MEMORANDUM OF CHANGES
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 263
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 263 on November 20, 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 has 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.
<PAGE>
FILE NO. 333-48108
CIK #1123029
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 263
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 November 20, 2000 pursuant to Rule 487.
GRUNTAL &CO.
INVESTMENT ADVICE SINCE 1880
T-COMMERCE GROWTH TRUST, SERIES 1
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Van Kampen Focus Portfolios, Series 263 includes the unit investment trust
described above (the "Trust"). The Trust seeks to increase the value of your
Units by investing in a diversified portfolio of common stocks of companies that
Gruntal & Co., L.L.C. believes may benefit from the growth of the interactive
television industry. Of course, we cannot guarantee that the Trust will achieve
its objective.
NOVEMBER 20, 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
NOVEMBER 20, 2000
PUBLIC OFFERING PRICE
Aggregate value of Securities per Unit (1) $ 9.90
Sales charge 0.45
Less deferred sales charge 0.35
Public offering price per Unit (2) $ 10.00
TRUST INFORMATION
Initial number of Units (3) 14,992
Aggregate value of Securities (1) $ 148,421
Redemption price per Unit (4) $ 9.55
GENERAL INFORMATION
Initial Date of Deposit November 20, 2000
Mandatory Termination Date November 19, 2004
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 last closing sale price on its principal
trading exchange or, if not listed, at the last asked price on the 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)The number of Units may be adjusted so that the Public Offering Price per
Unit equals $10 at the Evaluation Time on the Initial Date of Deposit. The
number of Units and fractional interest of each Unit will increase or
decrease to the extent of any adjustment.
(4)The redemption price is reduced by any remaining deferred sales charge. See
"Rights of Unitholders--Redemption of Units". The redemption price includes
the estimated organizational and offering costs. The redemption price will
not include these costs after the initial offering period.
FEE TABLE
TRANSACTION FEES (AS % OF OFFERING PRICE)
Initial sales charge (1)............................. 1.00%
Deferred sales charge (2)............................ 3.50%
----------
Maximum sales charge ................................ 4.50%
==========
Maximum sales charge on reinvested dividends......... 0.00%
==========
ESTIMATED ORGANIZATIONAL COSTS PER UNIT (3).......... $ 0.02791
==========
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............................................. $ 49
Three years.......................................... $ 53
Five years........................................... $ 57
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 your Trust distributions at the end of each year. Of course,
you should not consider this example a representation of actual past or future
expenses or annual rate of return which may differ from those assumed for this
example. The sales charge and expenses are described under "Public Offering" and
"Trust Operating Expenses".
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(1)The initial sales charge is the difference between the maximum sales charge
and the deferred sales charge.
(2)The deferred sales charge is actually equal to $0.35 per Unit. This amount
will exceed the 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. The 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.
T-COMMERCE GROWTH TRUST
The Trust seeks to offer diversification and capital appreciation over time
by investing in T-commerce companies expected to benefit from the growth in the
interactive television industry. Gruntal & Co., L.L.C. selected the securities
for the portfolio which, in their opinion, are well-positioned for future growth
and represent good investment opportunities in the interactive television
industry.
Consumers increasingly demand instant access to personalized information.
Gruntal believes that media and communications have converged in response,
enabling consumers to customize and interact with their information and
entertainment choices in real-time. Interactive television seeks to transform a
passive viewing experience into a participatory medium and a platform for
commerce, communication and targeted marketing. Gruntal believes that
interactive television and T-commerce (television-based transactions) can create
value for the consumer and generate incremental revenue streams for
broadcasters, cable operators and satellite providers.
Gruntal believes that the interactive television industry may be positioned
for growth in the next decade. The Trust portfolio seeks to encompass the
investment opportunities that may be offered by the convergence of traditional
media, commerce, and the interactivity of the Internet.
The migration of broadcast transmission to digital from analog, and the
increasing penetration of digital set-top boxes, may allow interactive
enhancements to be delivered simultaneously with video. Moreover, the
information captured through interactivity may bring advertisers the tools
needed to deliver true one-to-one targeted messages and to acquire customers
efficiently. Gruntal believes that marketing messages through interactive
television could become more targeted as well as interactive with e-commerce
offers to be embedded in the content.
In this new interactive environment, the passive nature of one-way broadcast
television may become less appealing for advertisers. New technologies may
threaten the traditional broadcast revenue model by enabling viewers to skip
over commercials. Broadcasters and advertisers may need to respond to these
technological advances by making commercials interactive through the placement
of digital advertisements and data enhancements within televised content.
Gruntal believes that the cable and broadcast industries are investing
significantly to upgrade their systems for digital transmission. Gruntal
believes that they need the incremental cash flows from T-Commerce and enhanced
broadcasting to recoup their investment in digital transmission. In Gruntal's
opinion, providers of interactive and enhanced broadcast services will
experience a surge in demand for their services as broadcasters, cable, and
satellite operators attempt to:
(1) offer compelling, high-response advertising;
(2) offer competitive, value-added services; and
(3) recoup their investments in digital transmission.
Gruntal believes that several blue chip technology firms have recently
demonstrated their commitment to the interactive television market through major
capital investments and product launches. Gruntal believes that consumer demand
for interactive television services will be a determinant of the success of the
industry. Of course, there is no guarantee that this demand will be realized.
Gruntal believes that the significance of direct response television and home
shopping industries may demonstrate that consumers accept television as a viable
shopping mechanism. Gruntal believes that new interactive functionality makes
closing secure transactions easier than in the past and could drive impulse
purchases. Gruntal further believes that consumers may have demonstrated through
their Internet usage behavior that they prefer a personalized experience in
which they control what they see. Forrester Research, Inc. estimates that by
2005 interactive television could generate incremental revenue of approximately
$25 billion, including advertising, television-based transactions (T-Commerce),
and subscription fees (July 21, 2000).
Of course, we cannot guarantee that the Trust will achieve its objective or
that expectations of the interactive television industry will be 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
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CURRENT COST OF
NUMBER TICKER PERCENTAGE MARKET VALUE DIVIDEND SECURITIES
OF SHARES SYMBOL NAME OF ISSUER (1) OF PORTFOLIO PER SHARE (2) YIELD (3) TO TRUST (2)
--------- ------ -------------------------------- ------------ ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
DELIVERY SYSTEMS (CABLE & SATELLITE)
293 T AT&T Corporation 3.96% $ 20.063 4.39% $ 5,878.31
426 CHTR Charter Communications, Inc. 6.14% 21.375 0.00% 9,105.75
161 CMCSK Comcast Corporation 4.03% 37.188 0.00% 5,987.19
218 DISH EchoStar Communications Corporation 4.99% 33.938 0.00% 7,398.38
INTERACTIVE TELEVISION OPERATING
SYSTEMS & APPLICATIONS
1,114 IATV ACTV, Inc. 6.00% 8.000 0.00% 8,912.00
376 CCUR Concurrent Computer Corporation 4.59% 18.125 0.00% 6,815.00
81 GMST Gemstar-TV Guide International, Inc. 2.95% 54.000 0.00% 4,374.00
513 LBRT Liberate Technologies, Inc. 5.98% 17.313 0.00% 8,881.31
757 LDIG Liberty Digital, Inc, 4.78% 9.375 0.00% 7,096.88
341 OPTV OpenTV Corporation 6.02% 26.188 0.00% 8,929.94
218 SEAC SeaChange International, Inc. 4.48% 30.500 0.00% 6,649.00
408 TIVO TiVo, Inc. 3.83% 13.938 0.00% 5,686.50
914 WINK Wink Communications, Inc. 5.85% 9.500 0.00% 8,683.00
503 WGAT WorldGate Communications, Inc. 4.89% 14.438 0.00% 7,262.06
MEDIA & CABLE NETWORKS
119 AOL America Online, Inc. 3.97% 49.560 0.00% 5,897.64
502 VVTV ValueVision International, Inc. 6.49% 19.188 0.00% 9,632.13
81 VIA Viacom, Inc. 2.95% 54.063 0.00% 4,379.06
147 DIS Walt Disney Company 2.99% 30.188 0.70% 4,437.56
TECHNOLOGY/INFRASTRUCTURE
86 CSCO Cisco Systems, Inc. 3.06% 52.813 0.00% 4,541.88
76 MSFT Microsoft Corporation 3.54% 69.063 0.00% 5,248.75
228 MOT Motorola, Inc. 3.46% 22.500 0.71% 5,130.00
124 SFA Scientific-Atlanta, Inc. 5.05% 60.438 0.07% 7,494.25
--------- ------------
7,686 $148,420.59
========= ============
</TABLE>
NOTES TO PORTFOLIO
(1) The Securities are initially represented by "regular way"
contracts for the performance of which an irrevocable letter of credit has
been deposited with the Trustee. Contracts to acquire Securities were
entered into on November 17, 2000 and have a settlement date of November
22, 2000 (see "The Trust").
(2) The market value of each Security is based on the closing sale
price on the applicable exchange or, if not listed, the last asked price on
the day prior to the Initial Date of Deposit. Other information regarding
the Securities, as of the Initial Date of Deposit, is as follows:
PROFIT
COST TO (LOSS) TO
SPONSOR SPONSOR
-------------- --------------
$ 148,293 $ 128
"+" indicates that the stock is held in the form of American
Depositary Receipts or similar receipts.
"^" indicates that the stock is traded on a foreign securities
exchange.
"#" indicates that the stock is a foreign common stock traded on a
United States securities exchange.
(3) Current Dividend Yield for each Security is based on the estimated
annual dividends per share and the Security's market value as of the time
described in the previous note. 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 witholding taxes.
THE SECURITIES. A brief description of each of the issuers of the Securities
is listed below.
ACTV, Inc. ACTV, Inc. provides Individualized Television and Hyper TV
software technologies. The company's technologies enable the creation of
interactive programming for both digital television and for applications merging
television and the Internet. ACTV currently provides its Hyper TV to the
education market, including classrooms, distance learning programs, and
corporations.
America Online, Inc. America Online, Inc. provides interactive communications
and services through its America Online and CompuServe worldwide Internet online
services. The company's Web sites offer such features as a personalized news
service, electronic mail via the Web, an online community center, public and
private meeting rooms and interactive conversations, and guest interviews.
AT&T Corporation. AT&T Corporation offers communication services and
products. The company provides voice, data, and video telecommunications
services to consumers, large and small businesses, and government entities. AT&T
and its subsidiaries furnish regional, domestic, international, and local
telecommunication services. The company also provides cellular telephone and
wireless services, as well as other services.
Charter Communications, Inc. Charter Communications, Inc. operates cable
television systems in the United States. The company offers a full range of
traditional cable television services, as well as digital cable television
services to customers in some of its systems.
Cisco Systems, Inc. Cisco Systems, Inc. supplies data networking products to
the corporate enterprise and public wide area service provider markets. The
company's products offer a variety of end-to-end networking hardware, software,
and services. Cisco's clients include utilities, corporations, universities,
governments, and small to medium-size businesses worldwide.
Comcast Corporation. Comcast Corporation develops, manages, and operates
hybrid fiber-coaxial broadband cable communications networks. The company also
provides programming content. Comcast is implementing high-speed Internet access
service and digital video applications.
Concurrent Computer Corporation. Concurrent Computer Corporation provides
computer systems for both the emerging video-on-demand (VOD) market and
real-time applications. The company provides VOD servers and related software
primarily to residential cable television operators and markets its computer
systems to government agencies, government suppliers, and commercial markets.
EchoStar Communications Corporation. EchoStar Communications Corporation
operates a direct broadcast satellite subscription television service in the
United States. The company also designs, manufactures, distributes, and sells
set-top boxes, antennae, and other digital equipment. EchoStar delivers video,
audio, and data services to business television customers and other satellite
users.
Gemstar-TV Guide International, Inc. Gemstar-TV Guide International, Inc.
develops, markets, and licenses proprietary technologies primarily for
consumers. The company provides electronic program guide services such as VCR
Plus+, as well as electronic book technology. Gemstar-TV Guide also markets and
distributes products such as TV Guide Magazine, the TV Guide Channel, TV Guide
Online, and Sneak Prevue.
Liberate Technologies, Inc. Liberate Technologies, Inc. provides
standards-based software that serves as a platform for the delivery of
Internet-enhanced content and applications to a variety of information
appliances, such as television set-top boxes, game couplers, smart phones, and
personal digital assistants. The company's software is used by
telecommunications companies and Internet service providers.
Liberty Digital, Inc. Liberty Digital, Inc., a new media company, conducts
operations in interactive television and new media business. The company holds
investments in Internet content and music programming and music related
services.
Microsoft Corporation. Microsoft Corporation develops, manufactures,
licenses, sells, and supports software products. The company offers operating
system software, server application software, business and consumer applications
software, software development tools, and Internet and intranet software.
Microsoft also develops the MSN network of Internet products and services.
Motorola, Inc. Motorola, Inc. provides integrated communications solutions
and embedded electronic solutions. The company offers software-enhanced wireless
telephones, two-way radios, messaging and satellite communications products and
systems, as well as networking and Internet-access products. Customers include
consumers, network operators, and commercial, government, and industrial
customers.
OpenTV Corporation. OpenTV Corporation provides software that enables digital
interactive television.
The company's OpenTV Runtime software runs on set-top boxes throughout the
world, enabling viewers to access real-time statistics, purchase various items,
and perform banking transactions.
Scientific-Atlanta, Inc. Scientific-Atlanta, Inc. provides products and
services for advanced communications networks which deliver voice, data, and
video. The company's products connect information generators with information
users via broadband terrestrial and satellite networks, and include applications
for the converging of cable, telephone, and data networks.
SeaChange International, Inc. SeaChange International, Inc. develops video
server systems and software to manage, store, and distribute digital video for
television operators and telecommunications companies. The company's turnkey
systems automate the distribution of short- and long-form video streams,
including advertisements, movies, news updates, and other video programming
requiring continuous execution.
TiVo, Inc. TiVo, Inc. provides a subscription-based service enabled by a
personal video recorder. The company's service allows viewers to locate and
record multiple shows, control live television, choose viewing preferences, and
access their customized lineup of shows. TiVo's service also serves as a
platform to deliver television programming, advertising, and in-home commerce.
ValueVision International, Inc. ValueVision International, Inc. is an
integrated direct marketing company that markets its products directly to
consumers through various forms of electronic media. The company operates a
television home-shopping network and multi-book catalog operation. ValueVision
offers live programming on a full-time and part-time basis and an Internet
shopping Web site.
Viacom, Inc. Viacom, Inc. is a worldwide entertainment and publishing
company. The company's operations include Blockbuster video and music, MTV
Networks, Showtime Networks, Paramount Pictures, Paramount Television, Simon &
Schuster, television stations, and movie screens in various countries. Viacom
merged with CBS Corporation and also produces television series, mini-series,
and television movies.
Walt Disney Company. Walt Disney Company, an entertainment company, conducts
operations in media networks, studio entertainment, theme parks and resorts,
consumer products, and Internet and direct marketing. The company produces
motion pictures, television programs, and musical recordings, as well as
publishes books and magazines. Disney also operates ABC radio and television and
theme parks.
Wink Communications, Inc. Wink Communications, Inc. provides a complete
end-to-end system for electronic commerce on television. The company's Wink
Enhanced Broadcasting allows advertisers, merchants, and broadcast and cable
networks to create interactive enhancements to traditional television
advertisements and programs. Wink's viewers can purchase merchandise and access
program-related information.
WorldGate Communications, Inc. WorldGate Communications, Inc. provides the
WorldGate television-based Internet service. The company's service enables
Internet access for consumers through the cable system without the need for a
personal computer, modem, or any additional in-home equipment.
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 263:
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen Focus Portfolios, Series 263 as of November 20, 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 263 as of November 20, 2000 in conformity with accounting principles
generally accepted in the United States of America.
GRANT THORNTON LLP
Chicago, Illinois
November 20, 2000
STATEMENT OF CONDITION
AS OF NOVEMBER 20, 2000
INVESTMENT IN SECURITIES
Contracts to purchase Securities (1) $ 148,421
-----------
Total $ 148,421
===========
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Organizational costs (2) $ 418
Deferred sales charge liability (3) 5,247
Interest of Unitholders--
Cost to investors (4) 149,920
Less: Gross underwriting commission
and organizational costs (2)(4)(5) 7,164
-----------
Net interest to Unitholders (4) 142,756
-----------
Total $ 148,421
===========
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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 actively traded equity securities. The Trust may be
an appropriate medium for investors who desire to participate in a portfolio of
common stocks with greater diversification than they might be able to acquire
individually.
On the Initial Date of Deposit, the Sponsor deposited delivery statements
relating to contracts for the purchase of the Securities and an irrevocable
letter of credit in the amount required for these purchases with the Trustee. In
exchange for these contracts the Trustee delivered to the Sponsor documentation
evidencing the ownership of Units of the Trust. Unless otherwise terminated as
provided in the Trust Agreement, the Trust will terminate on the Mandatory
Termination Date and any remaining Securities will be liquidated or distributed
by the Trustee within a reasonable time. As used in this Prospectus the term
"Securities" means the securities (including contracts to purchase these
securities) listed in "Portfolio" and any additional securities deposited into
the Trust.
Additional Units may be issued at any time by depositing in the Trust (i)
additional Securities, (ii) contracts to purchase Securities together with cash
or irrevocable letters of credit or (iii) cash (or a letter of credit or the
equivalent) with instructions to purchase additional Securities. As additional
Units are issued by the Trust, the aggregate value of the Securities will be
increased and the fractional undivided interest represented by each Unit will be
decreased. The Sponsor may continue to make additional deposits into the Trust
following the Initial Date of Deposit provided that the additional deposits will
be in amounts which will maintain, as nearly as practicable, the same percentage
relationship among the number of shares of each Security in the Trust's
portfolio that existed immediately prior to the subsequent deposit. Investors
may experience a dilution of their investments and a reduction in their
anticipated income because of fluctuations in the prices of the Securities
between the time of the deposit and the purchase of the Securities and because
the Trust will pay the associated brokerage or acquisition fees.
Each Unit initially offered represents an undivided interest in the Trust. To
the extent that any Units are redeemed by the Trustee or additional Units are
issued as a result of additional Securities being deposited by the Sponsor, the
fractional undivided interest in the Trust represented by each unredeemed Unit
will increase or decrease accordingly, although the actual interest in the Trust
will remain unchanged. Units will remain outstanding until redeemed upon tender
to the Trustee by Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
The Trust consists of (a) the Securities (including contracts for the
purchase thereof) listed under the "Portfolio" as may continue to be held from
time to time in the Trust, (b) any additional Securities acquired and held by
the Trust pursuant to the provisions of the Trust Agreement and (c) any cash
held in the related Income and Capital Accounts. Neither the Sponsor nor the
Trustee shall be liable in any way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
--------------------------------------------------------------------------------
The objective of the Trust is to provide capital appreciation by investing
in a portfolio of actively traded equity securities of companies within the
interactive television industry. We cannot guarantee that the Trust will achieve
its objective. The Securities were selected by Gruntal & Co., L.L.C.
("Gruntal").
Catherine M. Skelly primarily selected the stocks for the portfolio. Ms.
Skelly is a Vice President in Gruntal's Equity Research Department with primary
responsibility for covering New Media and E-Commerce companies with a particular
focus on the interactive television industry. Prior to joining Gruntal, Ms.
Skelly served as Senior Analyst at Bluestone Capital Partners where her research
followed e-commerce, consumer and retail companies. Prior to joining Bluestone,
Ms. Skelly worked for Tucker Anthony covering consumer and retail stocks,
including toy, apparel and specialty research companies. Ms. Skelly holds an MA
from Fordham University and a BS in Finance and Economics from Manhattan
College.
Gruntal uses the list of Securities in its independent capacity as an
investment adviser and distributes this information to various individuals and
entities. Gruntal 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.
Gruntal has acquired or may acquire the Securities for the Sponsor and may
benefit from doing so. Gruntal 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. Gruntal also issues reports and makes
recommendations on the Securities. Gruntal's research department, including the
analyst that selected the portfolio, will receive compensation based on the
broker commissions generated by research and/or sales of Units. The analyst that
selected the portfolio may trade the Securities in his personal accounts.
Investors should note that the above criteria were applied to the Securities
for inclusion in the Trust as of the Initial Date of Deposit. Subsequent to this
date, the Securities may no longer meet the above criteria. Should a Security no
longer meet the selection criteria, the Security generally will not be removed
from the Trust portfolio as a result thereof.
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.
TECHNOLOGY ISSUERS. The Trust invests significantly in technology companies.
Any negative impact on this industry will have a greater impact on the value of
Units than on a portfolio diversified over several industries. You should
understand the risks of these industries before you invest. These companies face
risks related to rapidly changing technology, rapid product obsolescence,
cyclical market patterns, evolving industry standards and frequent new product
introductions. An unexpected change in technology can have a significant
negative impact on a company. The failure of a company to introduce new products
or technologies or keep pace with rapidly changing technology, can have a
negative impact on the company's results. Technology stocks tend to experience
substantial price volatility and speculative trading. Announcements about new
products, technologies, operating results or marketing alliances can cause stock
prices to fluctuate dramatically. At times, however, extreme price and volume
fluctuations are unrelated to the operating performance of a company. This can
impact your ability to redeem your Units at a price equal to or greater than
what you paid.
The market for certain products may have only recently begun to develop, is
rapidly evolving or is characterized by increasing suppliers. Key components of
some technology products are available only from limited sources. This can
impact the cost of and ability to acquire these components. Some technology
companies serve highly concentrated customer bases with a limited number of
large customers. Any failure to meet the standard of these customers can result
in a significant loss or reduction in sales. Many products and technologies are
incorporated into other products. As a result, some companies are highly
dependent on the performance of other technology companies. We cannot guarantee
that these customers will continue to place additional orders or will place
orders in similar quantities as in the past.
FOREIGN STOCKS. Because the Trust may invest in common stocks of foreign
companies, it involves additional risks that differ from an investment only in
domestic stocks. These risks include the risk of losses due to future political
and economic developments, international trade conditions, foreign withholding
taxes and restrictions on foreign investments and exchange of securities. The
Trust also involves the risk that fluctuations in exchange rates between the
U.S. dollar and foreign currencies may negatively affect the value of the
stocks. The Trust involves the risk that information about the stocks is not
publicly available or is inaccurate due to the absence of uniform accounting and
financial reporting standards. In addition, some foreign securities markets are
less liquid than U.S. markets. This could cause the Trust to buy stocks at a
higher price or sell stocks at a lower price than would be the case in a highly
liquid market. Foreign securities markets are often more volatile and involve
higher trading costs than U.S. markets, and foreign companies, securities
markets and brokers are also generally not subject to the same level of
supervision and regulation as in the U.S. Certain stocks may be held in the form
of American Depositary Receipts or other similar receipts ("ADRs"). ADRs
represent receipts for foreign common stock deposited with a custodian (which
may include the Trustee). The ADRs in the Trust trade in the U.S. in U.S.
dollars and are registered with the Securities and Exchange Commission. ADRs
generally involve the same types of risks as foreign common stock held directly.
Some ADRs may experience less liquidity than the underlying common stocks traded
in their home market.
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
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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, the
payment will be charged on the next business day. Units purchased subsequent to
the initial deferred sales charge payment will be subject to only that portion
of the deferred sales charge payments not yet collected. A portion of the Public
Offering Price includes an amount of Securities to pay for all or a portion of
the costs incurred in establishing your Trust, including the cost of preparing
documents relating to the Trust (such as the prospectus, trust agreement and
closing documents, federal and state registration fees, the initial fees and
expenses of the Trustee and legal and audit expenses). Beginning on August 10,
2001, the secondary market sales charge will be 4.00% and will not include
deferred payments. This sales charge will reduce by 0.5% on each following
November 20 to a minimum of 3.00%. The initial offering period sales charge is
reduced as follows (except if you are purchasing Units for a "wrap fee account"
as described below):
AGGREGATE
DOLLAR AMOUNT SALES CHARGE
OF UNITS PURCHASED* REDUCTION
--------------------- ----------------
$50,000 - $99,999 0.25%
$100,000 - $249,999 0.50
$250,000 - $499,999 1.00
$500,000 or more 2.00
---------------
*The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied on
whichever basis is more favorable to the investor.
Any sales charge reduction is the responsibility of the selling broker,
dealer or agent. If you purchase Units through registered broker-dealers who
charge periodic fees for financial planning, investment advisory or asset
management services, or provide these services as part of an investment account
where a comprehensive "wrap fee" charge is imposed, the sales charge on such
Units is reduced by 2.40% of the Public Offering Price.
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.
During the initial offering period, unitholders of any Van Kampen-sponsored
unit investment trust may utilize their redemption or termination proceeds from
such a trust to purchase Units of the Trust at the Public Offering Price per
Unit less 1%.
The 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 (25 Units for retirement accounts) but may
vary by selling firm. However, in connection with fully disclosed transactions
with the Sponsor, the minimum purchase requirement will be that number of Units
set forth in the contract between the Sponsor and the related broker or agent.
OFFERING PRICE. The Public Offering Price of Units will vary from the amounts
stated under "Summary of Essential Financial Information" in accordance with
fluctuations in the prices of the underlying Securities in the 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 as of the Evaluation Time. The value of
the Securities for purposes of secondary market transactions and redemptions is
described under "Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather the
entire pool of Securities in a Trust, 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. Units
are not registered in any foreign country and neither Van Kampen Funds Inc. nor
Gruntal take responsibility with respect to sales or offers made to sell Units
where sales are not legal. Sales or offers to sell in such countries may only be
made in accordance with applicable laws. The Trust is not registered with the
Swiss Federal Banking Commission, which acts as supervisory authority in mutual
fund matters in Switzerland. Accordingly, investors should note that the Units
may not be offered or distributed in or from Switzerland unless this offer or
distribution is exclusively addressed to Swiss institutional investors without
any public offering. During the initial offering period, Units will be sold at
the current Public Offering Price. When the initial offering period ends, Units
may be offered by this prospectus at the secondary market Public Offering Price.
Dealers and other selling agents can purchase Units at prices which represent
a concession or agency commission of 3.0% of the Public Offering Price per Unit
(or 65% of the maximum sales charge after November 20, 2001). Eligible foreign
dealers and selling agents can purchase Units at prices which represent a
concession or agency commission of 2.0% of the Public Offering Price per Unit
(or 45% of the maximum sales charge after November 20, 2001). For transactions
involving unitholders of other Van Kampen unit investment trusts who use their
redemption or termination proceeds to purchase Units of the Trust, dealers and
other selling agents will receive a concession equal to $.23 per Unit ($.16 in
the case of foreign dealers and agents) if the Units are sold subject to the
maximum deferred sales charge or 66% (45% in the case of foreign dealers and
agents) of the then current maximum remaining deferred sales charge if the Units
are sold subject to a lesser amount.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. Notwithstanding anything to the
contrary herein, in no case shall the total of any concessions, agency
commissions and any additional compensation allowed or paid to any broker,
dealer or other distributor of Units with respect to any individual transaction
exceed the total sales charge applicable to such transaction. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase of
Units and to change the amount of the concession or agency commission to dealers
and others from time to time.
Broker-dealers of the Trusts, 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
Trusts. Such payments are made by the Sponsor out of its own assets, and not out
of the assets of any Trust. These programs will not change the price Unitholders
pay for their Units or the amount that a Trust will receive from the Units sold.
SPONSOR AND OTHER COMPENSATION. Gruntal will receive a gross sales commission
equal to the total sales charge applicable to each transaction. Any sales charge
discount provided to investors will be borne by the selling dealer or agent. The
Sponsor will receive from Gruntal the difference between the gross sales
commission and 3.30% of the Public Offering Price per Unit. The Sponsor will
also pay Gruntal an additional 0.30% of the Public Offering Price per Unit sold
during the initial offering period out of its own assets. Gruntal will also
receive additional compensation equal to 0.25% of the public offering price per
Unit if it distributes at least $20 million during the initial offering period.
In addition, the Sponsor will realize a profit or loss as a result of the
difference between the price paid for the Securities by the Sponsor and the cost
of the Securities to each 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 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 Gruntal. In maintaining a secondary market, Gruntal will realize
profits or losses in the amount of any difference between the price at which
Units are purchased and the price at which Units are resold (which price
includes the applicable sales charge) or from a redemption of repurchased Units
at a price above or below the purchase price. Cash, if any, made available to
the Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the Sponsor,
subject to the limitations of the Securities Exchange Act of 1934.
The Sponsor or an affiliate may have participated in a public offering of one
or more of the Securities. The Sponsor, an affiliate or their employees may have
a long or short position in these Securities or related securities. An affiliate
may act as a specialist or market maker for these Securities. An officer,
director or employee of the Sponsor or an affiliate may be an officer or
director for issuers of the Securities.
Purchases and sales of Securities by your Trust may impact the value of the
Securities. This may especially be the case during the initial offering of
Units, upon Trust termination and in the course of satisfying large Unit
redemptions. Any publication of a list of Securities, or a list of anticipated
Securities, to be included in the Trust may also cause increased buying activity
in certain Securities. Once this information becomes public, investors may
purchase individual Securities appearing in such a publication and may do so
during or prior to the initial offering of Units. It is possible that these
investors could include investment advisory and brokerage firms of the Sponsor
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, Gruntal 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"). Gruntal 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 Gruntal of any tendered of Units for
redemption. If the Gruntal'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. Gruntal may sell
repurchased Units at the secondary market Public Offering Price per Unit.
RETIREMENT ACCOUNTS
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Units are available for purchase in connection with certain types of
tax-sheltered retirement plans, including Individual Retirement Accounts for the
individuals, Simplified Employee Pension Plans for employees, qualified plans
for self-employed individuals, and qualified corporate pension and profit
sharing plans for employees. The minimum purchase for these accounts is reduced
to 25 Units but may vary by selling firm. The purchase of Units may be limited
by the plans' provisions and does not itself establish such plans.
WRAP FEE AND ADVISORY ACCOUNTS
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You should consult the "Public Offering--General" section for specific
information on sales charge discounts applicable to wrap fee and other fee-based
accounts. That section governs the calculation of all sales charge discounts.
RIGHTS OF UNITHOLDERS
--------------------------------------------------------------------------------
DISTRIBUTIONS. Dividends and any net proceeds from the sale of Securities
received by a Trust will generally be distributed to Unitholders on each
Distribution Date to Unitholders of record on the preceding Record Date and as
determined by the Trustee. These dates are listed under "Summary of Essential
Financial Information". A person becomes a Unitholder of record on the date of
settlement (generally three business days after Units are ordered). Unitholders
will initially have distributions reinvested into additional Units but may elect
to receive distributions in cash. See "Rights of Unitholders--Reinvestment
Option".
Dividends received by a 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. Any distribution to Unitholders consists of each Unitholder's pro
rata share of the available cash in the Income and Capital Accounts as of the
related Record Date.
REINVESTMENT OPTION. Unitholders will have distributions automatically
reinvested in additional Units under the Automatic Reinvestment Option (to the
extent Units may be lawfully offered for sale in the state in which the
Unitholder resides). To participate in this reinvestment option, a Unitholder
should purchase Units with the Automatic Reinvestment Option CUSIP number. 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.
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 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 2,500 or more Units of a Trust for redemption may
request an in kind distribution of Securities equal to the Redemption Price per
Unit on the date of tender. Unitholders may not request an in kind distribution
during the five business days prior to the Trust's termination. The Trust will
not make in kind distributions of stocks held in foreign securities markets. An
in kind distribution will be made by the Trustee through the distribution of
each of the Securities in book-entry form to the account of the Unitholder's
broker-dealer at Depository Trust Company. Amounts representing fractional
shares will be distributed in cash. The Trustee may adjust the number of shares
of any Security included in a Unitholder's in kind distribution to facilitate
the distribution of whole shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in kind or sold, the size of a Trust will be, and
the diversity of a Trust may be, reduced. Sales may be required at a time when
Securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. The price received upon redemption may be more or less
than the amount paid by the Unitholder depending on the value of the Securities
at the time of redemption. Special federal income tax consequences will result
if a Unitholder requests an in kind distribution. See "Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in the Trust determined on the
basis of (i) the cash on hand in the Trust, (ii) the value of the Securities in
the Trust and (iii) dividends receivable on the Securities in the Trust trading
ex-dividend as of the date of computation, less (a) amounts representing taxes
or other governmental charges payable out of the Trust, (b) the accrued expenses
of the Trust and (c) any unpaid deferred sales charge payments. During the
initial offering period, the redemption price and the secondary market
repurchase price will include estimated organizational and offering costs. For
these purposes, the Evaluator may determine the value of the Securities in the
following manner: If the Securities are listed on a national or foreign
securities exchange or the Nasdaq Stock Market, Inc., this evaluation is
generally based on the closing sale prices on that exchange or market (unless it
is determined that these prices are inappropriate as a basis for valuation) or,
if there is no closing sale price on that exchange or market, at the closing bid
prices. If the Securities are not so listed or, if so listed and the principal
market therefor is other than on the exchange or market, the evaluation may be
based on the current bid price on the over-the-counter market. If current bid
prices are unavailable or inappropriate, the evaluation may be determined (a) on
the basis of current bid prices for comparable securities, (b) by appraising the
Securities on the bid side of the market or (c) by any combination of the above.
The value of any foreign securities is based on the applicable currency exchange
rate as of the Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the SEC determines that
trading on that Exchange is restricted or an emergency exists, as a result of
which disposal or evaluation of the Securities is not reasonably practicable, or
for other periods as the SEC may permit.
CERTIFICATES. Ownership of Units is evidenced in book-entry form unless a
Unitholder makes a written request to the Trustee that ownership be in
certificate form. Units are transferable by making a written request to the
Trustee and, in the case of Units in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not limited
to, trust instruments, certificates of death, appointments as executor or
administrator or certificates of corporate authority. Fractional certificates
will not be issued. The Trustee may require a Unitholder to pay a reasonable fee
for each certificate reissued or transferred and to pay any governmental charge
that may be imposed in connection with each transfer or interchange. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
REPORTS PROVIDED. Unitholders will receive a statement of dividends and other
amounts received by the Trust for each distribution. Within a reasonable time
after the end of each year, each person who was a Unitholder during that year
will receive a statement describing dividends and capital received, actual Trust
distributions, Trust expenses, a list of the Securities and other Trust
information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
TRUST ADMINISTRATION
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PORTFOLIO ADMINISTRATION. The Trust is not 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. The Trustee must
reject any offer for securities or property in exchange for the Securities. 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 the Trust sells Securities, the composition and diversity of the
Securities in the Trust may be altered. In order to obtain the best price for
the Trust, it may be necessary for the Supervisor to specify minimum amounts
(generally 100 shares) in which blocks of Securities are to be sold. In
effecting purchases and sales of the Trust's portfolio securities, the Sponsor
may direct that orders be placed with and brokerage commissions be paid to
brokers, including brokers which may be affiliated with the Trust, the Sponsor
or dealers participating in the offering of Units. In addition, in selecting
among firms to handle a particular transaction, the Sponsor may take into
account whether the firm has sold or is selling units of unit investment trusts
which it sponsors.
AMENDMENT OF THE TRUST AGREEMENT. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
TERMINATION. The Trust will terminate on the Mandatory Termination Date or
upon the sale or other disposition of the last Security held in the Trust. The
Trust may be terminated at any time with consent of Unitholders representing
two-thirds of the outstanding Units or by the Trustee when the value of the
Trust is less than $500,000 ($3,000,000 if the value of the Trust has exceeded
$15,000,000) (the "Minimum Termination Value"). Unitholders will be notified of
any termination. The Trustee may begin to sell Securities in connection with a
Trust termination during a period beginning nine business days before, and no
later than, the Mandatory Termination Date. Approximately thirty days before
this date, the Trustee will notify Unitholders of the termination and provide a
form enabling qualified Unitholders to elect an in kind distribution of
Securities. See "Rights of Unitholders--Redemption of Units". This form must be
returned at least five business days prior to the Mandatory Termination Date.
Unitholders will receive a final cash distribution within a reasonable time
after the Mandatory Termination Date. All distributions will be net of Trust
expenses and costs. Unitholders will receive a final distribution statement
following termination. The Information Supplement contains further information
regarding termination of the Trust. See "Additional Information".
LIMITATIONS ON LIABILITIES. The Sponsor, 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.
GRUNTAL. Gruntal & Co., L.L.C. is a full-service investment bank
headquartered at One Liberty Plaza in New York, New York. Established in 1880,
Gruntal has a proud history of client service, financial stability and growth.
Today, Gruntal has over 2,100 employees in 29 offices across the United States.
The scope of Gruntal's business spans a broad range of financial services
including investment banking, research, trading, asset management and brokerage
services to individuals, institutions and corporations worldwide.
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 shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law. Additional information
regarding the Trustee is set forth in the Information Supplement, including the
Trustee's qualifications and duties, its ability to resign, the effect of a
merger involving the Trustee and the Sponsor's ability to remove and replace the
Trustee. See "Additional Information".
PERFORMANCE INFORMATION. The Sponsor may from time to time in its advertising
and sales materials compare the then current estimated returns on the Trust and
returns over specified time periods on other similar trusts (which may show
performance net of expenses and charges which the Trust would have charged) with
returns on other taxable investments such as the common stocks comprising the
Dow Jones Industrial Average, the S&P 500, other investment indices, corporate
or U.S. government bonds, bank CDs, money market accounts or money market funds,
or with performance data from Lipper Analytical Services, Inc., Morningstar
Publications, Inc. or various publications, each of which has characteristics
that may differ from those of the Trust. Information on percentage changes in
the dollar value of Units may be included from time to time in advertisements,
sales literature, reports and other information furnished to current or
prospective Unitholders. Total return figures may not be averaged and may not
reflect deduction of the sales charge, which would decrease return. No provision
is made for any income taxes payable. Past performance may not be indicative of
future results. The Trust portfolio is not managed and Unit price and return
fluctuate with the value of common stocks in the 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). Unitholders should consult their tax advisers regarding
the recognition of gains and losses for federal income tax purposes. Unitholders
should consult their tax advisers regarding the recognition of gains and losses
for federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the 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.
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. Unitholders should
consult their tax advisors with respect to the limitations on and modifications
to the dividends received deduction.
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 a Trust as miscellaneous
itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the
Trust or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. The Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers other than
corporations, net capital gain (which is defined as net long-term capital gain
over net short-term capital loss for the taxable year) realized from property
(with certain exclusions) is subject to a maximum marginal stated tax rate of
20% (10% in the case of certain taxpayers in the lowest tax bracket). Capital
gain or loss is long-term if the holding period for the asset is more than one
year, and is short-term if the holding period for the asset is one year or less.
The date on which a Unit is acquired (i.e., the "trade date") is excluded for
purposes for determining the holding period of the Unit. Capital gains realized
from assets held for one year or less are taxed at the same rates as ordinary
income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the 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 the Securities in the Trust. A Unitholder
may also under certain circumstances request an In Kind Distribution of the
Securities in the Trust upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units". The Unitholder requesting an In Kind
Distribution will be liable for expenses related thereto (the "Distribution
Expenses") and the amount of such In Kind Distribution will be reduced by the
amount of the Distribution Expenses. See "Rights of Unitholders--Redemption of
Units". As previously discussed, prior to the redemption of Units or the
termination of 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
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the 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 held by the Trust.
Because the 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 the 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 the 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 not 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 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 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 accrue on a daily basis. The
deferred sales charge, 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 Portfolio are
available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of this information may be obtained, after paying a
duplication fee, by electronic request at the following e-mail address:
[email protected] or by writing the SEC's Public Reference Section, Washington,
D.C. 20549-0102.
TABLE OF CONTENTS
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TITLE PAGE
----- ----
Summary of Essential Financial Information.. 2
Fee Table................................... 3
T-Commerce Growth 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-6
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-15
Additional Information...................... A-16
EMSPRO263
PROSPECTUS
--------------------------------------------------------------------------------
NOVEMBER 20, 2000
T-COMMERCE GROWTH TRUST,
SERIES 1
Gruntal & Co.
Investment Advice since 1880
14 Wall Street, 20th Floor
New York, NY 10005
(800) 223-7634
Please retain this prospectus for future reference.
INFORMATION SUPPLEMENT
VAN KAMPEN FOCUS PORTFOLIOS, SERIES 263
--------------------------------------------------------------------------------
This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the Prospectus. This
Information Supplement should be read in conjunction with the Prospectus. This
Information Supplement is not a prospectus, does not include all of the
information that an investor should consider before investing in the Trust and
may not be used to offer or sell Units without the Prospectus. Copies of the
Prospectus can be obtained by contacting the Sponsor at 1 Parkview Plaza, P.O.
Box 5555, Oakbrook Terrace, Illinois 60181-5555 or by contacting your broker.
This Information Supplement is dated as of the date of the Prospectus and all
capitalized terms have been defined in the Prospectus.
TABLE OF CONTENTS
PAGE
Risk Factors ................................. 2
Sponsor Information .......................... 4
Trustee Information .......................... 5
Trust Termination ............................ 5
RISK FACTORS
PRICE VOLATILITY. Because the Trust invests in common stocks, you should
understand the risks of investing in common stocks before purchasing Units.
These risks include the risk that the financial condition of the company or the
general condition of the stock market may worsen and the value of the stocks
(and therefore Units) will fall. Common stocks are especially susceptible to
general stock market movements. The value of common stocks often rises or falls
rapidly and unpredictably as market confidence and perceptions of companies
change. These perceptions are based on factors including expectations regarding
government economic policies, inflation, interest rates, economic expansion or
contraction, political climates and economic or banking crises. The value of
Units will fluctuate with the value of the stocks in the Trust and may be more
or less than the price you originally paid for your Units. As with any
investment, we cannot guarantee that the performance of the Trust will be
positive over any period of time. Because the Trust is unmanaged, the Trustee
will not sell stocks in response to market fluctuations as is common in managed
investments.
DIVIDENDS. Common stocks represent ownership interests in a company and are
not obligations of the company. Accordingly, common stockholders have a right to
receive payments from the company that is subordinate to the rights of
creditors, bondholders or preferred stockholders of the company. This means that
common stockholders have a right to receive dividends only if a company's board
of directors declares a dividend and the company has provided for payment of all
of its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if the
company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.
TECHNOLOGY ISSUERS. The Trust is concentrated in issuers within the
technology industry. A portfolio concentrated in a single industry may present
more risk than a portfolio broadly diversified over several industries. The
Trust, and therefore Unitholders, may be particularly susceptible to a negative
impact resulting from adverse market conditions or other factors affecting
technology issuers because any negative impact on the technology industry will
not be diversified among issuers within other unrelated industries. Accordingly,
an investment in Units should be made with an understanding of the
characteristics of the technology industry and the risks which such an
investment may entail.
Technology companies generally include companies involved in the development,
design, manufacture and sale of computers, computer related equipment, computer
networks, communications systems, telecommunications products, electronic
products, and other related products, systems and services. The market for
technology products and services, especially those specifically related to the
Internet, is characterized by rapidly changing technology, rapid product
obsolescence, cyclical market patterns, evolving industry standards and frequent
new product introductions. The success of the issuers of the Securities depends
in substantial part on the timely and successful introduction of new products.
An unexpected change in one or more of the technologies affecting an issuer's
products or in the market for products based on a particular technology could
have a material adverse affect on an issuer's operating results. Furthermore,
there can be no assurance that the issuers of the Securities will be able to
respond timely to compete in the rapidly developing marketplace.
The market for certain technology products and
services may have only recently begun to develop, is rapidly evolving and is
characterized by an increasing number of market entrants. Additionally, certain
technology companies may have only recently commenced operations or offered
equity securities to the public. Such companies are in the early stage of
development and have a limited operating history on which to analyze future
operating results. It is important to note that following its initial public
offering a security is likely to experience substantial stock price volatility
and speculative trading. Accordingly, there can be no assurance that upon
redemption of Units or termination of a Trust a Unitholder will receive an
amount greater than or equal to the Unitholder's initial investment.
Based on trading history, factors such as announcements of new products or
development of new technologies and general conditions of the industry have
caused and are likely to cause the market price of technology common stocks to
fluctuate substantially. In addition, technology company stocks have experienced
extreme price and volume fluctuations that often have been unrelated to the
operating performance of such companies. This market volatility may adversely
affect the market price of the Securities and therefore the ability of a
Unitholder to redeem units, or roll over Units into a new trust, at a price
equal to or greater than the original price paid for such Units.
Some key components of certain products of technology issuers are currently
available only from single sources. There can be no assurance that in the future
suppliers will be able to meet the demand for components in a timely and cost
effective manner. Accordingly, an issuer's operating results and customer
relationships could be adversely affected by either an increase in price for, or
and interruption or reduction in supply of, any key components. Additionally,
many technology issuers are characterized by a highly concentrated customer base
consisting of a limited number of large customers who may require product
vendors to comply with rigorous and constantly developing industry standards.
Any failure to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies are incorporated into
other related products, certain companies are often highly dependent on the
performance of other computer, electronics and communications companies. There
can be no assurance that these customers will place additional orders, or that
an issuer of Securities will obtain orders of similar magnitude as past orders
form other customers. Similarly, the success of certain companies is tied to a
relatively small concentration of products or technologies with intense
competition between companies. Accordingly, a decline in demand of such
products, technologies or from such customers could have a material adverse
impact on issuers of the Securities.
FOREIGN STOCKS. Because the Trust may invest in foreign common stocks, it
involves additional risks that differ from an investment in domestic stocks.
Investments in foreign securities may involve a greater degree of risk than
those in domestic securities. There is generally less publicly available
information about foreign companies in the form of reports and ratings similar
to those that are published about issuers in the United States. Also, foreign
issuers are generally not subject to uniform accounting, auditing and financial
reporting requirements comparable to those applicable to United States issuers.
With respect to certain foreign countries, there is the possibility of adverse
changes in investment or exchange control regulations, expropriation,
nationalization or confiscatory taxation, limitations on the removal of funds or
other assets of the Trust, political or social instability, or diplomatic
developments which could affect United States investments in those countries.
Moreover, industrial foreign economies may differ favorably or unfavorably from
the United States' economy in terms of growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. Foreign securities markets are generally not as developed or
efficient as those in the United States. While growing in volume, they usually
have substantially less volume than the New York Stock Exchange, and securities
of some foreign issuers are less liquid and more volatile than securities of
comparable United States issuers. Fixed commissions on foreign exchanges are
generally higher than negotiated commissions on United States exchanges. There
is generally less government supervision and regulation of securities exchanges,
brokers and listed issuers than in the United States.
FOREIGN CURRENCIES. The Trust may also involve the risk that fluctuations
in exchange rates between the U.S. dollar and foreign currencies may negatively
affect the value of the stocks. For example, if a foreign stock rose 10% in
price but the U.S. dollar gained 5% against the related foreign currency, a U.S.
investor's return would be reduced to about 5%. This is because the foreign
currency would "buy" fewer dollars or, conversely, a dollar would buy more of
the foreign currency. Many foreign currencies have fluctuated widely against the
U.S. dollar for a variety of reasons such as supply and demand of the currency,
investor perceptions of world or country economies, political instability,
currency speculation by institutional investors, changes in government policies,
buying and selling of currencies by central banks of countries, trade balances
and changes in interest rates. The Trust's foreign currency transactions will be
conducted with foreign exchange dealers acting as principals on a spot (i.e.,
cash) buying basis. These dealers realize a profit based on the difference
between the price at which they buy the currency (bid price) and the price at
which they sell the currency (offer price). The Evaluator will estimate the
currency exchange rates based on current activity in the related currency
exchange markets, however, due to the volatility of the markets and other
factors, the estimated rates may not be indicative of the rate the Trust might
obtain had the Trustee sold the currency in the market at that time.
LIQUIDITY. Whether or not the stocks in the Trust are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
ADDITIONAL UNITS. The Sponsor may create additional Units of the Trust by
depositing into the Trust additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Trust will pay brokerage fees.
VOTING. Only the Trustee may sell or vote the stocks in the Trust. While
you may sell or redeem your Units, you may not sell or vote the stocks in the
Trust. The Sponsor will instruct the Trustee how to vote the stocks. The Trustee
will vote the stocks in the same general proportion as shares held by other
shareholders if the Sponsor fails to provide instructions.
SPONSOR INFORMATION
Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of your
Trust. The Sponsor is an indirect subsidiary of Van Kampen Investments Inc. Van
Kampen Investments Inc. is a wholly owned subsidiary of MSAM Holdings II, Inc.,
which in turn is a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.
Morgan Stanley Dean Witter & Co., together with various of its directly and
indirectly owned subsidiaries, is engaged in a wide range of financial services
through three primary businesses: securities, asset management and credit
services. These principal businesses include securities underwriting,
distribution and trading; merger, acquisition, restructuring and other corporate
finance advisory activities; merchant banking; stock brokerage and research
services; credit services; asset management; trading of futures, options,
foreign exchange commodities and swaps (involving foreign exchange, commodities,
indices and interest rates); and real estate advice, financing and investing.
Van Kampen Funds Inc. specializes in the underwriting and distribution of
unit investment trusts and mutual funds with roots in money management dating
back to 1926. The Sponsor is a member of the National Association of Securities
Dealers, Inc. and has its principal offices at 1 Parkview Plaza, P.O. Box 5555,
Oakbrook Terrace, Illinois 60181-5555, (630) 684-6000. As of November 30, 1999,
the total stockholders' equity of Van Kampen Funds Inc. was $141,554,861
(audited). (This paragraph relates only to the Sponsor and not to the Trust or
to any other Series thereof. The information is included herein only for the
purpose of informing investors as to the financial responsibility of the Sponsor
and its ability to carry out its contractual obligations. More detailed
financial information will be made available by the Sponsor upon request.)
As of September 30, 2000, the Sponsor and its Van Kampen affiliates managed
or supervised more than $100 billion of investment products. The Sponsor and its
Van Kampen affiliates offer more than 50 open-end mutual funds, 37 closed-end
funds, and have sponsored over 2,700 series of fixed income and equity unit
investment trusts.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE INFORMATION
The Trustee is The Bank of New York, a trust company organized under the
laws of New York. The Bank of New York has its unit investment trust division
offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668. The Bank
of New York is subject to supervision and examination by the Superintendent of
Banks of the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder. Such books and records shall be open to
inspection by any Unitholder at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute, rule or
regulation. The Trustee is required to keep a certified copy or duplicate
original of the Trust Agreement on file in its office available for inspection
at all reasonable times during the usual business hours by any Unitholder,
together with a current list of the Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
TRUST TERMINATION
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Trust then outstanding or by the
Trustee when the value of the Securities owned by the Trust, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of the Trust has
exceeded $15,000,000). The Trust will be liquidated by the Trustee in the event
that a sufficient number of Units of the Trust not yet sold are tendered for
redemption by the Sponsor, so that the net worth of such Trust would be reduced
to less than 40% of the value of the Securities at the time they were deposited
in the Trust. If the Trust is liquidated because of the redemption of unsold
Units by the Sponsor, the Sponsor will refund to each purchaser of Units the
entire sales charge paid by such purchaser. The Trust Agreement will terminate
upon the sale or other disposition of the last Security held thereunder, but in
no event will it continue beyond the Mandatory Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities may begin to be sold in
connection with the termination of the Trust. The Sponsor will determine the
manner, timing and execution of the sales of the Securities. The Sponsor shall
direct the liquidation of the Securities in such manner as to effectuate orderly
sales and a minimal market impact. In the event the Sponsor does not so direct,
the Securities shall be sold within a reasonable period and in such manner as
the Trustee, in its sole discretion, shall determine. At least 30 days before
the Mandatory Termination Date the Trustee will provide written notice of any
termination to all Unitholders of the appropriate Trust and in the case of a
Trust will include with such notice a form to enable Unitholders owning the
minimum number of Units described in the Prospectus to request an in kind
distribution of the Securities. To be effective, this request must be returned
to the Trustee at least five business days prior to the Mandatory Termination
Date. On the Mandatory Termination Date (or on the previous business day if a
holiday) the Trustee will deliver each requesting Unitholder's pro rata number
of whole shares of the Securities in the Trust to the account of the
broker-dealer or bank designated by the Unitholder at Depository Trust Company.
The value of the Unitholder's fractional shares of the Securities will be paid
in cash. Unitholders not requesting an in kind distribution will receive a cash
distribution from the sale of the remaining Securities within a reasonable time
following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of the Trust any accrued costs,
expenses, advances or indemnities provided by the Trust Agreement, including
estimated compensation of the Trustee, costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or other
governmental charges. Any sale of Securities in the Trust upon termination may
result in a lower amount than might otherwise be realized if such sale were not
required at such time. The Trustee will then distribute to each Unitholder of
each Trust his pro rata share of the balance of the Income and Capital Accounts.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
CONTENTS OF REGISTRATION 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 263, 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 263 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 20th day of November, 2000.
Van Kampen Focus Portfolios, Series 263
By Van Kampen Funds Inc.
By /s/Christine K. Putong
-----------------------------------------
Assistant Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below on November
20, 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.
