FILE NO. 333-178903
CIK #1531276
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
ON
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 UNIT TRUSTS, SERIES 1202
B. Name of Depositor: VAN KAMPEN FUNDS INC.
C. Complete address of Depositor's principal executive offices:
11 Greenway Plaza
Houston, Texas 77046-1173
D. Name and complete address of agents for service:
PAUL HASTINGS LLP VAN KAMPEN FUNDS INC.
Attention: Michael R. Rosella, Esq. Attention: John M. Zerr, Esq.
75 East 55th Street 11 Greenway Plaza
New York, New York 10022 Houston, Texas 77046-1173
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E. Title of securities being registered: Units of fractional 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
immediately upon filing on March 15, 2012, pursuant to Rule 487.
BRIC Opportunity Portfolio 2012-2
Global Alternative Energy Portfolio 2012-2
Each unit investment trust named above (the "Portfolios"), included in Van
Kampen Unit Trusts, Series 1202, invests in a portfolio of stocks. Of course,
we cannot guarantee that a Portfolio will achieve its objective.
March 15, 2012
You should read this prospectus and retain it for future reference.
The Securities and Exchange Commission has not approved or disapproved of the
Units or passed upon the adequacy or accuracy of this prospectus.
Any contrary representation is a criminal offense.
INVESCO
BRIC Opportunity Portfolio
Investment Objective. The Portfolio seeks above-average capital
appreciation.
Principal Investment Strategy. The Portfolio seeks to achieve its objective
by investing in a portfolio of stocks of companies headquartered or
incorporated, or with a significant presence, in Brazil, Russia, India or China
(known as the "BRIC" countries). The Portfolio was selected by Horizon
Investment Services, LLC (the "Portfolio Consultant" for the Portfolio) using
its Quadrix rating system. Quadrix is a proprietary system that seeks to
identify factors that contribute to historical performance of a group of
stocks. Van Kampen Funds Inc. is the Sponsor of the Portfolio.
In selecting the portfolio securities, the Portfolio Consultant screened
Brazilian, Russian, Indian, and Chinese companies with shares traded in the
United States. Companies identified as being from Hong Kong were treated as
Chinese provided they are headquartered or incorporated in China. The Portfolio
Consultant then analyzed these stocks using its Quadrix rating system,
eliminating any securities that did not have sufficient data available for
meaningful analysis. The Portfolio Consultant then eliminated securities based
on analysis of market capitalization and recent historical trading volume as
compared to all other securities and as compared to other securities in each
individual BRIC country group. The Portfolio Consultant then ranked the
remaining stocks based on the following factors:
o Total Return for the Past Six Months -- The percentage return on a
stock over most recent six months, reflecting dividends and change in
stock price.
o Total Return for the Past Twelve Months -- The percentage return on a
stock over most recent twelve months, reflecting dividends and change
in stock price.
o Price/Book Value Ratio -- Stock price divided by current book value
per share.
o One-Year Earnings Growth -- The difference between operating earnings
per share in the most recent four quarters divided by operating
earnings per share in the four quarters one year earlier, expressed as
a percentage.
o Price/Earnings Ratio -- Stock price divided by earnings per share
from operations over past four quarters.
The Portfolio Consultant selected 25 of the top ranked stocks for the
Portfolio based on this analysis, seeking to create a portfolio diversified
across all of the BRIC countries.
The Portfolio is designed as part of a long-term investment strategy. The
Sponsor may offer a subsequent series of the portfolio when the current
Portfolio terminates. As a result, you may achieve more consistent overall
results by following the strategy over several years if subsequent series are
available. For more information see "Rights of Unitholders--Rollover".
Principal Risks. As with all investments, you can lose money by investing in
this Portfolio. The Portfolio also might not perform as well as you expect.
This can happen for reasons such as these:
o Security prices will fluctuate. The value of your investment may fall
over time.
o An issuer may be unwilling or unable to declare dividends in the
future, or may reduce the level of dividends declared. This may result
in a reduction in the value of your Units.
o The financial condition of an issuer may worsen or its credit ratings
may drop, resulting in a reduction in the value of your Units. This
may occur at any point in time, including during the initial offering
period.
o Stocks of foreign companies in the Portfolio present risks beyond
those of U.S. issuers. These risks may include market and political
factors related to the company's foreign market, international trade
conditions, less regulation, smaller or less liquid markets, increased
volatility, differing accounting practices and changes in the value of
foreign currencies.
o The Portfolio is considered to be concentrated in the emerging
markets of Brazil, Russia, India and China. Investing in emerging
markets entails the risk that news and events unique to a country or
region will affect those markets and their issuers. Countries with
emerging markets may have relatively unstable governments, may present
the risks of nationalization of businesses, restrictions on foreign
ownership and prohibitions on the repatriation of assets.
o The Portfolio Consultant's stock selection strategy may not be
successful in identifying stocks that appreciate in value. The
Portfolio may not achieve its objective of this happens.
o We do not actively manage the Portfolio. Except in limited
circumstances, the Portfolio will hold, and continue to buy, shares of
the same securities even if their market value declines.
Fee Table
The amounts below are estimates of the direct and indirect expenses that
you may incur based on a $10 Public Offering Price per Unit. Actual expenses
may vary.
As a % of
Public Amount
Offering Per 100
Sales Charge Price Units
--------- ---------
Initial sales charge 1.000% $10.000
Deferred sales charge 1.450 14.500
Creation and development fee 0.500 5.000
--------- ---------
Maximum sales charge 2.950% $29.500
========= =========
As a % Amount
of Net Per 100
Assets Units
--------- ---------
Estimated Organization Costs 0.518% $ 5.000
========= =========
Estimated Annual Expenses
Trustee's fee and operating expenses 0.194% $ 1.877
Supervisory, bookkeeping
and administrative fees 0.041 0.400
--------- ---------
Total 0.235% $ 2.277*
========= =========
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Example
This example helps you compare the cost of the Portfolio with other unit
trusts and mutual funds. In the example we assume that the expenses do not
change and that the Portfolio's annual return is 5%. Your actual returns and
expenses will vary. This example also assumes that you continue to follow the
Portfolio strategy and roll your investment, including all distributions, into
a new trust each year subject to a reduced rollover sales charge of 1.95%.
Based on these assumptions, you would pay the following expenses for every
$10,000 you invest in the Portfolio:
1 year $ 368
3 years 916
5 years 1,488
10 years 3,030
------------------
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* The estimated annual expenses are based upon the estimated trust size for
the Portfolio determined as of the initial date of deposit. Because certain
of the operating expenses are fixed amounts, if the Portfolio does not
reach the estimated size, or if the value of the Portfolio or number of
outstanding units decline over the life of the trust, or if the actual
amount of the operating expenses exceeds the estimated amounts, the actual
amount of the operating expenses per 100 units would exceed the estimated
amounts. In some cases, the actual amount of operating expenses may
substantially differ from the amounts reflected above.
The maximum sales charge is 2.95% of the Public Offering Price per Unit.
The initial sales charge is the difference between the total sales charge
(maximum of 2.95% of the Public Offering Price) and the sum of the remaining
deferred sales charge and the total creation and development fee. The deferred
sales charge is fixed at $0.145 per Unit and accrues daily from July 10, 2012
through December 9, 2012. Your Portfolio pays a proportionate amount of this
charge on the 10th day of each month beginning in the accrual period until paid
in full. The combination of the initial and deferred sales charges comprises
the "transactional sales charge". The creation and development fee is fixed at
$0.05 per Unit and is paid at the earlier of the end of the initial offering
period (anticipated to be three months) or six months following the Initial
Date of Deposit.
--------------------------------------------------------------------------------
Essential Information
Unit Price at Initial Date of Deposit $10.0000
Initial Date of Deposit March 15, 2012
Mandatory Termination Date June 14, 2013
Estimated Net Annual Income1 $0.22856 per Unit
Estimated Initial Distribution1 $0.05 per Unit
Record Dates 10th day of July 2012,
October 2012 and January 2013
Distribution Dates 25th day of July 2012,
October 2012 and January 2013
CUSIP Numbers Cash -- 92121V623
Reinvest -- 92121V631
Wrap Fee Cash -- 92121V649
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Wrap Fee Reinvest -- 92121V656
1 As of close of business day prior to Initial Date of Deposit. The actual
distributions you receive will vary from the estimated amount due to
changes in the Portfolio's fees and expenses, in actual income received by
the Portfolio, currency fluctuations and with changes in the Portfolio such
as the acquisition or liquidation of securities. See "Rights of
Unitholders--Estimated Distributions."
BRIC Opportunity Portfolio 2012-2
Portfolio
------------------------------------------------------------------------------------------
Current Cost of
Number Market Value Dividend Securities to
of Shares Name of Issuer (1) per Share (2) Yield (3) Portfolio (2)
------------------------------------------------------------------------------------------
Brazil - 40.13%
282 BRF - Brasil Foods S.A. - ADR $ 21.2500 1.75% $ 5,992.50
143 Companhia de Bebidas das
Americas - ADR 41.2300 2.55 5,895.89
80 Companhia de Saneamento Basico
do Estado de Sao Paulo - ADR 74.9500 2.50 5,996.00
253 Companhia Energetica de Minas
Gerais - CEMIG - ADR 23.5900 4.37 5,968.27
242 Companhia Paranaense de
Energia - COPEL - ADR 24.4900 2.36 5,926.58
184 CPFL Energia S.A. - ADR 32.3100 4.56 5,945.04
198 Embraer S.A. - ADR 30.6300 3.02 6,064.74
281 Itau Unibanco Holding S.A. - ADR 21.2100 2.61 5,960.01
264 Ultrapar Participacoes S.A. - ADR 22.2900 2.64 5,884.56
258 Vale S.A. - ADR 23.3800 3.74 6,032.04
China - 19.95%
52 China Petroleum & Chemical Corporation
(Sinopec Corporation) - ADR 114.2200 2.80 5,939.44
310 Guangshen Railway Company, Ltd. - ADR 18.8900 3.30 5,855.90
240 Huaneng Power International, Inc. - ADR 24.7200 4.44 5,932.80
40 PetroChina Company, Ltd. - ADR 147.8100 3.14 5,912.40
406 WuXi PharmaTech (Cayman), Inc. - ADR 14.8100 0.00 6,012.86
Hong Kong - 7.93%
109 China Mobile, Ltd. - ADR 54.0300 3.40 5,889.27
332 China Unicom (Hong Kong), Ltd. - ADR 17.7500 0.62 5,893.00
India - 20.02%
176 Dr. Reddy's Laboratories, Ltd. - ADR 33.8600 0.68 5,959.36
171 HDFC Bank, Ltd. - ADR 34.6000 0.55 5,916.60
158 ICICI Bank, Ltd. - ADR 37.6900 1.60 5,955.02
102 Infosys Technologies, Ltd. - ADR 58.7100 1.19 5,988.42
258 MakeMyTrip, Ltd. 23.0000 0.00 5,934.00
Russia - 11.97%
92 LUKOIL - ADR 64.6000 2.68 5,943.20
322 Mobile TeleSystems OJSC - ADR 18.2600 4.87 5,879.72
524 VimpelCom, Ltd. - ADR 11.3900 5.90 5,968.36
---------- ------------
5,477 $ 148,645.98
========== ============
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See "Notes to Portfolios".
Global Alternative Energy Portfolio
Investment Objective. The Portfolio seeks total return.
Principal Investment Strategy. The Portfolio seeks to achieve its objective
by investing in a portfolio of 25 stocks derived from the Ardour Global
Index[SM] (Composite) (the "AGIGL Index"). The AGIGL Index is designed to serve
as an equity benchmark for globally traded stocks of companies which are
principally engaged in the field of alternative energy technologies. Companies
are selected for inclusion in the AGIGL Index based on minimum revenue
thresholds, so that all main alternative energy industry sectors, as defined by
the AGIGL Index Committee, are represented. These primary sectors include
Alternative Energy Resources, Distributed Generation, Environmental
Technologies, Energy Efficiency and Enabling Technologies. The AGIGL Index is a
constituent of the Ardour Global Alternative Energy Indexes[SM] , which were
introduced on 05/17/06.
In selecting securities from the AGIGL Index, Van Kampen Funds Inc., the
Sponsor, considered factors such as: daily trading volume and other liquidity
factors; principal trading exchange; and diversification by geography and
sub-sector within the alternative energy industry.
The Portfolio is designed as part of a long-term investment strategy. The
Sponsor may offer a subsequent series of the portfolio when the current
Portfolio terminates. As a result, you may achieve more consistent overall
results by following the strategy over several years if subsequent series are
available. For more information see "Rights of Unitholders--Rollover".
Principal Risks. As with all investments, you can lose money by investing in
this Portfolio. The Portfolio also might not perform as well as you expect.
This can happen for reasons such as these:
o Security prices will fluctuate. The value of your investment may fall
over time.
o An issuer may be unwilling or unable to declare dividends in the
future, or may reduce the level of dividends declared. This may result
in a reduction in the value of your Units.
o The financial condition of an issuer may worsen or its credit ratings
may drop, resulting in a reduction in the value of your Units. This
may occur at any point in time, including during the initial offering
period.
o The Portfolio is considered to be concentrated in securities issued
by companies in the alternative energy industry. A concentration makes
the Portfolio subject to more risk. Specifically, the alternative
energy industry can be significantly affected by factors such as:
obsolescence of existing technology, short product cycles, legislation
resulting in more strict government regulations and enforcement
policies, fluctuations in energy prices and supply and demand of
alternative energy fuels, energy conservation, the success of
exploration projects, the supply of and demand for oil and gas, world
events and economic conditions. In addition, shares in the companies
involved in this industry have been significantly more volatile than
shares of companies operating in other more established industries and
the securities included in the Portfolio may be subject to sharp price
declines. This industry is relatively nascent and under-researched in
comparison to more established and mature sectors, and should
therefore be regarded as having greater investment risk.
o Stocks of foreign companies in the Portfolio present risks beyond
those of U.S. issuers. These risks may include market and political
factors related to the company's foreign market, international trade
conditions, less regulation, smaller or less liquid markets, increased
volatility, differing accounting practices and changes in the value of
foreign currencies.
o The Portfolio invests significantly in stocks of small capitalization
companies. These stocks are often more volatile and have lower trading
volumes than stocks of larger companies. Small capitalization
companies may have limited products or financial resources, management
inexperience and less publicly available information.
o The Portfolio does not seek to replicate all of the components of the
AGIGL Index or its component weightings and the stocks in the
Portfolio will not change if the index components, or their weightings
within the index, change. The performance of the Portfolio will not
correspond with the AGIGL Index for this reason and because the
Portfolio incurs a sales charge and expenses. The Portfolio is not
intended to replicate the performance of the index.
o We do not actively manage the Portfolio. Except in limited
circumstances, the Portfolio will hold, and continue to buy, shares of
the same securities even if their market value declines.
Fee Table
The amounts below are estimates of the direct and indirect expenses that
you may incur based on a $10 Public Offering Price per Unit. Actual expenses
may vary.
As a % of
Public Amount
Offering Per 100
Sales Charge Price Units
--------- ---------
Initial sales charge 1.000% $10.000
Deferred sales charge 2.450 24.500
Creation and development fee 0.500 5.000
--------- ---------
Maximum sales charge 3.950% $39.500
========= =========
As a % Amount
of Net Per 100
Assets Units
--------- ---------
Estimated Organization Costs 0.523% $ 5.000
========= =========
Estimated Annual Expenses
Trustee's fee and operating expenses 1.048% $10.017
Supervisory, bookkeeping
and administrative fees 0.042 0.400
--------- ---------
Total 1.090% $10.417*
========= =========
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Example
This example helps you compare the cost of the Portfolio with other unit
trusts and mutual funds. In the example we assume that the expenses do not
change and that the Portfolio's annual return is 5%. Your actual returns and
expenses will vary. This example also assumes that you continue to follow the
Portfolio strategy and roll your investment, including all distributions, into
a new trust every two years subject to the applicable reduced rollover sales
charge. Based on these assumptions, you would pay the following expenses for
every $10,000 you invest in the Portfolio:
1 year $ 549
3 years 1,116
5 years 1,706
10 years 3,084
------------------
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* The estimated annual expenses are based upon the estimated trust size for
the Portfolio determined as of the initial date of deposit. Because certain
of the operating expenses are fixed amounts, if the Portfolio does not
reach the estimated size, or if the value of the Portfolio or number of
outstanding units decline over the life of the trust, or if the actual
amount of the operating expenses exceeds the estimated amounts, the actual
amount of the operating expenses per 100 units would exceed the estimated
amounts. In some cases, the actual amount of operating expenses may
substantially differ from the amounts reflected above.
The maximum sales charge is 3.95% of the Public Offering Price per Unit.
The initial sales charge is the difference between the total sales charge
(maximum of 3.95% of the Public Offering Price) and the sum of the remaining
deferred sales charge and the total creation and development fee. The deferred
sales charge is fixed at $0.245 per Unit and accrues daily from October 10,
2012 through March 9, 2013. Your Portfolio pays a proportionate amount of this
charge on the 10th day of each month beginning in the accrual period until paid
in full. The combination of the initial and deferred sales charges comprises
the "transactional sales charge". The creation and development fee is fixed at
$0.05 per Unit and is paid at the earlier of the end of the initial offering
period (anticipated to be six months) or six months following the Initial Date
of Deposit.
Essential Information
Unit Price at Initial Date of Deposit $10.0000
Initial Date of Deposit March 15, 2012
Mandatory Termination Date March 6, 2014
Estimated Net Annual Income1 N/A
Record Dates 10th day of July 2012,
October 2012, January 2013, April 2013,
July 2013, October 2013 and January 2014
Distribution Dates 25th day of July 2012,
October 2012, January 2013, April 2013,
July 2013, October 2013 and January 2014
CUSIP Numbers Cash -- 92121V581
Reinvest -- 92121V599
Wrap Fee Cash -- 92121V607
Wrap Fee Reinvest -- 92121V615
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1 As of close of business day prior to Initial Date of Deposit. The actual
distributions you receive will vary from the estimated amount due to
changes in the Portfolio's fees and expenses, in actual income received by
the Portfolio, currency fluctuations and with changes in the Portfolio such
as the acquisition or liquidation of securities. See "Rights of
Unitholders--Estimated Distributions."
Global Alternative Energy Portfolio 2012-2
Portfolio
------------------------------------------------------------------------------------
Current Cost of
Number Market Value Dividend Securities to
of Shares Name of Issuer (1) per Share (2) Yield (3) Portfolio (2)
------------------------------------------------------------------------------------
Activated Carbon - 4.01%
391 Calgon Carbon Corporation $ 15.230 0.00% $ 5,954.93
Advance Battery Chemistries - 3.99%
169 EnerSys 35.110 0.00 5,933.59
Advance Materials - 3.90%
157 Polypore International, Inc. 36.930 0.00 5,798.01
Advanced Fuels - 4.07%
307 Clean Energy Fuels Corporation 19.730 0.00 6,057.11
Advanced Metering - 7.96%
169 ESCO Technologies, Inc. 35.090 0.91 5,930.21
128 Itron, Inc. 46.130 0.00 5,904.64
Advanced Metering And Demand
Response - 8.03%
+ 94 Cooper Industries plc 63.650 1.95 5,983.10
+ 381 Elster Group SE - ADR 15.620 0.00 5,951.22
Bio-Energy - 8.01%
+ 412 Cosan, Ltd. - CL A 14.530 1.86 5,986.36
364 Covanta Holding Corporation 16.280 3.69 5,925.92
Electric Car Manufacturer - 4.04%
170 Tesla Motors, Inc. 35.290 0.00 5,999.30
Filtration & Pumps - 4.02%
117 Franklin Electric Co., Inc. 51.050 1.06 5,972.85
Lighting - 3.99%
198 Veeco Instruments, Inc. 29.980 0.00 5,936.04
Power Conversion Technologies - 3.99%
156 Power Integrations, Inc. 38.010 0.53 5,929.56
Power Electronics - 3.98%
444 AVX Corporation 13.340 2.25 5,922.96
Power Inverters - 3.95%
1,404 Power-One, Inc 4.180 0.00 5,868.72
Semiconductor - 8.02%
208 Cree, Inc. 28.650 0.00 5,959.20
273 International Rectifier Corporation 21.820 0.00 5,956.86
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Global Alternative Energy Portfolio 2012-2
Portfolio (continued)
------------------------------------------------------------------------------------
Current Cost of
Number Market Value Dividend Securities to
of Shares Name of Issuer (1) per Share (2) Yield (3) Portfolio (2)
------------------------------------------------------------------------------------
Solar Power - 28.04%
220 First Solar, Inc. $ 27.100 0.00% $ 5,962.00
719 GT Advanced Technologies, Inc. 8.220 0.00 5,910.18
+ 1,267 LDK Solar Company, Ltd. - ADR 4.650 0.00 5,891.55
1,523 MEMC Electronic Materials, Inc. 3.930 0.00 5,985.39
+ 1,967 Suntech Power Holdings
Company, Ltd. - ADR 3.060 0.00 6,019.02
+ 802 Trina Solar, Ltd. - ADR 7.500 0.00 6,015.00
+ 1,580 Yingli Green Energy Holding
Company, Ltd. - ADR 3.740 0.00 5,909.20
--------- ------------
13,620 $ 148,662.92
========= ============
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See "Notes to Portfolios".
Notes to Portfolios
(1) The Securities are initially represented by "regular way" contracts for
the performance of which an irrevocable letter of credit has been deposited
with the Trustee. Contracts to acquire Securities were entered into on
March 14, 2012 and have a settlement date of March 19, 2012 (see "The
Portfolios").
(2) The value of each Security is determined on the bases set forth under
"Public Offering--Unit Price" as of the close of the New York Stock
Exchange on the business day before the Initial Date of Deposit. In
accordance with FASB Accounting Standards Codification ("ASC"), ASC 820,
Fair Value Measurements and Disclosures, the Portfolio's investments are
classified as Level 1, which refers to security prices determined using
quoted prices in active markets for identical securities. Other information
regarding the Securities, as of that time, is as follows:
Profit
Cost to (Loss) To
Sponsor Sponsor
---------------- ----------------
BRIC Opportunity Portfolio $ 148,810 $ (164)
Global Alternative Energy Portfolio $ 149,072 $ (409)
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"+" indicates that the security was issued by a foreign company.
(3) Current Dividend Yield for each Security is based on the estimated annual
dividends per share and the Security's value as of the most recent close of
trading on the New York Stock Exchange on the business day before the
Initial Date of Deposit. Generally, estimated annual dividends per share
are calculated by annualizing the most recently declared regular dividends
or by adding the most recent regular interim and final dividends declared
and reflect any foreign withholding taxes. In certain cases, this
calculation may consider several recently declared dividends in order for
the Current Dividend Yield to be more reflective of recent historical
dividend rates.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Unitholders of Van Kampen Unit Trusts, Series 1202:
We have audited the accompanying statements of condition including the
related portfolios of BRIC Opportunity Portfolio 2012-2 and Global Alternative
Energy Portfolio 2012-2 (included in Van Kampen Unit Trusts, Series 1202) as of
March 15, 2012. The statements of condition are the responsibility of the
Sponsor. Our responsibility is to express an opinion on such statements of
condition based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about
whether the statements of condition are free of material misstatement. The
trusts are not required to have, nor were we engaged to perform an audit of
their internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the trusts'
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements of condition, assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall statements of condition presentation. Our
procedures included confirmation with The Bank of New York Mellon, Trustee, of
cash or an irrevocable letter of credit deposited for the purchase of
Securities as shown in the statements of condition as of March 15, 2012. We
believe that our audits of the statements of condition provide a reasonable
basis for our opinion.
In our opinion, the statements of condition referred to above present
fairly, in all material respects, the financial position of BRIC Opportunity
Portfolio 2012-2 and Global Alternative Energy Portfolio 2012-2 (included in
Van Kampen Unit Trusts, Series 1202) as of March 15, 2012, in conformity with
accounting principles generally accepted in the United States of America.
/s/ GRANT THORNTON LLP
New York, New York
March 15, 2012
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STATEMENTS OF CONDITION
As of March 15, 2012
Global
BRIC Alternative
Opportunity Energy
INVESTMENT IN SECURITIES Portfolio Portfolio
-------------- --------------
Contracts to purchase Securities (1) $ 148,646 $ 148,663
-------------- --------------
Total $ 148,646 $ 148,663
============== ==============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Organization costs (2) $ 751 $ 751
Deferred sales charge liability (3) 2,177 3,679
Creation and development fee liability (4) 751 751
Interest of Unitholders--
Cost to investors (5) 150,150 150,170
Less: initial sales charge (5)(6) 1,504 1,507
Less: deferred sales charge, creation and development
fee and organization costs (2)(4)(5)(6) 3,679 5,181
-------------- --------------
Net interest to Unitholders (5) 144,967 143,482
-------------- --------------
Total $ 148,646 $ 148,663
============== ==============
Units outstanding 15,015 15,017
============== ==============
Net asset value per Unit $ 9.655 $ 9.555
============== ==============
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(1) The value of the Securities is determined by the Trustee on the bases set
forth under "Public Offering--Unit Price". The contracts to purchase
Securities are collateralized by separate irrevocable letters of credit
which have been deposited with the Trustee.
(2) A portion of the Public Offering Price represents an amount sufficient to
pay for all or a portion of the costs incurred in establishing a Portfolio.
The amount of these costs are set forth in the "Fee Table". A distribution
will be made as of the earlier of the close of the initial offering period
(approximately three or six months, as applicable) or six months following
the Initial Date of Deposit to an account maintained by the Trustee from
which the organization expense obligation of the investors will be
satisfied. To the extent that actual organization costs of a Portfolio are
greater than the estimated amount, only the estimated organization costs
added to the Public Offering Price will be reimbursed to the Sponsor and
deducted from the assets of the Portfolio.
(3) Represents the amount of mandatory distributions from a Portfolio on the
bases set forth under "Public Offering".
(4) The creation and development fee is payable by a Portfolio on behalf of
Unitholders out of the assets of the Portfolio as of the close of the
initial offering period. If Units are redeemed prior to the close of the
initial public offering period, the fee will not be deducted from the
proceeds.
(5) The aggregate public offering price and the aggregate sales charge are
computed on the bases set forth under "Public Offering".
(6) Assumes the maximum sales charge.
THE PORTFOLIOS
The Portfolios were created under the laws of the State of New York pursuant
to a Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the
date of this prospectus (the "Initial Date of Deposit"), among Van Kampen Funds
Inc., as Sponsor and Invesco Investment Advisers LLC (formerly Van Kampen Asset
Management), as Supervisor, and The Bank of New York Mellon, as Trustee.
The Portfolios offer investors the opportunity to purchase Units
representing proportionate interests in a portfolio of securities. A Portfolio
may be an appropriate medium for investors who desire to participate in a
portfolio of securities 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 Portfolios. Unless
otherwise terminated as provided in the Trust Agreement, your Portfolio will
terminate on the Mandatory Termination Date and any remaining Securities will
be liquidated or distributed by the Trustee within a reasonable time. As used
in this prospectus the term "Securities" means the securities (including
contracts to purchase these securities) listed in the "Portfolios" and any
additional securities deposited into the Portfolios.
Additional Units of your Portfolio may be issued at any time by depositing
in the Portfolio (i) additional Securities, (ii) contracts to purchase
Securities together with cash or irrevocable letters of credit or (iii) cash
(or a letter of credit or the equivalent) with instructions to purchase
additional Securities. As additional Units are issued by your Portfolio, the
aggregate value of the Securities will be increased and the fractional
undivided interest represented by each Unit may be decreased. The Sponsor may
continue to make additional deposits into your Portfolio following the Initial
Date of Deposit provided that the additional deposits will be in amounts which
will maintain, as nearly as practicable, the same percentage relationship among
the number of shares of each Security in the Portfolio that existed immediately
prior to the subsequent deposit. Investors may experience a dilution of their
investments and a reduction in their anticipated income because of fluctuations
in the prices of the Securities between the time of the deposit and the
purchase of the Securities and because your Portfolio will pay the associated
brokerage or acquisition fees. Due to round lot requirements in certain foreign
securities markets and market value fluctuations, your Portfolio may not be
able to invest in each Security on any subsequent date of deposit in the same
proportion as existed on the Initial Date of Deposit or immediately prior to
the subsequent deposit of Securities. This could increase the potential for
dilution of investments and variances in anticipated income. In addition,
during the initial offering of Units it may not be possible to buy a particular
Security due to trading restrictions or corporate actions. While such
limitations are in effect, additional Units would be created by purchasing each
of the Securities in your Portfolio that are not subject to those limitations.
This would also result in the dilution of the investment in any such Security
not purchased and potential variances in anticipated income. Purchases and
sales of Securities by your Portfolio may impact the value of the Securities.
This may especially be the case during the initial offering of Units, upon
Portfolio termination and in the course of satisfying large Unit redemptions.
Each Unit of your Portfolio initially offered represents an undivided
interest in the Portfolio. At the close of the New York Stock Exchange on the
Initial Date of Deposit, the number of Units may be adjusted so that the Public
Offering Price per Unit equals $10. The number of Units, fractional interest of
each Unit in your Portfolio and the estimated distributions per Unit will
increase or decrease to the extent of any adjustment. 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 your Portfolio represented by each unredeemed Unit will increase or
decrease accordingly, although the actual interest in your Portfolio will
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
Your Portfolio consists of (a) the Securities (including contracts for the
purchase thereof) listed under the applicable "Portfolio" as may continue to be
held from time to time in the Portfolio, (b) any additional Securities acquired
and held by the Portfolio pursuant to the provisions of the Trust Agreement and
(c) any cash held in the related Income and Capital Accounts. Neither the
Sponsor nor the Trustee shall be liable in any way for any contract failure in
any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
The objective of your Portfolio is described in the individual Portfolio
sections. There is no assurance that your Portfolio will achieve its
objective.
The Portfolio Consultant is not an affiliate of the Sponsor. The Portfolio
Consultant may use the applicable list of Securities in its independent
capacity as an investment adviser and distributes this information to various
individuals and entities.
The Global Alternative Energy Portfolio is not sponsored, endorsed, sold or
promoted by Ardour Global Indexes, LLC, ("AGI"). AGI makes no representation or
warranty, express or implied, to the owners of the Global Alternative Energy
Portfolio or any member of the public regarding the advisability of investing
in securities generally or in the Portfolio particularly or the ability of the
AGIGL Index to track the performance of the alternative energies market. AGI's
only relationship to the Sponsor is the licensing of certain service marks and
trade names of AGI and of the AGIGL Index that is determined, composed and
calculated by AGI without regard to the Sponsor or the Global Alternative
Energy Portfolio. AGI has no obligation to take the needs of the Sponsor or the
Unitholders of the Global Alternative Energy Portfolio into consideration in
determining, composing or calculating the AGIGL Index. AGI is not responsible
for and has not participated in the determination of the timing of, prices at,
or quantities of the Global Alternative Energy Portfolio to be issued or in the
determination or calculation of the equation by which the Portfolio is to be
converted into cash. AGI has no obligation or liability in connection with the
administration, marketing or trading of the Global Alternative Energy
Portfolio.
AGI DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE AGIGL
INDEX OR ANY DATA INCLUDED THEREIN AND AGI SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. AGI MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY SPONSOR, OWNERS OF THE GLOBAL
ALTERNATIVE ENERGY PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
AGI INDEX(ES) OR ANY DATA INCLUDED THEREIN. AGI MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE AGIGL INDEX OR ANY
DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL
AGI HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL
DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
The AGIGL Index is calculated by Dow Jones Indexes, a business unit of Dow
Jones & Company, Inc. ("Dow Jones"). The Global Alternative Energy Portfolio
based on the AGIGL Index, is not sponsored, endorsed, sold or promoted by Dow
Jones Indexes, and Dow Jones Indexes makes no representation regarding the
advisability of investing in such product(s).
Dow Jones, its affiliates, sources and distribution agents (collectively,
the "Index Calculation Agent") shall not be liable to the Sponsor, any customer
or any third party for any loss or damage, direct, indirect or consequential,
arising from (i) any inaccuracy or incompleteness in, or delays, interruptions,
errors or omissions in the delivery of the AGIGL Index or any data related
thereto (the "Index Data") or (ii) any decision made or action taken by the
Sponsor, any customer or third party in reliance upon the Index Data. The Index
Calculation Agent does not make any warranties, express or implied, to the
Sponsor, any of its customers or any one else regarding the Index Data,
including, without limitation, any warranties with respect to the timeliness,
sequence, accuracy, completeness, currentness, merchantability, quality or
fitness for a particular purpose or any warranties as to the results to be
obtained by the Sponsor, any of its customers or other person in connection
with the use of the Index Data. The Index Calculation Agent shall not be liable
to the Sponsor, its customers or other third parties for loss of business
revenues, lost profits or any indirect, consequential, special or similar
damages whatsoever, whether in contract, tort or otherwise, even if advised of
the possibility of such damages.
The Portfolio Consultant 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 your Portfolio pays for the
Securities and the price received upon Unit redemptions or Portfolio
termination. The Portfolio Consultant may act as agent or principal in
connection with the purchase and sale of equity securities, including the
Securities, and may act as a market maker in the Securities. The Portfolio
Consultant may also issue reports and makes recommendations on the Securities.
The Portfolio Consultant's research department may receive compensation based
on commissions generated by research and/or sales of Units.
Neither the Portfolio Consultant nor the Sponsor manage the Portfolios. You
should note that the Sponsor applied the selection criteria to the Securities
for inclusion in your Portfolio prior to the Initial Date of Deposit. After
this time, the Securities may no longer meet the selection criteria. Should a
Security no longer meet the selection criteria, we will generally not remove
the Security from its Portfolio. In offering the Units to the public, neither
the Sponsor nor any broker-dealers are recommending any of the individual
Securities but rather the entire pool of Securities in a Portfolio, taken as a
whole, which are represented by the Units.
RISK FACTORS
All investments involve risk. This section describes the main risks that can
impact the value of the securities in your Portfolio. You should understand
these risks before you invest. If the value of the securities falls, the value
of your Units will also fall. We cannot guarantee that your Portfolio will
achieve its objective or that your investment return will be positive over any
period.
Market Risk. Market risk is the risk that the value of the securities in
your Portfolio will fluctuate. This could cause the value of your Units to fall
below your original purchase price. Market value fluctuates in response to
various factors. These can include changes in interest rates, inflation, the
financial condition of a security's issuer, perceptions of the issuer, or
ratings on a security of the issuer. Even though your Portfolio is supervised,
you should remember that we do not manage your Portfolio. Your Portfolio will
not sell a security solely because the market value falls as is possible in a
managed fund.
Dividend Payment Risk. Dividend payment risk is the risk that an issuer of a
security is unwilling or unable to pay dividends on a security. Stocks
represent ownership interests in the issuers and are not obligations of the
issuers. Common stockholders have a right to receive dividends only after the
company has provided for payment of its creditors, bondholders and preferred
stockholders. Common stocks do not assure dividend payments. Dividends are paid
only when declared by an issuer's board of directors and the amount of any
dividend may vary over time. If dividends received by your Portfolio are
insufficient to cover expenses, redemptions or other Portfolio costs, it may be
necessary for your Portfolio to sell Securities to cover such expenses,
redemptions or other costs. Any such sales may result in capital gains or
losses to you. See "Taxation".
Index Correlation. The Global Alternative Energy Portfolio will consist of
stocks derived from the Ardour Global Index[SM] (Composite) selected prior to
the date of the Portfolio's formation. The Portfolio does not seek to replicate
all of the components of the AGIGL Index or its component weightings and the
stocks in the Portfolio will not change if the index components, or their
weightings within the index, change. The performance of the Portfolio will not
correspond with the index for this reason and because the Portfolio incurs a
sales charge and expenses.
Strategy Risk. The Portfolio Consultant's stock selection strategy may not
be successful in identifying stocks that appreciate in value. Your Portfolio
may not achieve its objectives if this happens.
Foreign Stocks. Because the BRIC Opportunity Portfolio invests exclusively,
and the Global Alternative Energy Portfolio invests significantly in foreign
stocks, the Portfolios involve additional risks that differ from an investment
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 or exchange of
securities, foreign currency fluctuations or restriction on exchange or
repatriation of currencies.
The political, economic and social structures of some foreign countries may
be less stable and more volatile than those in the U.S. Investments in these
countries may be subject to the risks of internal and external conflicts,
currency devaluations, foreign ownership limitations and tax increases. It is
possible that a government may take over the assets or operations of a company
or impose restrictions on the exchange or export of currency or other assets.
Some countries also may have different legal systems that may make it difficult
for a Portfolio to vote proxies, exercise investor rights, and pursue legal
remedies with respect to its foreign investments. Diplomatic and political
developments, including rapid and adverse political changes, social
instability, regional conflicts, terrorism and war, could affect the economies,
industries, and securities and currency markets, and the value of a Portfolio's
investments, in non-U.S. countries. No one can predict the impact that these
factors could have on a Portfolio's securities.
Certain stocks may be held in the form of American Depositary Receipts
("ADRs"), Global Depositary Receipts ("GDRs"), or other similar receipts. ADRs
and GDRs represent receipts for foreign common stock deposited with a custodian
(which may include the Trustee). The ADRs in your Portfolio, if any, trade in
the U.S. in U.S. dollars and are registered with the Securities and Exchange
Commission ("SEC"). GDRs are receipts, issued by foreign banks or trust
companies, or foreign branches of U.S. banks, that represent an interest in
shares of either a foreign or U.S. corporation. These instruments may not
necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs and GDRs generally involve the same types of risks
as foreign common stock held directly. Some ADRs and GDRs may experience less
liquidity than the underlying common stocks traded in their home market. The
Portfolios may invest in sponsored or unsponsored ADRs. Unlike a sponsored ADR
where the depositary has an exclusive relationship with the foreign issuer, an
unsponsored ADR may be created by a depositary institution independently and
without the cooperation of the foreign issuer. Consequently, information
concerning the foreign issuer may be less current or reliable for an
unsponsored ADR and the price of an unsponsored ADR may be more volatile than
if it was a sponsored ADR. Depositaries of unsponsored ADRs are not required to
distribute shareholder communications received from the foreign issuer or to
pass through voting rights to its holders. The holders of unsponsored ADRs
generally bear all the costs associated with establishing the unsponsored ADR,
whereas the foreign issuers typically bear certain costs in a sponsored ADR.
The purchase and sale of the foreign securities may occur in foreign
securities markets. Certain of the factors stated above may make it impossible
to buy or sell them in a timely manner or may adversely affect the value
received on a sale of securities. Custody of certain of the securities in your
Portfolio may be maintained by a global custody and clearing institution which
has entered into a sub-custodian relationship with the Trustee. In addition,
round lot trading requirements exist in certain foreign securities markets.
These round lot trading requirements could cause the proportional composition
and diversification of your Portfolio's securities to vary when the Portfolio
purchases additional securities or sells securities to satisfy expenses or Unit
redemptions. This could have a material impact on investment performance and
portfolio composition. Brokerage commissions and other fees generally are
higher for foreign securities. Government supervision and regulation of foreign
securities markets, currency markets, trading systems and brokers may be less
than in the U.S. The procedures and rules governing foreign transactions and
custody (holding of the Portfolios' assets) also may involve delays in payment,
delivery or recovery of money or investments.
Foreign companies may not be subject to the same disclosure, accounting,
auditing and financial reporting standards and practices as U.S. companies.
Thus, there may be less information publicly available about foreign companies
than about most U.S. companies.
Certain foreign securities may be less liquid (harder to sell) and more
volatile than many U.S. securities. This means the Portfolios may at times be
unable to sell foreign securities in a timely manner or at favorable prices.
Because securities of foreign issuers not listed on a U.S. securities
exchange generally pay dividends and trade in foreign currencies, the U.S.
dollar value of these securities and dividends will vary with fluctuations in
foreign exchange rates. Most foreign currencies have fluctuated widely in value
against the U.S. dollar for various economic and political reasons. To
determine the value of foreign securities or their dividends, the Trustee will
estimate current exchange rates for the relevant currencies based on activity
in the various currency exchange markets. However, these markets can be quite
volatile depending on the activity of the large international commercial banks,
various central banks, large multi-national corporations, speculators and other
buyers and sellers of foreign currencies. Since actual foreign currency
transactions may not be instantly reported, the exchange rates estimated by the
Trustee may not reflect the amount your Portfolio would receive in U.S.
dollars, had the Trustee sold any particular currency in the market. The value
of the Securities in terms of U.S. dollars, and therefore the value of your
Units, will decline if the U.S. dollar decreases in value relative to the value
of the currencies in which the Securities trade.
Emerging Market Risk. The Portfolios invest in securities issued by entities
located in emerging markets. Emerging markets are generally defined as
countries in the initial states of their industrialization cycles with low per
capita income. The markets of emerging markets countries are generally more
volatile than the markets of developed countries with more mature economies.
All of the risks of investing in foreign securities described above are
heightened by investing in emerging markets countries.
BRIC Company Risk. The BRIC Opportunity Portfolio invests in securities of
companies located in Brazil, Russia, India and China. The Global Alternative
Energy Portfolio invests significantly in companies located in China. Here is
what you should know about the risks of investing in the securities of
companies located in these countries.
Brazil has experienced substantial economic instability resulting from,
among other things, periods of very high inflation, persistent structural
public sector deficits and significant devaluations of the currency of Brazil,
and leading also to a high degree of price volatility in both the Brazilian
equity and foreign currency markets. Brazilian companies may also be adversely
affected by high interest and unemployment rates, and are particularly
sensitive to fluctuations in commodity prices.
Investing in securities of Russian companies involves additional risks,
including, among others, the absence of developed legal structures governing
private or foreign investments and private property; the possibility of the
loss of all or a substantial portion of the trust's assets invested in Russia
as a result of expropriation; certain national policies which may restrict the
trust's investment opportunities, including, without limitation, restrictions
on investing in issuers or industries deemed sensitive to relevant national
interests; and potentially greater price volatility in, significantly smaller
capitalization of, and relative illiquidity of, some of these markets.
The Russian stock markets experienced a period of general decline in 2008,
dropping to levels at certain points more than 50% lower from highs earlier in
2008. Furthermore, extreme volatility resulting from the global financial
crisis caused the Federal Financial Markets Service of Russia to suspend
trading in Russia's stock markets on more than one occasion in September 2008.
Investing in securities of Indian companies involves additional risks,
including, but not limited to, greater price volatility, substantially less
liquidity and significantly smaller market capitalization of securities
markets, more substantial governmental involvement in the economy, higher rates
of inflation and greater political, economic and social uncertainty.
Furthermore, future actions of the Indian government or religious and ethnic
unrest could have a significant impact on the economy.
Investing in securities issued by companies headquartered, or with a
significant presence, in the People's Republic of China ("China") involves
additional risks, including, but not limited to the following: The Chinese
government has been reforming economic and market practices and providing a
larger sphere for private ownership of property for over 25 years. Despite
these reforms, the Chinese Communist Party continues to play the leading role
in formulating policy and a significant portion of China's output continues to
be derived from state-owned enterprises. In the past, the Chinese government
has from time to time taken actions that influence the prices at which certain
goods may be sold, encourage companies to invest or concentrate in particular
industries, induce mergers between companies in certain industries and induce
private companies to publicly offer their securities to increase or continue
the rate of economic growth, control the rate of inflation or otherwise
regulate economic expansion. It may do so in the future as well. Price controls
cover an increasing number of sectors, including fuel, electricity, steaming
coal, certain foodstuffs and fertilizers. Despite being listed as publicly
traded entities, state-owned companies may be asked to sacrifice their profits
in the greater interest. Price controls may result to consumer subsidies at the
expense of shareholder profits. The Chinese government's control over a
significant range of products and companies could affect the public and private
sector companies.
China has yet to develop comprehensive securities, corporate, or commercial
laws, and its market is relatively new and undeveloped. Changes in government
policy could significantly affect Chinese companies and the markets in China.
Given the still-developing nature of laws and policies impacting China region
securities markets and corporate entities, changes in law or policy could have
a material adverse affect on the Securities.
Cost inflation has emerged as a significant problem facing the Chinese
economy. Risings food costs have contributed to inflation in China, and the
possible need gradually to lift price controls on such items as fuel and
electricity may extend increases in rates of inflation, despite the global
economic slowdown.
Securities of Chinese companies may be particularly sensitive to changes in
China's economy as the result of a reversal of economic liberalization,
political unrest or changes in China's trading status. A deterioration of the
relationship between China and the United States could have negative
implications on Chinese issuers. The emerging market economy of China may also
be subject to over-extension of credit, currency devaluations and restrictions,
decreased exports, and economic recession. In addition, expropriation or
nationalization of companies or industries, confiscatory taxation, political,
economic or social instability or other developments could adversely affect and
significantly diminish the values of Chinese issuers.
Investing in securities issued by companies headquartered, or with a
significant presence, in Hong Kong Special Administrative Region ("Hong Kong")
involves additional risks, including, but not limited to the following: Hong
Kong issuers are subject to risks related to Hong Kong's political and economic
environment, the volatility of the Hong Kong stock market, and the
concentration of real estate companies listed on the Stock Exchange of Hong
Kong Limited ("Hong Kong Stock Exchange"). Hong Kong reverted to Chinese
control on July 1, 1997 and any increase in uncertainty as to the future
economic and political status of Hong Kong, or a deterioration of the
relationship between China and the United States, could have negative
implications on Hong Kong companies or stocks traded in Hong Kong. There is
uncertainty as to whether China will continue to respect the relative
independence of Hong Kong and refrain from exerting a tighter grip on the
country's political, economic, and social concerns. Securities prices on the
Hong Kong Stock Exchange can be highly volatile and are sensitive to
developments in Hong Kong and China, as well as other world markets.
Industry Risks. The Portfolios invest significantly in certain industries.
Any negative impact on these industries 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.
Alternative Energy Issuers. The Global Alternative Energy Portfolio invests
significantly in alternative energy 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 this
industry before you invest.
The alternative energy industry can be significantly affected by
obsolescence of existing technology, short product cycles, falling prices and
profits, competition from new market entrants and general economic conditions.
Further, the alternative energy industry can be significantly affected by
intense competition and legislation resulting in more strict government
regulations and enforcement policies, and can be subject to risks associated
with hazardous materials. The alternative energy industry can be significantly
affected by fluctuations in energy prices and supply and demand of alternative
energy fuels, energy conservation, the success of exploration projects and tax
and other government regulations. The industry also can be significantly
affected by the supply of and demand for specific products or services, the
supply of and demand for oil and gas, the price of oil and gas, production
spending, government regulation, world events and economic conditions.
Shares in the companies involved in this industry have been significantly
more volatile than shares of companies operating in other more established
industries and shares of companies in the Portfolio may be subject to sharp
price declines. Certain valuation methods currently used to value companies
involved in the alternative power and power technology sectors, particularly
those companies that have not yet traded profitably, have not been in
widespread use for a significant period of time. As a result, the use of these
valuation methods may serve to increase further the volatility of certain
alternative power and power technology company share prices. This industry
sector is relatively nascent and under-researched in comparison to more
established and mature sectors, and should therefore be regarded as having
greater investment risk.
Changes in U.S., European and other governments' policies towards
alternative power and power technology also may have an adverse effect on the
Portfolio's performance.
The Portfolio may invest in the shares of companies with a limited operating
history, some of which may never have traded profitably. Investment in young
companies with a short operating history is generally riskier than investment
in companies with a longer operating history.
The Portfolio being composed of securities issued by companies operating in
a limited number of industries, will carry greater risk and may be more
volatile than a portfolio composed of securities issued by companies operating
in a wide variety of different industries. The price of crude oil, natural gas,
electricity produced from traditional hydropower and that generated from
nuclear power and possibly other as yet undiscovered energy sources could
potentially have a negative impact on the competitiveness of renewable
energies.
Many energy companies are subject to various uncertainties, including:
o risks of increases in fuel and other operating costs;
o restrictions on operations and increased costs and delays as a result
of environmental, nuclear safety and other regulations;
o regulatory restrictions on the ability to pass increasing wholesale
costs along to the retail and business customer;
o coping with the general effects of energy conservation;
o technological innovations which may render existing plants, equipment
or products obsolete;
o the effects of local weather, maturing markets and difficulty in
expanding to new markets due to regulatory and other factors;
o the potential impact of natural or man-made disasters;
o difficulty obtaining adequate returns on invested capital, even if
frequent rate increases are approved by public service commissions;
o the high cost of obtaining financing during periods of inflation;
o difficulties of the capital markets in absorbing utility debt and
equity securities; and
o increased competition.
Any of these factors, or a combination of these factors, could affect the
supply of or demand for electricity, natural gas, water or other energy, which
could adversely affect the profitability of the issuers of the Securities and
the performance of the your Portfolio.
Utility Issuers. The BRIC Opportunity Portfolio invests significantly in
utility companies or in companies related to the utility or energy industries.
Many utility companies, especially electric and gas and other energy related
utility companies, are subject to various uncertainties, including:
o risks of increases in fuel and other operating costs;
o restrictions on operations and increased costs and delays as a result
of environmental, nuclear safety and other regulations;
o regulatory restrictions on the ability to pass increasing wholesale
costs along to the retail and business customer;
o coping with the general effects of energy conservation;
o technological innovations which may render existing plants, equipment
or products obsolete;
o the effects of unusual, unexpected or normal local weather, maturing
markets and difficulty in expanding to new markets due to regulatory
and other factors;
o the potential impact of natural or man-made disasters;
o difficulty obtaining adequate returns on invested capital, even if
frequent rate increases are approved by public service commissions;
o the high cost of obtaining financing during periods of inflation;
o difficulties of the capital markets in absorbing utility debt and
equity securities; and
o increased competition.
Any of these factors, or a combination of these factors, could affect the
supply of or demand for energy, such as electricity or natural gas, or water,
or the ability of the issuers to pay for such energy or water which could
adversely affect the profitability of the issuers of the Securities and the
performance of the Portfolio.
Utility companies are subject to extensive regulation at the federal and
state levels in the United States. At the federal level, the Federal Energy
Regulatory Commission (the "FERC"), the Federal Trade Commission (the "FTC"),
the Securities and Exchange Commission (the "SEC"), and the Nuclear Regulatory
Commission (the "NRC") have authority to oversee electric and combination
electric and gas utilities. The value of utility company stocks may decline
because governmental regulation affecting the utilities industry can change.
This regulation may prevent or delay the utility company from passing along
cost increases to its customers, which could hinder the utility company's
ability to meet its obligations to its suppliers and could lead to the taking
of measures, including the acceleration of obligations or the institution of
involuntary bankruptcy proceedings, by its creditors against such utility
company. Furthermore, regulatory authorities, which may be subject to political
and other pressures, may not grant future rate increases, or may impose
accounting or operational policies, any of which could adversely affect a
company's profitability and its stock price.
Certain utility companies have experienced full or partial deregulation in
recent years. These utility companies are frequently more similar to industrial
companies in that they are subject to greater competition and have been
permitted by regulators to diversify outside of their original geographic
regions and their traditional lines of business. These opportunities may permit
certain utility companies to earn more than their traditional regulated rates
of return. Some companies, however, may be forced to defend their core business
and may be less profitable. Mergers in the utility industry may require
approval from several federal and state regulatory agencies, including the
FERC, the FTC, and the SEC. These regulatory authorities could, as a matter of
policy, reverse the trend toward deregulation and make consolidation more
difficult, or cause delay in the merger process, any of which could cause the
prices of these stocks to fall.
Small Capitalization Companies. The Global Alternative Energy Portfolio
invests significantly in small capitalization ("small-cap") companies.
Investing in stocks of small-cap companies may involve greater risk than
investing in stocks of medium and large capitalization companies, since they
can be subject to more abrupt or erratic price movements. Many small-cap
companies will have had their securities publicly traded, if at all, for only a
short period of time and will not have had the opportunity to establish a
reliable trading pattern through economic cycles. The price volatility of
small-cap companies is relatively higher than larger, older and more mature
companies. This greater price volatility of small-cap companies may result from
the fact that there may be less market liquidity, less information publicly
available or fewer investors who monitor the activities of these companies. In
addition, the market prices of these securities may exhibit more sensitivity to
changes in industry or general economic conditions. Some small-cap companies
will not have been in existence long enough to experience economic cycles or to
demonstrate whether they are sufficiently well managed to survive downturns or
inflationary periods. Further, a variety of factors may affect the success of a
company's business beyond the ability of its management to prepare or
compensate for them, including domestic and international political
developments, government trade and fiscal policies, patterns of trade and war
or other military conflict which may affect industries or markets or the
economy generally.
Legislation/Litigation. From time to time, various legislative initiatives
are proposed in the United States and abroad which may have a negative impact
on certain of the companies represented in your Portfolio, or on the tax
treatment of your Portfolio or of your investment in a Portfolio. In addition,
litigation regarding any of the issuers of the Securities or of the industries
represented by these issuers may negatively impact the share prices of these
Securities. No one can predict what impact any pending or threatened litigation
will have on the share prices of the Securities.
No FDIC Guarantee. An investment in your Portfolio is not a deposit of any
bank and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
PUBLIC OFFERING
General. Units are offered at the Public Offering Price which consists of
the net asset value per Unit plus organization costs plus the sales charge. The
net asset value per Unit is the value of the securities, cash and other assets
in your Portfolio reduced by the liabilities of the Portfolio divided by the
total Units outstanding. The maximum sales charge equals 2.95% of the Public
Offering Price per Unit for the BRIC Opportunity Portfolio and 3.95% of the
Public Offering Price per Unit for the Global Alternative Energy Portfolio
(3.04% and 4.11% of the aggregate offering price of the Securities,
respectively) at the time of purchase.
You pay the initial sales charge at the time you buy Units. The initial
sales charge is the difference between the total sales charge percentage
(maximum of 2.95% of the Public Offering Price per Unit for the BRIC
Opportunity Portfolio and 3.95% of the Public Offering Price per Unit for the
Global Alternative Energy Portfolio) and the sum of the remaining fixed dollar
deferred sales charge and the total fixed dollar creation and development fee.
The initial sales charge will be approximately 1.00% of the Public Offering
Price per Unit depending on the Public Offering Price per Unit. The deferred
sales charge is fixed at $0.145 per Unit for the BRIC Opportunity Portfolio and
$0.245 per Unit for the Global Alternative Energy Portfolio.. Your Portfolio
pays the deferred sales charge in installments as described in the "Fee Table."
If any deferred sales charge payment date is not a business day, we will charge
the payment on the next business day. If you purchase Units after the initial
deferred sales charge payment, you will only pay that portion of the payments
not yet collected. If you redeem or sell your Units prior to collection of the
total deferred sales charge, you will pay any remaining deferred sales charge
upon redemption or sale of your Units. The initial and deferred sales charges
are referred to as the "transactional sales charge." The transactional sales
charge does not include the creation and development fee which compensates the
Sponsor for creating and developing your Portfolio and is described under
"Expenses." The creation and development fee is fixed at $0.05 per Unit. Your
Portfolio pays the creation and development fee as of the close of the initial
offering period as described in the "Fee Table." If you redeem or sell your
Units prior to collection of the creation and development fee, you will not pay
the creation and development fee upon redemption or sale of your Units. Because
the deferred sales charge and creation and development fee are fixed dollar
amounts per Unit, the actual charges will exceed the percentages shown in the
"Fee Table" if the Public Offering Price per Unit falls below $10 and will be
less than the percentages shown in the "Fee Table" if the Public Offering Price
per Unit exceeds $10. In no event will the maximum total sales charge exceed
2.95% of the Public Offering Price per Unit for the BRIC Opportunity Portfolio
and 3.95% of the Public Offering Price per Unit for the Global Alternative
Energy Portfolio.
Since the deferred sales charge and creation and development fee are fixed
dollar amounts per Unit, your Portfolio must charge these amounts per Unit
regardless of any decrease in net asset value. However, if the Public Offering
Price per Unit falls to the extent that the maximum sales charge percentage
results in a dollar amount that is less than the combined fixed dollar amounts
of the deferred sales charge and creation and development fee, your initial
sales charge will be a credit equal to the amount by which these fixed dollar
charges exceed your sales charge at the time you buy Units. In such a
situation, the value of securities per Unit would exceed the Public Offering
Price per Unit by the amount of the initial sales charge credit and the value
of those securities will fluctuate, which could result in a benefit or
detriment to Unitholders that purchase Units at that price. The initial sales
charge credit is paid by the Sponsor and is not paid by your Portfolio. The
"Fee Table" shows the sales charge calculation at a $10 Public Offering Price
per Unit and the following examples illustrate the sales charge at prices below
and above $10. With respect to the BRIC Opportunity Portfolio, if the Public
Offering Price per Unit fell to $6, the maximum sales charge would be $0.1770
(2.95% of the Public Offering Price per Unit), which consists of an initial
sales charge of -$0.0180, a deferred sales charge of $0.145 and a creation and
development fee of $0.05. If the Public Offering Price per Unit rose to $14,
the maximum sales charge would be $0.4130 (2.95% of the Public Offering Price
per Unit), consisting of an initial sales charge of $0.2180, a deferred sales
charge of $0.145 and the creation and development fee of $0.05. With respect to
the Global Alternative Energy Portfolio, if the Public Offering Price per Unit
fell to $6, the maximum sales charge would be $0.2370 (3.95% of the Public
Offering Price per Unit), which consists of an initial sales charge of
-$0.0580, a deferred sales charge of $0.245 and a creation and development fee
of $0.05. If the Public Offering Price per Unit rose to $14, the maximum sales
charge would be $0.5530 (3.95% of the Public Offering Price per Unit),
consisting of an initial sales charge of $0.2580, a deferred sales charge of
$0.245 and the creation and development fee of $0.05.
The actual sales charge that may be paid by an investor may differ slightly
from the sales charges shown herein due to rounding that occurs in the
calculation of the Public Offering Price and in the number of Units purchased.
The minimum purchase is 100 Units (25 Units for retirement accounts) but may
vary by selling firm. Certain broker-dealers or selling firms may charge an
order handling fee for processing Unit purchases.
Reducing Your Sales Charge. The Sponsor offers a variety of ways for you to
reduce the sales charge that you pay. It is your financial professional's
responsibility to alert the Sponsor of any discount when you purchase Units.
Before you purchase Units you must also inform your financial professional of
your qualification for any discount or of any combined purchases to be eligible
for a reduced sales charge. You may not combine discounts. Since the deferred
sales charge and creation and development fee are fixed dollar amounts per
Unit, your Portfolio must charge these amounts per Unit regardless of any
discounts. However, if you are eligible to receive a discount such that your
total sales charge is less than the fixed dollar amounts of the deferred sales
charge and creation and development fee, you will receive a credit equal to the
difference between your total sales charge and these fixed dollar charges at
the time you buy Units.
Large Quantity Purchases. You can reduce your sales charge by increasing the
size of your investment. If you purchase Units in the amounts shown in the
table below during the initial offering period, the sales charge will be as
follows:
Transaction
Amount Sales Charge
------------------ -----------------------
Global
BRIC Alternative
Opportunity Energy
Portfolio Portfolio
----------- ----------
Less than $50,000 2.95% 3.95%
$50,000 - $99,999 2.70 3.70
$100,000 - $249,999 2.45 3.45
$250,000 - $499,999 2.10 3.10
$500,000 - $999,999 1.85 2.95
$1,000,000 or more 1.20 2.45
|
Except as described below, these quantity discount levels apply only to
purchases of a single Portfolio made by the same person on a single day from a
single broker-dealer. We apply these sales charges as a percent of the Public
Offering Price per Unit at the time of purchase. The breakpoints will be
adjusted to take into consideration purchase orders stated in dollars which
cannot be completely fulfilled due to the requirement that only whole Units
will be issued.
For purposes of achieving these levels you may combine purchases of Units of
a Portfolio offered in this prospectus with purchases of units of any other Van
Kampen-sponsored unit investment trusts in the initial offering period which
are not already subject to a reduced sales charge (including other Portfolios
offered in this prospectus). In addition, Units purchased in the name of your
spouse or children under 21 living in the same household as you will be deemed
to be additional purchases by you for the purposes of calculating the
applicable quantity discount level. The reduced sales charge levels will also
be applicable to a trustee or other fiduciary purchasing Units for a single
trust, estate (including multiple trusts created under a single estate) or
fiduciary account. To be eligible for aggregation as described in this
paragraph, all purchases must be made on the same day through a single
broker-dealer or selling agent. You must inform your broker-dealer of any
combined purchases before your purchase to be eligible for a reduced sales
charge.
Fee Accounts. Investors may purchase Units through registered investment
advisers, certified financial planners and registered broker-dealers who in
each case either charge periodic fees for brokerage services, financial
planning, investment advisory or asset management services, or provide such
services in connection with the establishment of an investment account for
which a comprehensive "wrap fee" charge ("Wrap Fee") is imposed ("Fee
Accounts"). If Units of a Portfolio are purchased for a Fee Account and the
Portfolio is subject to a Wrap Fee (i.e., the Portfolio is "Wrap Fee
Eligible"), then the purchase will not be subject to the transactional sales
charge but will be subject to the creation and development fee that is retained
by the Sponsor. Please refer to the section called "Fee Accounts" for
additional information on these purchases. The Sponsor reserves the right to
limit or deny purchases of Units described in this paragraph by investors or
selling firms whose frequent trading activity is determined to be detrimental
to a Portfolio.
Rollovers and Exchanges. During the initial offering period of your
Portfolio offered in this prospectus, unitholders of any Van Kampen-sponsored
unit investment trusts and unitholders of unaffiliated unit investment trusts
may utilize their redemption or termination proceeds from such a trust to
purchase Units of a Portfolio at the Public Offering Price per Unit less 1.00%
. In order to be eligible for the sales charge discounts applicable to Unit
purchases made with redemption or termination proceeds from other unit
investment trusts, the termination or redemption proceeds used to purchase
Units of a Portfolio must be derived from a transaction that occurred within 30
days of your Unit purchase. In addition, the discounts will only be available
for investors that utilize the same broker-dealer (or a different broker-dealer
with appropriate notification) for both the Unit purchase and the transaction
resulting in the receipt of the termination or redemption proceeds used for the
Unit purchase. You may be required to provide appropriate documentation or
other information to your broker-dealer to evidence your eligibility for these
reduced sales charge discounts. An exchange does not avoid a taxable event on
the redemption or termination of an interest in a trust.
Employees. Employees, officers and directors (including their spouses and
children under 21 living in the same household, and trustees, custodians or
fiduciaries for the benefit of such persons) of Van Kampen Funds Inc. and its
affiliates, and dealers and their affiliates may purchase Units at the Public
Offering Price less the applicable dealer concession. All employee discounts
are subject to the policies of the related selling firm. Only employees,
officers and directors of companies that allow their employees to participate
in this employee discount program are eligible for the discounts.
Distribution Reinvestments. We do not charge any sales charge when you
reinvest distributions from your Portfolio into additional Units of your
Portfolio. Since the deferred sales charge and creation and development fee are
fixed dollar amounts per unit, your Portfolio must charge these amounts per
unit regardless of this discount. If you elect to reinvest distributions, the
Sponsor will credit you with additional Units with a dollar value sufficient to
cover the amount of any remaining deferred sales charge and creation and
development fee that will be collected on such Units at the time of
reinvestment. The dollar value of these Units will fluctuate over time.
Unit Price. The Public Offering Price of Units will vary from the amounts
stated under "Essential Information" in accordance with fluctuations in the
prices of the underlying Securities in the Portfolios. The initial price of the
Securities upon deposit by the Sponsor was determined by the Trustee. The
Trustee 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. The Evaluation Time is the close of the New York Stock
Exchange on each business day. The term "business day", as used herein and
under "Rights of Unitholders--Redemption of Units", means any day on which the
New York Stock Exchange is open for regular trading. The Public Offering Price
per Unit will be effective for all orders received prior to the Evaluation Time
on each business day. Orders received by the Sponsor prior to the Evaluation
Time and orders received by authorized financial professionals prior to the
Evaluation Time that are properly transmitted to the Sponsor by the time
designated by the Sponsor, are priced based on the date of receipt. Orders
received by the Sponsor after the Evaluation Time, and orders received by
authorized financial professionals after the Evaluation Time or orders received
by such persons that are not transmitted to the Sponsor until after the time
designated by the Sponsor, are priced based on the date of the next determined
Public Offering Price per Unit provided they are received timely by the Sponsor
on such date. It is the responsibility of authorized financial professionals to
transmit orders received by them to the Sponsor so they will be received in a
timely manner.
The value of portfolio securities is based on the securities' market price
when available. When a market price is not readily available, including
circumstances under which the Trustee determines that a security's market price
is not accurate, a portfolio security is valued at its fair value, as
determined under procedures established by the Trustee or an independent
pricing service used by the Trustee. In these cases, a Portfolio's net asset
value will reflect certain portfolio securities' fair value rather than their
market price. With respect to securities that are primarily listed on foreign
exchanges, the value of the portfolio securities may change on days when you
will not be able to purchase or sell Units. The value of any foreign securities
is based on the applicable currency exchange rate as of the Evaluation Time.
The Sponsor will provide price dissemination and oversight services to the
Portfolios.
During the initial offering period, part of the Public Offering Price
represents an amount that will pay the costs incurred in establishing your
Portfolio. These costs include the costs of preparing documents relating to
your Portfolio (such as the registration statement, prospectus, trust agreement
and legal documents), federal and state registration fees, fees paid to any
Portfolio Consultant for assisting the Sponsor in the selection of securities,
the initial fees and expenses of the Trustee and the initial audit. Your
Portfolio will sell securities to reimburse us for these costs at the end of
the initial offering period or after six months, if earlier. The value of your
Units will decline when your Portfolio pays these costs.
Unit Distribution. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. Units repurchased in
the secondary market, if any, may be offered by this prospectus at the
secondary market Public Offering Price in the manner described above.
The Sponsor intends to qualify Units for sale in a number of states.
Brokers, dealers and others will be allowed a regular concession or agency
commission in connection with the distribution of Units during the initial
offering period as described in the following table:
Concession
Transaction or Agency
Amount* Commission
-------------------- ------------------------
Global
BRIC Alternative
Opportunity Energy
Portfolio Portfolio
----------- -----------
Less than $50,000 2.25% 3.15%
$50,000 - $99,999 2.00 2.90
$100,000 - $249,999 1.75 2.65
$250,000 - $499,999 1.45 2.35
$500,000 - $999,999 1.20 2.25
$1,000,000 or more 0.65 1.80
--------------------
|
* The breakpoints will be adjusted to take into consideration purchase
orders stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units will be issued.
For transactions involving unitholders of other unit investment trusts who
use their redemption or termination proceeds to purchase Units, this regular
concession or agency commission will amount to 1.20% per Unit for the BRIC
Opportunity Portfolio and 2.15% per Unit for the Global Alternative Energy
Portfolio.
In addition to the regular concession or agency commission set forth above,
all broker-dealers and other selling firms will be eligible to receive
additional compensation based on total initial offering period sales of all
eligible Van Kampen unit investment trusts during a Quarterly Period as set
forth in the following table:
Initial Offering Period Volume
Sales During Quarterly Period Concession
------------------------------------------------
$2 million but less than $5 million 0.025%
$5 million but less than $10 million 0.050
$10 million but less than $50 million 0.075
$50 million or more 0.100
|
"Quarterly Period" means the following periods: January -- March; April --
June; July -- September; and October -- December. Broker-dealers and other
selling firms will not receive these additional volume concessions on the sale
of units which are not subject to the transactional sales charge, however, such
sales will be included in determining whether a firm has met the sales level
breakpoints set forth in the table above. Secondary market sales of all unit
investment trusts are excluded for purposes of these volume concessions.
Notwithstanding the foregoing, Wells Fargo Advisors will receive the maximum
volume concession set forth in the table above for all eligible unit sales. The
Sponsor will pay these amounts out of the transactional sales charge received
on units within a reasonable time following each Quarterly Period. For a trust
to be eligible for this additional compensation for Quarterly Period sales, the
trust's prospectus must include disclosure related to this additional
compensation; a trust is not eligible for this additional compensation if the
prospectus for such trust does not include disclosure related to this
additional compensation.
In addition to the regular concession and additional volume concessions set
forth in the tables above, Preferred Distributors will receive a reallowance of
0.10% of the Public Offering Price per Unit of all Units of a Portfolio sold
during a Quarterly Period. This additional compensation will be paid to
Preferred Distributors as an additional broker-dealer concession at the time
Units are purchased unless the Preferred Distributor notifies the Sponsor that
it elects to receive a separate payment following each applicable Quarterly
Period. The "Preferred Distributors" include (1) the following firms and their
affiliates: Edward D. Jones & Co., L.P., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley Smith Barney LLC, UBS Financial Services Inc. and
Wells Fargo Advisors and (2) any selling firm that has achieved aggregate sales
of Van Kampen unit investment trusts of either $30 million in the three-month
period preceding the related Quarterly Period or $100 million in the
twelve-month period preceding the related Quarterly Period. Preferred
Distributors will not receive this additional compensation on the sale of Units
which are not subject to the transactional sales charge, however, such sales
will be included in determining whether a firm has met the sales levels
described in the preceding sentence for purposes of qualifying as a Preferred
Distributor. Secondary market sales of Units are excluded for purposes of this
Preferred Distributor compensation.
Except as provided in this section, any sales charge discount provided to
investors will be borne by the selling broker-dealer or agent as indicated
under "General" above. For all secondary market transactions the total
concession or agency commission will amount to 80% of the sales charge.
Notwithstanding anything to the contrary herein, in no case shall the total of
any concessions, agency commissions and any additional compensation allowed or
paid to any broker, dealer or other distributor of Units with respect to any
individual transaction exceed the total sales charge applicable to such
transaction. The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units and to change the amount of the concession or
agency commission to dealers and others from time to time.
We may provide, at our own expense and out of our own profits, additional
compensation and benefits to broker-dealers who sell Units of the Portfolios
and our other products. This compensation is intended to result in additional
sales of our products and/or compensate broker-dealers and financial advisors
for past sales. We may make these payments for marketing, promotional or
related expenses, including, but not limited to, expenses of entertaining
retail customers and financial advisors, advertising, sponsorship of events or
seminars, obtaining shelf space in broker-dealer firms and similar activities
designed to promote the sale of the Portfolios and our other products. Fees may
include payment for travel expenses, including lodging, incurred in connection
with trips taken by invited registered representatives for meetings or seminars
of a business nature. These arrangements will not change the price you pay for
your Units.
Sponsor Compensation. The Sponsor will receive the total sales charge
applicable to each transaction. Except as provided under "Unit Distribution,"
any sales charge discount provided to investors will be borne by the selling
dealer or agent. In addition, the Sponsor will realize a profit or loss as a
result of the difference between the price paid for the Securities by the
Sponsor and the cost of the Securities to your Portfolio on the Initial Date of
Deposit as well as on subsequent deposits. See "Notes to Portfolios". The
Sponsor has not participated as sole underwriter or as manager or as a member
of the underwriting syndicates or as an agent in a private placement for any of
the Securities. The Sponsor may realize profit or loss as a result of the
possible fluctuations in the market value of Units held by the Sponsor for sale
to the public. In maintaining a secondary market, the Sponsor will realize
profits or losses in the amount of any difference between the price at which
Units are purchased and the price at which Units are resold (which price
includes the applicable sales charge) or from a redemption of repurchased Units
at a price above or below the purchase price. Cash, if any, made available to
the Sponsor prior to the date of settlement for the purchase of Units may be
used in the Sponsor's business and may be deemed to be a benefit to the
Sponsor, subject to the limitations of the Securities Exchange Act of 1934.
The Sponsor or an affiliate may have participated in a public offering of
one or more of the Securities. The Sponsor, an affiliate or their employees may
have a long or short position in these Securities or related securities. An
affiliate may act as a specialist or market maker for these Securities. An
officer, director or employee of the Sponsor or an affiliate may be an officer
or director for issuers of the Securities.
Market for Units. Although it is not obligated to do so, the Sponsor may
maintain a market for Units and to purchase Units at the secondary market
repurchase price (which is described under "Right of Unitholders--Redemption of
Units"). The Sponsor may discontinue purchases of Units or discontinue
purchases at this price at any time. In the event that a secondary market is
not maintained, a Unitholder will be able to dispose of Units by tendering them
to the Trustee for redemption at the Redemption Price. See "Rights of
Unitholders--Redemption of Units". Unitholders should contact their broker to
determine the best price for Units in the secondary market. Units sold prior to
the time the entire deferred sales charge has been collected will be assessed
the amount of any remaining deferred sales charge at the time of sale. The
Trustee will notify the Sponsor of any Units tendered for redemption. If the
Sponsor's bid in the secondary market equals or exceeds the Redemption Price
per Unit, it may purchase the Units not later than the day on which Units would
have been redeemed by the Trustee. The Sponsor may sell repurchased Units at
the secondary market Public Offering Price per Unit.
RETIREMENT ACCOUNTS
Units are available for purchase in connection with certain types of
tax-sheltered retirement plans, including Individual Retirement Accounts for
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.
FEE ACCOUNTS
As described above, Units may be available for purchase by investors in Fee
Accounts where a Portfolio is Wrap Fee Eligible. You should consult your
financial professional to determine whether you can benefit from these
accounts. This table illustrates the sales charge you will pay if a Portfolio
is Wrap Fee Eligible as a percentage of the initial Public Offering Price per
Unit on the Initial Date of Deposit (the percentage will vary thereafter).
Initial sales charge 0.00%
Deferred sales charge 0.00
-----
Transactional sales charge 0.00%
=====
Creation and development fee 0.50%
-----
Total sales charge 0.50%
=====
|
You should consult the "Public Offering--Reducing Your Sales Charge" section
for specific information on this and other sales charge discounts. That section
governs the calculation of all sales charge discounts. The Sponsor reserves the
right to limit or deny purchases of Units in Fee Accounts by investors or
selling firms whose frequent trading activity is determined to be detrimental
to a Portfolio. To purchase Units in these Fee Accounts, your financial
professional must purchase Units designated with one of the Wrap Fee CUSIP
numbers set forth under "Essential Information," either Wrap Fee Cash for cash
distributions or Wrap Fee Reinvest for the reinvestment of distributions in
additional Units, if available. See "Rights of Unitholders--Reinvestment
Option."
RIGHTS OF UNITHOLDERS
Distributions. Dividends and interest, net of expenses, and any net proceeds
from the sale of Securities received by a Portfolio will generally be
distributed to Unitholders on each Distribution Date to Unitholders of record
on the preceding Record Date. These dates appear under "Essential Information".
In addition, the Portfolios will generally make required distributions at the
end of each year because each is structured as a "regulated investment company"
for federal tax purposes. Unitholders will also receive a final distribution of
income when their Portfolio terminates. A person becomes a Unitholder of record
on the date of settlement (generally three business days after Units are
ordered). Unitholders may elect to receive distributions in cash or to have
distributions reinvested into additional Units. See "Rights of
Unitholders--Reinvestment Option".
Dividends and interest received by a Portfolio are credited to the Income
Account of the Portfolio. Other receipts (e.g., capital gains, proceeds from
the sale of Securities, etc.) are credited to the Capital Account. Proceeds
received on the sale of any Securities, to the extent not used to meet
redemptions of Units or pay deferred sales charges, fees or expenses, will be
distributed to Unitholders. Proceeds received from the disposition of any
Securities after a Record Date and prior to the following Distribution Date
will be held in the Capital Account and not distributed until the next
Distribution Date. Any distribution to Unitholders consists of each
Unitholder's pro rata share of the available cash in the Income and Capital
Accounts as of the related Record Date.
Estimated Distributions. The estimated initial distribution and estimated
net annual income per Unit may be shown under "Essential Information."
Generally, the estimate of the income a Portfolio may receive is based on the
most recent ordinary quarterly dividends declared by an issuer, the most recent
interim and final dividends declared for certain foreign issuers, or scheduled
income payments (in all cases accounting for any applicable foreign withholding
taxes). In certain cases, estimated net annual income may also be based upon
several recently declared dividends of an issuer. However, common stocks do not
assure dividend payments and therefore the amount of future dividend income to
your Portfolio is uncertain. The actual net annual distributions may decrease
over time because a portion of the Securities included in a Portfolio will be
sold to pay for the organization costs, deferred sales charge and creation and
development fee. Securities may also be sold to pay regular fees and expenses
during a Portfolio's life. Dividend and income conventions for certain
companies and/or certain countries differ from those typically used in the
United States and in certain instances, dividends/income paid or declared over
several years or other periods may be used to estimate annual distributions.
The actual net annual income distributions you receive will vary from the
estimated amount due to changes in a Portfolio's fees and expenses, in actual
income received by a Portfolio, currency fluctuations and with changes in a
Portfolio such as the acquisition, call, maturity or sale of Securities. Due to
these and various other factors, actual income received by a Portfolio will
most likely differ from the most recent dividends or scheduled income
payments.
Reinvestment Option. Unitholders may have distributions automatically
reinvested in additional Units without a sales charge (to the extent Units may
be lawfully offered for sale in the state in which the Unitholder resides). The
CUSIP numbers for either "Cash" distributions or "Reinvest" for the
reinvestment of distributions are set forth under "Essential Information".
Brokers and dealers can use the Dividend Reinvestment Service through
Depository Trust Company ("DTC") or purchase a Reinvest (or Wrap Fee Reinvest
in the case of Wrap Fee Eligible Units held in Fee Accounts) CUSIP, if
available. To participate in this reinvestment option, a Unitholder must file
with the Trustee a written notice of election, together with any other
documentation that the Trustee may then require, at least five days prior to
the related Record Date. A Unitholder's election will apply to all Units owned
by the Unitholder and will remain in effect until changed by the Unitholder.
The reinvestment option is not offered during the 30 days prior to termination.
If Units are unavailable for reinvestment or this reinvestment option is no
longer available, distributions will be paid in cash. Distributions will be
taxable to Unitholders if paid in cash or automatically reinvested in
additional Units. See "Taxation".
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. The
reinvestment plan is subject to availability or limitation by each
broker-dealer or selling firm. Broker-dealers may suspend or terminate the
offering of a reinvestment plan at any time. Please contact your financial
professional for additional information.
Redemption of Units. All or a portion of your Units may be tendered to The
Bank of New York Mellon, the Trustee, for redemption at Unit Investment Trust
Division, 111 Sanders Creek Parkway, East Syracuse, New York 13057, on any day
the New York Stock Exchange is open. No redemption fee will be charged by the
Sponsor or the Trustee, but you are responsible for applicable governmental
charges, if any. Units redeemed by the Trustee will be canceled. You may redeem
all or a portion of your Units by sending a request for redemption to your bank
or broker-dealer through which you hold your Units. No later than three
business days following satisfactory tender, the Unitholder will be entitled to
receive in cash an amount for each Unit equal to the Redemption Price per Unit
next computed on the date of tender. The "date of tender" is deemed to be the
date on which Units are received by the Trustee, except that with respect to
Units received by the Trustee after the Evaluation Time or on a day which is
not a Portfolio business day, the date of tender is deemed to be the next
business day. Redemption requests received by the Trustee after the Evaluation
Time, and redemption requests received by authorized financial professionals
after the Evaluation Time or redemption requests received by such persons that
are not transmitted to the Trustee until after the time designated by the
Trustee, are priced based on the date of the next determined redemption price
provided they are received timely by the Trustee on such date. It is the
responsibility of authorized financial professionals to transmit redemption
requests received by them to the Trustee so they will be received in a timely
manner. Certain broker-dealers or selling firms may charge an order handling
fee for processing redemption requests. Units redeemed directly through the
Trustee are not subject to such fees.
Unitholders tendering 1,000 or more Units of the BRIC Opportunity Portfolio
(or such higher amount as may be required by your broker-dealer or selling
agent) for redemption may request an in kind distribution of Securities equal
to the Redemption Price per Unit on the date of tender. The Global Alternative
Energy Portfolio generally will not offer in kind distributions. Unitholders
may not request an in kind distribution within thirty days of a Portfolio's
termination. Your Portfolio generally will not offer in kind distributions of
portfolio securities that are held in foreign markets. An in kind distribution
will be made by the Trustee through the distribution of each of the Securities
in book-entry form to the account of the Unitholder's broker-dealer at DTC.
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 in kind
distribution option may be modified or discontinued at any time without notice.
Notwithstanding the foregoing, if the Unitholder requesting an in kind
distribution is the Sponsor or an affiliated person of a Portfolio, the Trustee
may make an in kind distribution to such Unitholder provided that no one with a
pecuniary incentive to influence the in kind distribution may influence
selection of the distributed securities, the distribution must consist of a pro
rata distribution of all portfolio securities (with limited exceptions) and the
in kind distribution may not favor such affiliated person to the detriment of
any other Unitholder.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in kind or sold, the size of a Portfolio will be,
and the diversity of a Portfolio may be, reduced. Sales may be required at a
time when Securities would not otherwise be sold and may result in lower prices
than might otherwise be realized. The price received upon redemption may be
more or less than the amount paid by the Unitholder depending on the value of
the Securities at the time of redemption. Special federal income tax
consequences will result if a Unitholder requests an in kind distribution. See
"Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in your Portfolio determined
on the basis of (i) the cash on hand in the Portfolio, (ii) the value of the
Securities in the Portfolio and (iii) dividends or other income distributions
receivable on the Securities in the Portfolio trading ex-dividend as of the
date of computation, less (a) amounts representing taxes or other governmental
charges payable out of the Portfolio, (b) the accrued expenses of the Portfolio
(including costs associated with liquidating securities after the end of the
initial offering period) and (c) any unpaid deferred sales charge payments.
During the initial offering period, the redemption price and the secondary
market repurchase price are not reduced by the estimated organization costs or
the creation and development fee. For these purposes, the Trustee will
determine the value of the Securities as described under "Public Offering--Unit
Price".
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.
Exchange Option. When you redeem Units of your Portfolio or when your
Portfolio terminates, you may be able to exchange your Units for units of other
Van Kampen unit trusts at a reduced sales charge. You should contact your
financial professional for more information about trusts currently available
for exchanges. Before you exchange Units, you should read the prospectus of the
new trust carefully and understand the risks and fees. You should then discuss
this option with your financial professional to determine whether your
investment goals have changed, whether current trusts suit you and to discuss
tax consequences. An exchange is a taxable event to you. We may discontinue
this option at any time.
Rollover. We may offer a subsequent series of each Portfolio for a Rollover
when the Portfolios terminate.
On the Mandatory Termination Date you will have the option to (1)
participate in a Rollover and have your Units reinvested into a subsequent
trust series or (2) receive a cash distribution.
If you elect to participate in a cash Rollover, your Units will be redeemed
on the Mandatory Termination Date. As the redemption proceeds become available,
the proceeds (including dividends) will be invested in a new trust series at
the public offering price for the new trust. The Trustee will attempt to sell
Securities to satisfy the redemption as quickly as practicable on the Mandatory
Termination Date. We do not anticipate that the sale period will be longer than
one day, however, certain factors could affect the ability to sell the
Securities and could impact the length of the sale period. The liquidity of any
Security depends on the daily trading volume of the Security and the amount
available for redemption and reinvestment on any day.
We may make subsequent trust series available for sale at various times
during the year. Of course, we cannot guarantee that a subsequent trust or
sufficient units will be available or that any subsequent trusts will offer the
same investment strategies or objectives as the current Portfolios. We cannot
guarantee that a Rollover will avoid any negative market price consequences
resulting from trading large volumes of securities. Market price trends may
make it advantageous to sell or buy securities more quickly or more slowly than
permitted by the Portfolio procedures. We may, in our sole discretion, modify a
Rollover or stop creating units of a trust at any time regardless of whether
all proceeds of Unitholders have been reinvested in a Rollover. If we decide
not to offer a subsequent series, Unitholders will be notified prior to the
Mandatory Termination Date. Cash which has not been reinvested in a Rollover
will be distributed to Unitholders shortly after the Mandatory Termination
Date. Rollover participants may receive taxable dividends or realize taxable
capital gains which are reinvested in connection with a Rollover but may not be
entitled to a deduction for capital losses due to the "wash sale" tax rules.
Due to the reinvestment in a subsequent trust, no cash will be distributed to
pay any taxes. See "Taxation".
Units. Ownership of Units is evidenced in book-entry form only and will not
be evidenced by certificates. Units purchased or held through your bank or
broker-dealer will be recorded in book-entry form and credited to the account
of your bank or broker-dealer at DTC. Units are transferable by contacting your
bank or broker-dealer through which you hold your Units. Transfer, and the
requirements therefore, will be governed by the applicable procedures of DTC
and your agreement with the DTC participant in whose name your Units are
registered on the transfer records of DTC.
Reports Provided. Unitholders will receive a statement of dividends and
other amounts received by a Portfolio for each distribution. Within a
reasonable time after the end of each year, each person who was a Unitholder
during that year will receive a statement describing dividends and capital
received, actual Portfolio distributions, Portfolio expenses, a list of the
Securities and other Portfolio information. Unitholders may obtain evaluations
of the Securities upon request to the Trustee. If you have questions regarding
your account or your Portfolio, please contact your financial advisor or the
Trustee. The Sponsor does not have access to individual account information.
PORTFOLIO ADMINISTRATION
Portfolio Administration. Your Portfolio is not a managed fund and, except
as provided in the Trust Agreement, Securities generally will not be sold or
replaced. The Sponsor may, however, direct that Securities be sold in certain
limited circumstances to protect your Portfolio based on advice from the
Supervisor. These situations may include events such as the issuer having
defaulted on payment of any of its outstanding obligations or the price of a
Security has declined to such an extent or other credit factors exist so that
in the opinion of the Supervisor retention of the Security would be detrimental
to your Portfolio. If a public tender offer has been made for a Security or a
merger or acquisition has been announced affecting a Security, the Trustee may
either sell the Security or accept an offer if the Supervisor determines that
the sale or exchange is in the best interest of Unitholders. The Trustee will
distribute any cash proceeds to Unitholders. In addition, the Trustee may sell
Securities to redeem Units or pay Portfolio expenses or deferred sales charges.
If securities or property are acquired by a Portfolio, the Sponsor may direct
the Trustee to sell the securities or property and distribute the proceeds to
Unitholders or to accept the securities or property for deposit in your
Portfolio. Should any contract for the purchase of any of the Securities fail,
the Sponsor will (unless substantially all of the moneys held in a Portfolio to
cover the purchase are reinvested in substitute Securities in accordance with
the Trust Agreement) refund the cash and sales charge attributable to the
failed contract to all Unitholders on or before the next Distribution Date.
The Sponsor may direct the reinvestment of proceeds of the sale of
Securities if the sale is the direct result of serious adverse credit factors
which, in the opinion of the Sponsor, would make retention of the Securities
detrimental to your Portfolio. In such a case, the Sponsor may, but is not
obligated to, direct the reinvestment of sale proceeds in any other securities
that meet the criteria for inclusion in your Portfolio on the Initial Date of
Deposit. The Sponsor may also instruct the Trustee to take action necessary to
ensure that your Portfolio continues to satisfy the qualifications of a
regulated investment company and to avoid imposition of tax on undistributed
income of the Portfolio.
When your Portfolio sells Securities, the composition and diversity of the
Securities in the Portfolio may be altered. In order to obtain the best price
for a Portfolio, it may be necessary for the Supervisor to specify minimum
amounts (generally 100 shares) in which blocks of Securities are to be sold. In
effecting purchases and sales of 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 your Portfolio, the Sponsor or
dealers participating in the offering of Units.
Pursuant to an exemptive order, your Portfolio may be permitted to sell
Securities to a new trust when it terminates if those Securities are included
in the new trust. The exemption may enable your Portfolio to eliminate
commission costs on these transactions. The price for those securities will be
the closing sale price on the sale date on the exchange where the Securities
are principally traded, as certified by the Sponsor.
Amendment of the Trust Agreement. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not materially
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. Your Portfolio will terminate on the Mandatory Termination Date
or upon the sale or other disposition of the last Security held in the
Portfolio. A Portfolio may be terminated at any time with consent of
Unitholders representing two-thirds of the outstanding Units or by the Trustee
when the value of the Portfolio is less than $500,000 ($3,000,000 if the value
of the Portfolio has exceeded $15,000,000) (the "Minimum Termination Value"). A
Portfolio will be liquidated by the Trustee in the event that a sufficient
number of Units of the Portfolio not yet sold are tendered for redemption by
the Sponsor, so that the net worth of the Portfolio would be reduced to less
than 40% of the value of the Securities at the time they were deposited in the
Portfolio. If your Portfolio is liquidated because of the redemption of unsold
Units by the Sponsor, the Sponsor will refund to each purchaser of Units the
entire sales charge paid by such purchaser. Unitholders will be notified of any
termination. The Trustee may begin to sell Securities in connection with a
Portfolio termination nine business days before, and no later than, the
Mandatory Termination Date. Approximately forty-five days before this date, the
Trustee will notify Unitholders of the termination and provide a form enabling
qualified Unitholders of the BRIC Opportunity Portfolio to elect an in kind
distribution of Securities, provided that Unitholders may not request an in
kind distribution of Securities within thirty days of the Portfolio's
termination. Any in kind distribution of Securities will be made in the manner
and subject to the restrictions described under "Rights of
Unitholders--Redemption of Units", provided that, in connection with an in kind
distribution election more than 30 days prior to termination, Unitholders
tendering 1,000 or more Units of the BRIC Opportunity Portfolio (or such higher
amount as may be required by your broker-dealer or selling agent) may request
an in kind distribution of Securities equal to the Redemption Price per Unit on
the date of tender. Unitholders will receive a final cash distribution within a
reasonable time after the Mandatory Termination Date. All distributions will be
net of Portfolio expenses and costs. Unitholders will receive a final
distribution statement following termination. The Information Supplement
contains further information regarding termination of your Portfolio. See
"Additional Information".
Limitations on Liabilities. The Sponsor, Supervisor and Trustee are under no
liability for taking any action or for refraining from taking any action in
good faith pursuant to the Trust Agreement, or for errors in judgment, but
shall be liable only for their own willful misfeasance, bad faith or gross
negligence (negligence in the case of the Trustee) in the performance of their
duties or by reason of their reckless disregard of their obligations and duties
hereunder. The Trustee is not liable for depreciation or loss incurred by
reason of the sale by the Trustee of any of the Securities. In the event of the
failure of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and is not liable for any action taken by it in good faith under the
Trust Agreement. The Trustee is not liable for any taxes or other governmental
charges imposed on the Securities, on it as Trustee under the Trust Agreement
or on a Portfolio which the Trustee may be required to pay under any present or
future law of the United States of America or of any other taxing authority
having jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee. The Sponsor and Supervisor
may rely on any evaluation furnished by the Trustee and have no responsibility
for the accuracy thereof. Determinations by the Trustee shall be made in good
faith upon the basis of the best information available to it.
Sponsor. Van Kampen Funds Inc. is the Sponsor of your Portfolio. The Sponsor
is a wholly owned subsidiary of Van Kampen Investments Inc. ("Van Kampen
Investments"). Van Kampen Investments is a diversified asset management company
that administers more than three million retail investor accounts and has
extensive capabilities for managing institutional portfolios. Van Kampen
Investments is an indirect wholly owned subsidiary of Invesco Ltd. ("Invesco"),
a leading independent global investment manager that provides a wide range of
investment strategies and vehicles to its retail, institutional and high net
worth clients around the globe. On June 1, 2010, Invesco completed the
previously announced acquisition of the retail asset management business,
including Van Kampen Investments, from Morgan Stanley & Co. Incorporated. The
Sponsor's principal office is located at 11 Greenway Plaza, Houston, Texas
77046-1173. As of June 30, 2011, the total stockholders' equity of Van Kampen
Funds Inc. was $82,277,726 (unaudited). The current assets under management and
supervision by Invesco and its affiliates were valued at approximately $625.3
billion as of December 31, 2011.
The Sponsor and your Portfolio have adopted a code of ethics requiring
Invesco's employees who have access to information on Portfolio transactions to
report personal securities transactions. The purpose of the code is to avoid
potential conflicts of interest and to prevent fraud, deception or misconduct
with respect to your Portfolio. The Information Supplement contains additional
information about the Sponsor.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the SEC, (ii) terminate the
Trust Agreement and liquidate your Portfolio as provided therein or (iii)
continue to act as Trustee without terminating the Trust Agreement.
Trustee. The Trustee is The Bank of New York Mellon, a trust company
organized under the laws of New York. The Bank of New York Mellon has its
principal unit investment trust division offices at 2 Hanson Place, 12th Floor,
Brooklyn, New York 11217, (800) 856-8487. If you have questions regarding your
account or your Portfolio, please contact the Trustee at its principal unit
investment trust division offices or your financial adviser. The Sponsor does
not have access to individual account information. The Bank of New York Mellon
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".
TAXATION
This section summarizes some of the principal U.S. federal income tax
consequences of owning Units of the Portfolios as of the date of this
prospectus. Tax laws and interpretations change frequently, possibly with
retroactive effect, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do not
describe your situation if you are a corporation, a non-U.S. person, a
broker/dealer, a tax-exempt entity or other investor with special
circumstances. In addition, this section does not describe your state, local or
foreign tax consequences.
This federal income tax summary is based in part on the advice of counsel to
the Sponsor. The Internal Revenue Service could disagree with any conclusions
set forth in this section. In addition, our counsel was not asked to review the
federal income tax treatment of the assets to be deposited in your Portfolio.
As with any investment, you should seek advice based on your individual
circumstances from your own tax advisor.
Portfolio Status. Your Portfolio intends to elect and to qualify annually as
a "regulated investment company" under the federal tax laws. If your Portfolio
qualifies as a regulated investment company and distributes its income as
required by the tax law, the Portfolio generally will not pay federal income
taxes.
Distributions. Portfolio distributions are generally taxable. After the end
of each year, you will receive a tax statement reporting your Portfolio's
distributions, including the amounts of ordinary income distributions and
capital gains dividends. Ordinary income distributions are generally taxed at
your ordinary tax rate, however, as further discussed below, certain ordinary
income distributions received from your Portfolio may be taxed at the capital
gains tax rates for taxable years beginning before January 1, 2013. Certain
ordinary income dividends on Units that are attributable to qualifying
dividends received by your Portfolio from certain corporations may be reported
by the Portfolio as being eligible for the dividends received deduction for
corporate Unitholders provided certain holding period requirements are met. In
addition, your Portfolio may make distributions that represent a return of
capital for tax purposes to the extent of the Unitholder's basis in the Units,
and any additional amounts in excess of basis would be taxed as a capital gain.
Generally, you will treat all capital gains dividends as long-term capital
gains regardless of how long you have owned your Units. The tax status of your
distributions from your Portfolio is not affected by whether you reinvest your
distributions in additional Units or receive them in cash. The income from your
Portfolio that you must take into account for federal income tax purposes is
not reduced by amounts used to pay a deferred sales charge, if any. The tax
laws may require you to treat distributions made to you in January as if you
had received them on December 31 of the previous year.
A distribution paid by your Portfolio reduces the Portfolio's net asset
value per Unit on the date paid by the amount of the distribution. Accordingly,
a distribution paid shortly after a purchase of Units by a Unitholder would
represent, in substance, a partial return of capital, even though it would be
subject to income taxes.
Sale or Redemption of Units. If you sell or redeem your Units, you will
generally recognize a taxable gain or loss. To determine the amount of this
gain or loss, you must subtract your adjusted tax basis in your Units from the
amount you receive in the transaction. Your initial tax basis in your Units is
generally equal to the cost of your Units, generally including sales charges.
In some cases, however, you may have to adjust your tax basis after you
purchase your Units.
Capital Gains and Losses and Certain Ordinary Income Dividends. If you are
an individual, the maximum marginal federal tax rate for net capital gain under
current law is generally 15% (zero for certain taxpayers in the 10% and 15% tax
brackets). These capital gains rates are generally effective for taxable years
beginning before January 1, 2013. For later periods, as of the date of this
prospectus, the maximum marginal federal tax rate for net capital gains for
individuals is scheduled to be 20% (10% for certain taxpayers in the 10% and
15% tax brackets). If the gain is earned on property with a holding period of
more than five years the long-term capital gain rate of 20% currently is
scheduled to be reduced to 18% and the 10% rate reduced to 8%.
Net capital gain equals net long-term capital gain minus net short-term
capital loss for the taxable year. Capital gain or loss is long-term if the
holding period for the asset is more than one year and is short-term if the
holding period for the asset is one year or less. You must exclude the date you
purchase your Units to determine your holding period. However, if you receive a
capital gain dividend from your Portfolio and sell your Units at a loss after
holding it for six months or less, the loss will be recharacterized as
long-term capital loss to the extent of the capital gain dividend received. The
tax rates for capital gains realized from assets held for one year or less are
generally the same as for ordinary income. The Internal Revenue Code of 1986,
as amended, treats certain capital gains as ordinary income in special
situations.
In certain circumstances, ordinary income dividends received by an
individual Unitholder from a regulated investment company such as your
Portfolio may be taxed at the same rates that apply to net capital gain (as
discussed above), provided certain holding period requirements are satisfied
and provided the dividends are attributable to qualified dividend income
received by the Portfolio itself. These special rules relating to the taxation
of qualified dividend income from regulated investment companies generally
apply to taxable years beginning before January 1, 2013. Each Portfolio will
provide notice to its Unitholders of the amount of any distribution which may
be taken into account as qualified dividend income which is eligible for the
new capital gains tax rates.
In Kind Distributions. Under certain circumstances, as described in this
prospectus, you may receive an in kind distribution of Portfolio securities
when you redeem your Units. In general, this distribution will be treated as a
sale for federal income tax purposes and you will recognize gain or loss, based
on the value at that time of the securities and the amount of cash received.
The Internal Revenue Service could however assert that a loss could not be
currently deducted.
Rollovers and Exchanges. If you elect to have your proceeds from your
Portfolio rolled over into a future trust, it is considered a sale for federal
income tax purposes and any gain on the sale will be treated as a capital gain,
and, in general, any loss will be treated as a capital loss. However, any loss
realized on a sale or exchange will be disallowed to the extent that Units
disposed of are replaced (including through reinvestment of dividends) within a
period of 61 days beginning 30 days before and ending 30 days after disposition
of Units or to the extent that the Unitholder, during such period, acquires or
enters into an option or contract to acquire, substantially identical stock or
securities. In such a case, the basis of the Units acquired will be adjusted to
reflect the disallowed loss.
Deductibility of Portfolio Expenses. Generally, expenses incurred by your
Portfolio will be deducted from the gross income received by your Portfolio and
only your share of your Portfolio's net income will be paid to you and reported
as taxable income to you. However, if the Units of your Portfolio are held by
fewer than 500 Unitholders at any time during a taxable year, your Portfolio
will generally not be able to deduct certain expenses from income, thus
resulting in your reported share of your Portfolio's taxable income being
increased by your share of those expenses, even though you do not receive a
corresponding cash distribution. In this case you may be able to take a
deduction for these expenses; however, certain miscellaneous itemized
deductions, such as investment expenses, may be deducted by individuals only to
the extent that all of these deductions exceed 2% of the individual's adjusted
gross income.
Foreign Investors. If you are a foreign investor (i.e., an investor other
than a U.S. citizen or resident or a U.S. corporation, partnership, estate or
trust), generally, subject to applicable tax treaties, distributions to you
from your Portfolio will be characterized as dividends for federal income tax
purposes (other than dividends which the Portfolio reports as capital gain
dividends) and will be subject to U.S. income taxes, including withholding
taxes, subject to certain exceptions described below. However, distributions
received by a foreign investor from a Portfolio that are properly reported by
the trust as capital gain dividends may not be subject to U.S. federal income
taxes, including withholding taxes, provided that your Portfolio makes certain
elections and certain other conditions are met.
Foreign Tax Credit. If your Portfolio invests in any foreign securities, the
tax statement that you receive may include an item showing foreign taxes your
Portfolio paid to other countries. In this case, dividends taxed to you will
include your share of the taxes your Portfolio paid to other countries. You may
be able to deduct or receive a tax credit for your share of these taxes if your
Portfolio meets certain requirements for passing through such deductions or
credits to you.
Backup Withholding. By law, your Portfolio must withhold as backup
withholding a percentage of your taxable distributions and redemption proceeds
if you do not provide your correct social security or taxpayer identification
number and certify that you are not subject to backup withholding, or if the
IRS instructs your Portfolio to do so.
Investors should consult their advisors concerning the federal, state, local
and foreign tax consequences of investing in a Portfolio.
PORTFOLIO OPERATING EXPENSES
General. The fees and expenses of your Portfolio will generally accrue on a
daily basis. Portfolio operating fees and expenses are generally paid out of
the Income Account to the extent funds are available, and then from the Capital
Account. The deferred sales charge, creation and development fee and
organization costs are generally paid out of the Capital Account of your
Portfolio. It is expected that Securities will be sold to pay these amounts
which will result in capital gains or losses to Unitholders. See "Taxation".
These sales will reduce future income distributions. The Sponsor's,
Supervisor's and Trustee's fees may be increased without approval of the
Unitholders by amounts not exceeding proportionate increases under the category
"Services Less Rent of Shelter" in the Consumer Price Index for All Urban
Consumers or, if this category is not published, in a comparable category.
Organization Costs. You and the other Unitholders will bear all or a portion
of the organization costs and charges incurred in connection with the
establishment of your Portfolio. These costs and charges will include the cost
of the preparation, printing and execution of the trust agreement, registration
statement and other documents relating to your Portfolio, federal and state
registration fees and costs, fees paid to any Portfolio Consultant for
assisting the Sponsor in the selection of securities, the initial fees and
expenses of the Trustee, and legal and auditing expenses. The Public Offering
Price of Units includes the estimated amount of these costs. The Trustee will
deduct these expenses from your Portfolio's assets at the end of the initial
offering period.
Creation and Development Fee. The Sponsor will receive a fee from your
Portfolio for creating and developing the Portfolio, including determining the
Portfolio's objectives, policies, composition and size, selecting service
providers and information services and for providing other similar
administrative and ministerial functions. The creation and development fee is a
charge of $0.05 per Unit. The Trustee will deduct this amount from your
Portfolio's assets as of the close of the initial offering period. No portion
of this fee is applied to the payment of distribution expenses or as
compensation for sales efforts. This fee will not be deducted from proceeds
received upon a repurchase, redemption or exchange of Units before the close of
the initial public offering period.
Trustee's Fee. For its services the Trustee will receive the fee from your
Portfolio set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Portfolio expenses). The Trustee benefits to the extent there are
funds in the Capital and Income Accounts since these Accounts are non-interest
bearing to Unitholders and the amounts earned by the Trustee are retained by
the Trustee. Part of the Trustee's compensation for its services to your
Portfolio is expected to result from the use of these funds.
Compensation of Sponsor and Supervisor. The Sponsor and the Supervisor,
which is an affiliate of the Sponsor, will receive the annual fees for
providing bookkeeping and administrative services and portfolio supervisory
services set forth in the "Fee Table". These fees may exceed the actual costs
of providing these services to your Portfolio but at no time will the total
amount received for these services rendered to all Van Kampen unit investment
trusts in any calendar year exceed the aggregate cost of providing these
services in that year.
Miscellaneous Expenses. The following additional charges are or may be
incurred by your Portfolio: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of the
Portfolio, (b) fees of the Trustee for extraordinary services, (c) expenses of
the Trustee (including legal and auditing expenses) and of counsel designated
by the Sponsor, (d) various governmental charges, (e) expenses and costs of any
action taken by the Trustee to protect the Portfolio and the rights and
interests of Unitholders, (f) indemnification of the Trustee for any loss,
liability or expenses incurred in the administration of the Portfolio without
negligence, bad faith or wilful misconduct on its part, (g) foreign custodial
and transaction fees (which may include compensation paid to the Trustee or its
subsidiaries or affiliates), (h) costs associated with liquidating the
securities held in the Portfolio, (i) any offering costs incurred after the end
of the initial offering period and (j) expenditures incurred in contacting
Unitholders upon termination of the Portfolio. Your Portfolio may pay the
expenses of updating its registration statement each year. The Global
Alternative Energy Portfolio will pay a license fee to Ardour Global Indexes,
LLC for use of certain trademarks and other property.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed
upon by Paul Hastings LLP. Dorsey & Whitney LLP has acted as counsel to the
Trustee.
Independent Registered Public Accounting Firm. The statements of condition
and the related portfolios included in this prospectus have been audited by
Grant Thornton LLP, independent registered public accounting firm, 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 statements filed by your Portfolio with the SEC under the
Securities Act of 1933 and the Investment Company Act of 1940 (file no.
811-2754). The Information Supplement, which has been filed with the SEC and is
incorporated herein by reference, includes more detailed information concerning
the Securities, investment risks and general information about your Portfolio.
Information about your Portfolio (including the Information Supplement) can be
reviewed and copied at the SEC's Public Reference Room in Washington, DC. You
may obtain information about the Public Reference Room by calling
1-202-551-8090. 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:
publicinfo@sec.gov or by writing the SEC's Public Reference Section,
Washington, DC 20549-0102.
TABLE OF CONTENTS
Title Page
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BRIC Opportunity Portfolio 2
Global Alternative Energy Portfolio 6
Notes to Portfolios 11
Report of Independent Registered
Public Accounting Firm 12
Statements of Condition 13
The Portfolios A-1
Objectives and Securities Selection A-2
Risk Factors A-3
Public Offering A-9
Retirement Accounts A-15
Fee Accounts A-15
Rights of Unitholders A-16
Portfolio Administration A-19
Taxation A-21
Portfolio Operating Expenses A-24
Other Matters A-25
Additional Information A-25
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When Units of the Portfolios are no longer available this prospectus may be
used as a preliminary prospectus for a future Portfolio. If this prospectus is
used for future Portfolios you should note the following:
The information in this prospectus is not complete with respect to future
Portfolio series and may be changed. No person may sell Units of future
Portfolios until a registration statement is filed with the Securities and
Exchange Commission and is effective. This prospectus is not an offer to sell
Units and is not soliciting an offer to buy Units in any state where the offer
or sale is not permitted.
U-EMSPRO1202
PROSPECTUS
March 15, 2012
BRIC Opportunity Portfolio 2012-2
Global Alternative Energy Portfolio 2012-2
Please retain this prospectus for future reference.
INVESCO
Information Supplement
BRIC Opportunity Portfolio 2012-2
Global Alternative Energy Portfolio 2012-2
This Information Supplement provides additional information concerning the
risks and operations of the Portfolios which is not described in the
prospectus. You should read this Information Supplement in conjunction with the
prospectus. This Information Supplement is not a prospectus but is incorporated
into the prospectus by reference. It does not include all of the information
that you should consider before investing in a Portfolio. This Information
Supplement may not be used to offer or sell Units without the prospectus. You
can obtain copies of the prospectus by contacting the Sponsor's unit investment
trust division at 1 Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, Illinois
60181-5555, or by contacting your broker. This Information Supplement is dated
as of the date of the prospectus. All capitalized terms have been defined in
the prospectus.
Table of Contents
Page
Risk Factors 2
The Index 9
Sponsor Information 10
Trustee Information 11
Taxation 12
Portfolio Termination 13
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INVESCO
RISK FACTORS
Price Volatility. Because the Portfolios invest in securities of U.S. and
foreign companies, you should understand the risks of investing in securities
before purchasing Units. These risks include the risk that the financial
condition of the company or the general condition of the securities markets may
worsen and the value of the securities (and therefore Units) will fall.
Securities are especially susceptible to general market movements. The value of
securities 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 securities in a Portfolio and may be more or less than the price you
originally paid for your Units. As with any investment, we cannot guarantee
that the performance of a Portfolio will be positive over any period of time.
Because the Portfolios are unmanaged, the Trustee will not sell securities in
response to market fluctuations as is common in managed investments.
Dividends. Stocks represent ownership interests in a company and are not
obligations of the company. Common stockholders have a right to receive
payments from the company that is subordinate to the rights of creditors,
bondholders or preferred stockholders of the company. This means that common
stockholders have a right to receive dividends only if a company's board of
directors declares a dividend and the company has provided for payment of all
of its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if
the company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.
Foreign Stocks. Because the Portfolios invest in foreign stocks, these
Portfolios involve 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 a Portfolio, 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 Portfolios 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. A Portfolio'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 Trustee
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 a Portfolio might obtain had the Trustee sold the currency in the market
at that time.
Emerging Markets. An investment in Units of the Portfolios should be made
with an understanding of the risks inherent with investing in certain smaller
and emerging markets.
Investing. Compared to more mature markets, some emerging markets may have a
low level of regulation, enforcement of regulations and monitoring of
investors' activities. Those activities may include practices such as trading
on material non-public information. The securities markets of developing
countries are not as large as the more established securities markets and have
substantially less trading volume, resulting in a lack of liquidity and high
price volatility. There may be a high concentration of market capitalization
and trading volume in a small number of issuers representing a limited number
of industries as well as a high concentration of investors and financial
intermediaries. These factors may adversely affect the timing and pricing of
the acquisition or disposal of securities. In certain emerging markets,
registrants are not subject to effective government supervision nor are they
always independent from issuers. The possibility of fraud, negligence, undue
influence being exerted by the issuer or refusal to recognize ownership exists,
which, along with other factors, could result in the registration of a
shareholding being completely lost. Investors should therefore be aware that a
Portfolio could suffer loss arising from these registration problems. In
addition, the legal remedies in emerging markets are often more limited than
the remedies available in the United States.
Liquidity/Settlement. Practices pertaining to the settlement of securities
transactions in emerging markets involve higher risks than those in developed
markets, in large part because of the need to use brokers and counterparties
who are less well capitalized, and custody and registration of assets in some
countries may be unreliable. As a result, brokerage commissions and other fees
are generally higher in emerging markets and the procedures and rules governing
foreign transactions and custody may involve delays in payment, delivery or
recovery of money or investments. Delays in settlement could result in
investment opportunities being missed if a Portfolio is unable to acquire or
dispose of a security. Certain foreign investments may also be less liquid and
more volatile than U.S. investments, which may mean at times that such
investments are unable to be sold at desirable prices.
Political. Political and economic structures in emerging markets often
change rapidly, which may cause instability. In adverse social and political
circumstances, governments have been involved in policies of expropriation,
confiscatory taxation, nationalization, intervention in the securities market
and trade settlement, and imposition of foreign investment restrictions and
exchange controls, and these could be repeated in the future. In addition to
withholding taxes on investment income, some governments in emerging markets
may impose different capital gains taxes on foreign investors. Foreign
investments may also be subject to the risks of seizure by a foreign government
and the imposition of restrictions on the exchange or export of foreign
currency. Additionally, some governments exercise substantial influence over
the private economic sector and the political and social uncertainties that
exist for many developing countries are considerable.
Trade. Another risk common to most developing countries is that the economy
is heavily export oriented and, accordingly, is dependent upon international
trade. The existence of overburdened infrastructures and obsolete financial
systems also presents risks in certain countries, as do environmental problems.
Certain economies also depend to a large degree upon exports of primary
commodities and, therefore, are vulnerable to changes in commodity prices
which, in turn, may be affected by a variety of factors.
China. Investment in securities issued by companies organized, doing
business or traded in China or its territorial possessions involves risks not
typically associated with investments in securities of U.S. companies. For many
centuries, the economy of the People's Republic of China was largely closed by
geography as well as by government policy. Large-scale foreign investment in
China's economy began during the middle of the 19th century and was curtailed
after 1949 when the Communist government barred foreign investment. Political
and economic structures in China are undergoing significant evolution and rapid
development and may lack the social, political and economic stability
characteristics of the United States. In 1978, China began implementing an
economic reform program in an effort to revitalize the economy and improve the
standard of living. Since that time, the Chinese government's economic policies
have allowed for an increasing degree of liberalization from a
centrally-planned economy to a more market-oriented economy. In October 1992,
the National People's congress called for a "socialist market economy" in which
full reign should be given to market forces with the government limiting its
role to setting and implementing broad macroeconomic policies. As part of the
economic reforms, managers of enterprises have been granted more
decision-making powers and responsibilities in relation to matters such as
production, marketing, use of funds, and employment and disciplining of staff.
Economic reform in China, designed to replace Communist style central
planning, has proceeded largely by trial and error aimed at achieving the
fastest possible change with the minimum social dislocation. The reform process
has not always been even, however, it has generally proceeded in a direction
toward increased openness and decentralization of economic decision-making.
While there is a broad base of support for these reforms, there can be no
assurance that current or future reforms in economic, trade and investment
policies will be successful. Despite recent reforms, the Chinese Communist
Party continues to play the leading role in formulating policy and selecting
and providing personnel at all levels of government. In addition, a significant
portion of China's output continues to be derived state-owned enterprises and,
therefore, the Chinese government maintains control over a significant range of
products, including the production obligations and prices of such products. Of
course, there can be no assurance that reform efforts will be successful and in
certain economies, such as the former Soviet-bloc countries, reform efforts
have experienced difficulties.
The development of China's economy has been characterized by the adoption,
since 1953, of Five Year Plans and Twenty Year Plans carried out under the
supervision of the State Planning Commission which reports to the State
Council, China's highest executive body (the National People's Congress is the
highest authority and law-making body).
The Chinese economy is dependent on the economies of other Asian countries
and can be significantly affected by currency fluctuations and increasing
competition from Asia's other low-cost emerging economies. The stability of
China's economic policies has however, increased following its membership in
December 2001 in the World Trade Organization.
The willingness and ability of the Chinese government to support the Chinese
economy and market is uncertain. China has yet to develop comprehensive
securities, corporate, or commercial laws, and its market is relatively new and
undeveloped. Changes in government policy could significantly affect the
markets in China. A small number of industries, including the commercial
banking industry, which can be significantly affected by interest rate and
currency fluctuations, changes in market regulation, and political and economic
developments in the Asian region, represent a large portion of the Chinese
market as a whole. Given the still-developing nature of laws impacting China
region securities markets and corporate entities, changes in regulatory policy
could have a material adverse affect on the Securities.
Hong Kong. Hong Kong, established as a British colony in the 1840s, reverted
to Chinese sovereignty effective July 1, 1997. On such date, Hong Kong became a
Special Administrative Region ("SAR") of China. With the transfer of
sovereignty to China, Hong Kong is now governed under a "Basic Law",
essentially a constitution, which guarantees the SAR its own legislature, legal
and judicial system, and full economic autonomy, while giving the central
government in Beijing responsibility for defense and foreign affairs. Prior to
July 1, 1997, the Hong Kong government followed a laissez-faire policy toward
industry. There were no major import, export or foreign exchange restrictions.
Regulation of business was generally minimal with certain exceptions, including
regulated entry into certain sectors of the economy and a fixed exchange rate
regime by which the Hong Kong dollar has been pegged to the U.S. dollar. In the
two decades through 1996, the gross domestic product (GDP) has tripled in real
terms, equivalent to an average annual growth of 6%. Hong Kong has experienced
three recessions since 1997, and public spending has increased. As a result,
Hong Kong has experienced rising budget deficits. Hong Kong's GDP grew by 8.5%
in 2004, 7.1% in 2005, 7.0% in 2006, 6.4% in 2007 and 2.4% in 2008, however, as
the result of spending cuts, it has fallen back into deficit as the government
has undertaken a number of stimulus measures to address a contracting economy.
The government has estimated a deficit equivalent to 0.3% of GDP in fiscal year
2008-2009.
Although China has committed by treaty to preserve for 50 years the economic
and social freedoms enjoyed in Hong Kong prior to the reversion, the
continuation of the economic system in Hong Kong will be dependent on the
Chinese government, and there can be no assurance that the commitment made by
China regarding Hong Kong will be maintained. Prior to the reversion,
legislation was enacted in Hong Kong designed to extend democratic voting
procedures for Hong Kong's legislature. China has expressed disagreement with
this legislation, which it states is in contravention of the principles
evidenced in the Basic Law of the Hong Kong SAR. The national People's Congress
of China passed a resolution to the effect that the Legislative Council and
certain other councils and boards of the Hong Kong Government were to be
terminated on June 30, 1997. Such bodies have subsequently been reconstituted
in accordance with China's interpretation of the Basic Law. On June 29, 2003,
Hong Kong and mainland China signed the Close Economic Partnership Arrangement
("CEPA"), which is designed to liberalize trade relations between China and
Hong Kong, and is a part of a series of measures being taken by China to boost
Hong Kong's economy. The CEPA became operational in January 2004. Any increase
in uncertainty as to the future economic and political status of Hong Kong
could have a materially adverse effect on the value of your Portfolio. The
Sponsor is unable to predict the level of market liquidity or volatility which
may occur as a result of the reversion to sovereignty, both of which may
negatively impact your Portfolio and the value of the Units.
The currency crisis which affected a majority of Asian markets since
mid-1997 has forced Hong Kong leaders to address whether to devalue the Hong
Kong dollar or maintain its peg to the U.S. dollar. During the volatile markets
of 1998, the Hong Kong Monetary Authority (the "HKMA") acquired the common
stock of certain Hong Kong issuers on the Hong Kong Stock Exchange in an effort
to stabilize the Hong Kong dollar and thwart currency speculators. Government
intervention may hurt Hong Kong's reputation as a free market and increases
concerns that authorities are not willing to let Hong Kong's currency system
function autonomously. This may undermine confidence in the Hong Kong dollar's
peg to the U.S. dollar. Any downturn in economic growth or increase in the rate
of inflation in China or Hong Kong could have a materially adverse effect on
the value of your Portfolio.
Securities prices on the Hong Kong Stock Exchange can be highly volatile and
are sensitive to developments in Hong Kong and China, as well as other world
markets. For example, the Hang Seng Index declined by approximately 31% in
October, 1997 as a result of speculation that the Hong Kong dollar would become
the next victim of the Asian currency crisis, and in 1989, the Hang Seng Index
dropped 1,216 points (approximately 58%) in early June following the events in
Tiananmen Square. The Hang Seng Index gradually climbed subsequent to the
events at Tiananmen Square, but fell by 181 points on October 13, 1989
(approximately 6.5%) following a substantial fall in the U.S. stock markets.
During 1994, the Hang Seng Index lost approximately 31% of its value. From
January through August of 1998, during a period marked by international
economic instability and a global currency crisis, the Hang Seng Index declined
by nearly 27%.
Alternative Energy Industry Risk. An investment in Units of certain
Portfolios should be made with an understanding of the characteristics of the
alternative energy industry. 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 this industry before you
invest.
The alternative energy industry can be significantly affected by
obsolescence of existing technology, short product cycles, falling prices and
profits, competition from new market entrants and general economic conditions.
Further, the alternative energy industry can be significantly affected by
intense competition and legislation resulting in more strict government
regulations and enforcement policies, and can be subject to risks associated
with hazardous materials. The alternative energy industry can be significantly
affected by fluctuations in energy prices and supply and demand of alternative
energy fuels, energy conservation, the success of exploration projects and tax
and other government regulations. The industry also can be significantly
affected by the supply of and demand for specific products or services, the
supply of and demand for oil and gas, the price of oil and gas, production
spending, government regulation, world events and economic conditions.
Shares in the companies involved in this industry have been significantly
more volatile than shares of companies operating in other more established
industries and shares of companies in certain Portfolios may be subject to
sharp price declines. Certain valuation methods currently used to value
companies involved in the alternative power and power technology sectors,
particularly those companies that have not yet traded profitably, have not been
in widespread use for a significant period of time. As a result, the use of
these valuation methods may serve to increase further the volatility of certain
alternative power and power technology company share prices. This industry
sector is relatively nascent and under-researched in comparison to more
established and mature sectors, and should therefore be regarded as having
greater investment risk.
Changes in U.S., European and other governments' policies towards
alternative power and power technology also may have an adverse effect on
certain Portfolios' performance.
Certain Portfolios may invest in the shares of companies with a limited
operating history, some of which may never have traded profitably. Investment
in young companies with a short operating history is generally riskier than
investment in companies with a longer operating history.
Certain Portfolios being composed of securities issued by companies
operating in a limited number of industries, will carry greater risk and may be
more volatile than a portfolio composed of securities issued by companies
operating in a wide variety of different industries. The price of crude oil,
natural gas, electricity produced from traditional hydropower and that
generated from nuclear power and possibly other as yet undiscovered energy
sources could potentially have a negative impact on the competitiveness of
renewable energies.
General problems of the public utility and energy industries include the
difficulty in obtaining an adequate return on invested capital despite frequent
increases in rates which have been granted by the public service commissions
having jurisdiction, the difficulty in financing large construction programs
during an inflationary period, the restrictions on operations and increased
cost and delays attributable to environmental, nuclear safety and other
regulatory considerations, the difficulty of the capital markets absorbing
utility debt and equity securities, the difficulty in obtaining fuel for
electric generation at reasonable prices, regulatory restrictions on the
ability to pass increasing wholesale costs along to the retail and business
customer, and the effects of energy conservation. There is no assurance that
public service commissions will grant rate increases in the future or that any
such increases will be timely or adequate to cover operating and other expenses
and debt service requirements. All of the public utilities which are issuers of
the Securities have been experiencing many of these problems in varying
degrees. Furthermore, utility and energy stocks are particularly susceptible to
interest rate risk, generally exhibiting an inverse relationship to interest
rates. As a result, electric utility stock prices may be adversely affected as
interest rates rise. Similarly, the success of certain companies is tied to a
relatively small concentration of products or technologies with intense
competition between companies. There can be no assurance that these customers
will place additional orders, or that an issuer of Securities will obtain
orders of similar magnitude as past orders from other customers. Accordingly, a
decline in demand of such products, technologies or from such customers could
have a material adverse impact on issuers of the Securities.
Certain of the issuers of the Securities may own or operate nuclear
generating facilities. Governmental authorities may from time to time review
existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. Nuclear generating projects
in the electric utility industry have experienced substantial cost increases,
construction delays and licensing difficulties. These have been caused by
various factors, including inflation, high financing costs, required design
changes and rework, allegedly faulty construction, objections by groups and
governmental officials, limits on the ability to finance, reduced forecasts of
energy requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties remain
present until completion and achievement of commercial operation of any nuclear
project. Also, nuclear generating units in service have experienced unplanned
outages or extensions of scheduled outages due to equipment problems or new
regulatory requirements sometimes followed by a significant delay in obtaining
regulatory approval to return to service. A major accident at a nuclear plant
anywhere could cause the imposition of limits or prohibitions on the operation,
construction or licensing of nuclear units.
In view of the uncertainties discussed above, there can be no assurance that
any alternative energy or utility company's share of the full cost of nuclear
units under construction ultimately will be recovered in rates or the extent to
which a company could earn an adequate return on its investment in such units.
The likelihood of a significantly adverse event occurring in any of the areas
of concern described above varies, as does the potential severity of any
adverse impact. It should be recognized, however, that one or more of such
adverse events could occur and individually or collectively could have a
material adverse impact on a company's financial condition, the results of its
operations, its ability to make interest and principal payments on its
outstanding debt or to pay dividends.
Other general problems of the electric, gas and water utility industries
(including state and local joint action power agencies) include rising costs of
rail transportation to transport fossil fuels, the uncertainty of transmission
service costs for both interstate and intrastate transactions, changes in tax
laws which adversely affect a utility's ability to operate profitably,
increased competition in service costs, recent reductions in estimates of
future demand for electricity and gas in certain areas of the country,
restrictions on operations and increased cost and delays attributable to
environmental considerations, uncertain availability and increased cost of
capital, unavailability of fuel for electric generation at reasonable prices,
including the steady rise in fuel costs and the costs associated with
conversion to alternate fuel sources such as coal, availability and cost of
natural gas for resale, technical and cost factors and other problems
associated with construction, licensing, regulation and operation of nuclear
facilities for electric generation, including, among other considerations, the
problems associated with the use of radioactive materials and the disposal of
radioactive wastes, and the effects of energy and environmental conservation
efforts. Each of the problems referred to could adversely affect the ability of
the issuers of any Securities to make dividend payments and the value of such
Securities on redemption of your Units.
Utility Issuers. An investment in Units of certain Portfolios should be made
with an understanding of the characteristics of the public utility industry and
the risks which such an investment may entail. General problems of the public
utility industry include the difficulty in obtaining an adequate return on
invested capital despite frequent increases in rates which have been granted by
the public service commissions having jurisdiction, the difficulty in financing
large construction programs during an inflationary period, the restrictions on
operations and increased cost and delays attributable to environmental, nuclear
safety and other regulatory considerations, the difficulty of the capital
markets absorbing utility debt and equity securities, the difficulty in
obtaining fuel for electric generation at reasonable prices, unusual, unexpected
or normal weather and its effects, regulatory restrictions on the ability to
pass increasing wholesale costs along to the retail and business customer, and
the effects of energy conservation. There is no assurance that public service
commissions will grant rate increases in the future or that any such increases
will be timely or adequate to cover operating and other expenses and debt
service requirements. All of the public utilities which are issuers of the
Securities have been experiencing many of these problems in varying degrees.
Furthermore, utility stocks are particularly susceptible to interest rate risk,
generally exhibiting an inverse relationship to interest rates. As a result,
electric utility stock prices may be adversely affected as interest rates rise.
Similarly, the success of certain companies is tied to a relatively small
concentration of products or technologies with intense competition between
companies. There can be no assurance that these customers will place additional
orders, or that an issuer of Securities will obtain orders of similar magnitude
as past orders from other customers. Accordingly, a decline in demand for
products or technologies or from such customers could have a material adverse
impact on issuers of the Securities.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged and the
appropriate rate of return on an approved asset base, which must be approved by
the state commissions. Certain utilities have had difficulty from time to time
in persuading regulators, who are subject to political pressures, to grant rate
increases necessary to maintain an adequate return on investment. Any unexpected
limitations could negatively affect the profitability of utilities whose budgets
are planned far in advance. In addition, gas pipeline and distribution companies
have had difficulties in adjusting to short and surplus energy supplies,
enforcing or being required to comply with long-term contracts and avoiding
litigation with their customers, on the one hand, or suppliers, on the other.
Furthermore, regulatory authorities, which may be subject to political and other
pressures, may not grant future rate increases, or may impose accounting or
operational policies, any of which could adversely affect a company's
profitability and its stock price. Certain utility companies have experienced
full or partial deregulation in recent years. These utility companies are
frequently more similar to industrial companies in that they are subject to
greater competition and have been permitted by regulators to diversify outside
of their original geographic regions and their traditional lines of business.
These opportunities may permit certain utility companies to earn more than their
traditional regulated rates of return. Some companies, however, may be forced to
defend their core business and may be less profitable.
Certain of the issuers of the Securities may own or operate nuclear
generating facilities. Governmental authorities may from time to time review
existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. In the past, nuclear
generating projects in the electric utility industry have experienced
substantial cost increases, construction delays and licensing difficulties.
These have been caused by various factors, including inflation, high financing
costs, required design changes and rework, allegedly faulty construction,
objections by groups and governmental officials, limits on the ability to obtain
financing, reduced forecasts of energy requirements and economic conditions.
This experience indicates that the risk of significant cost increases, delays
and licensing difficulties remain present until completion and achievement of
commercial operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled outages
due to equipment problems or new regulatory requirements sometimes followed by a
significant delay in obtaining regulatory approval to return to service. A major
accident at a nuclear plant anywhere could cause the imposition of limits or
prohibitions on the operation, construction or licensing of nuclear units.
In view of the uncertainties discussed above, there can be no assurance that
any utility company's share of the full cost of nuclear units under construction
ultimately will be recovered in rates or the extent to which a company could
earn an adequate return on its investment in such units. The likelihood of a
significantly adverse event occurring in any of the areas of concern described
above varies, as does the potential severity of any adverse impact. It should be
recognized, however, that one or more of such adverse events could occur and
individually or collectively could have a material adverse impact on a company's
financial condition, the results of its operations, its ability to make interest
and principal payments on its outstanding debt or to pay dividends.
Other general problems of the electric, gas and water utility industries
(including state and local joint action power agencies) include rising costs of
rail transportation to transport fossil fuels, the uncertainty of transmission
service costs for both interstate and intrastate transactions, changes in tax
laws which adversely affect a utility's ability to operate profitably, increased
competition in service costs, recent reductions in estimates of future demand
for electricity and gas in certain areas of the country, restrictions on
operations and increased cost and delays attributable to environmental
considerations, uncertain availability and increased cost of capital,
unavailability of fuel for electric generation at reasonable prices, including
the steady rise in fuel costs and the costs associated with conversion to
alternate fuel sources such as coal, availability and cost of natural gas for
resale, technical and cost factors and other problems associated with
construction, licensing, regulation and operation of nuclear facilities for
electric generation, including, among other considerations, the problems
associated with the use of radioactive materials and the disposal of radioactive
wastes, and the effects of energy and environmental conservation efforts. Each
of the problems referred to could adversely affect the ability of the issuers of
any Securities to make dividend payments and the value of such Securities on
redemption of your Units.
Liquidity. Whether or not the stocks in a Portfolio are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be
liquid. The value of the stocks could fall if trading markets are limited or
absent.
Additional Units. The Sponsor may create additional Units of a Portfolio by
depositing into the Portfolio additional stocks or cash with instructions to
purchase additional stocks. A 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 a Portfolio will pay brokerage or acquisition fees.
Voting. Only the Trustee may sell or vote the stocks in a Portfolio. While
you may sell or redeem your Units, you may not sell or vote the stocks in your
Portfolio. The Sponsor will instruct the Trustee how to vote the stocks. The
Trustee will vote the stocks in the same general proportion as shares held by
other shareholders if the Sponsor fails to provide instructions.
THE INDEX
The Portfolios are not sponsored, endorsed, sold or promoted by Ardour
Global Indexes, LLC, ("AGI"). AGI makes no representation or warranty, express
or implied, to the owners of the Portfolios or any member of the public
regarding the advisability of investing in securities generally or in the
Portfolios particularly or the ability of the AGIGL Index to track the
performance of the alternative energies market. AGI's only relationship to the
Sponsor is the licensing of certain service marks and trade names of AGI and of
the AGIGL Index that is determined, composed and calculated by AGI without
regard to the Sponsor or the Portfolios. AGI has no obligation to take the
needs of the Sponsor or the Unitholders of the Portfolios into consideration in
determining, composing or calculating the AGIGL Index. AGI is not responsible
for and has not participated in the determination of the timing of, prices at,
or quantities of the Portfolios to be issued or in the determination or
calculation of the equation by which the Portfolios is to be converted into
cash. AGI has no obligation or liability in connection with the administration,
marketing or trading of the Portfolios.
AGI DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE AGIGL
INDEX OR ANY DATA INCLUDED THEREIN AND AGI SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. AGI MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY SPONSOR, OWNERS OF THE PORTFOLIO, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE AGI INDEX(ES) OR ANY DATA
INCLUDED THEREIN. AGI MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR USE WITH RESPECT TO THE AGIGL INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL AGI HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
The AGIGL Index is calculated by Dow Jones Indexes, a business unit of Dow
Jones & Company, Inc. ("Dow Jones"). Certain Portfolios based on the AGIGL
Index, are not sponsored, endorsed, sold or promoted by Dow Jones Indexes, and
Dow Jones Indexes makes no representation regarding the advisability of
investing in such product(s).
Dow Jones, its affiliates, sources and distribution agents (collectively,
the "Index Calculation Agent") shall not be liable to the Sponsor, any customer
or any third party for any loss or damage, direct, indirect or consequential,
arising from (i) any inaccuracy or incompleteness in, or delays, interruptions,
errors or omissions in the delivery of the AGIGL Index or any data related
thereto (the "Index Data") or (ii) any decision made or action taken by the
Sponsor, any customer or third party in reliance upon the Index Data. The Index
Calculation Agent does not make any warranties, express or implied, to the
Sponsor, any of its customers or any one else regarding the Index Data,
including, without limitation, any warranties with respect to the timeliness,
sequence, accuracy, completeness, currentness, merchantability, quality or
fitness for a particular purpose or any warranties as to the results to be
obtained by the Sponsor, any of its customers or other person in connection
with the use of the Index Data. The Index Calculation Agent shall not be liable
to the Sponsor, its customers or other third parties for loss of business
revenues, lost profits or any indirect, consequential, special or similar
damages whatsoever, whether in contract, tort or otherwise, even if advised of
the possibility of such damages.
SPONSOR INFORMATION
Van Kampen Funds Inc. is the Sponsor of your Portfolio. The Sponsor is a
wholly owned subsidiary of Van Kampen Investments Inc. ("Van Kampen
Investments"). Van Kampen Investments is a diversified asset management company
that administers more than three million retail investor accounts and has
extensive capabilities for managing institutional portfolios. Van Kampen
Investments is an indirect wholly owned subsidiary of Invesco Ltd. ("Invesco"),
a leading independent global investment manager that provides a wide range of
investment strategies and vehicles to its retail, institutional and high net
worth clients around the globe. On June 1, 2010, Invesco completed the
previously announced acquisition of the retail asset management business,
including Van Kampen Investments, from Morgan Stanley & Co. Incorporated. The
Sponsor's principal office is located at 11 Greenway Plaza, Houston, Texas
77046-1173. As of June 30, 2011, the total stockholders' equity of Van Kampen
Funds Inc. was $82,277,726 (unaudited). The current assets under management and
supervision by Invesco and its affiliates were valued at approximately $625.3
billion as of December 31, 2011. (This paragraph relates only to the Sponsor
and not to the Portfolios 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).
The Sponsor and your Portfolio have adopted a code of ethics requiring
Invesco's employees who have access to information on Portfolio transactions to
report personal securities transactions. The purpose of the code is to avoid
potential conflicts of interest and to prevent fraud, deception or misconduct
with respect to your Portfolio.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Portfolios as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE INFORMATION
The Trustee is The Bank of New York Mellon, a trust company organized under
the laws of New York. The Bank of New York Mellon has its principal unit
investment trust division offices at 2 Hanson Place, 12th Floor, Brooklyn, New
York 11217, (800) 856-8487. The Bank of New York Mellon is subject to
supervision and examination by the Superintendent of Banks of the State of New
York and the Board of Governors of the Federal Reserve System, and its deposits
are insured by the Federal Deposit Insurance Corporation to the extent
permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for each Portfolio.
Such records shall include the name and address of, and the number of Units of
each Portfolio held by, every Unitholder. Such books and records shall be open
to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may from
time to time be required under any applicable state or federal statute, rule or
regulation. The Trustee is required to keep a certified copy or duplicate
original of the Trust Agreement on file in its office available for inspection
at all reasonable times during the usual business hours by any Unitholder,
together with a current list of the Securities held in each Portfolio.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
TAXATION
The prospectus contains a discussion of certain U.S. federal income tax
issues concerning the Portfolios and the purchase, ownership and disposition of
Portfolio Units. The discussion below supplements the prospectus discussion and
is qualified in its entirety by the prospectus discussion. Prospective
investors should consult their own tax advisors with regard to the federal tax
consequences of the purchase, ownership, or disposition of Portfolio Units, as
well as the tax consequences arising under the laws of any state, locality,
non-U.S. country, or other taxing jurisdiction.
This federal income tax summary is based in part on the advice of counsel to
the Sponsor. The Internal Revenue Service could disagree with any conclusions
set forth in this section. In addition, our counsel was not asked to review the
federal income tax treatment of the assets to be deposited in your Portfolio.
The Portfolios intend to elect and to qualify annually as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"), and to comply with applicable distribution requirements so that it
will not pay federal income tax on income and capital gains distributed to its
Unitholders.
To qualify for the favorable U.S. federal income tax treatment generally
accorded to regulated investment companies, a Portfolio must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock, securities or foreign currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies, and net income from qualified publicly traded
partnerships; (b) diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of the Portfolio's
assets is represented by cash and cash items (including receivables), U.S.
government securities, the securities of other regulated investment companies
and other securities, with such other securities of any one issuer generally
limited for the purposes of this calculation to an amount not greater than 5%
of the value of the Portfolio's total assets and not greater than 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities (other than U.S.
government securities or the securities of other regulated investment
companies) of any one issuer, or two or more issuers which the Portfolio
controls (by owning 20% or more of the issuer's outstanding voting securities)
and which are engaged in the same, similar or related trades or businesses, or
the securities of qualified publicly traded partnerships; and (c) distribute at
least 90% of its investment company taxable income (which includes, among other
items, dividends, interest and net short-term capital gains in excess of net
long-term capital losses but excludes net capital gain, if any) and at least
90% of its net tax-exempt interest income, if any, each taxable year.
As a regulated investment company, your Portfolio generally will not be
subject to U.S. federal income tax on its investment company taxable income (as
that term is defined in the Code, but without regard to the deduction for
dividends paid) and net capital gain (the excess of net long-term capital gain
over net short-term capital loss), if any, that it distributes to Unitholders.
Your Portfolio intends to distribute to its Unitholders, at least annually,
substantially all of its investment company taxable income and net capital
gain. If a Portfolio retains any net capital gain or investment company taxable
income, it will generally be subject to federal income tax at regular corporate
rates on the amount retained. In addition, amounts not distributed on a timely
basis in accordance with a calendar year distribution requirement are subject
to a nondeductible 4% excise tax unless, generally, a Portfolio distributes
during each calendar year an amount equal to the sum of (1) at least 98% of its
ordinary income (not taking into account any capital gains or losses) for the
calendar year, (2) at least 98.2% of its capital gains in excess of its capital
losses (adjusted for certain ordinary losses) for the one-year period ending
October 31 of the calendar year, and (3) any ordinary income and capital gains
for previous years that were not distributed or taxed during those years. To
prevent application of the excise tax, your Portfolio intends to make its
distributions in accordance with the calendar year distribution requirement.
Further, if a Portfolio retains any net capital gain, the Portfolio may
designate the retained amount as undistributed capital gains in a notice to
Unitholders who, if subject to federal income tax on long-term capital gains
(i) will be required to include in income for federal income tax purposes, as
long-term capital gain, their share of such undistributed amount, and (ii) will
be entitled to credit their proportionate share of the tax paid by the
Portfolio against their federal income tax liabilities, if any, and to claim
refunds to the extent the credit exceeds such liabilities. A distribution will
be treated as paid on December 31 of the current calendar year if it is
declared by a Portfolio in October, November or December with a record date in
such a month and paid by the Portfolio during January of the following calendar
year. These distributions will be taxable to Unitholders in the calendar year
in which the distributions are declared, rather than the calendar year in which
the distributions are received.
If a Portfolio failed to qualify as a regulated investment company or failed
to satisfy the 90% distribution requirement in any taxable year, the Portfolio
would be taxed as an ordinary corporation on its taxable income (even if such
income were distributed to its Unitholders) and all distributions out of
earnings and profits would be taxed to Unitholders as ordinary dividend
income.
Your Portfolio may be required to withhold as backup withholding federal
income tax at the backup withholding rate (currently 28%) on all taxable
distributions payable to you if you fail to provide your correct taxpayer
identification number or to make required certifications, or if the IRS
indicates that you are subject to backup withholding. Backup withholding is not
an additional tax. Any amounts withheld may be credited against your federal
income tax liability if you provide the required information or certification.
If a Portfolio is treated as holding directly or indirectly 10 percent or
more of the combined voting power of the stock of a foreign corporation, and
all U.S. shareholders collectively own more than 50 percent of the vote or
value of the stock of such corporation, the foreign corporation may be treated
as a "controlled foreign corporation" (a "CFC") for U.S. federal income tax
purposes. In such circumstances, a Portfolio will be required to include
certain types of passive income and certain other types of income relating to
insurance, sales and services with related parties and oil related income in
the Portfolio's taxable income whether or not such income is distributed.
If a Portfolio holds an equity interest in any "passive foreign investment
companies" ("PFICs"), which are generally certain foreign corporations that
receive at least 75% of their annual gross income from passive sources (such as
interest, dividends, certain rents and royalties or capital gains) or that hold
at least 50% of their assets in investments producing such passive income, the
Portfolio could be subject to U.S. federal income tax and additional interest
charges on gains and certain distributions with respect to those equity
interests, even if all the income or gain is timely distributed to its
Unitholders. A Portfolio will not be able to pass through to its Unitholders
any credit or deduction for such taxes. A Portfolio may be able to make an
election that could ameliorate these adverse tax consequences. In this case, a
Portfolio would recognize as ordinary income any increase in the value of such
PFIC shares, and as ordinary loss any decrease in such value to the extent it
did not exceed prior increases included in income. Under this election, a
Portfolio might be required to recognize in a year income in excess of its
distributions from PFICs and its proceeds from dispositions of PFIC stock
during that year, and such income would nevertheless be subject to the
distribution requirement and would be taken into account for purposes of the 4%
excise tax (described above). Dividends paid by PFICs will not be treated as
qualified dividend income.
PORTFOLIO TERMINATION
A Portfolio may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Portfolio then outstanding or by the
Trustee when the value of the Securities owned by a Portfolio, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of a Portfolio has
exceeded $15,000,000). A Portfolio will be liquidated by the Trustee in the
event that a sufficient number of Units of such Portfolio not yet sold are
tendered for redemption by the Sponsor, so that the net worth of such Portfolio
would be reduced to less than 40% of the value of the Securities at the time
they were deposited in such Portfolio. If a Portfolio is liquidated because of
the redemption of unsold Units by the Sponsor, the Sponsor will refund to each
purchaser of Units the entire sales charge paid by such purchaser. The Trust
Agreement will terminate upon the sale or other disposition of the last
Security held thereunder, but in no event will it continue beyond the Mandatory
Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities will begin to be sold in
connection with the termination of the Portfolios. The Sponsor will determine
the manner, timing and execution of the sales of the Securities. The Sponsor
shall direct the liquidation of the Securities in such manner as to effectuate
orderly sales and a minimal market impact. In the event the Sponsor does not so
direct, the Securities shall be sold within a reasonable period and in such
manner as the Trustee, in its sole discretion, shall determine. At least 45
days before the Mandatory Termination Date the Trustee will provide written
notice of any termination to all Unitholders of the appropriate Portfolio.
Unitholders will receive a cash distribution from the sale of the remaining
Securities within a reasonable time following the Mandatory Termination Date.
The Trustee will deduct from the funds of the appropriate Portfolio any accrued
costs, expenses, advances or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee, costs of liquidation and any
amounts required as a reserve to provide for payment of any applicable taxes or
other governmental charges. Any sale of Securities in a Portfolio upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder of each Portfolio his pro rata share of the balance of the
Income and Capital Accounts of such Portfolio.
The Sponsor may, but is not obligated to, offer for sale units of a
subsequent series of the Portfolios. There is, however, no assurance that units
of any new series of the Portfolios will be offered for sale at that time, or
if offered, that there will be sufficient units available for sale to meet the
requests of any or all Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
U-EMSSUP1202
CONTENTS OF REGISTRATION STATEMENT
This Amendment of the Registration Statement comprises the following papers
and documents:
The Facing Sheet of Form S-6.
The Prospectus.
The Undertaking to File Reports.
The Signatures.
The Written Consents of Legal Counsel, Initial Evaluator and
Independent Registered Public Accounting Firm.
The following exhibits:
1.1 Trust Agreement.
1.1.1 Standard Terms and Conditions of Trust. Reference is made to Exhibit
1.1.1 to the Registration Statement on Form S-6 of Van Kampen Focus
Portfolios, Series 284 (File No. 333-57836) dated May 2, 2001.
1.2 Certificate of Incorporation of Van Kampen Funds Inc. Reference is
made to Exhibit 1.2 to the Registration Statement on Form S-6 of Van
Kampen Focus Portfolios, Series 320 (File No. 333-75548) dated January
2, 2002.
1.3 By-laws of Van Kampen Funds Inc. Reference is made to Exhibit 1.3 to
the Registration Statement on Form S-6 of Van Kampen Focus Portfolios,
Series 320 (File No. 333-75548) dated January 2, 2002.
1.4 Form of Dealer Agreement. Reference is made to Exhibit 1.4 to the
Registration Statement on Form S-6 of Van Kampen Unit Trusts,
Municipal Series 560 (File No. 333-122799) dated May 18, 2005.
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 Unit Trusts,
Municipal Series 890 (File No. 333-165240) dated June 2, 2010.
2.2 License and Consulting Agreements. Reference is made to Exhibit 2.2
to the Registration Statement on Form S-6 of Van Kampen Unit Trusts,
Series 605 (File No. 333-136306) dated September 14, 2006 and Van
Kampen Unit Trusts, Series 601 (File No. 333-136786) dated September
7, 2006.
3.1 Opinion and Consent of Counsel as to the legality of securities being
registered.
3.3 Opinion of Counsel as to the Trustee and the Trust.
4.1 Consent of Initial Evaluator.
4.2 Consent of Independent Registered Public Accounting Firm.
6.1 List of Officers and Directors of Van Kampen Funds Inc. Reference is
made to Exhibit 6.1 to the Registration Statement on Form S-6 of Van
Kampen Unit Trusts, Municipal Series 1019 (File No. 333-176336) dated
October 12, 2011.
7.1 Powers of Attorney. Reference is made to Exhibit 7.1 to the
Registration Statement on Form S-6 of Van Kampen Unit Trusts,
Municipal Series 890 (File No. 333-165240) dated June 2, 2010 and Van
Kampen Unit Trusts, Taxable Income Series 332 (File No. 333-174177)
dated July 14, 2011.
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UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
The Registrant, Van Kampen Unit Trusts, Series 1202, hereby identifies Van
Kampen Merritt Insured Income Trust, Series 1; Insured Municipals Income Trust
and Investors' Quality Tax-Exempt Trust, Multi-Series 189, Multi-Series 213 and
Multi-Series 300; Van Kampen Merritt Emerging Markets Income Trust, Series 1;
Van Kampen Merritt Utility Income Trust, Series 1; 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; Van Kampen Focus Portfolios, Series 235, Series 265, Series 314,
Series 366 and Series 402; Van Kampen Focus Portfolios, Taxable Income Series
47; and Van Kampen Unit Trusts, Series 427, Series 450, Series 687, Series 778,
Series 894, Series 908, Series 827, Series 963, Series 984, Series 1009, Series
1027 and Series 1050 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 Unit Trusts, Series 1202, has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago and State of Illinois on the 15th day of
March, 2012.
VAN KAMPEN UNIT TRUSTS, SERIES 1202
BY: VAN KAMPEN FUNDS INC., as Depositor
By: /s/ JOHN F. TIERNEY
-------------------
Vice President
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Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below on March 15, 2012, by the
following persons who constitute the principal officers and a majority of the
Board of Directors of Van Kampen Funds Inc.:
SIGNATURE TITLE
John S. Cooper Director and President
Steven Massoni Director and President
Annette J. Lege Treasurer and Chief Financial Officer
By: /s/ JOHN F. TIERNEY
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(Attorney-in-fact*)
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* An executed copy of each of the related powers of attorney is filed
herewith or incorporated herein by reference as set forth in Exhibit 7.1.