyond the Mandatory Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities may begin to be sold in
connection with the termination of the Trust. The Sponsor will determine the
manner, timing and execution of the sales of the Securities. The Sponsor shall
direct the liquidation of the Securities in such manner as to effectuate orderly
sales and a minimal market impact. In the event the Sponsor does not so direct,
the Securities shall be sold within a reasonable period and in such manner as
the Trustee, in its sole discretion, shall determine. At least 30 days before
the Mandatory Termination Date the Trustee will provide written notice of any
termination to all Unitholders of the appropriate Trust. Unitholders will
receive a cash distribution from the sale of the remaining Securities within a
reasonable time following the Mandatory Termination Date. The Trustee will
deduct from the funds of the Trust any accrued costs, expenses, advances or
indemnities provided by the Trust Agreement, including estimated compensation of
the Trustee, costs of liquidation and any amounts required as a reserve to
provide for payment of any applicable taxes or other governmental charges. Any
sale of Securities in the Trust upon termination may result in a lower amount
than might otherwise be realized if such sale were not required at such time.
The Trustee will then distribute to each Unitholder of each Trust his pro rata
share of the balance of the Income and Capital Accounts.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
CONTENTS OF REGISTRATION STATEMENT
This Amendment No. 1 of Registration Statement comprises the following
papers and documents:
The facing sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
2.1 Form of Code of Ethics. Reference is made to Exhibit 2.1 to the
Registration Statement on Form S-6 of Van Kampen Focus Portfolios,
Series 223 (File No. 333-34242) dated July 25, 2000.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of Counsel as to the Federal Income tax status of securities being
registered.
3.3 Opinion and consent of counsel as to New York tax status of securities
being registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Accountants.
SIGNATURES
The Registrant, Van Kampen Focus Portfolios, Series 262, 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 262 has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago and State of
Illinois on the 31st day of October 2000.
Van Kampen Focus Portfolios, Series 262
By Van Kampen Funds Inc.
By /s/Christine K. Putong
-----------------------------------------
Assistant Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below on October
31, 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
/s/Christine K. Putong
------------------------------------------
(Attorney-in-fact*)
--------------------------------------------------------------------------------
*An executed copy of each of the related powers of attorney is filed
herewith or was filed with the Securities and Exchange Commission in connection
with the Registration Statement on Form S-6 of Van Kampen Focus Portfolios,
Series 136 (File No. 333-70897) and the same are hereby incorporated herein by
this reference.
