FILE NO. 333-179056
CIK #1524271
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
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, TAXABLE INCOME SERIES
380
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.
Global Bond Income Trust, Series 2
Global Bond Income Trust, Series 2 invests in a portfolio primarily
consisting of foreign corporate and sovereign bonds with maturities
approximately 5 years or less from the Date of Deposit. The Trust seeks to
provide a high level of current income and to preserve capital. The Trust may
also invest in bonds of U.S. issuers. The Trust is a unit investment trust
included in Van Kampen Unit Trusts, Taxable Income Series 380.
Monthly
Distributions
-------------
Estimated Current Return: 5.54%
Estimated Long Term Return: 3.46%
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Estimated current return shows the estimated cash you should receive each
year divided by the Unit price. Estimated long term return shows the estimated
return over the estimated life of your Trust. These estimates are as of the
close of business on the business day before the Date of Deposit based upon
current U.S. dollar equivalents and will vary thereafter. We base this estimate
on an average of the bond yields over their estimated life. This estimate also
reflects the sales charge and estimated expenses. We derive the average yield
for your portfolio by weighting each bond's yield by its value and estimated
life. Unlike estimated current return, estimated long term return accounts for
maturities, discounts and premiums of the bonds. These estimates show a
comparison rather than a prediction of returns. No return calculation can
predict your actual return. Your actual return may vary from these estimates.
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
Trust units or passed upon the adequacy or accuracy of this prospectus.
Any contrary representation is a criminal offense.
INVESCO
Investment Objective. The Trust seeks to provide a high level of current
income and to preserve capital by investing in global bonds.
Principal Investment Strategy. The Trust invests in a portfolio primarily
consisting of foreign corporate and sovereign bonds with maturities
approximately 5 years or less from the Date of Deposit. The Trust may also
invest in bonds of U.S. issuers. In selecting bonds for the Trust, the Sponsor
considered following factors, among others:
o the bonds must have a Standard & Poor's rating of at least "BBB-", a
Moody's Investors Service, Inc. rating of at least "Baa3" or, if not
rated, credit characteristics sufficiently similar to those of
comparable bonds that were so rated as to be acceptable for
acquisition by the Trust in the opinion of the Sponsor;
o the prices and liquidity of the bonds relative to other bonds of
comparable quality and maturity;
o the current income provided by the bonds;
o the diversification of bonds as to purpose of issue and location of
issuer; and
o the probability of early return of principal or high legal or event
risk.
The foreign bonds in the Trust are generally denominated and pay interest in
foreign currencies.
Principal Risks. As with all investments, you can lose money by investing in
the Trust. The Trust also might not perform as well as you expect. This can
happen for reasons such as these:
o Bond prices will fluctuate. The value of your investment may fall
over time.
o The value of the bonds will generally fall if interest rates, in
general, rise. No one can predict whether interest rates will rise or
fall in the future.
o A bond issuer or insurer may be unable to make interest and/or
principal payments in the future.
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 primary offering
period.
o Changes in the exchange rates of the foreign currencies of the bonds
relative to the U.S. dollar will affect the value of the Trust's
income and assets. These changes could be material and will affect the
amount of your interest distributions. Changes in relative currency
exchange rates and exchange control restrictions will also affect the
amount of bonds required to be liquidated to meet redemption
requirements and to pay Trust expenses, as well as the value of the
bonds at their respective maturities and at termination of the Trust.
o The financial markets, including those for corporate and sovereign
bonds, have recently experienced periods of extreme illiquidity and
volatility. Due to these significant difficulties in the financial
markets, there can be substantial uncertainty in assessing the value
of an issuer's assets or the extent of its obligations. For these or
other reasons, the ratings of the bonds in the Trust's portfolio may
not accurately reflect the current financial condition or prospects of
the issuer of the bond.
o A bond issuer might prepay or "call" a bond before its stated
maturity. If this happens, the Trust will distribute the principal to
you but future interest distributions will fall. A bond's call price
could be less than the price the Trust paid for the bond. If enough
bonds are called, the Trust could terminate earlier than expected.
o Securities of foreign issuers in the Trust 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 and tax practices and changes in the
value of foreign currencies which may have both economic and tax
consequences.
o The Trust is concentrated in bonds issued by banks and other
companies in the financials sector. Negative developments in this
sector will affect the value of your investment more than would be the
case in a more diversified investment.
o We do not actively manage the Trust's portfolio. Except in limited
circumstances, the Trust will hold the same bonds even if the market
value declines.
Summary of Essential Financial Information
(As of the close of business on the business day before the Date of Deposit)
==================================================================================================================================
General Information Unit Price
--------------------------------------------------------------- -----------------------------------------------------------------
Date of Deposit March 15, 2012 Aggregate offering price of bonds in Trust (1) $ 24,645,411
Principal amount of bonds in Trust (1) $23,468,040 Aggregate offering price of bonds per Unit $ 958.11
Principal amount of bonds per Unit (1)(2) $912.34 Plus sales charge per Unit $ 34.75
Number of Units 25,723 Plus organization costs per Unit (3) $ 2.14
Weighted average maturity of bonds 3.4 years Public offering price per Unit (4) $ 995.00
Redemption price per Unit (3)(4) $ 951.65
=============================================================== -----------------------------------------------------------------
Portfolio Diversification (% of Par Value) Estimated Annual Income Per Unit
--------------------------------------------------------------- Estimated interest income (6) $ 57.56
Country (5) Type of Issuer Less estimated expenses (7) $ 2.39
-------------------- -------------------- Estimated net interest income (6) $ 55.17
Brazil 4% Corporate Bonds
Canada 19 Consumer Staples 13%
Germany 8 Energy 9
Mexico 9 Financials 51
Netherlands 4 -----
Norway 4 73%
Supranational 21 -----
United Kingdom 9
United States 22 Sovereign Bonds 27%
----- -----
Total 100% Total 100%
===== =====
--------------------------------------------------------------- -----------------------------------------------------------------
Expenses Distributions
--------------------------------------------------------------- -----------------------------------------------------------------
Sales Charge (% of Unit Price) 3.50% Record dates 10th day of each month
Organizational Costs per Unit (3) $ 2.14 Distribution dates 25th day of each month
=========== Initial Record Date April 10, 2012
Estimated Annual Expenses per Unit Initial Distribution Date April 25, 2012
Trustee's fee) $ 1.13
Supervisory, bookkeeping and
administrative services fee $ 0.40 -----------------------------------------------------------------
Evaluation fee (8) $ 0.33 CUSIP Numbers
Other operating expenses $ 0.53 -----------------------------------------------------------------
----------- Monthly 37990N-12-9
Total annual expenses per Unit $ 2.39 Monthly Wrap Fee 37990N-13-7
===========
==================================================================================================================================
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(1) The bonds in the Trust are primarily denominated in foreign currencies.
This figure is a U.S. dollar equivalent calculated using the applicable
currency exchange rate as of the close of business on the business day
before the Date of Deposit.
(2) Some bonds may mature or be called or sold during your Trust's life. This
could include a call or sale at a price below par value. We cannot
guarantee that the value of your Units will equal the principal amount of
bonds per Unit when you redeem them or when your Trust terminates. This
figure may vary based on fluctuations in the relative currency exchange
rates or other factors.
(3) During the initial offering period, part of the value of the Units
represents an amount of cash deposited to pay all or a portion of the costs
of organizing the Trust. The estimated organization costs per Unit will be
deducted from the assets of the Trust at the earlier of six months after
the Date of Deposit or the end of the initial offering period. If Units are
redeemed prior to any such reduction, these costs will not be deducted from
the redemption proceeds. Organization costs are not included in the Public
Offering Price per Unit for purposes of calculating the sales charge.
(4) After the first settlement date (March 20, 2012), you will pay accrued
interest from this date to your settlement date less interest
distributions.
(5) The term "Supranational" refers to certain international entities that are
not organized in a single country. See "Risk Factors -- Foreign securities
risk" for additional information.
(6) We base this amount on the current U.S. dollar equivalent of estimated
cash flows per Unit. This amount will vary with changes in expenses,
interest rates, fluctuations in currency exchange rates and maturity, call
or sale of bonds.
(7) This shows estimated expenses in the first year other than organization
costs. Organization costs are not deducted from interest income.
(8) Your Trust assesses this fee per $1,000 principal amount of bonds. Your
Trust assesses other fees per Unit.
PORTFOLIO (as of the close of business on the business day before the Date of Deposit)
------------------------------------------------------------------------------------------------------------------------------
Rating (4)
----------------
Principal Aggregate Standard Offering Price
Amount (1)(2) Name of Issuer, Interest Rate and Maturity Date of Bonds (2)(3) Principal (2) & Poor's Moody's To Trust (3)
------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS - 72.13%
Consumer Staples - 13.34%
3,700,000 (BRL) Anheuser-Busch Inbev $ 2,048,273 A- Baa1 $ 2,192,676
9.750% Due 11/17/2015
1,000,000 (AUD) Nestle Holdings, Inc. 1,045,096 AA Aa1 1,095,281
5.500% Due 01/28/2016
Energy - 8.74%
2,000,000 (AUD) BP Capital Markets plc 2,090,192 A A2 2,153,106
6.000% Due 03/17/2015
Financials - 50.05%
7,500,000 (ZAR) Inter-American Development Bank 973,552 NR Aaa 994,376
#7.000% Due 01/05/2015
6,800,000 (SEK) Daimler Canada Finance, Inc. 991,760 A- A3 997,333
3.125% Due 01/20/2015
60,000,000 (RUB) European Bank for Reconstruction and Development 2,027,027 AAA NR 2,077,703
6.500% Due 02/09/2015
1,200,000 (NZD) International Finance Corporation 969,963 AAA Aaa 1,025,950
#5.375% Due 03/19/2015
7,500,000 (ZAR) KFW 973,552 AAA Aaa 1,010,810
#7.500% Due 06/22/2015
5,700,000 (NOK) Kommunalbanken AS 978,507 AAA Aaa 1,004,516
#3.500% Due 09/11/2015
625,000 (GBP) Citigroup, Inc. 979,962 A- A3 1,060,711
#5.500% Due 11/18/2015
30,000,000 (RUB) Rabobank Nederland 1,013,513 AA Aaa 1,052,534
7.500% Due 02/10/2016
12,500,000 (MXN) Landwirtsch Rentenbank 982,735 AAA Aaa 1,104,398
#8.500% Due 02/22/2016
7,500,000 (ZAR) European Investment Bank 973,552 AAA Aaa 993,539
#7.500% Due 06/01/2016
5,700,000 (NOK) General Electric Capital Corporation 978,507 NR Aa2 1,012,872
#4.500% Due 06/30/2016
SOVEREIGN BONDS - 27.87%
400,000 (CAD) Canadian Government 402,799 AAA Aaa 400,459
#1.000% Due 02/01/2015
5,700,000 (NOK) Province of Ontario 978,507 AA- Aa1 1,015,328
3.250% Due 06/11/2015
27,000,000 (MXN) Mexico Bonos Desarr 2,122,708 A- Baa1 2,201,885
6.000% Due 06/18/2015
1,000,000 (AUD) Province of Quebec 1,045,096 A+ Aa2 1,075,613
#5.750% Due 07/15/2015
1,600,000 (BRL) Federative Republic of Brazil 885,740 BBB Baa2 1,073,959
#12.500% Due 01/05/2016
1,000,000 (CAD) Province of Manitoba 1,006,999 AA Aa1 1,102,362
#4.300% Due 03/01/2016
------------- -------------
$ 23,468,040 $ 24,645,411
============= =============
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For an explanation of the footnotes used on this page, see "Notes to Portfolio".
Notes to Portfolio
(1) As calculated using the U.S. dollar equivalent of the stated principal
amount of each bond based on foreign currency exchange rates as of the
close of business on the business day before the Date of Deposit, the bonds
are broken down by denomination of currency as set forth below:
Australian Dollar (AUD) 17.81%
Mexican Peso (MXN) 13.23%
Russian Ruble (RUB) 12.96%
Norwegian Krone (NOK) 12.51%
Brazilian Real (BRL) 12.50%
South African Rand (ZAR) 12.45%
Canadian Dollar (CAD) 6.00%
Swedish Krona (SEK) 4.23%
British Pound (GBP) 4.18%
New Zealand Dollar (NZD) 4.13%
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(2) The bonds are represented by "regular way" or "when issued" contracts for
the performance of which an irrevocable letter of credit, obtained from an
affiliate of the Trustee, has been deposited with the Trustee. Contracts to
acquire the bonds were entered into from March 13, 2012 to March 14, 2012.
The actual principal amount of the bonds as denominated in the applicable
foreign currency is set forth under "Principal Amount". The amount set
forth under "Aggregate Principal" is the U.S. dollar equivalent of the
stated principal amount of bonds based on foreign currency exchange rates
as of the close of business on the business day before the Date of Deposit.
(3) The Offering Price to Trust of the bonds is based on (1) the offering side
valuation as of the close of business on the business day before the Date
of Deposit determined by the Evaluator, a third party valuation provider,
on the basis set forth under "Public Offering--Offering Price" and (2) the
currency exchange rates as of the close of the New York Stock Exchange on
the business day before the Date of Deposit. In accordance with FASB
Accounting Standards Codification ("ASC"), ASC 820, Fair Value Measurements
and Disclosures, the Trust's investments are classified as Level 2, which
refers to security prices determined using other significant observable
inputs. Observable inputs are inputs that other market participants would
use in pricing a security. These may include quoted market prices for
similar securities, interest rates, prepayment speeds and credit risk. The
cost of the bonds to the Sponsor for the Trust is $24,708,809 and the
Sponsor's profit or (loss) is $(63,398).
Bonds marked by "##" following the maturity date have been purchased on a
"when, as and if issued" or "delayed delivery" basis. Interest on these
bonds begins accruing to the benefit of Unitholders on their respective
dates of delivery. Delivery is expected to take place at various dates
after the first settlement date.
"#" prior to the coupon rate indicates that the bond was issued at an
original issue discount. See "The Trust--Risk Factors". The tax effect of
bonds issued at an original issue discount is described in "Federal Tax
Status".
The bonds may be subject to redemption without premium at any time pursuant
to extraordinary optional or mandatory redemptions if certain events occur.
See "The Trust--Risk Factors".
(4) "NR" indicates that the rating service did not provide a rating for that
bond. For a brief description of the ratings see "Description of Ratings"
in the Information Supplement.
(5) This bond has a "make whole" call option and is redeemable in whole or in
part at any time at the option of the issuer at a redemption price that is
generally equal to the sum of the principal amount of the bonds, a "make
whole" amount, and any accrued and unpaid interest to the date of
redemption. The "make whole" amount is generally equal to the excess, if
any, of (i) the aggregate present value as of the date of redemption of
principal being redeemed and the amount of interest (exclusive of interest
accrued to the date of redemption) that would have been payable if
redemption had not been made, determined by discounting the remaining
principal and interest at a specified rate (which varies from bond to bond
and is generally equal to an average of yields on U.S. Treasury or other
specified obligations with maturities corresponding to the remaining life
of the bond plus a premium rate) from the dates on which the principal and
interest would have been payable if the redemption had not been made, over
(ii) the aggregate principal amount of the bonds being redeemed.
Report of Independent Registered Public Accounting Firm
To the Unitholders of Global Bond Income Trust, Series 2 (included in Van
Kampen Unit Trusts, Taxable Income Series 380):
We have audited the accompanying statement of condition including the
related portfolio of Global Bond Income Trust, Series 2 (included in Van Kampen
Unit Trusts, Taxable Income Series 380) as of March 15, 2012. The statement of
condition is the responsibility of the Sponsor. Our responsibility is to
express an opinion on such statement of condition based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the statement of condition is free of material misstatement. The Trust is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit 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 Trust's 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 statement of condition, assessing the accounting principles used and
significant estimates made by the Sponsor, as well as evaluating the overall
statement 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 statement of
condition as of March 15, 2012. We believe that our audit of the statement of
condition provides a reasonable basis for our opinion.
In our opinion, the statement of condition referred to above presents
fairly, in all material respects, the financial position of Global Bond Income
Trust, Series 2 (included in Van Kampen Unit Trusts, Taxable Income Series 380)
as of March 15, 2012, in conformity with accounting principles generally
accepted in the United States of America.
New York, New York /s/ GRANT THORNTON LLP
March 15, 2012
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Statement of Condition
As of March 15, 2012
INVESTMENT IN BONDS
Contracts to purchase bonds (1)(2) $ 24,645,411
Accrued interest to the first settlement date (1)(2) 398,400
Cash (3) 54,983
--------------
Total $ 25,098,794
==============
LIABILITY AND INTEREST OF UNITHOLDERS
Liability--
Accrued interest payable to Sponsor (1)(2) $ 398,400
Organization costs (3) 54,983
Interest of Unitholders--
Cost to investors 25,594,259
Less: Gross underwriting commission 893,865
Less: Organization costs (3) 54,983
--------------
Net interest to Unitholders (1)(2) 24,645,411
--------------
Total $ 25,098,794
==============
Units outstanding 25,723
==============
Net asset value per Unit $ 958.11
==============
-----------------
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(1) The value of the bonds is determined by Standard & Poor's Securities
Evaluations, Inc. on the bases set forth under "Public Offering--Offering
Price". The contracts to purchase bonds are collateralized by an
irrevocable letter of credit in an amount sufficient to satisfy such
contracts.
(2) The Trustee will advance the amount of the net interest accrued to the
first settlement date to the Trust for distribution to the Sponsor as the
Unitholder of record as of such date.
(3) A portion of the public offering price represents an amount of cash
sufficient to pay for all or a portion of the costs incurred in
establishing the Trust. The amount of these costs are set forth under
"Summary of Essential Financial Information--Expenses". A distribution will
be made as of the earlier of six months after the Date of Deposit or the
close of the initial offering period 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 the
Trust 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 Trust.
THE TRUST
General. Your Trust was created under the laws of the State of New York
pursuant to a Trust Indenture and Agreement (the "Trust Agreement"), dated the
date of this prospectus (the "Date of Deposit") among Van Kampen Funds Inc., as
Sponsor, Standard & Poor's Securities Evaluations, Inc., as Evaluator, Invesco
Investment Advisors LLC (formerly Van Kampen Asset Management), as Supervisor,
and The Bank of New York Mellon, as Trustee.
Your Trust may be an appropriate medium for investors who desire to
participate in a portfolio primarily consisting of taxable bonds issued by
foreign issuers with greater diversification than they might be able to acquire
individually. Diversification of a Trust's assets will not eliminate the risk
of loss always inherent in the ownership of bonds. For a breakdown of your
Trust's portfolio, see "Portfolio". In addition, bonds of the type initially
deposited in the portfolio of a Trust are often not available in small amounts
and may, in the case of any privately placed bonds, be available only to
institutional investors.
On the Date of Deposit, the Sponsor deposited with the Trustee the aggregate
principal amount of bonds indicated in the "Summary of Essential Financial
Information". The bonds initially consist of delivery statements relating to
contracts for their purchase and cash, cash equivalents and/or irrevocable
letters of credit issued by a financial institution. Thereafter, the Trustee,
in exchange for the bonds, delivered to the Sponsor evidence of ownership of
the number of Units indicated under "Summary of Essential Financial
Information". Unless otherwise terminated as provided herein, the Trust
Agreement will terminate at the end of the calendar year prior to the twentieth
anniversary of its execution.
Each Unit initially offered represents a fractional undivided interest in
the principal and net income of the Trust. To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest in the Trust
represented by each Unit will increase, although the actual interest in the
Trust will remain unchanged. Units will remain outstanding until redeemed by
Unitholders or until the termination of the Trust Agreement.
Objective and Bond Selection. The objective of the Trust is to provide a high
level of current income and to preserve capital by investing in a portfolio
primarily consisting of foreign corporate and sovereign bonds with maturities
approximately 5 years or less from the Date of Deposit. The Trust may also
invest in bonds of U.S. issuers. There is, of course, no guarantee that the
Trust will achieve its objective. Your Trust may be an appropriate investment
vehicle for investors who desire to participate in a portfolio primarily
consisting of fixed income bonds issued by foreign issuers with greater
diversification than they might be able to acquire individually.
In selecting bonds for the Trust, the Sponsor considered the following
factors, among others: (a) the bonds must have a Standard & Poor's rating of at
least "BBB-", a Moody's rating of at least "Baa3" or, if not rated, credit
characteristics sufficiently similar to those of comparable bonds that were so
rated as to be acceptable for acquisition by the Trust in the opinion of the
Sponsor, (b) the prices and liquidity of the bonds relative to other bonds of
comparable quality and maturity, (c) the current income provided by the bonds;
(d) the diversification of bonds as to purpose of issue and location of issuer;
(e) the probability of early return of principal or high legal or event risk.
After the Date of Deposit, a bond may cease to be rated or its rating may be
reduced below the minimum required as of the Date of Deposit. Neither event
requires elimination of a bond from the Trust but may be considered in the
Sponsor's determination as to whether or not to direct the Trustee to dispose
of the bond (see "Trust Administration--Portfolio Administration").
Risk Factors. All investments involve risk. This section describes the main
risks that can impact the value of bonds in your Trust. You should understand
these risks before you invest. If the value of the bonds falls, the value of
your Units will also fall. You can lose money by investing in a Trust. No one
can guarantee that your Trust will achieve its objective or that your
investment return will be positive over any period. The Information Supplement,
which is available upon request, contains a more detailed discussion of risks
related to your investment.
Current economic conditions. The markets for credit instruments, including
corporate and sovereign bonds, have experienced periods of extreme illiquidity
and volatility since the latter half of 2007. The current economic environment
has made conditions difficult for virtually all industries and companies to
operate in an efficient manner. General market uncertainty and consequent
repricing risk have led to market imbalances of sellers and buyers, which in
turn have resulted in significant valuation uncertainties in a variety of debt
securities. These conditions resulted, and in many cases continue to result in,
greater volatility, less liquidity, widening credit spreads and a lack of price
transparency, with many debt securities remaining illiquid and of uncertain
value. These market conditions may make valuation of some of the Trust's bonds
uncertain and/or result in sudden and significant valuation increases or
declines in its holdings.
Market risk is the risk that the value of the bonds in your Trust will
fluctuate. This could cause the value of your Units to fall below your original
purchase price or below the par value. Market value fluctuates in response to
various factors. These can include changes in interest rates, foreign currency
exchange rates, inflation, the financial condition of a bond's issuer or
insurer, perceptions of the issuer or insurer, or ratings on a bond. Even
though the Supervisor supervises your portfolio, you should remember that no
one manages your portfolio. Your Trust will not sell a bond solely because the
market value falls or the credit rating on the bond is downgraded, as is
possible in a managed fund.
Interest rate risk is the risk that the value of bonds will fall if interest
rates increase. Bonds typically fall in value when interest rates rise and rise
in value when interest rates fall. Bonds with longer periods before maturity
are often more sensitive to interest rate changes.
Credit risk is the risk that a bond's issuer or insurer is unable to meet its
obligation to pay principal or interest on the bond.
Call risk is the risk that the issuer prepays or "calls" a bond before its
stated maturity. An issuer might call a bond if interest rates fall and the
bond pays a higher interest rate or if it no longer needs the money for the
original purpose. If an issuer calls a bond, your Trust will distribute the
principal to you but your future interest distributions will fall. You might
not be able to reinvest this principal at as high a yield. A bond's call price
could be less than the price your Trust paid for the bond and could be below
the bond's par value. This means that you could receive less than the amount
you paid for your Units. If enough bonds in your Trust are called, your Trust
could terminate early. Some or all of the bonds may also be subject to
extraordinary optional or mandatory redemptions if certain events occur, such
as certain changes in tax laws, the substantial damage or destruction by fire
or other casualty of the project for which the proceeds of the bonds were used,
and various other events. The call provisions are described in general terms in
"Notes to Portfolio".
Bond quality risk is the risk that a bond will fall in value if a rating
agency decreases the bond's rating.
Bond concentration risk is the risk that your Trust is less diversified
because it concentrates in a particular type of bond. When a certain type of
bond makes up 25% or more of a Trust, the Trust is considered to be
"concentrated" in that bond type. The different bond types are described in the
following sections.
Foreign securities risk. Investing in foreign securities typically involves
more risks than investing in securities of United States issuers. These risks
can increase the potential for losses in the Trust and affect its Unit price.
These risks may include risks such as losses due to political, economic and
social developments, international trade conditions, foreign taxes (including
withholding taxes), 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., and 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 the Trust to 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 the Trust's investments, in
non-U.S. countries. No one can predict the impact that these factors could have
on the Trust's portfolio securities.
The purchase and sale of the bonds in the Trust portfolio will generally
occur only in foreign securities markets. Certain of the factors described
herein may make it impossible to sell them in a timely manner or adversely
affect the value received on a bond sale. Custody of certain of the securities
in the Trust may be maintained by a global custody and clearing institution
which has entered into a sub-custodian relationship with the Trustee. The
Sponsor will take appropriate action in response to a notification by the
Trustee of any material risk associated with maintaining assets with a
sub-custodian. In addition, round lot trading requirements exist in certain
foreign securities markets which could cause the proportional composition and
diversification of your Trust's securities to vary when your Trust 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. Foreign
countries may have restrictions affecting a foreign issuer's ability to make
interst or principal payments to investors located in the U.S. due to
international currency exchange blockages or otherwise. The procedures and
rules governing foreign transactions and custody (holding of the Trust's
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. In particular, the Trust may not be permitted
to vote the securities in the Trust, or receive other communications from the
Trust's security issuers since these issuers may be under no obligation to
distribute them.
Certain foreign securities may be less liquid (harder to sell) and more
volatile than many U.S. securities. This means the Trust may at times be unable
to sell foreign securities in a timely manner or at favorable prices.
Certain of Trust's securities are issued by "supranational" entities, which
are international organizations designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (commonly called the
"World Bank"), the Asian Development Bank and the Inter-American Development
Bank. Obligations of supranational entities are backed by the guarantee of one
or more foreign governmental parties which sponsor the entity. However, there
can be no assurance that the constituent non-U.S. governments will be able or
willing to honor their financial obligations for those entities.
Sovereign debt risk. Investments in sovereign debt securities involve
special risks. Sovereign debt includes investments in securities issued or
guaranteed by a foreign sovereign government or its agencies, authorities or
political subdivisions. The governmental entity that controls the repayment of
sovereign debt may not be able or willing to repay the principal and/or
interest when due in accordance with the terms of the debt. A governmental
entity's willingness or ability to repay principal and interest due in a timely
manner may be affected by, among other factors, its cash flow situation, the
extent of its foreign reserves, the availability of sufficient foreign exchange
on the date a payment is due, the relative size of the debt service burden to
the economy as a whole, the governmental entity's policy toward the
International Monetary Fund, and the political constraints to which a
governmental entity may be subject. If an issuer of sovereign debt defaults on
payments of principal and/or interest, the Trust may have limited legal
recourse against the issuer and/or guarantor. In certain cases, remedies must
be pursued in the courts of the defaulting party itself, and the Trust's
ability to obtain recourse may be limited. There is no bankruptcy proceeding by
which sovereign debt on which governmental entities have defaulted may be
collected in whole or in part.
Certain issuers of sovereign debt may be dependent on disbursements from
foreign governments, multilateral agencies and others abroad to reduce
principal and interest arrearages on their debt. Such disbursements may be
conditioned upon a debtor's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. A failure on
the part of the debtor to implement such reforms, achieve such levels of
economic performance or repay principal or interest when due may result in the
cancellation of such third parties' commitments to lend funds to the government
debtor, which may impair the debtor's ability to service its debts on a timely
basis. As a holder of government debt, the Trust may be requested to
participate in the rescheduling of such debt and to extend further loans to
government debtors.
During periods of economic uncertainty, the market prices of sovereign debt
may be more volatile than prices of U.S. debt obligations. In the past, certain
emerging markets have encountered difficulties in servicing their debt
obligations, withheld payments of principal and interest and declared moratoria
on the payment of principal and interest on their sovereign debts. The ongoing
global economic crisis has brought several small economies in Europe to the
brink of bankruptcy and many other economies into recession and weakened the
banking and financial sectors of many European countries. For example, the
governments of Greece, Spain, Portugal, Italy and the Republic of Ireland have
all recently experienced large public budget deficits, the effects of which are
still yet unknown and may slow the overall recovery of the European economies
from the recent global economic crisis. In addition, due to large public
deficits, some European countries may be dependent on assistance from other
European governments and institutions or multilateral agencies and offices.
Assistance may be dependent on a country's implementation of reforms or
reaching a certain level of performance. Failure to reach those objectives or
an insufficient level of assistance could result in a deep economic downturn
which could significantly affect the value of the Trust's European investments.
Foreign currency exchange rate risk. The bonds in the Trust generally pay
interest and trade in foreign currencies. As a result, the U.S. dollar value of
these securities and interest payments 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 interest payments, 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 the Trust would receive in U.S. dollars had
the Trustee sold any particular currency in the market. The value of the
portfolio 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. Changes in foreign currencies
relative to the U.S. dollar, which could be material, will affect the U.S.
dollar value of the Trust's assets, and therefore such changes will therefore
affect the actual interest income earned on Units and ultimately the amount of
principal distributed either at their respective maturities, the maturity of
the bonds in or upon the Trust's termination. Such currency fluctuations will
also affect the amount of bonds required to be liquidated to meet redemption
requirements and to pay Trust expenses. It should be realized that the bonds
will pay interest on difference dates and the foreign currencies of the bonds
may not simultaneously fluctuate at similar rates or even in the same direction
relative to the U.S. dollar.
Canadian issuer risk. The Trust invests significantly in Canadian sovereign
bonds and in bonds issued by companies headquartered, or with a significant
presence, in Canada. Canada is a major producer of commodities, including forest
products, metals, agricultural products and energy related products, including
oil, gas, and hydroelectricity. Accordingly, changes in the supply and demand of
base commodity resources and industrial and precious metals and materials, both
domestically and internationally, can have a significant effect on Canadian bond
issuers.
The United States is Canada's largest trading partner and changes in U.S.
economic policy and market conditions may significantly impact Canadian bond
issuers. The expansion of the financial integration of the United States, Canada
and Mexico through the NAFTA Agreement may increase the sensitivity of the
Canadian economy to North American trade patterns. Growth in developing nations
overseas, particularly China, may change the composition of Canada's trade and
foreign investment composition in the near future.
Emerging markets risk. Certain of the bonds may be 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.
Emerging markets are also more likely to encounter high inflation or deflation,
currency devaluations or currency restrictions, which can harm their economies
and securities markets and increase volatility. All of the risks of investing
in foreign securities described herein are heightened by investing in emerging
markets countries.
Reduced diversification risk is the risk that your Trust will become smaller
and less diversified as bonds are sold, are called or mature. This could
increase your risk of loss and increase your share of Trust expenses.
Liquidity risk is the risk that the value of a bond will fall if trading in
the bond is limited or absent, thereby adversely affecting the Trust's net
asset value. No one can guarantee that a liquid trading market will exist for
any bond because these bonds generally trade in the over-the-counter market
(they are not listed on a securities exchange). Because of the difficulties
currently being experienced by many companies in the financial services
industry, many markets are experiencing substantially reduced liquidity. As a
result of such illiquidity, the Trustee may have to sell other or additional
bonds if necessary to satisfy redemption requests.
Litigation and legislation risk is the risk that future litigation or
legislation could affect the value of your Trust or the tax treatment of your
Trust or of your investment in the Trust. Litigation could challenge an
issuer's authority to issue or make payments on bonds.
Consumer Product and Retail Issuers. Your Trust may invest significantly in
bonds issued by companies that manufacture or sell various consumer products.
General risks of these companies include the general state of the economy,
intense competition and consumer spending trends. A decline in the economy
which results in a reduction of consumers' disposable income can negatively
impact spending habits. Competitiveness in the retail industry will require
large capital outlays for the installation of automated checkout equipment to
control inventory, track the sale of items and gauge the success of sales
campaigns. Retailers who sell their products over the Internet have the
potential to access more consumers, but will require sophisticated technology
to remain competitive. Changes in demographics and consumer tastes can also
affect the demand for, and the success of, consumer products and services in
the marketplace.
Financial Services Issuers. Your Trust may is concentrated in bonds issued
by financial services 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 effects of the global financial crisis that began to unfold in 2007
continue to manifest in nearly all the sub-divisions of the financial services
industry. Financial losses and write downs among investment banks and similar
institutions reached significant levels in 2008. The impact of these losses
among traditional banks, investment banks, broker/dealers and insurers has
forced a number of large such institutions into either liquidation or
combination, while drastically increasing the credit risk, and possibility of
default, of bonds issued by such institutions faced with these troubles. Many
of the institutions are having difficulty in accessing credit markets to
finance their operations and in maintaining appropriate levels of equity
capital. Furthermore, the global financial services industry has been
materially and adversely impacted by declines in the value of mortgage-backed
and asset-backed securities, and by the ongoing developments of the European
sovereign debt crisis. In some cases, foreign governments have acted to bail
out or provide support to select institutions, however the risk of default by
such issuers has nonetheless increased substantially.
While the U.S. and foreign governments, and their respective agencies, have
taken steps to address problems in the financial markets and with financial
institutions, there can be no assurance that the risks associated with
investment in financial services company issuers will decrease as a result of
these steps.
Your Trust invests significantly in bonds issued by banks. Banks and their
holding companies are especially subject to the adverse effects of economic
recession; volatile interest rates; portfolio concentrations in geographic
markets and in commercial and residential real estate loans; and competition
from new entrants in their fields of business. In addition, banks and their
holding companies may be extensively regulated and may be adversely affected by
increased regulation. Economic conditions in the real estate markets have
deteriorated and have had a substantial negative effect upon banks because they
generally have a portion of their assets invested in loans secured by real
estate.
Banks are highly dependent on net interest margin. Bank profitability is
largely dependent on the availability and cost of capital funds, and can
fluctuate significantly when interest rates change or due to increased
competition. Banks have received significant consumer mortgage fee income as a
result of activity in mortgage and refinance markets. As initial home
purchasing and refinancing activity subsided as a result of increasing interest
rates and other factors, this income diminished. Banks and their holding
companies are generally subject to regulations imposing strict capital
requirements and limitations on the nature and extent of business activities
that banks may pursue. Regulatory actions, such as increases in the minimum
capital requirements applicable to banks and increases in deposit insurance
premiums required to be paid by banks and thrifts can negatively impact
earnings and the ability of a company to pay dividends or make interest
payments. Neither insurance of deposits nor governmental regulations, however,
insures the solvency or profitability of banks or their holding companies, or
insures against any risk of investment in the securities issued by such
institutions.
Banks face increased competition from nontraditional lending sources.
Technological advances such as the Internet allow these nontraditional lending
sources to cut overhead and permit the more efficient use of customer data.
Banks continue to face tremendous pressure from mutual funds, brokerage firms
and other financial service providers in the competition to furnish services
that were traditionally offered by banks.
Companies engaged in investment management and broker-dealer activities are
subject to volatility in their earnings and share prices that often exceeds the
volatility of the securities markets in general. Adverse changes in the
direction of the securities markets, investor confidence, equity transaction
volume, the level and direction of interest rates and the outlook of emerging
markets could adversely affect the financial stability of these companies.
Additionally, competitive pressures, including increased competition with new
and existing competitors, the ongoing commoditization of traditional businesses
and the need for increased capital expenditures on new technology could
adversely impact the profit margins of companies in the investment management
and brokerage industries. Companies involved in investment management and
broker-dealer activities are also subject to extensive regulation by government
agencies and self-regulatory organizations, and changes in laws, regulations or
rules, or in the interpretation of such laws, regulations and rules could
adversely affect such companies.
Companies involved in the insurance, reinsurance and risk management
industry underwrite, sell or distribute property, casualty and business
insurance. Many factors affect insurance, reinsurance and risk management
company profits, including interest rate movements, the imposition of premium
rate caps, a misapprehension of the risks involved in given underwritings,
competition and pressure to compete globally, weather catastrophes or other
disasters and the effects of client mergers. Already extensively regulated,
insurance companies' profits may be adversely affected by increased government
regulations or tax law changes.
Industrials Issuers. Your Trust may invest significantly in bonds issued by
industrials companies. General risks of industrials companies include the
general state of the economy, intense competition, consolidation, domestic and
international politics, excess capacity and consumer spending trends. Capital
goods companies may also be significantly affected by overall capital spending
and leverage levels, economic cycles, technical obsolescence, delays in
modernization, limitations on supply of key materials, labor relations,
government regulations, government contracts and e-commerce initiatives.
Industrials companies may also be affected by factors more specific to their
individual industries. Industrial machinery manufacturers may be subject to
declines in commercial and consumer demand and the need for modernization.
Aerospace and defense companies may be influenced by decreased demand for new
equipment, aircraft order cancellations, disputes over or ability to obtain or
retain government contracts, labor disputes, changes in government budget
priorities, changes in aircraft-leasing contracts and cutbacks in profitable
business travel. The number of housing starts, levels of public and
non-residential construction including weakening demand for new office and
retail space, and overall construction spending may adversely affect
construction materials and equipment manufacturers.
Telecommunications Issuers. Your Trust may invest significantly in bonds
issued by telecommunications companies. This industry has experienced
substantial deregulation in recent years. Deregulation may lead to fierce
competition for market share and can have a negative impact on certain
companies. Competitive pressures are intense and values of telecommunications
company securities can experience rapid volatility. Certain telecommunications
products may become outdated very rapidly. A company's performance can be hurt
if the company fails to keep pace with technological advances.
Several high-profile bankruptcies of large telecommunications companies have
illustrated the potentially unstable condition of telecommunications companies.
High debt loads that were accumulated during the industry growth spurt of the
1990s are catching up to the industry, causing debt and stock prices to trade
at distressed levels for many telecommunications companies and increasing the
cost of capital for needed additional investment. At the same time, demand for
some telecommunications services has fallen sharply, as several key markets
have become oversaturated, some local customers have switched to substitute
providers and technologies, and corporate profits and the economy generally
remain weak. To meet increasing competition, companies may have to commit
substantial capital, particularly in the formulation of new products and
services using new technologies. As a result, many companies have been
compelled to cut costs by reducing their workforce, outsourcing, consolidating
and/or closing existing facilities and divesting low selling product lines.
Furthermore, certain companies involved in the industry have also faced
scrutiny for alleged accounting irregularities that may have led to the
overstatement of their financial results, and other companies in the industry
may face similar scrutiny. Due to these and other factors, the risk level of
owning the securities of telecommunications companies has increased
substantially and may continue to rise.
Issues of certain smaller companies in the portfolio may involve greater
risk than larger, established issuers. Smaller companies may have limited
product lines, markets or financial resources. Their securities may trade in
lower volumes than larger companies. As a result, the prices of these
securities may fluctuate more than the prices of securities of other issuers.
More About the Bonds. In addition to describing the purpose of the bonds,
other information about the bonds is also included in the "Portfolio" and notes
thereto. This information relates to other characteristics of the bonds. This
section briefly describes some of these characteristics.
Original issue discount bonds were initially issued at a price below their
face (or par) value. These bonds typically pay a lower interest rate than
comparable bonds that were issued at or above their par value. In a stable
interest rate environment, the market value of these bonds tends to increase
more slowly in early years and in greater increments as the bonds approach
maturity. The issuers of these bonds may be able to call or redeem a bond
before its stated maturity date and at a price less than the bond's par value.
Zero coupon bonds are a type of original issue discount bond. These bonds do
not pay any current interest during their life. If an investor owns this type
of bond, the investor has the right to receive a final payment of the bond's
par value at maturity. The price of these bonds often fluctuates greatly during
periods of changing market interest rates compared to bonds that make current
interest payments. The issuers of these bonds may be able to call or redeem a
bond before its stated maturity date and at a price less than the bond's par
value.
"When, as and if issued" bonds are bonds that trade before they are actually
issued. This means that the Sponsor can only deliver them to your Trust "when,
as and if" the bonds are actually issued. Delivery of these bonds may be
delayed or may not occur. Interest on these bonds does not begin accruing to
your Trust until the Sponsor delivers the bond to the Trust. You may have to
adjust your tax basis if the Sponsor delivers any of these bonds after the
expected delivery date. Any adjustment would reflect interest that accrued
between the time you purchased your Units and the delivery of the bonds to your
Trust. This could lower your first year estimated current return. You may
experience gains or losses on these bonds from the time you purchase Units even
though your Trust has not yet received them.
In order to acquire certain bonds, it may be necessary for the Sponsor or
Trustee to pay amounts covering accrued interest on the bonds which exceed the
amounts which will be made available through cash furnished by the Sponsor on
the Date of Deposit. This cash may exceed the interest which would accrue to
the First Settlement Date. The Trustee has agreed to pay for any amounts
necessary to cover any excess and will be reimbursed when funds become
available from interest payments on the related bonds. Also, since interest on
any "when, as and if issued" bonds does not begin accruing to the benefit of
Unitholders until the date of delivery, the Trustee may reduce its fee and pay
Trust expenses in order to maintain or approach the same estimated net annual
interest income during the first year of the Trust's operations as described
under "Summary of Essential Financial Information".
No FDIC Guarantee. An investment in your Trust is not a deposit of any bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation
or any other government agency.
ESTIMATED CURRENT AND LONG-TERM RETURNS
The Estimated Current Return and the Estimated Long-Term Return as of the
business day before the Date of Deposit are set forth on the cover of the
Prospectus. Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The estimated net
annual interest income per Unit will vary with changes in fees and expenses of
your Trust, currency rate fluctuations and with the principal prepayment,
default (if any), redemption, maturity, exchange or sale of bonds. The Public
Offering Price will vary with changes in the price of the bonds. Accordingly,
there is no assurance that the present Estimated Current Return will be realized
in the future. Estimated Long-Term Return is calculated using a formula which
(1) takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements of the bonds and (2) takes into account the expenses and sales
charge associated with Units. Since the value and estimated retirements of the
bonds and the expenses of your Trust will change, and there may be corporate
developments with respect to bonds held by the Trust, there is no assurance that
the present Estimated Long-Term Return will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to differ
because the calculation of Estimated Long-Term Return reflects the estimated
date and amount of principal returned while the Estimated Current Return
calculation includes only net annual interest income and Public Offering Price.
PUBLIC OFFERING
General. Units are offered at the Public Offering Price. During the initial
offering period the Public Offering Price is based on the aggregate offering
price of the bonds, the sales charge described below, cash, if any, in the
Principal Account (including cash to pay organization costs) and accrued
interest, if any. The maximum sales charge for your Trust is equal to 3.50% of
the public offering price per Unit (3.627% of the aggregate offering price of
the bonds). Organization costs are not included in the Public Offering Price
per Unit for purposes of calculating the sales charge. After the initial public
offering period, the secondary market public offering price is based on the bid
prices of the bonds, the sales charge described below, cash, if any, in the
Principal Account and accrued interest, if any. 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 in the primary
and secondary market is one Unit. Certain broker-dealers or selling firms may
charge an order handling fee for processing Unit purchases.
The secondary market sales charge is computed as described in the following
table based upon the estimated long-term return life in years ("ELTR Life") of
your Trust's portfolio:
ELTR Life Sales Charge
------------ ------------
1 year 1.00%
2 years 2.50
3 or more years 3.95
|
The ELTR Life represents the estimated life of the bonds in a Trust's
portfolio as determined for purposes of calculating Estimated Long-Term Return.
See "Estimated Current and Long-Term Returns". The sales charges in the above
table are expressed as a percentage of the aggregate bid prices of the bonds.
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 broker-dealer of your
qualification for any discount or of any combined purchases to be eligible for
a reduced sales charge. You may not combine discounts.
Large Quantity Purchases. You can reduce your sales charge by increasing the
size of your investment. If you purchase the amount of Units shown in the table
below during the initial offering period, your sales charge will be as
follows:
Sales
Charge
Aggregate Number Sales Reduction
of Units Purchased Charge per Unit
--------------------------------------------------
Less than 100 Units 3.50% --
100-249 Units 3.25 $2.50
250-499 Units 3.00 5.00
500-999 Units 2.75 7.50
1,000 Units - 2,999 Units 2.50 10.00
3,000 Units - 4,999 Units 2.25 12.50
5,000 Units or more 2.00 15.00
|
Except as described below, these quantity discount levels apply only to
purchases of a single Trust made by the same person on a single day from a
single broker-dealer. We also apply the different purchase levels on a dollar
basis using a $1,000 Unit equivalent. For example, if you purchase between
$250,000 and $499,999, your sales charge discount per Unit for the Trust will
be $5.00.
Aggregated Purchases--For purposes of achieving these levels you may combine
purchases of Units of a Trust 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. 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. A portion of the sales charge is waived for certain accounts
described in this paragraph. Purchases by these accounts are subject only to
the portion of the sales charge that is retained by the Sponsor. Please refer
to the section called "Fee Accounts" for additional information on these
purchases. Units may be purchased in the initial offering period at the Public
Offering Price less the maximum applicable concession the Sponsor typically
allows to brokers and dealers for purchases by investors who purchase Units
through registered investment advisers, certified financial planners and
registered broker-dealers who in each case either charge periodic fees for
brokerage services, financial planning, investment advisory or asset management
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 the Units are purchased for a Fee Account and the
Trust is subject to a Wrap Fee (i.e. the Trust is "Wrap Fee Eligible"). 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 Trust.
Exchanges. During the initial offering period of a Trust, unitholders of any
Van Kampen-sponsored unit investment trust and unitholders of unaffiliated unit
investment trusts may utilize their redemption or termination proceeds from
such a trust to purchase Units of the Trust with a sales charge reduction of
$7.50 per Unit. 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 Trust 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. The exchange will
generally be treated as a sale and a taxable transaction for federal income tax
purposes.
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 (collectively referred to herein as
"related purchasers")) of Van Kampen Funds Inc. and its affiliates may purchase
Units at the Public Offering Price less the applicable underwriting commission
or less the applicable dealer concession in the absence of an underwriting
commission. Employees, officers and directors (including related purchasers) of
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.
Offering Price. The Public Offering Price of Units will vary from the
amounts stated under "Summary of Essential Financial Information" in accordance
with fluctuations in the prices of the bonds. The price of Units as of the
close of business on the business day before the Date of Deposit was determined
by adding the applicable sales charge and organization costs to the aggregate
offering price of the bonds and dividing the sum by the number of Units
outstanding. This price determination was made on the basis of an evaluation of
the bonds prepared by the Evaluator. During the initial offering period, the
Evaluator will value the bonds as of the Evaluation Time on days the New York
Stock Exchange is open for business and will adjust the Public Offering Price
of Units accordingly. The "Evaluation Time" is the close of regular trading on
the New York Stock Exchange on each day that the Exchange is open for trading,
or earlier on days where the Bond Market Association recommends an early bond
market close, provided, however, on the Date of Deposit the Evaluation Time
will be the close of regular trading on the New York Stock Exchange or the time
the registration statement filed with the SEC becomes effective, if later. The
secondary market Public Offering Price per Unit will be equal to the aggregate
bid price of the bonds plus the applicable secondary market sales charge and
dividing the sum by the number of Units outstanding. For secondary market
purposes, this computation will be made by the Evaluator as of the Evaluation
Time for each day on which any Unit is tendered for redemption and as
necessary. The offering price of bonds may be expected to range approximately
from 0.125% to 1.375% more than the bid price. 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 aggregate price of the bonds is determined on the basis of the
appropriate bid prices or offering prices, as described herein, (a) on the
basis of current market prices obtained from dealers or brokers who customarily
deal in bonds comparable to those held by your Trust; (b) if these prices are
not available, on the basis of current market prices for comparable bonds; (c)
by causing the value of the bonds to be determined by others engaged in the
practice of evaluation, quoting or appraising comparable bonds; or (d) by any
combination of the above. Because the bonds in the Trust are primarily traded
in foreign markets, the value of the bonds and foreign currencies may change on
days when you will not be able to purchase or sell Units. The value of foreign
securities is based on the applicable currency exchange rate as of the
Evaluation Time.
A person will become the owner of Units on the date of settlement provided
payment has been received. 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.
Organization Costs. During the initial offering period, part of the Public
Offering Price represents an amount of cash deposited to pay the estimated
costs incurred in establishing your Trust. These costs include the costs of
preparing documents relating to the Trust (such as the registration statement,
prospectus, trust agreement and legal documents), federal and state
registration fees, the initial fees and expenses of the Trustee and the initial
audit. Your Trust will 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 the Trust deducts these costs from the Trust assets.
Accrued Interest. Accrued interest is an accumulation of unpaid interest on
securities which generally is paid by the bonds semi-annually or annually,
although your Trust accrues interest daily. Because of this, your Trust always
has an amount of interest earned but not yet collected by the Trustee. For this
reason, with respect to sales settling after the First Settlement Date, the
proportionate share of accrued interest to the settlement date is added to the
Public Offering Price of Units. You will receive the amount of accrued interest
paid on your Units on the next distribution date. In an effort to reduce the
accrued interest which would have to be paid by Unitholders, the Trustee will
advance the amount of accrued interest to the Sponsor as the Unitholder of
record as of the First Settlement Date. Consequently, the accrued interest
added to the Public Offering Price of Units will include only accrued interest
from the First Settlement Date to the date of settlement, less any
distributions from the Interest Account after the First Settlement Date.
Because of the varying interest payment dates of the bonds, accrued interest at
any point in time will be greater than the amount of interest actually received
by your Trust and distributed to Unitholders. If you sell or redeem all or a
portion of your Units, you will be entitled to receive your proportionate share
of the accrued interest from the purchaser of your Units. The bonds in the
Trust generally pay interest in foreign currencies. Accordingly, the accrued
interest added to the Public Offering Price per Unit each day is the U.S.
dollar equivalent of the current accrued interest on the bonds. Accrued
interest will fluctuate with changes in currency exchange rates and the U.S.
dollar equivalent of the applicable foreign currencies at the time actual
interest payments are received by the Trust may differ from the U.S. dollar
equivalent of such currencies at the time of any computation of accrued
interest.
Unit Distribution. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price, plus accrued interest.
The Sponsor intends to qualify Units for sale in a number of states. During the
initial offering period, the Sponsor will sell Units to broker-dealers and
selling agents at the Public Offering Price (net of any sales charge discount)
less the concession or agency commission described in the following sections.
During the initial offering period, the Sponsor will sell Units of the Trust
to broker-dealers and selling agents at the Public Offering Price (net of any
sales charge discount) less the gross concession or agency commission set forth
in the following table.
Concession
or Agency
Transaction Amount Commission
------------------------ ------------
Less than 100 Units $25.50
100 Units - 249 Units 23.00
250 Units - 499 Units 20.50
500 Units - 999 Units 18.00
1,000 Units - 2,999 Units 15.50
3,000 Units - 4,999 Units 13.50
5,000 Units or more 11.50
|
For initial offering period transactions involving unitholders of other unit
investment trusts who use their redemption or termination proceeds to purchase
Units of a Trust, the regular concession or agency commission allowed by the
Sponsor to broker-dealers and other selling agents will equal $18.00 per Unit
for the Trust.
The breakpoint concessions or agency commissions above are also applied on a
dollar basis utilizing a breakpoint equivalent of $1,000 per Unit and will be
applied on whichever basis is more favorable to the distributor. The
breakpoints above 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 be issued.
In addition to the concession or agency commission and rebates described in
the sections 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:
Additional
Initial Offering Period Sales Volume
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 a transactional sales charge (as defined in
applicable prospectuses), 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.
Certain commercial banks may be making Units available to their customers on
an agency basis. A portion of the sales charge paid by these customers (equal
to the agency commission referred to above) is retained by or remitted to the
banks. Any discount provided to investors will be borne by the selling dealer
or agent. For secondary market transactions, the Sponsor will sell Units to
broker-dealers and selling agents at the Public Offering Price less a
concession or agency commission of 80% of the applicable sales charge. Dealers
other than the Sponsor may sell Units in the secondary market to other
broker-dealers and selling agents at the Public Offering Price less a
concession or agency commission not in excess of the secondary market
concession allowed to the dealer. 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.
Sponsor Compensation. The Sponsor will receive the total sales charge
applicable to each transaction. Except as described in "Unit Distribution"
above, any sales charge discount provided to investors will be borne by the
selling broker-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 bonds by
the Sponsor and the cost of the bonds to a Trust. See "Portfolio" and "Notes to
Portfolio". The Sponsor may also realize profits or losses with respect to
bonds which were acquired by the Sponsor from underwriting syndicates of which
they were members. The Sponsor has not participated as sole underwriter or as
manager or as a member of the underwriting syndicates from which the bonds were
acquired. The Sponsor will also 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 in connection with maintaining a secondary market for
Units and will also realize profits or losses resulting from a redemption of
repurchased Units at a price above or below the purchase price.
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 Trust 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 Trust 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.
Market for Units. Although not obligated to do so, the Sponsor intends to
maintain a market for Units and offer to purchase Units at prices, subject to
change at any time, based upon the aggregate bid prices of the bonds plus
accrued interest and any principal cash on hand, less any amounts representing
taxes or other governmental charges payable out of your Trust and less any
accrued Trust expenses. If the supply of Units exceeds demand or if some other
business reason warrants it, the Sponsor may either discontinue all purchases
of Units or discontinue purchases of Units at these prices. If a market is not
maintained and the Unitholder cannot find another purchaser, 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". A
Unitholder who wishes to dispose of his Units should inquire of his broker as
to current market prices in order to determine whether there is any price in
excess of the Redemption Price and, if so, the amount thereof. The Trustee will
notify the Sponsor of any tender of Units for redemption. If the Sponsor's bid
in the secondary market at that time equals or exceeds the Redemption Price per
Unit, it may purchase the Units not later than the day on which the Units would
otherwise have been redeemed by the Trustee.
FEE ACCOUNTS
As described above, Units may be available for purchase by investors in Fee
Accounts where the Trust is Wrap Fee Eligible. You should consult your
financial professional to determine whether you can benefit from these
accounts. For these purchases you generally only pay the portion of the sales
charge that is retained by your Trust's Sponsor, Van Kampen Funds Inc. 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 the Trust.
RIGHTS OF UNITHOLDERS
Distributions of Interest and Principal. Interest received by a Trust, pro
rated on an annual basis, will be distributed monthly. There can be no
assurance that the estimated net annual interest income per Unit described
under "Summary of Essential Financial Information" will be realized in the
future. The estimated net annual interest income per Unit will vary with
changes in fees and expenses of your Trust, currency exchange rate
fluctuations, changes in interest rates, and with the principal prepayment,
redemption, maturity, exchange or sale of bonds. Interest distributions will
consist of the available balance of the Trust's Interest Account, net of
applicable expenses and charges, as of the record date applicable to the
distribution date. In addition, the Trust may make additional required
distributions at the end of each year in order to maintain its status as a
"regulated investment company" for federal tax purposes.
Interest received by a Trust, including that part of the proceeds of any
disposition of bonds which represents accrued interest, is credited by the
Trustee to the Interest Account. Other receipts are credited to the Principal
Account. After deduction of amounts sufficient to reimburse the Trustee,
without interest, for any amounts advanced and paid to the Sponsor as the
Unitholder of record as of the First Settlement Date, interest received will be
distributed on each distribution date to Unitholders of record as of the
preceding record date. All distributions will be net of estimated expenses. The
Trustee is not required to pay interest on funds held in the Principal or
Interest Account (but may itself earn interest thereon and therefore benefits
from the use of these funds). Should the amount available for distribution in
the Principal Account equal or exceed $5.00 per Unit, the Trustee will make a
distribution from the Principal Account on the next monthly distribution date
to Unitholders of record on the related monthly record date. However, funds in
the Principal Account will be distributed on the last distribution date of each
calendar year to Unitholders of record as of the preceding record date if the
amount available for distribution shall equal at least $1.00 per Unit.
Because interest payments are not received by a Trust at a constant rate
throughout the year, interest distributions may be more or less than the amount
credited to the Interest Account as of the record date. For the purpose of
minimizing fluctuations in interest distributions, the Trustee is authorized to
advance amounts necessary to provide interest distributions of approximately
equal amounts. However, fluctuations in currency exchange rates may cause
variability in the amount of the monthly interest distributions and may result
in Unitholders receiving lower distributions when the Trust actually receives
less income in U.S. dollars than the amounts anticipated by the Trustee when it
calculated prior monthly interest payments. The Trustee is reimbursed for these
advances from funds in the Interest Account. Persons who purchase Units between
a record date and a distribution date will receive their first distribution on
the second distribution date after the purchase.
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 receive an
amount for each Unit equal to the Redemption Price per Unit next computed after
receipt by the Trustee of the tender of Units. The "date of tender" is deemed
to be the date on which Units are received by the Trustee, except that as
regards Units received after the Evaluation Time on days of trading on the New
York Stock Exchange, the date of tender is the next day on which that Exchange
is open and the Units will be deemed to have been tendered to the Trustee on
that day for redemption at the Redemption Price. 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.
Under Internal Revenue Service (the "IRS") regulations, the Trustee is
required to withhold a specified percentage of a Unit redemption if the Trustee
has not received the Unitholder's tax identification number as required by such
regulations or if the IRS notifies the Trustee that such withholding is
required. Any amount withheld is transmitted to the IRS and may be recovered by
the Unitholder only when filing a return or a claim for refund. Under normal
circumstances the Trustee obtains the Unitholder's tax identification number
from the selling broker. However, at any time a Unitholder elects to tender
Units for redemption, the Unitholder should provide a tax identification number
to the Trustee in order to avoid this possible "backup withholding".
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the bid price of the bonds
as of the Evaluation Time on days of trading on the New York Stock Exchange on
the date any such determination is made. The Evaluator determines the
Redemption Price per Unit on days Units are tendered for redemption. The
Redemption Price per Unit is the pro rata share of each Unit on the basis of
(i) the cash on hand in a Trust or moneys in the process of being collected,
(ii) the value of the bonds based on the bid prices of the bonds, (iii) accrued
interest, less (a) amounts representing taxes or other governmental charges and
(b) the accrued Trust expenses. During the initial offering period, the
Redemption Price and secondary market repurchase price are not reduced by
estimated organization costs. The Evaluator may determine the value of the
bonds by employing any of the methods set forth in "Public Offering--Offering
Price". Accrued interest paid on redemption shall be withdrawn from the
Interest Account or, if the balance therein is insufficient, from the Principal
Account. All other amounts will be withdrawn from the Principal Account. Units
so redeemed shall be cancelled.
The price at which Units may be redeemed could be less than the price paid
by the Unitholder and may be less than the par value of the bonds represented
by the Units redeemed. The Trustee may sell bonds to cover redemptions. When
bonds are sold, the size and diversity of your Trust will be reduced. Sales may
be required at a time when bonds would not otherwise be sold and might result
in lower prices than might otherwise be realized.
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 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 bonds is not reasonably practicable, or for
other periods as the SEC may by order permit. Under certain extreme
circumstances the Sponsor may apply to the SEC for an order permitting a full
or partial suspension of the right of Unitholders to redeem their Units.
Exchange Option. When you redeem Units of your Trust or when your Trust
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. We may discontinue this option at any time. The exchange will
generally be treated as a sale and a taxable transaction for federal and state
income tax purposes.
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 the Depository Trust Company ("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 interest and other
receipts received for each distribution. For as long as the Sponsor deems it to
be in the best interest of Unitholders, the accounts of your Trust will be
audited annually by an independent registered public accounting firm and the
report of the accountants will be furnished to Unitholders upon request. Within
a reasonable period of time after the end of each year, the Trustee will
furnish to each person who was a registered Unitholder during that year a
statement describing the interest and principal received on the bonds, actual
Trust distributions, Trust expenses, a list of the bonds and other Trust
information. Unitholders will be furnished the Evaluator's evaluations of the
bonds upon request to the Trustee. If you have questions regarding your account
or your Trust, please contact your financial adviser or the Trustee. The
Sponsor does not have access to individual account information.
TRUST ADMINISTRATION
Sponsor. Van Kampen Funds Inc. is the Sponsor of your Trust. 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 Trust have adopted a code of ethics requiring Invesco's
employees who have access to information on Trust transactions to report
personal securities transactions. The purpose of the code is to avoid potential
conflicts of interest and to prevent fraud, deception or misconduct with
respect to your Trust. The Information Supplement contains additional
information about the Sponsor. If we fail to or cannot perform our duties under
the trust agreement or become bankrupt, the Trustee may appoint a new sponsor,
continue to operate your Trust without a sponsor, or terminate your Trust and
distribute the liquidation proceeds.
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, telephone (800) 856-8487. If you have questions
regarding your account or your Trust, 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".
Portfolio Administration. Your Trust is not a managed fund and, except as
provided in the Trust Agreement, bonds generally will not be sold or replaced.
The Sponsor may, however, direct that bonds be sold in certain limited
situations to protect your Trust based on advice from the Supervisor. These
situations may include default in interest or principal payments on the bonds
or other obligations of an issuer, an advanced refunding or institution of
certain legal proceedings. In addition, the Trustee may sell bonds designated
by the Supervisor for purposes of redeeming Units or payment of expenses. The
Supervisor will consider a variety of factors in designating bonds to be sold
including interest rates, market value and marketability. Except in limited
circumstances, the Trustee must reject any offer by an issuer to issue bonds in
exchange or substitution for the bonds (such as a refunding or refinancing
plan). The Trustee will promptly notify Unitholders of any exchange or
substitution. The Information Supplement contains a more detailed description
of circumstances in which bonds may be sold or replaced. See "Additional
Information".
If a Trust is structured as a "regulated investment company" for federal tax
purposes, the Sponsor may direct the reinvestment of proceeds of the sale of
bonds if the sale is the direct result of serious adverse credit factors which,
in the opinion of the Sponsor, would make retention of the bonds detrimental to
the Trust. In such a case, the Sponsor may, but is not obligated to, direct the
reinvestment of sale proceeds in any other securities that meet the criteria
for inclusion in the trust on the Date of Deposit. The Sponsor may also
instruct the Trustee to take action necessary to ensure that such a Trust
continues to satisfy the qualifications of a regulated investment company and
to avoid imposition of tax on undistributed income of the Trust.
Replacement Bonds. No assurance can be given that a Trust will retain its
present size or composition because bonds may be sold, redeemed or mature from
time to time and the proceeds will be distributed to Unitholders and will not
be reinvested. In the event of a failure to deliver any bond that has been
purchased under a contract ("Failed Bonds"), the Sponsor is authorized under
the Trust Agreement to direct the Trustee to acquire other bonds ("Replacement
Bonds") to make up the original portfolio of a Trust. Replacement Bonds must be
purchased within 20 days after delivery of the notice of the failed contract
and the purchase price (exclusive of accrued interest) may not exceed the
amount of funds reserved for the purchase of the Failed Bonds. The Replacement
Bonds must (i) be bonds, debentures, notes or other straight debt obligations
(whether secured or unsecured and whether senior or subordinated) without
equity or other conversion features, with fixed maturity dates substantially
the same as those of the Failed Bonds having no warrants or subscription
privileges attached; (ii) not be when, as and if issued obligations or
restricted securities; (iii) be issued after July 18, 1984 if the interest is
United States source income and (iv) be issued or guaranteed by an issuer
subject to or exempt from the reporting requirements under Section 13 or 15(d)
of the Securities Exchange Act of 1934 (or similar provisions of law) or
guaranteed, directly or indirectly, by means of a lease agreement, agreement to
buy securities, services or products, or other similar commitment of the credit
of such an issuer to the payment of the substitute bonds. The Trustee shall
notify all Unitholders of a Trust within five days after the acquisition of a
Replacement Bond and shall make a pro rata distribution of the amount, if any,
by which the cost of the Failed Bond exceeded the cost of the Replacement Bond
plus accrued interest. If Failed Bonds are not replaced, the Sponsor will
refund the sales charge attributable to the Failed Bonds to all Unitholders of
a Trust and distribute the principal and accrued interest (at the coupon rate
of the Failed Bonds to the date of removal from the Trust) attributable to the
Failed Bonds within 30 days after removal. If Failed Bonds are not replaced,
the Estimated Net Annual Interest Income per Unit would be reduced and the
Estimated Current Return and Estimated Long-Term Return might be lowered.
Unitholders may not be able to reinvest their proceeds in other securities at a
yield equal to or in excess of the yield of the Failed Bonds.
Amendment of Trust Agreement. The Sponsor and the Trustee 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 the interest of the 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 to permit the acquisition of bonds in addition
to or in substitution for any of the bonds initially deposited in a Trust,
except for the substitution of certain refunding bonds. The Trustee will notify
Unitholders of any amendment.
Termination of Trust Agreement. A Trust will terminate upon the redemption,
sale or other disposition of the last bond held in the Trust. A Trust may also
be terminated at any time by consent of Unitholders of 75% of the Units then
outstanding or by the Trustee when the value of the Trust is less than 20% of
the original principal amount of bonds. A Trust will be liquidated by the
Trustee in the event that a sufficient number of Units of the Trust not yet
sold are tendered for redemption by the Sponsor, so that the net worth of the
Trust would be reduced to less than 40% of the value of the Securities at the
time they were deposited in the Trust. The Trustee will notify each Unitholder
of any termination within a reasonable time and will then liquidate any
remaining bonds. The sale of bonds upon termination may result in a lower
amount than might otherwise be realized if the sale was not required at that
time. For this reason, among others, the amount realized by a Unitholder upon
termination may be less than the principal amount of bonds per Unit or value at
the time of purchase. The Trustee will distribute to each Unitholder his share
of the balance of the Interest and Principal Accounts after deduction of costs,
expenses or indemnities. The Unitholder will receive a final distribution
statement with this distribution. When the Trustee in its sole discretion
determines that any amounts held in reserve are no longer necessary, it will
distribute these amounts to Unitholders. The Information Supplement contains
further information regarding termination of a Trust. See "Additional
Information".
Limitation on Liabilities. The Sponsor, Supervisor, Evaluator and Trustee
shall be under no liability to Unitholders 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 shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee
of any of the bonds. In the event of the failure of the Sponsor to act under
the Trust Agreement, the Trustee may act thereunder and shall not be liable for
any action taken by it in good faith under the Trust Agreement. The Trustee is
not liable for any taxes or governmental charges imposed on the bonds, on it as
Trustee under the Trust Agreement or on a Trust which the Trustee may be
required to pay under any present or future law of the United States of America
or of any other taxing authority having jurisdiction. In addition, the Trust
Agreement contains other customary provisions limiting the liability of the
Trustee. The Trustee and Sponsor may rely on any evaluation furnished by the
Evaluator and have no responsibility for the accuracy thereof. Determinations
by the Evaluator shall be made in good faith upon the basis of the best
information available to it; provided, however, that the Evaluator shall be
under no liability to the Trustee, Sponsor or Unitholders for errors in
judgment.
FEDERAL TAX STATUS
This section summarizes some of the principal U.S. federal income tax
consequences of owning Units of a Trust 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, except as specifically provided below, 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 IRS 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 the Trust. Additional
information on taxes is contained in the Information Supplement.
As with any investment, you should seek advice based on your individual
circumstances from your own tax advisor.
Trust Status. The Trust intends to elect and to qualify annually as a
"regulated investment company" under the federal tax laws. If the Trust
qualifies as a regulated investment company and distributes its income as
provided in the tax law, the Trust generally will not pay federal income taxes.
Distributions. Trust distributions are generally taxable. After the end of
each year, you will receive a tax statement reporting your Trust's
distributions, including the amounts of ordinary income distributions and
capital gains dividends.
Ordinary income distributions are generally taxed at your ordinary tax rate.
The Trust 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 Trust is not affected by whether you reinvest your
distributions in additional shares or receive them in cash. The income from
your Trust 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 Trust reduces the Trust'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.
Dividends Received Deduction and Qualified Dividend Income. A corporation
that owns Units generally will not be entitled to the dividends received
deduction with respect to dividends received from the Trust because the
dividends received deduction is generally not available for distributions from
regulated investment companies that do not invest in stock. An individual that
owns Units generally will not be entitled to treat Trust distributions as
qualified dividend income currently taxed at long-term capital gains rates, as
it is not expected that Trust distributions will be attributable to qualified
dividend income received by the Trust.
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. 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, if you are an individual, the maximum marginal federal
tax rate for net capital gains currently is scheduled to be generally 20% (10%
for certain taxpayers in the 10% and 15% tax brackets). The 20% rate currently
is scheduled to be reduced for tax years beginning in 2013 to 18% and the 10%
rate is reduced to 8% for long-term capital gains from most property with a
holding period of more than five years.
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 Trust and sell your Unit 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 treats
certain capital gains as ordinary income in special situations.
Exchanges. If you elect to have your proceeds from your Trust rolled over
into a future series of the Trust, the exchange would generally be considered a
sale and a taxable transaction for federal income tax purposes. In general, any
gain on the sale will be treated as capital gain and any loss will be treated
as capital loss. However, any loss realized on a sale or exchange will be
disallowed to the extent that Units disposed of are replaced within a period of
61 days beginning 30 days before and ending 30 days after the 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 Trust Expenses. Expenses incurred and deducted by your
Trust will generally not be treated as income taxable to you. In some cases,
however, you may be required to treat your portion of these Trust expenses as
income. In these cases 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 Tax Credit. If your Trust invests in any foreign securities, the tax
statement that you receive may include an item showing foreign taxes your Trust
paid to other countries. In this case, dividends taxed to you will include your
share of the taxes your Trust paid to other countries. Based on the principal
investment strategies of the Trust, it is not expected that the Trust will be
eligible to pass through to investors any credits or deductions against U.S.
federal income tax with respect to such foreign taxes paid.
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), you should be aware that, generally, subject to applicable tax
treaties, distributions from the Trust will be characterized as dividends for
federal income tax purposes (other than dividends which the Trust reports as
capital gain dividends) and will generally be subject to U.S. income taxes,
including withholding taxes, subject to certain exceptions. However
distributions received by a foreign investor from the Trust 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 the Trust
makes certain elections and certain other conditions are met.
Backup Withholding. By law, your Trust 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 Trust to do so.
Investors Should Consult Their Tax Advisors. Investors in the Trust may be
subject to federal, state, local, or foreign taxes in connection with their
investment in the Trust. Investors are encouraged to consult their own tax
advisors regarding the specific federal, state, local, and foreign tax
consequences that may affect them as a result of an investment in the Trust.
EXPENSES
General. The Trustee will periodically deduct from the Interest Account and,
to the extent funds are not sufficient therein, from the Principal Account,
amounts necessary to pay the expenses of the Trusts, provided that organization
costs are generally paid out of cash deposited in the Principal Account. The
Trustee also may withdraw from these Accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of
the Trusts. Amounts so withdrawn shall not be considered a part of a Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate Accounts.
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 Trust. These costs and charges will include the cost of
the preparation, printing and execution of the trust agreement, registration
statement and other documents relating to your Trust, federal and state
registration fees and costs, the initial fees and expenses of the Trustee, and
legal and auditing expenses. The Public Offering Price of Units includes the
estimated amount of these costs. The Trustee will deduct these expenses from
your Trust's assets at the end of the initial offering period or after six
months, if earlier.
Sponsor, Supervisor, Evaluator and Trustee. The Sponsor and the Supervisor,
which is an affiliate of the Sponsor, will receive the annual fee indicated
under "Summary of Essential Financial Information" for providing bookkeeping
and administrative services and for providing portfolio supervisory services
for the Trusts. These fees may exceed the actual costs of providing these
services for a Trust but the total amount received for providing these services
to all Van Kampen unit investment trusts will not exceed the total cost of
providing the services in any calendar year. The Evaluator will receive the
annual evaluation fee indicated under "Summary of Essential Financial
Information" for evaluating your Trust's portfolio. For its services the
Trustee will receive the fee indicated under "Summary of Essential Financial
Information" (which may be reduced as described therein). Part of the Trustee's
compensation for its services is expected to result from the use of the funds
being held in the Principal and Interest Accounts for future distributions,
payment of expenses and redemptions since these Accounts are non-interest
bearing to Unitholders. These fees are based on the outstanding principal
amount of bonds and Units on the Date of Deposit for the first year and as of
the close of business on January 1 for each year thereafter. The Sponsor's,
Supervisor's, Evaluator's and Trustee's fees may be increased without approval
of the Unitholders by amounts not exceeding proportionate increases under the
category "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.
Miscellaneous Expenses. The following additional charges are or may be
incurred by your Trust (a) fees of the Trustee for extraordinary services, (b)
expenses of the Trustee (including legal and auditing expenses) and of counsel
designated by the Sponsor, (c) various governmental charges, (d) expenses and
costs of any action taken by the Trustee to protect the Trusts and the rights
and interests of Unitholders, (e) indemnification of the Trustee for any loss,
liability or expenses incurred by it in the administration of the Trusts
without negligence, bad faith or willful misconduct on its part, (f) any
special custodial fees payable in connection with the sale of any of the bonds
in a Trust, (g) expenditures incurred in contacting Unitholders upon
termination of the Trusts, (h) costs incurred to reimburse the Trustee for
advancing funds to the Trusts to meet scheduled distributions (which costs may
be adjusted periodically in response to fluctuations in short-term interest
rates and (i) foreign custodial and transaction fees (which may include
compensation paid to the Trustee or its subsidiaries or affiliates). Your Trust
will pay the costs associated with updating its registration statement each
year. The fees and expenses set forth herein are payable out of the Trust. When
such fees and expenses are paid by or owing to the Trustee, they are secured by
a lien on the portfolio of your Trust. If the balances in the Interest and
Principal Accounts are insufficient to provide for amounts payable by the
Trust, the Trustee has the power to sell bonds to pay such amounts.
ADDITIONAL INFORMATION
This prospectus does not contain all the information set forth in the
registration statements filed by your Trust 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, includes more
detailed information concerning the bonds in your Trust, investment risks and
general information about the Trust. Information about your Trust (including
the Information Supplement) can be reviewed and copied at the SEC's Public
Reference Room in Washington, DC. You may obtain information about the Public
Reference Room by calling 1-202-551-8090. Reports and other information about
your Trust are available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. Copies of this information may be obtained, after paying a
duplication fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the SEC's Public Reference Section,
Washington, DC 20549-0102.
OTHER MATTERS
Legal Matters. The legality of the Units offered hereby and certain matters
relating to federal tax law have been passed upon by Paul Hastings LLP. Dorsey
& Whitney LLP has acted as counsel to the Trustee.
Independent Registered Public Accounting Firm. The statement of condition
and the related portfolio at the Date of Deposit 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.
Contents of Prospectus
Investment Objective 2
Principal Investment Strategy 2
Principal Risks 2
Summary of Essential Financial Information 4
Portfolio 5
Notes to Portfolio 6
Report of Independent Registered
Public Accounting Firm 7
Statement of Condition 7
The Trust A-1
Estimated Current and Long-Term Returns A-8
Public Offering A-8
Fee Accounts A-13
Rights of Unitholders A-13
Trust Administration A-15
Federal Tax Status A-18
Expenses A-20
Additional Information A-20
Other Matters A-21
Daily Prices
o Call our 24-Hour Pricing Line
(800) 953-6785
o Visit our Unit Trusts Daily Pricing Page
http://www.invesco.com/UIT
Account Questions
o Contact the Trustee
(800) 856-8487
Learning More About Unit Trusts
o Contact Van Kampen
(630) 684-6000
o Visit our Unit Trusts Internet Page
http://www.invesco.com/UIT
|
Additional Information
You may obtain an Information Supplement that
provides more details about your trust and its
policies.
o Visit the SEC Internet Site
http://www.sec.gov
o Contact the Trustee
(800) 856-8487
When Units of the Trust are no longer available this prospectus may be used as
a preliminary prospectus for a future Trust. If this prospectus is used for
future Trusts you should note the following:
The information in this prospectus is not complete with respect to future Trust
series and may be changed. No person may sell Units of future Trusts 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-GBITPRO2
U-TISPRO380
PROSPECTUS
March 15, 2012
Taxable Income Series 380
Global Bond Income Trust, Series 2
INVESCO
Information Supplement
Taxable Income Series 380
Global Bond Income Trust, Series 2
This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the prospectus for
the Trust. This Information Supplement should be read in conjunction with the
prospectus. This Information Supplement is not a prospectus (but is
incorporated into the prospectus by reference), does not include all of the
information that an investor should consider before investing in a Trust and
may not be used to offer or sell Units without the prospectus. Copies of the
prospectus can be obtained by contacting the Sponsor'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 and all capitalized terms have been defined in
the prospectus.
Table of Contents
Page
Risk Factors 2
Portfolio Administration 5
Sponsor Information 5
Trustee Information 6
Taxation 7
Termination of the Trust Agreement 8
Description of Ratings 9
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INVESCO
Risk Factors
The Trust includes, certain types of bonds described below. Accordingly, an
investment in the Trust should be made with an understanding of the
characteristics of and risks associated with such bonds. Neither the Sponsor
nor the Trustee shall be liable in any way for any default, failure or defect
in any of the bonds.
Consumer Product and Retail Issuers. The Trust may invest significantly in
bonds issued by companies that manufacture or sell consumer products. The
profitability of these companies will be affected by various factors including
the general state of the economy and consumer spending trends. In the past,
there have been major changes in the retail environment due to the declaration
of bankruptcy by some of the major corporations involved in the retail
industry, particularly the department store segment. The continued viability of
the retail industry will depend on the industry's ability to adapt and to
compete in changing economic and social conditions, to attract and retain
capable management, and to finance expansion. Weakness in the banking or real
estate industry, a recessionary economic climate with the consequent slowdown
in employment growth, less favorable trends in unemployment or a marked
deceleration in real disposable personal income growth could result in
significant pressure on both consumer wealth and consumer confidence, adversely
affecting consumer spending habits. In addition, competitiveness of the retail
industry will require large capital outlays for investment in the installation
of automated checkout equipment to control inventory, to track the sale of
individual items and to gauge the success of sales campaigns. Changes in
demographics and consumer tastes can also affect the demand for, and the
success of, consumer products and services in the marketplace. Increasing
employee and retiree benefit costs may also have an adverse effect on the
industry. In many sectors of the retail industry, competition may be fierce due
to market saturation, converging consumer tastes and other factors. Because of
these factors and the recent increase in trade opportunities with other
countries, American retailers are now entering global markets which entail
added risks such as sudden weakening of foreign economies, difficulty in
adapting to local conditions and constraints and added research costs.
Financial Services Issuers. The Trust is concentrated in bonds issued by
companies within the bank and financial services sector.
The effects of the global financial crisis that began to unfold in 2007
continue to manifest in nearly all the sub-divisions of the financial services
industry. Financial losses and write downs among investment banks and similar
institutions reached significant levels in 2008. The impact of these losses
among traditional banks, investment banks, broker/dealers and insurers has
forced a number of large such institutions into either liquidation or
combination, while drastically increasing the credit risk, and possibility of
default, of bonds issued by such institutions faced with these troubles. Many
of the institutions are having difficulty in accessing credit markets to
finance their operations and in maintaining appropriate levels of equity
capital. In some cases, foreign governments have acted to bail out or provide
support to select institutions, however the risk of default by such issuers has
nonetheless increased substantially.
While the U.S. and foreign governments, and their respective agencies, have
taken steps to address problems in the financial markets and with financial
institutions, there can be no assurance that the risks associated with
investment in financial services company issuers will decrease as a result of
these steps.
Banks and their holding companies are especially subject to the adverse
effects of economic recession, volatile interest rates, portfolio
concentrations in geographic markets and in commercial and residential real
estate loans, and competition from new entrants in their fields of business.
Banks are highly dependent on net interest margin. Bank profitability is
largely dependent on the availability and cost of capital funds, and can
fluctuate significantly when interest rates change or due to increased
competition. As initial home purchasing and refinancing activity subsided as a
result of increasing interest rates and other factors, this income diminished.
Economic conditions in the real estate markets have deteriarated and have a
substantial negative effect upon banks because they generally have a portion of
their assets invested in loans secured by real estate. Banks and their holding
companies are subject to extensive federal regulation and, when such
institutions are state-chartered, to state regulation as well. Such regulations
impose strict capital requirements and limitations on the nature and extent of
business activities that banks may pursue. Furthermore, bank regulators have a
wide range of discretion in connection with their supervisory and enforcement
authority and may substantially restrict the permissible activities of a
particular institution if deemed to pose significant risks to the soundness of
such institution or the safety of the federal deposit insurance fund.
Regulatory actions, such as increases in the minimum capital requirements
applicable to banks and increases in deposit insurance premiums required to be
paid by banks and thrifts can negatively impact earnings and the ability of a
company to pay dividends. Neither federal insurance of deposits nor
governmental regulations, however, insures the solvency or profitability of
banks or their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
Banks face significant competition from other financial institutions such as
mutual funds, credit unions, mortgage banking companies and insurance
companies, and increased competition may result from legislative broadening of
regional and national interstate banking powers. Among other benefits, such
legislation allows banks and bank holding companies to acquire across
previously prohibited state lines and to consolidate their various bank
subsidiaries into one unit. The Sponsor makes no prediction as to what, if any,
manner of bank regulatory actions might ultimately be adopted or what ultimate
effect such actions might have on the Trust's portfolio.
Companies engaged in the investment management industry are subject to the
adverse effects of economic recession, volatile interest rates, and competition
from new entrants in their fields of business. Adverse changes in the direction
of the stock market, investor confidence, equity transaction volume, the level
and direction of interest rates and the outlook of emerging markets could
adversely affect the financial stability, as well as the stock prices of the
securities, of these companies. Additionally, competitive pressures, including
increased competition with new and existing competitors, the ongoing
commoditization of traditional businesses and the need for increased capital
expenditures on new technology could adversely impact the profit margins of
companies in the investment management and brokerage industries. Companies
involved in the investment management industry are also subject to extensive
regulation by government agencies and self-regulatory organizations, and
changes in laws, regulations or rules, or in the interpretation of such laws,
regulations and rules could adversely affect such companies.
Companies involved in the insurance, reinsurance and risk management
industry underwrite, sell or distribute property, casualty and business
insurance. Many factors affect insurance, reinsurance and risk management
company profits, including but not limited to interest rate movements, the
imposition of premium rate caps, a misapprehension of the risks involved in
given underwritings, competition and pressure to compete globally, weather
catastrophes or other disasters and the effects of client mergers. Individual
companies may be exposed to material risks including reserve inadequacy and the
inability to collect from reinsurance carriers. Insurance companies are subject
to extensive governmental regulation, including the imposition of maximum rate
levels, which may not be adequate for some lines of business. Proposed or
potential tax law changes may also adversely affect insurance companies' policy
sales, tax obligations and profitability. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization of
traditional businesses, new competitors, capital expenditures on new technology
and the pressure to compete globally.
In addition to the normal risks of business, companies involved in the
insurance and risk management industry are subject to significant risk factors,
including those applicable to regulated insurance companies, such as:
o the inherent uncertainty in the process of establishing
property-liability loss reserves, and the fact that ultimate losses
could materially exceed established loss reserves, which could have a
material adverse effect on results of operations and financial
condition;
o the fact that insurance companies have experienced, and can be
expected in the future to experience, catastrophic losses, which could
have a material adverse impact on their financial conditions, results
of operations and cash flow;
o the inherent uncertainty in the process of establishing
property-liability loss reserves due to changes in loss payment
patterns caused by new claim settlement practices;
o the need for insurance companies and their subsidiaries to maintain
appropriate levels of statutory capital and surplus, particularly in
light of continuing scrutiny by rating organizations and state
insurance regulatory authorities, and in order to maintain acceptable
financial strength or claims-paying ability ratings;
o the extensive regulation and supervision to which insurance companies
are subject, and various regulatory and other legal actions;
o the adverse impact that increases in interest rates could have on the
value of an insurance company's investment portfolio and on the
attractiveness of certain of its products; and
o the uncertainty involved in estimating the availability of
reinsurance and the collectibility of reinsurance recoverables.
Insurance companies generally are subject to laws and regulations that
require diversification of their investment portfolios and limit the amount of
investments in certain investment categories. Failure to comply with these laws
and regulations would cause non-conforming investments to be treated as
non-admitted assets for purposes of measuring statutory surplus and, in some
instances, would require divestiture.
Industrials Issuers. The Trust may invest significantly in bonds issued by
industrials companies. General risks of industrials companies include the
general state of the economy, intense competition, consolidation, domestic and
international politics, excess capacity and consumer spending trends. In
addition, capital goods companies may also be significantly affected by overall
capital spending levels, economic cycles, technical obsolescence, delays in
modernization, limitations on supply of key materials, labor relations,
government regulations, government contracts and ecommerce initiatives.
Industrials companies may also be affected by factors more specific to their
individual industries. Industrial machinery manufacturers may be subject to
declines in commercial and consumer demand and the need for modernization.
Aerospace and defense companies may be influenced by decreased demand for new
equipment, aircraft order cancellations, disputes over or ability to obtain or
retain government contracts, labor disputes or changes in government budget
priorities, changes in aircraft-leasing contracts and cutbacks in profitable
business travel. The number of housing starts, levels of public and
non-residential construction including weakening demand for new office and
retail space, and overall construction spending may adversely affect
construction equipment manufacturers.
Telecommunications Issuers. The Trust may invest significantly in bonds
issued by telecommunications companies. The telecommunications industry is
subject to governmental regulation, and the products and services of
telecommunications companies may be subject to rapid obsolescence. These
factors could affect the value of Units. Telephone companies may be subject to
regulations affecting permitted rates of returns and the kinds of services that
may be offered. Certain types of companies represented in a portfolio are
engaged in fierce competition for a share of the market of their products. As a
result, competitive pressures are intense and the values of telecommunications
company securities are subject to rapid price volatility.
Several high-profile bankruptcies of large telecommunications companies have
illustrated the potentially unstable condition of telecommunications companies.
High debt loads that were accumulated during the industry growth spurt of the
1990s are catching up to the industry, causing debt and stock prices to trade
at distressed levels for many telecommunications companies and increasing the
cost of capital for needed additional investment. At the same time, demand for
some telecommunications services has fallen sharply, as several key markets
have become oversaturated, some local customers have switched to substitute
providers and technologies, and corporate profits and the economy generally
remain weak. To meet increasing competition, companies may have to commit
substantial capital, particularly in the formulation of new products and
services using new technologies. As a result, many companies have been
compelled to cut costs by reducing their workforce, outsourcing, consolidating
and/or closing existing facilities and divesting low selling product lines.
Furthermore, certain companies involved in the industry have also faced
scrutiny for alleged accounting irregularities that may have led to the
overstatement of their financial results, and other companies in the industry
may face similar scrutiny. Due to these and other factors, the risk level of
owning the securities of telecommunications companies has increased
substantially and may continue to rise.
While a portfolio may invest significantly in the securities of established
suppliers of traditional telecommunication products and services, a Trust may
also invest in bonds of smaller telecommunications companies which may benefit
from the development of new products and services. These smaller companies may
present greater opportunities for capital appreciation, and may also involve
greater risk than large, established issuers. Such smaller companies may have
limited product lines, market or financial resources, and their securities may
trade less frequently and in limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such
smaller companies may fluctuate to a greater degree than the prices of
securities of other issuers.
Portfolio Administration
The Trustee is empowered to sell, for the purpose of redeeming Units
tendered by any Unitholder, and for the payment of expenses for which funds may
not be available, such of the bonds designated by the Supervisor as the Trustee
in its sole discretion may deem necessary. The Supervisor, in designating such
bonds, will consider a variety of factors, including (a) interest rates, (b)
market value and (c) marketability. To the extent that bonds are sold which are
current in payment of principal and interest in order to meet redemption
requests and defaulted bonds are retained in the portfolio in order to preserve
the related insurance protection applicable to said bonds, if any, the overall
quality of the bonds remaining in a Trust's portfolio will tend to diminish.
The Sponsor is empowered, but not obligated, to direct the Trustee to dispose
of bonds in the event of an advanced refunding.
The Sponsor is required to instruct the Trustee to reject any offer made by
an issuer of any of the bonds to issue new bonds in exchange or substitution
for any bond pursuant to a refunding or refinancing plan, except that the
Sponsor may instruct the Trustee to accept or reject such an offer or to take
any other action with respect thereto as the Sponsor may deem proper if (1) the
issuer is in default with respect to such bond or (2) in the written opinion of
the Sponsor the issuer will probably default with respect to such bond in the
reasonably foreseeable future. Any bond so received in exchange or substitution
will be held by the Trustee subject to the terms and conditions of the Trust
Agreement to the same extent as bonds originally deposited thereunder. Within
five days after the deposit of obligations in exchange or substitution for
underlying bonds, the Trustee is required to give notice thereof to each
Unitholder, identifying the bonds eliminated and the bonds substituted
therefor. Except as stated herein and under "Trust Administration--Replacement
Bonds" in the prospectus regarding the substitution of Replacement Bonds for
Failed Bonds, the acquisition by a Trust of any bonds other than the bonds
initially deposited is not permitted.
If any default in the payment of principal or interest on any bond occurs
and no provision for payment is made therefor within 30 days, the Trustee is
required to notify the Sponsor thereof. If the Sponsor fails to instruct the
Trustee to sell or to hold such bonds within 30 days after notification by the
Trustee to the Sponsor of such default, the Trustee may in its discretion sell
the defaulted Bond and not be liable for any depreciation or loss thereby
incurred.
Sponsor Information
Sponsor. Van Kampen Funds Inc. is the Sponsor of your Trust. 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 Trust or to any other Series thereof. The information is
included herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
The Sponsor and your Trust have adopted a code of ethics requiring Invesco's
employees who have access to information on Trust transactions to report
personal securities transactions. The purpose of the code is to avoid potential
conflicts of interest and to prevent fraud, deception or misconduct with respect
to your Trust.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee Information
The Trustee is The Bank of New York 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, telephone (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 bonds for the portfolios of any of the Trusts.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trusts. Such
records shall include the name and address of every Unitholder of the Trusts.
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
bonds held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of the trusts 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 bonds
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 your Trust and the purchase, ownership and disposition of
Trust Units. The discussion below supplements the prospectus discussion, is
qualified in its entirety by the prospectus discussion and is not intended to
be a complete discussion of all material tax consequences that might apply to
an investor in the Trust. Prospective investors should consult their own tax
advisors with regard to the federal tax consequences of the purchase,
ownership, or disposition of Trust Units, as well as the tax consequences
arising under the laws of any state, locality, non-U.S. country, or other
taxing jurisdiction.
The federal income tax summary below and in the prospectus is based on the
Code, Treasury regulations promulgated thereunder, case law and rulings and
announcements by the Internal Revenue Service, and in part on the advice of
counsel to your Trust. The laws on which such advice of counsel is based are
subject to change, possibly with retroactive effect. The Internal Revenue
Service could disagree with any conclusions set forth in these discussions. In
addition, our counsel was not asked to review the federal income tax treatment
of the assets to be held by your Trust.
Your Trust intends 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, your Trust 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 certain 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 Trust'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 Trust'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 Trust controls (by owning 20% or more of such
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 Trust 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
Trust intends to distribute to its Unitholders, at least annually,
substantially all of its investment company taxable income and net capital
gain. If your Trust 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, your Trust 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 Trust intends to make its
distributions in accordance with the calendar year distribution requirement.
Further, if your Trust retains any net capital gain, the Trust 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 Trust
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 your
Trust in October, November or December with a record date in such a month and
paid by your Trust 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 your Trust failed to qualify as a regulated investment company or failed
to satisfy the 90% distribution requirement in any taxable year, the Trust
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 Trust 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.
Investors in the Trust may be subject to federal, state, local, or foreign
taxes in connection with their investment in the Trust. Investors are
encouraged to consult their own tax advisors regarding the specific federal,
state, local, and foreign tax consequences that may affect them as a result of
an investment in the Trust.
Termination of the Trust Agreement
A Trust may be terminated at any time by consent of Unitholders representing
75% of the Units of the Trust then outstanding or by the Trustee when the value
of the Trust, as shown by any semi-annual evaluation, is less than 20% of the
original principal amount of bonds.
A Trust will be liquidated by the Trustee in the event that a sufficient
number of Units not yet sold are tendered for redemption by the Sponsor, so
that the net worth of the Trust would be reduced to less than 40% of the
initial principal amount of the Trust. If a Trust is liquidated because of the
redemption of unsold Units the Sponsor will refund to each purchaser of Units
the entire sales charge paid by such purchaser.
The Trust Agreement provides that a Trust shall terminate upon the
redemption, sale or other disposition of the last bond held in the Trust, but
in no event shall it continue beyond the end of the calendar year preceding the
twentieth anniversary of its execution. In the event of termination of a Trust,
written notice thereof will be sent by the Trustee to each Unitholder at his
address appearing on the registration books of the Trust maintained by the
Trustee. Within a reasonable time thereafter the Trustee shall liquidate any
bonds then held in a Trust and shall deduct from the funds of the Trust any
accrued costs, expenses or indemnities provided by the Trust Agreement,
including estimated compensation of the Trustee and costs of liquidation and
any amounts required as a reserve to provide for payment of any applicable
taxes or other governmental charges. The sale of bonds in a Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. For this reason, among others, the
amount realized by a Unitholder upon termination may be less than the principal
amount or par amount of bonds represented by the Units held by such Unitholder.
The Trustee shall then distribute to each Unitholder his share of the balance
of the Interest and Principal Accounts. With such distribution the Unitholders
shall be furnished a final distribution statement of the amount distributable.
At such time as the Trustee in its sole discretion shall determine that any
amounts held in reserve are no longer necessary, it shall make distribution
thereof to Unitholders in the same manner.
Description of Ratings
Standard & Poor's, A Division of the McGraw-Hill Companies. A Standard &
Poor's long-term debt obligation credit rating is a current opinion of the
creditworthiness of an obligor with respect to a specific debt obligation. This
opinion of creditworthiness may take into consideration the creditworthiness of
guarantors, insurers or other forms of credit enhancement on the obligation.
The long-term debt obligation credit ratings are not a recommendation to
purchase, sell or hold the debt obligation, inasmuch as they do not comment as
to market price or suitability for a particular investor.
The long-term debt obligation credit ratings are based on current
information furnished by the obligor or obtained by Standard & Poor's from
other sources it considers reliable. Standard & Poor's does not perform an
audit in connection with any credit rating and may, on occasion, rely on
unaudited financial information. Credit ratings may be changed, suspended or
withdrawn as a result of changes in, or unavailability of, such information, or
based on other circumstances.
The long-term debt obligation credit ratings are based, in varying degrees,
on the following considerations:
I. Likelihood of payment--capacity and willingness of the obligor to
meet its financial commitment on an obligation in accordance with the
terms of the obligation.
II. Nature of and provisions of the obligation.
III. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
The credit rating definitions are expressed in terms of default risk. As
such, they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations to reflect the lower priority in
bankruptcy, as noted above. (Such differentiation applies when an entity has
both senior and subordinate obligations, secured and unsecured obligations or
operating company and holding company obligations.) Accordingly, in the case of
junior debt, the rating may not conform exactly with the category definition.
AAA--An obligation rated "AAA" has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is extremely strong.
AA--An obligation rated "AA" differs from the highest-rated obligations only
in small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A--An obligation rated "A" is somewhat more susceptible to adverse effects
of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB--An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR--This indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that Standard & Poor's
does not rate a particular obligation as a matter of policy.
Moody's Investors Service. Moody's long-term obligation ratings are opinions
of the relative credit risk of fixed-income obligations with an original
maturity of one year or more. They address the possibility that a financial
obligation will not be honored as promised. Such ratings reflect both the
likelihood of default and any financial loss suffered in the event of default.
Aaa--Obligations rated Aaa are judged to be of the highest quality, with
minimal credit risk.
Aa--Obligations rated Aa are judged to be of high quality and are subject to
very low credit risk.
A--Obligations rated A are considered upper-medium grade and are subject to
low credit risk.
Baa--Obligations rated Baa are subject to moderate credit risk. They are
considered medium-grade and as such may possess certain speculative
characteristics.
Obligations rated "Ba," "B," "Caa," Ca" and "C" are regarded as having
significant speculative characteristics. "Ba" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating
category from Aa through Caa. The modifier 1 indicates that the issuer or
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the
lower end of that generic rating category.
U-TISSUP380
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 Insured Income Trust, Series 80 (File No. 333-60654) dated
May 24, 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.
1.5 Form of Master Agreement Among Underwriters. Reference is made to
Exhibit 1.5 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.
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, Taxable Income Series 380, 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, Taxable Income Series 380, 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, TAXABLE INCOME SERIES 380
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
-------------------
(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.