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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 1, 1996
FILE NO. 811-7571
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 1
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VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
ONE PARKVIEW PLAZA
OAKBROOK TERRACE, IL 60181
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(708) 684-6000
(REGISTRANT'S TELEPHONE NUMBER)
RONALD A. NYBERG, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
VAN KAMPEN AMERICAN CAPITAL, INC.
ONE PARKVIEW PLAZA
OAKBROOK TERRACE, IL 60181
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
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PART A
INFORMATION REQUIRED IN A PROSPECTUS
Items 1, 2, 3 and 5A of Part A are omitted pursuant to Item F.4. of the General
Instructions to Form N-1A.
This Prospectus, which incorporates by reference the entire Statement of
Additional Information, concisely sets forth certain information about the Fund
that a prospective shareholder should know before investing in the Fund.
Shareholders should read this Prospectus carefully and retain it for future
reference. A copy of the Statement of Additional Information may be obtained
without charge by calling the Fund's toll free number: (800) 341-2911, (800)
772-8889 for the hearing impaired.
This Prospectus is dated July 1, 1996.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
(a) (i) Van Kampen American Capital Foreign Securities Fund (the "Fund"),
is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended
(the "1940 Act"). The Fund was organized as a business trust under
the laws of Delaware on February 14, 1996.
The Fund has been created and is managed to provide a convenient
vehicle for the publicly offered funds for which Van Kampen
American Capital Asset Management, Inc. and Van Kampen American
Capital Investment Advisory Corp. (the "Adviser") serve as
investment advisers or sub-advisers to participate conveniently
and economically in foreign securities markets.
(ii) INVESTMENT OBJECTIVE. The investment objective of the Fund is to
provide long-term growth of capital through investments in an
internationally diversified portfolio of equity securities of
companies of any country. Normally, the Fund invests in securities
of issuers traded on markets of at least three of the world's
largest countries by market capitalization other than the United
States (Japan, United Kingdom, Germany, France, Canada,
Switzerland, Italy, Netherlands, Australia, Sweden and Spain), but
securities of issuers traded on quoted markets of other countries
are also considered for investment. Equity securities include
common stocks, preferred stocks and warrants or options to acquire
such securities. In selecting portfolio securities, the Fund
attempts to take advantage of the differences between economic
trends and the anticipated performance of securities markets in
various countries.
The investment objective and policies, the percentage limitations
and the kinds of securities in which the Fund may invest may be
changed by the Trustees unless expressly governed by those
limitations listed under Part B Item 13(b) which can be changed
only by action of the shareholders.
RISK FACTORS. An investment in the Fund involves risks similar to
those of investing directly in foreign equity securities.
Investment in equity securities of foreign issuers may subject the
Fund to risks of foreign, political, economic and legal conditions
and developments. Such conditions or developments might include
favorable or unfavorable changes in currency exchange rates,
exchange control regulations (including currency blockage),
expropriation of assets of the Fund or of issuers whose equity
securities are held by the Fund, imposition of withholding taxes
on dividend or interest payments, and possible difficulty in
obtaining and enforcing judgments against a foreign issuer. Also,
foreign equity securities may not be as liquid and may have more
volatile price fluctuations than comparable domestic equity
securities.
Furthermore, issuers of foreign equity securities are subject to
different, often less comprehensive, accounting, reporting and
disclosure requirements than domestic issuers. The Fund, in
connection with its purchases and sales of foreign securities,
other than securities purchased or sold in United States dollars,
will incur transaction costs in converting currencies. Also,
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brokerage costs incurred in purchasing and selling securities in
foreign securities markets generally are higher than such costs in
comparable transactions in domestic securities markets, and
foreign custodial costs relating to the Fund's portfolio
securities generally are higher than domestic custodial costs.
FOREIGN CURRENCY TRANSACTIONS. The value of the Fund's portfolio
securities may be affected by changes in currency exchange rates
and exchange control regulations. In addition, the Fund will incur
costs in connection with conversions between various currencies.
The Fund's foreign currency exchange transactions generally will
be conducted on a spot basis (that is, cash basis) at the spot
rate for purchasing or selling currency prevailing in the foreign
currency exchange market. The Fund purchases and sells foreign
currency on a spot basis in connection with the settlement of
transactions in securities traded in such foreign currency. The
Fund does not intend to purchase and sell foreign currencies as an
investment, but may enter into contracts with banks or other
foreign currency brokers or dealers to purchase or sell foreign
currencies at a future date ("forward contracts") and purchase and
sell foreign currency futures contracts to hedge against changes
in foreign currency exchange rates. A foreign currency forward
contract is a negotiated agreement between the contracting parties
to exchange a specified amount of currency at a specified future
time at a specified rate. The rate can be higher or lower than the
spot rate between the currencies that are the subject of the
contract.
The Fund may attempt to hedge against changes in the value of the
United States dollar in relation to a foreign currency by entering
into a forward contract for the purchase or sale of the amount of
foreign currency invested or to be invested, or by buying or
selling a foreign currency futures contract for such amount. Such
hedging strategies may be employed before the Fund purchases a
foreign security traded in the hedged currency which the Fund
anticipates acquiring or between the date the foreign security is
purchased or sold and the date on which payment therefor is made
or received. Hedging against a change in the value of a foreign
currency in the foregoing manner does not eliminate fluctuations
in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Furthermore, such hedging
transactions reduce or preclude the opportunity for gain if the
value of the hedged currency should move in the direction opposite
to the hedged position. The Fund will not speculate in foreign
currency forward or futures contracts or through the purchase and
sale of foreign currencies.
TEMPORARY SHORT-TERM INVESTMENTS. It is the Fund's policy, in
normal market conditions, to be fully invested in foreign equity
securities. However, the Fund may hold a portion of its assets in
cash to meet redemptions and other day-to-day operating expenses.
The Fund may invest cash held for such purposes in obligations of
the United States and of foreign governments, including their
political subdivisions, commercial paper, bankers' acceptances,
certificates of deposit, repurchase agreements collateralized by
these securities, and other short-term evidences of indebtedness.
The Fund will only purchase commercial paper if it is rated
Prime-1 or Prime-2 by Moody's Investors Service, Inc. or A-1 or
A-2 by Standard & Poor's Corporation. The Fund also may invest
cash held for such purposes in short-term, investment grade
foreign debt securities. Investment grade foreign debt securities
are those debt securities of foreign issuers which the Adviser
determines to have creditworthiness substantially equivalent to
that of domestic issuers of debt securities rated investment
grade.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase
agreements with domestic or foreign banks or broker/dealers in
order to earn a return on temporarily available cash. The Fund
will not invest in repurchase agreements maturing in more than
seven days if any such investment, together with any other
illiquid securities held by the Fund, exceeds 15% of the value of
the Fund's net assets.
For the purpose of investing in repurchase agreements, the Adviser
may aggregate the cash that substantially all of the funds advised
or subadvised by the Adviser or Van Kampen American Capital Asset
Management, Inc. would otherwise invest separately into a joint
account. The
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cash in the joint account is then invested and the funds that
contributed to the joint account share pro rata in the net revenue
generated.
RESTRICTED SECURITIES. The Fund may invest up to 15% of its net
assets in restricted securities and other illiquid assets. As used
herein, restricted securities are those that have been sold in the
United States without registration under the Securities Act of
1933 ("1933 Act") and are thus subject to restrictions on resale.
Excluded from the limitation, however, are any restricted
securities which are eligible for resale pursuant to Rule 144A
under the 1933 Act and which have been determined to be liquid by
the Trustees or by the Advisers pursuant to Board-approved
guidelines. The determination of liquidity is based on the volume
of reported trading in the institutional secondary market for each
security. Since market quotations are not readily available for
restricted securities, such securities will be valued by a method
that the Fund's Trustees believe accurately reflects fair value.
SHORT SALES AGAINST THE BOX. The Fund may from time to time make
short sales of securities it owns or has the right to acquire
through conversion or exchange of other securities it owns. The
Fund may not make short sales or maintain a short position if to
do so would cause more than 25% of its total assets, taken at
market value, to be held as collateral for such sales.
USING OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS. The Fund is
authorized to utilize options, futures contracts and options
thereon.
(b) See Item (a).
(c) See Item (a).
ITEM 5. MANAGEMENT OF THE FUND.
(a) The business and affairs of the Fund will be managed under the
direction of the Board of Trustees of the Fund. Subject to their
authority, the Adviser and the respective officers of the Fund will
supervise and implement the Fund's investment activities and will be
responsible for overall management of the Fund's business affairs. Van
Kampen American Capital Investment Advisory Corp. provides advisory
services to the Fund without cost.
(b) The Adviser is located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181.
The Adviser is a wholly-owned subsidiary of Van Kampen American Capital,
Inc. ("Van Kampen American Capital"). Van Kampen American Capital is a
diversified asset management company with more than two million retail
investor accounts, extensive capabilities for managing institutional
portfolios, and more than $57 billion under management or supervision.
Van Kampen American Capital's more than 65 open-end and 37 closed-end
funds and more than 2,600 unit investment trusts are professionally
distributed by leading financial advisers nationwide.
Van Kampen American Capital is a wholly-owned subsidiary of VK/AC
Holding, Inc. VK/AC Holding, Inc. is controlled, through the ownership
of a substantial majority of its common stock, by The Clayton & Dubilier
Private Equity Fund IV Limited Partnership ("C&D L.P."), a Connecticut
limited partnership. C&D L.P. is managed by Clayton, Dubilier & Rice,
Inc. a New York based private investment firm. The General Partner of
C&D L.P. is Clayton & Dubilier Associates IV Limited Partnership ("C&D
Associates L.P."). The general partners of C&D Associates L.P. are
Joseph L. Rice, III, B. Charles Ames, William A. Barbe, Alberto
Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and
Andrall E. Pearson, each of whom is a principal of Clayton, Dubilier &
Rice, Inc. In addition, certain officers, directors and employees of Van
Kampen American Capital and its subsidiaries (some of whom are officers
or trustees of the Fund) own, in the aggregate, not more than 7% of the
common stock of VK/AC Holding, Inc. and have the right to acquire, upon
the exercise of options, approximately an additional 13% of the common
stock of VK/AC Holding, Inc. Presently, and after giving effect to the
exercise of such options, no officer or trustee of the Fund owns or
would own 5% or more of the common stock of VK/AC Holding, Inc.
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On June 24, 1996, VK/AC Holding, Inc. announced it had entered into an
Agreement and Plan of Merger among Morgan Stanley Group Inc. MSAM
Holdings II, Inc. and MSAM Acquisition Inc., pursuant to which MSAM
Acquisition Inc. will be merged with and into VK/AC Holding, Inc. and
VK/AC Holding, Inc. will be the surviving corporation.
The proposed transaction may be deemed to cause an assignment, within
the meaning of the 1940 Act and the Investment Advisers Act of 1940, of
the investment advisory agreement between the Adviser and the Fund.
Accordingly, the completion of the transaction is contingent upon, among
other things and subject to certain de minimis exceptions, the approval
of both the Board of Trustees of the Fund and the shareholders of the
Fund of a new investment advisory agreement between the Fund and the
Adviser. Management of the Fund currently anticipates recommending to
the Fund's board of trustees that a special meeting of shareholders be
called to obtain such approval and that the record date for such
shareholder meeting be a date in late August. Management of the Fund
also anticipates that investment advisory fees under the new investment
advisory agreement to be voted on at such meeting will be in the same
amount as those paid under the current investment advisory agreement
between the Fund and the Adviser.
MSAM Acquisition Inc. is a wholly owned subsidiary of MSAM Holdings II,
Inc. which, in turn, is a wholly owned subsidiary of Morgan Stanley
Group Inc. Subject to a number of conditions being met, it is currently
anticipated that a closing will occur on or about November 29, 1996.
Thereafter, VK/AC Holding, Inc. and its affiliated entities shall be
part of Morgan Stanley Group Inc.
(c) John Cunniff is primarily responsible for the day-to-day management of
the Fund's investment portfolio. Mr. Cunniff is a Vice President of the
Adviser and has been employed with Van Kampen American Capital Asset
Management, Inc., an affiliate of the Adviser, since October 1995. Prior
to that time, Mr. Cunniff was Vice President, Portfolio Manager at
Templeton Quantitative Advisors.
(d) INAPPLICABLE
(e) ACCESS Investor Services, Inc. ("ACCESS"), P.O. Box 418256, Kansas
City, Missouri 64141-9256, serves as shareholder service agent for the
Fund. ACCESS, a wholly owned subsidiary of Van Kampen American Capital,
provides these services at a charge of $15,000 per annum.
(f) Under its investment advisory agreement with the Adviser, the Fund has
agreed to assume and pay the charges and expenses of the Fund's
operation, including the compensation of the Trustees of the Fund (other
than those who are affiliated persons, as defined in the 1940 Act, of
the Adviser, Van Kampen American Capital Distributors, Inc. or Van
Kampen American Capital), the charges and expenses of independent
accountants, legal counsel, any transfer or dividend disbursing agent
and the custodian (including fees for safekeeping of securities), costs
of calculating net asset value, costs of acquiring and disposing of
portfolio securities, interest (if any) on obligations incurred by the
Fund, membership dues in the Investment Company Institute or any similar
organization, reports and notices to shareholders, costs of registering
shares of the Fund under the federal securities laws, miscellaneous
expenses and all taxes and fees to federal, state or other governmental
agencies.
(g) INAPPLICABLE
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
(a) The holders of Registrant's shares of beneficial interest will have
equal rights to participate in distributions made by the Fund, equal
rights to the Fund's assets upon dissolution and equal voting rights;
the Fund does not allow cumulative voting. Shares may be redeemed at any
time at net asset value with no charge.
(b) The Fund's shares are offered and sold only to publicly offered funds
advised or subadvised by the Adviser or Van Kampen American Capital
Asset Management, Inc. In the event any of such publicly offered funds
owns more than 25% of the outstanding shares of the Fund, such publicly
offered fund would be deemed to control the Fund within the meaning of
the 1940 Act. As of July 1,
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1996, Van Kampen American Capital Distributors, Inc. owned beneficially
and of record 100% of the outstanding shares of the Fund, and,
therefore, may be deemed to control the Fund. Van Kampen American
Capital Distributors, Inc. is a Delaware corporation located at One
Parkview Plaza, Oakbrook Terrace, Illinois 60181.
(c) INAPPLICABLE
(d) INAPPLICABLE
(e) Inquiries regarding the Fund or its shares should be made to the Fund's
Secretary at One Parkview Plaza, Oakbrook Terrace, IL 60181.
(f) The Fund intends to make annual distributions of net investment income.
The Fund intends to distribute realized capital gains to shareholders
annually.
(g) The Fund intends to qualify as a Regulated Investment Company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund intends to distribute substantially all of its net
investment income and net realized capital gains to its shareholders at
least annually. Any distributions in excess of the Fund's net investment
income and capital gains will be a tax-free return of capital, to the
extent of the investor's tax basis in its shares. Distributions of the
Fund's net investment income are taxable as ordinary income.
Distributions of the Funds net capital gains are taxable to shareholders
as long-term capital gains regardless of the length of time the shares
of the Fund have been held by such shareholder. Shareholders not subject
to federal income tax on their income generally will not be required to
pay federal income tax on amounts distributed to them. The Fund will
inform its shareholders of the amount and nature of such income and
gains distributed.
(h) INAPPLICABLE
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
(a) INAPPLICABLE
(b) Shares of the Fund are offered to eligible purchasers based on the next
calculation of a net asset value, which is determined as described under
Item 8(a) below, after the order is placed. There is no sales charge on
the sale of Fund shares.
(c) INAPPLICABLE
(d) INAPPLICABLE
(e) There is no continuing fee paid out of Fund assets to any dealer or any
persons who may be advising shareholders regarding the purchase, sale or
retention of Fund shares.
(f) INAPPLICABLE
ITEM 8. REDEMPTION OR REPURCHASE.
(a) Shareholders may redeem shares at net asset value at any time without
charge by submitting a written request in proper form to ACCESS at P.O.
Box 418256, Kansas City, Missouri 64141-9256.
The net asset value per share is determined as of 2:00 p.m. eastern time
on each day on which the New York Stock Exchange (the "Exchange") is
open or such earlier time as determined by the Trustees when the
Exchange closes before 4:00 p.m. eastern time.
Trading in securities on European and Far Eastern securities exchanges
and over-the-counter markets is normally completed well before the close
of business on each business day in New York (i.e., a day on which the
Exchange is open). In addition, European or Far Eastern securities
trading generally or in a particular country or countries may not take
place on all business days in New York. Furthermore, trading takes place
on all business days in Japanese markets on certain Saturdays and
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in various foreign markets on days which are not business days in New
York and on which the Fund's net asset value is not calculated and on
which the Fund does not effect sales, redemptions and repurchases of its
shares. There may be significant variations in the net asset value of
Fund shares on days when net asset value is not calculated and on which
shareholders cannot redeem on account of changes in prices of stocks
traded in foreign stock markets.
The Fund calculates net asset value per share, and therefore effects
sales, redemptions and repurchases of its shares, as of the close of the
Exchange once on each day on which the Exchange is open. Such
calculation does not take place contemporaneously with the determination
of the prices of the majority of the portfolio securities used in such
calculation. If events materially affecting the value of such securities
occur between the time when their price is determined and the time when
the Fund's net asset value is calculated, such securities will be valued
at fair value as determined in good faith by the Trustees.
The net asset value of the Fund is computed by (i) valuing securities
listed or traded on a national securities exchange at the last reported
sale price, or if there has been no sale that day at the last reported
bid price, using prices as of the close of trading on the Exchange, (ii)
valuing unlisted securities for which over-the-counter market quotations
are readily available at the most recent bid price as supplied by the
National Association of Securities Dealers Automated Quotations
("NASDAQ") or by broker/dealers, and (iii) valuing any securities for
which market quotations are not readily available and any other assets
at fair value as determined in good faith by the Trustees. Options on
stocks, options on stock indexes, and stock index futures contracts and
options thereon, which are traded on exchanges, are valued at their last
sale or settlement price as of the close of such exchanges, or, if no
sales are reported, at the mean between the last reported bid and asked
prices. Debt securities with a remaining maturity of 60 days or less are
valued on an amortized cost basis which approximates market value. The
Fund reserves the right to redeem in kind.
(b) INAPPLICABLE
(c) INAPPLICABLE
(d) INAPPLICABLE
ITEM 9. PENDING LEGAL PROCEEDINGS.
INAPPLICABLE
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PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
ITEM 10. COVER PAGE
Van Kampen American Capital Foreign Securities Fund (the "Fund"), is a
diversified open-end management investment company.
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Prospectus for the Fund dated July 1, 1996 (the
"Prospectus"). This Statement of Additional Information does not include all of
the information that a prospective investor should consider before purchasing
shares of the Fund, and investors should obtain and read the Prospectus prior to
purchasing shares. A copy of the Prospectus may be obtained without charge by
calling the Fund's toll-free number: (800) 421-5666 (or (800) 772-8889 for the
hearing impaired).
This Statement of Additional Information is dated July 1, 1996.
ITEM 11. TABLE OF CONTENTS.
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PAGE
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B-1
General Information and History............................................
B-1
Investment Objectives and Policies.........................................
B-3
Management of the Fund.....................................................
B-10
Control Persons and Principal Holders of Securities........................
B-10
Investment Advisory and Other Services.....................................
B-12
Brokerage Allocation and Other Practices...................................
B-12
Capital Stock and Other Securities.........................................
B-13
Purchase, Redemption and Pricing of Securities Being Offered...............
B-13
Tax Status.................................................................
B-13
Underwriters...............................................................
B-13
Calculation of Performance Data............................................
B-13
Financial Statements.......................................................
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ITEM 12. GENERAL INFORMATION AND HISTORY.
See Item 4.
The Fund and Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") have adopted Codes of Ethics designed to recognize the fiduciary
relationship between the Fund and the Adviser and its employees. The Codes
permit directors/trustees, officers and employees to buy and sell securities for
their personal accounts subject to procedures designed to prevent conflicts of
interest including, in some instances, preclearance of trades.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.
(a) See Item 4.
(b) The Fund has adopted certain investment restrictions which may be
altered or rescinded only with the approval of the holders of the
lesser of (i) 67% or more of the Fund's shares present or represented
by proxy at a meeting if the holders of more than 50% of its
outstanding shares are
B-1
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present or represented by proxy, or (ii) more than 50% of the Fund's
outstanding shares. These restrictions provide that the Fund shall not:
1. Engage in the underwriting of securities of other issuers, except
that the Fund may sell an investment position even though it may be
deemed to be an underwriter under the federal securities laws.
2. Purchase any security (other than obligations of the United States
Government, its agencies, or instrumentalities) if more than 25% of
its total assets (taken at current value) would then be invested in a
single industry.
3. Invest more than 5% of its total assets (taken at current value) in
securities of a single issuer other than the United States
Government, its agencies or instrumentalities, or hold more than 10%
of the outstanding voting securities of an issuer.
4. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of
its net assets, or pledge more than 10% of its net assets in
connection with permissible borrowings or purchase additional
securities when money borrowed exceeds 5% of its net assets. Margin
deposits or payments in connection with the writing of options or in
connection with the purchase or sale of forward contracts, futures,
foreign currency futures and related options are not deemed to be a
pledge or other encumbrance.
5. Make short sales of securities, unless at the time of the sale it
owns or has the right to acquire an equal amount of such securities;
provided that this prohibition does not apply to the writing of
options or the sale of forward contracts, futures, foreign currency
futures or related options.
6. Purchase securities on margin but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales
of securities. The deposit or payment by the Fund of initial or
maintenance margin in connection with forward contracts, futures,
foreign currency futures or related options is not considered the
purchase of a security on margin.
7. Buy or sell real estate or interests in real estate including real
estate limited partnerships, provided that the foregoing prohibition
does not apply to a purchase and sale of publicly traded (i)
securities which are secured by real estate, (ii) securities
representing interests in real estate, and (iii) securities of
companies principally engaged in investing or dealing in real estate.
8. Invest in commodities or commodity contracts, except that the Fund
may enter into transactions in options, futures contracts or related
options including foreign currency futures contracts and related
options and forward contracts.
9. Issue senior securities, as defined in the Investment Company Act of
1940, as amended ("1940 Act"), except that this restriction shall not
be deemed to prohibit the Fund from (i) making and collateralizing
any permitted borrowings, (ii) making any permitted loans of its
portfolio securities or (iii) entering into repurchase agreements,
utilizing options, futures contracts, options on futures contracts,
forward contracts, forward commitments and other investment
strategies and instruments that would be considered "senior
securities" but for the maintenance by the Fund of a segregated
account with its custodian or some other form of "cover".
(c) INAPPLICABLE
(d) The Adviser expects portfolio turnover not to exceed 400% annually.
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ITEM 14. MANAGEMENT OF THE FUND.
(a) The tables below list the trustees and officers of the Fund and their
affiliations, if any, with Van Kampen American Capital Investment
Advisory Corp. (the "VK Adviser" or "Adviser"), Van Kampen American
Capital Asset Management, Inc. (the "AC Adviser"), Van Kampen American
Capital Management, Inc., McCarthy, Crisanti & Maffei, Inc., MCM Asia
Pacific Company, Ltd., Van Kampen American Capital Distributors, Inc.
(the "Distributor"), Van Kampen American Capital, Inc. ("Van Kampen
American Capital" or "VKAC") or VK/AC Holding, Inc. and their principal
occupations for the past five years. For purposes hereof, the term "Van
Kampen American Capital Funds" refer to each of the open-end investment
companies advised by the VK Adviser (excluding The Explorer
Institutional Trust) and each of the open-end investment companies
advised by the AC Adviser (excluding Common Sense Trust and Van Kampen
American Capital Exchange Fund -- a California Limited Partnership
(dba)).
TRUSTEES
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PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
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J. Miles Branagan.................. Co-founder, Chairman, Chief Executive Officer and
Strafford Hall President of MDT Corporation, a company which develops,
Suite 200 manufactures, markets and services medical and scientific
1009 Slater Road equipment. A Trustee of each of the Van Kampen American
Harrisville, NC 27560 Capital Funds.
Date of Birth: 07/14/32
Linda Hutton Heagy................. Managing Partner, Paul Ray Berndston, an executive
10 South Riverside Plaza recruiting and management consulting firm. Formerly,
Suite 720 Executive Vice President of ABN AMRO, N.A., a Dutch bank
Chicago, IL 60606 holding company. Prior to 1992, Executive Vice President
Date of Birth: 06/03/49 of La Salle National Bank. A Trustee of each of the Van
Kampen American Capital Funds.
Roger Hilsman...................... Professor of Government and International Affairs
251-1 Hamburg Cove Emeritus, Columbia University. A Trustee of each of the
Lyme, CT 06371 Van Kampen American Capital Funds.
Date of Birth: 11/23/19
R. Craig Kennedy................... President and Director, German Marshall Fund of the
11 DuPont Circle, N.W. United States. Formerly, advisor to the Dennis Trading
Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive
Date of Birth: 02/29/52 Officer, Director and member of the Investment Committee
of the Joyce Foundation, a private foundation. A Trustee
of each of the Van Kampen American Capital Funds.
Dennis J. McDonnell*............... President, Chief Operating Officer and a Director of the
One Parkview Plaza Adviser, the AC Adviser and Van Kampen American Capital
Oakbrook Terrace, IL 60181 Management, Inc. Executive Vice President and a Director
Date of Birth: 06/20/42 of VK/AC Holding, Inc. and Van Kampen American Capital.
Chief Executive Officer of McCarthy, Crisanti & Maffei,
Inc. Chairman and a Director of MCM Asia Pacific Company,
Ltd. Executive Vice President and a Trustee of each of
the Van Kampen American Capital Funds. President of the
closed-end investment companies advised by the VK
Adviser. Prior to December, 1991, Senior Vice President
of Van Kampen Merritt Inc.
</TABLE>
B-3
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Donald C. Miller................... Prior to 1992, Director of Royal Group, Inc., a company
415 North Adams in insurance related businesses. Formerly Vice Chairman
Hinsdale, IL 60521 and Director of Continental Illinois National Bank and
Date of Birth: 03/31/20 Trust Company of Chicago and Continental Illinois
Corporation. A Trustee of each of the Van Kampen American
Capital Funds and Chairman of each Van Kampen American
Capital Fund advised by the VK Adviser.
Jack E. Nelson..................... President of Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President of Nelson Investment Brokerage
Date of Birth: 02/13/36 Services Inc., a member of the National Association of
Securities Dealers, Inc. ("NASD") and Securities
Investors Protection Corp. A Trustee of each of the Van
Kampen American Capital Funds.
Don G. Powell*..................... President, Chief Executive Officer and a Director of
2800 Post Oak Blvd. VK/AC Holding, Inc. and VKAC. Chairman, Chief Executive
Houston, TX 77056 Officer and a Director of the Distributor, the Adviser,
Date of Birth: 10/19/39 the AC Adviser, Van Kampen American Capital Management,
Inc. and Van Kampen American Capital Advisors, Inc.
Chairman, President and a Director of Van Kampen American
Capital Exchange Corporation, American Capital
Contractual Services, Inc. and American Capital
Shareholders Corporation. Chairman and a Director of
ACCESS Investor Services, Inc. ("ACCESS"), Van Kampen
Merritt Equity Advisors Corp., Van Kampen Merritt Equity
Holdings Corp., and VCJ Inc., McCarthy, Crisanti &
Maffei, Inc., McCarthy, Crisanti & Maffei Acquisition,
and Van Kampen American Capital Trust Company. Chairman,
President and a Director of Van Kampen American Capital
Services, Inc. President, Chief Executive Officer and a
Trustee of each of the Van Kampen American Capital Funds.
Director, Trustee or Managing General Partner of other
open-end investment companies and closed-end investment
companies advised by the Adviser or the AC Adviser.
Jerome L. Robinson................. President of Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director of Pacesetter Software, a
Date of Birth: 10/10/22 software programming company specializing in white collar
productivity. Director of Panasia Bank. A Trustee of each
of the Van Kampen American Capital Funds.
Fernando Sisto..................... George M. Bond Chaired Professor and, prior to 1995, Dean
Stevens Institute of Graduate School and Chairman, Department of Mechanical
of Technology Engineering, Stevens Institute of Technology. Director of
Castle Point Station Dynalysis of Princeton, a firm engaged in engineering
Hoboken, NJ 07030 research. A Trustee of each of the Van Kampen American
Date of Birth: 08/02/24 Capital Funds and Chairman of the Van Kampen American
Capital Funds advised by the AC Adviser.
Wayne W. Whalen*................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom, legal counsel to the Van Kampen American Capital
Chicago, IL 60606 Funds. A Trustee of each of the Van Kampen American
Date of Birth: 08/22/39 Capital Funds. He also is a Trustee of The Explorer
Institutional Trust and the closed-end investment
companies advised by the VK Adviser.
</TABLE>
B-4
<PAGE> 12
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
William S. Woodside................ Vice Chairman of the Board of LSG Sky Chefs, Inc., a
712 Fifth Avenue caterer of airline food. Formerly, Director of Primerica
40th Floor Corporation (currently known as The Traveler's Inc.).
New York, NY 10019 Formerly, Director of James River Corporation, a producer
Date of Birth: 01/31/22 of paper products. Trustee, and former President of
Whitney Museum of American Art. Formerly, Chairman of
Institute for Educational Leadership, Inc., Board of
Visitors, Graduate School of The City University of New
York, Academy of Political Science. Trustee of Committee
for Economic Development. Director of Public Education
Fund Network, Fund for New York City Public Education.
Trustee of Barnard College. Member of Dean's Council,
Harvard School of Public Health. Member of Mental Health
Task Force, Carter Center. A Trustee of each of the Van
Kampen American Capital Funds.
</TABLE>
- ---------------
* Such Trustees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Messrs. Powell and McDonnell are interested persons of the
Adviser and the Fund by reason of their position with the Adviser. Mr. Whalen
is an interested person of the Fund by reason of his firm acting as legal
counsel to the Fund.
Messrs. Powell and McDonnell own, or have the opportunity to purchase, an
equity interest in VK/AC Holding, Inc., the parent company of VKAC and have
entered into employment contracts (for a term of five years) with VKAC.
The Fund's Officers other than Messrs. Hegel, Nyberg, Wood, Sullivan,
Dalmaso, Martin, Wetherell and Hill are located at 2800 Post Oak Blvd., Houston,
TX 77056. Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell and
Hill are located at One Parkview Plaza, Oakbrook Terrace, IL 60181.
OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
William N. Brown......... Vice President Executive Vice President of the VK Adviser,
Date of Birth: 05/26/53 AC Adviser, VK/AC Holding, Inc., VKAC, Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services,
Inc., Van Kampen American Capital Exchange
Corporation, ACCESS, and Van Kampen
American Capital Trust Company. Director of
American Capital Shareholders Corporation.
Vice President of each of the Van Kampen
American Capital Funds.
Peter W. Hegel........... Vice President Executive Vice President of the VK Adviser,
Date of Birth: 06/25/56 AC Adviser and Van Kampen American Capital
Advisors, Inc. Director of McCarthy,
Crisanti & Maffei, Inc. and McCarthy,
Crisanti & Maffei Acquisition Corporation.
Vice President of each of the Van Kampen
American Capital Funds. Vice President of
the closed-end funds advised by the VK
Adviser.
Curtis W. Morell......... Vice President and Chief Vice President and Chief Accounting Officer
Date of Birth: 08/04/46 Accounting Officer of each of the Van Kampen American Capital
Funds. Vice President and Treasurer of
other investment companies advised by the
AC Adviser.
</TABLE>
B-5
<PAGE> 13
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
Ronald A. Nyberg......... Vice President and Executive Vice President, General Counsel
Date of Birth: 07/29/53 Secretary and Secretary of Van Kampen American
Capital and VK/AC Holding, Inc. Executive
Vice President, General Counsel and a
Director of the Distributor. Executive Vice
President and General Counsel of the VK
Adviser and the AC Adviser, Van Kampen
American Capital Management, Inc., VSM Inc.
VCJ, Inc., Van Kampen Merritt Equity
Advisors Corp., and Van Kampen Merritt
Equity Holdings Corp. Executive Vice
President, General Counsel and Assistant
Secretary of Van Kampen American Capital
Advisors, Inc., American Capital
Contractual Services, Inc., Van Kampen
American Capital Exchange Corporation,
ACCESS, American Capital Shareholders
Corporation, and Van Kampen American
Capital Trust Company. General Counsel of
McCarthy, Crisanti & Maffei, Inc. and
McCarthy, Crisanti & Maffei Acquisition
Corp. Vice President and Secretary of each
of the Van Kampen American Capital Funds.
Secretary of the closed-end funds advised
by the VK Adviser. Director of ICI Mutual
Insurance Co., a provider of insurance to
members of the Investment Company
Institute.
Robert C. Peck, Jr....... Vice President Executive Vice President of the VK Adviser.
Date of Birth: 10/01/46 Executive Vice President and Director of
the AC Adviser. Vice President of each of
the Van Kampen American Capital Funds.
Alan T. Sachtleben....... Vice President Executive Vice President of the VK Adviser.
Date of Birth: 04/20/42 Executive Vice President and a Director of
the AC Adviser. Vice President of each of
the Van Kampen American Capital Funds.
Paul R. Wolkenberg....... Vice President Executive Vice President of the VK Adviser
Date of Birth: 11/10/44 and the AC Adviser. President, Chief
Executive Officer and a Director of Van
Kampen American Capital Trust Company and
ACCESS. Vice President of each of the Van
Kampen American Capital Funds.
Edward C. Wood III....... Vice President and Chief Senior Vice President of the VK Adviser and
Date of Birth: 01/11/56 Financial Officer the AC Adviser. Vice President and Chief
Financial Officer of each of the Van Kampen
American Capital Funds. Vice President,
Treasurer and Chief Financial Officer of
the closed-end funds advised by the VK
Adviser.
John L. Sullivan......... Treasurer First Vice President of the VK Adviser and
Date of Birth: 08/20/55 the AC Adviser. Treasurer of each of the
Van Kampen American Capital Funds.
Controller of the closed-end funds advised
by the the VK Adviser. Formerly Controller
of open-end funds advised by VK Adviser.
</TABLE>
B-6
<PAGE> 14
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
Tanya M. Loden........... Controller Controller of each of the Van Kampen
Date of Birth: 11/19/59 American Capital Funds. Vice President and
Controller of other investment companies
advised by the AC Adviser. Formerly Tax
Manager/ Assistant Controller of investment
companies advised by the AC Adviser.
Nicholas Dalmaso......... Assistant Secretary Assistant Vice President and Senior
Date of Birth: 03/01/65 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Distributor,
the VK Adviser, the AC Adviser and Van
Kampen American Capital Management, Inc.
Assistant Vice President of Van Kampen
American Capital Advisors, Inc. Assistant
Secretary of each of the Van Kampen
American Capital Funds. Assistant Secretary
of the closed-end funds advised by the VK
Adviser. Prior to May 1992, attorney for
Cantwell & Cantwell, a Chicago law firm.
Huey P. Falgout, Jr...... Assistant Secretary Assistant Vice President and Senior
Date of Birth: 11/15/63 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Distributor,
the VK Adviser, the AC Adviser, Van Kampen
American Capital Management, Inc., Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services,
Inc., Van Kampen American Capital Exchange
Corporation, ACCESS, and American Capital
Shareholders Corporation. Assistant
Secretary of each of the Van Kampen
American Capital Funds.
Scott E. Martin.......... Assistant Secretary Senior Vice President, Deputy General
Date of Birth: 08/20/56 Counsel and Assistant Secretary of VKAC.
Senior Vice President, Deputy General
Counsel and Secretary of the VK Adviser,
the AC Adviser and the Distributor, Van
Kampen American Capital Management, Inc.,
Van Kampen American Capital Advisers, Inc.,
VSM Inc., VCJ Inc., American Capital
Contractual Services, Inc., Van Kampen
American Capital Exchange Corporation,
ACCESS, Van Kampen Merritt Equity Advisors
Corp., Van Kampen Merritt Equity Holdings
Corp., American Capital Shareholders
Corporation. Secretary and Deputy General
Counsel of McCarthy, Crisanti, & Maffei,
Inc. and McCarthy, Crisanti & Maffei
Acquisition. Chief Legal Officer of
McCarthy, Crisanti & Maffei, S.A. Assistant
Secretary of each of the Van Kampen
American Capital Funds. Assistant Secretary
of the closed-end funds advised by the VK
Adviser.
</TABLE>
B-7
<PAGE> 15
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
Weston B. Wetherell...... Assistant Secretary Vice President, Associate General Counsel
Date of Birth: 06/15/56 and Assistant Secretary of VKAC, the VK
Adviser, the AC Adviser, the Distributor,
Van Kampen American Capital Management,
Inc. and Van Kampen American Capital
Advisors, Inc. Assistant Secretary of each
of the Van Kampen American Capital Funds.
Assistant Secretary of the closed-end funds
advised by the VK Adviser.
Steven M. Hill........... Assistant Treasurer Assistant Vice President of the VK Adviser
Date of Birth: 10/16/64 and the AC Adviser. Assistant Treasurer of
each of the Van Kampen American Capital
Funds. Assistant Treasurer of the
closed-end funds advised by the VK Adviser.
Robert Sullivan.......... Assistant Controller Assistant Controller of each of the Van
Date of Birth: 03/30/33 Kampen American Capital Funds.
</TABLE>
(b) See Item 14(a).
(c) Each of the foregoing trustees and officers in Item 14(a) holds the
same position with each of 47 other Van Kampen American Capital mutual
funds (the "Fund Complex"). Each trustee who is not an affiliated
person of the Adviser, the Distributor or VKAC (each a "Non-Affiliated
Trustee") is compensated by an annual retainer and meeting fees for
services to the funds in the Fund Complex. Each fund in the Fund
Complex offers a deferred compensation plan to its Non-Affiliated
Trustees that allows trustees to defer receipt of his or her
compensation and earn a return on such deferred amounts based upon the
return of the common shares of the funds in the Fund Complex as more
fully described below.
The compensation of each Non-Affiliated Trustee includes a retainer
from the Fund in an amount equal to $2,500 per calendar year, due in
four quarterly installments on the first business day of each calendar
quarter. Each Non-Affiliated Trustee receives a per meeting fee from
the Fund in the amount of $125 per regular quarterly meeting attended
by the Non-Affiliated Trustee, due on the date of such meeting, plus
reasonable expenses incurred by the Non-Affiliated Trustee in
connection with his or her services as a trustee. Each Non-Affiliated
Trustee receives a per meeting fee in the amount of $125 per special
meeting attended by the Non-Affiliated Trustee, due on the date of such
meeting, plus reasonable expenses incurred by the Non-Affiliated
Trustee in connection with his or her services as a trustee, provided
that no compensation will be paid in connection with certain telephonic
special meetings. The trustees have approved an aggregate compensation
cap with respect to the Fund Complex of $84,000 per Non-Affiliated
Trustee per year (excluding any retirement benefits) for the period
July 22, 1995 through December 31, 1996, subject to the net assets and
the number of mutual funds in the Fund Complex as of July 21, 1995 and
certain other exceptions. In addition, the Adviser has agreed to
reimburse each fund in the Fund Complex through December 31, 1996 for
any increase in the aggregate trustee's compensation over the aggregate
compensation paid by such fund in its 1994 fiscal year, provided that
if a fund did not exist for the entire 1994 fiscal year appropriate
adjustments will be made.
Each Non-Affiliated Trustee can elect to defer receipt of all or a
portion of the compensation earned by such Non-Affiliated Trustee until
retirement. Amounts deferred are retained by the Fund and earn a rate
of return determined by reference to either the return on the common
shares of the Fund or other mutual funds in the Fund Complex as
selected by the respective Non-Affiliated Trustee. To the extent
permitted by the 1940 Act, it is anticipated that the Fund will invest
in securities of those mutual funds selected by the Non-Affiliated
Trustees in order to match the deferred compensation obligation. The
deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of the
Fund.
Under the Fund's retirement plan, a Non-Affiliated Trustee who is
receiving trustee's fees from the Fund prior to such Non-Affiliated
Trustee's retirement, has at least ten years of service and retires at
or after attaining the age of 60, is eligible to receive a retirement
benefit equal to $2,500 per year for
B-8
<PAGE> 16
each of the ten years following such trustee's retirement. Under
certain conditions, reduced benefits are available for early retirement
provided the trustee has served at least five years. As of the date
hereof, the retirement plan contains a Fund Complex retirement benefit
cap of $60,000 per year.
Additional information regarding compensation before deferral paid by
the Fund and other funds in the Fund Complex is set forth below.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT ESTIMATED BEFORE DEFERRAL
COMPENSATION BENEFITS ACCRUED ANNUAL FROM REGISTRANT
BEFORE DEFERRAL AS BENEFITS AND FUND
FROM PART OF REGISTRANT UPON COMPLEX PAID TO
NAME(1) REGISTRANT(2) EXPENSES(3) RETIREMENT(4) TRUSTEE(5)
- -------------------------------------- ---------------- ------------------ ----------- ---------------
<S> <C> <C> <C> <C>
J. Miles Branagan..................... $3,000 $1,200 $ 2,250 $84,250
Linda Hutton Heagy.................... 3,000 230 2,500 38,417
Dr. Roger Hilsman..................... 3,000 -- -- 91,250
R. Craig Kennedy...................... 3,000 160 2,500 92,625
Donald C. Miller...................... 3,000 -- -- 94,625
Jack E. Nelson........................ 3,000 840 2,500 93,625
Jerome L. Robinson.................... 3,000 -- -- 89,375
Dr. Fernando Sisto.................... 3,000 -- -- 98,750
Wayne W. Whalen....................... 3,000 580 2,500 93,375
William S. Woodside................... 3,000 -- -- 79,125
</TABLE>
- ---------------
(1) Messrs. Powell and McDonnell, trustees of the Fund, are affiliated persons
of the Adviser and are not eligible for compensation or retirement benefits
from the Registrant.
(2) The amounts shown in this column are the estimated Aggregate Compensation
before Deferral for the Registrant assuming a full fiscal year of operations
and net assets exceeding $25,000,000. The Trustees may defer all or a
portion of their Aggregate Compensation. Amounts deferred will be retained
by the Fund and earn a rate of return determined by reference to either the
return on the common shares of the Fund or other mutual funds in the Fund
Complex as selected by the respective Non-Affiliated Trustee. To the extent
permitted by the 1940 Act, it is anticipated that the Fund will invest in
securities of those mutual funds selected by the Non-Affiliated Trustees in
order to match the deferred compensation obligation.
(3) The amounts shown in these columns are the estimated Retirement Benefit
Accruals for the Registrant's fiscal year ending December 31, 1996. The
retirement plan is described above the Compensation Table.
(4) The amounts shown in this column are the maximum estimated annual benefits
payable per year from the Registrant for the 10-year period commencing in
the years of such trustee's retirement. The amounts are based on each
trustee's anticipated retirement date. The retirement plan is described
above the Compensation Table.
(5) The amounts shown in this column are accumulated from the Aggregate
Compensation before Deferral of each of the 47 mutual funds in the Fund
Complex as of December 31, 1995. The following trustees deferred
compensation paid by the funds in the Fund Complex during the calendar year
ended December 31, 1995; Dr. Caruso, $41,750; Mr. Gaughan, $57,750; Ms.
Heagy, $8,750; Mr. Kennedy, $65,875; Mr. Miller, $65,875; Mr. Nelson,
$65,875; Mr. Rees, $8,375; Mr. Robinson, $62,375; Dr. Sisto, $30,260; and
Mr. Whalen, $65,625. Amounts deferred are retained by the funds and earn a
rate of return determined by reference to either the return on the common
shares of the Fund or other mutual funds in the Fund Complex as selected by
the respective Non-Affiliated Trustee. To the extent permitted by the 1940
Act, it is anticipated that the Fund will invest in securities of those
mutual funds selected by the Non-Affiliated Trustees in order to match the
deferred compensation obligation. The trustees' Fund Complex compensation
cap commenced on July 22, 1995 and covered the period between July 22, 1995
and December 31, 1995. Compensation received prior to July 22, 1995 was not
subject to the cap. For the
B-9
<PAGE> 17
calendar year ended December 31, 1995, while certain trustees received
compensation over $84,000 in the aggregate, no trustee received compensation
in excess of the pro rata amount of the Fund Complex cap for the period July
22, 1995 through December 31, 1995. In addition to the amounts set forth
above, certain trustees received lump sum retirement benefit distributions
not subject to the cap in 1995 related to three mutual funds that ceased
investment operations during 1995 as follows: Mr. Gaughan, $22,136; Mr.
Miller, $33,205; Mr. Nelson, $30,851; Mr. Robinson, $11,068; and Mr. Whalen,
$27,332. The Adviser and its affiliates also serve as investment adviser for
other investment companies; however, with the exception of Messrs. Powell,
McDonnell and Whalen, the trustees were not trustees of such investment
companies. Combining the Fund Complex with other investment companies
advised by the Adviser and its affiliates, Mr. Whalen received Total
Compensation of $268,857 during the calendar year ended December 31, 1995.
None of the trustees or officers of the Fund owns or is eligible to own
shares of the Fund. As of July 1, 1996, no trustee or officer of the Fund
owns or would be able to acquire 5% or more of the common stock of VK/AC
Holding, Inc.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
(a) See Item 6(b).
(b) See Item 6(b).
(c) None of the Fund's trustees or officers owns or is eligible to own
shares of beneficial interest of the Fund.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
(a) (i) The Adviser's principal office is located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181.
The Adviser and ACCESS, the Fund's shareholder service agent, are
wholly-owned subsidiaries of VKAC, which is a wholly-owned
subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc. is
controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity Fund IV
Limited Partnership ("C&D L.P."), a Connecticut limited
partnership. C&D L.P. is managed by Clayton, Dubilier & Rice, Inc.
a New York based private investment firm. The General Partner of
C&D L.P. is Clayton & Dubilier Associates IV Limited Partnership
("C&D Associates L.P."). The general partners of C&D Associates
L.P. are Joseph L. Rice, III, B. Charles Ames, William A. Barbe,
Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard
C. Howe and Andrall E. Pearson, each of whom is a principal of
Clayton, Dubilier & Rice, Inc. In addition, certain officers,
directors and employees of VKAC own, in the aggregate, not more
than 7% of the common stock of VK/AC Holding, Inc. and have the
right to acquire, upon the exercise of options, approximately an
additional 13% of the common stock of VK/AC Holding, Inc.
Presently, and after giving effect to the exercise of such
options, no officer or trustee of the Fund owns or would own 5% or
more of the common stock of VK/AC Holding, Inc.
On June 24, 1996, VK/AC Holding, Inc. announced it had entered
into an Agreement and Plan of Merger among Morgan Stanley Group
Inc. MSAM Holdings II, Inc. and MSAM Acquisition Inc., pursuant to
which MSAM Acquisition Inc. will be merged with and into
VK/AC Holding, Inc. and VK/AC Holding, Inc. will be the surviving
corporation.
The proposed transaction may be deemed to cause an assignment,
within the meaning of the 1940 Act and the Investment Advisers Act
of 1940, of the investment advisory agreement between the Adviser
and the Fund. Accordingly, the completion of the transaction is
contingent upon, among other things and subject to certain de
minimis exceptions, the approval of both the Board of Trustees of
the Fund and the shareholders of the Fund of a new investment
advisory agreement between the Fund and the Adviser. Management of
the Fund
B-10
<PAGE> 18
currently anticipates recommending to the Fund's board of trustees
that a special meeting of shareholders be called to obtain such
approval and that the record date for such shareholder meeting be
a date in late August. Management of the Fund also anticipates
that investment advisory fees under the new investment advisory
agreement to be voted on at such meeting will be in the same
amount as those paid under the current investment advisory
agreement between the Fund and the Adviser.
MSAM Acquisition Inc. is a wholly owned subsidiary of MSAM
Holdings II, Inc. which, in turn, is a wholly owned subsidiary of
Morgan Stanley Group Inc. Subject to a number of conditions being
met, it is currently anticipated that a closing will occur on or
about November 29, 1996. Thereafter, VK/AC Holding, Inc. and its
affiliated entities shall be part of Morgan Stanley Group Inc.
(ii) See Item 14(a).
(iii) The Fund and the Adviser are parties to an investment advisory
agreement (the "Agreement") which provides that the Adviser will
provide investment advisory services to the Fund at no fee. The
Fund is, however, required to reimburse the Adviser for certain
expenses as described in Item 16(b).
The Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by the Fund's Trustees or (ii)
by vote of a majority of the Fund's outstanding voting securities
and (b) by the affirmative vote of a majority of the Trustees who
are not parties to the agreement or interested persons of any
such party by votes cast in person at a meeting called for that
purpose. The Agreement provides that it may be terminated without
penalty by either party on 30 days' written notice.
(b) The investment advisory agreement between the Adviser and the Fund
provides that the Adviser will supply investment research and portfolio
management, including the selection of securities for the Fund to
purchase. The Adviser also administers the business affairs of the
Fund, furnishes offices, necessary facilities and equipment, provides
administrative services, and permits its officers and employees to
serve without compensation as officers of the Fund and trustees of the
Trust if duly elected to such positions.
The agreement provides that the Adviser shall not be liable for any
error of judgment or of law, or for any loss suffered by the Fund in
connection with the matters to which the agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Adviser in the performance of its obligations and
duties, or by reason of its reckless disregard of its obligations and
duties under the agreement.
(c) INAPPLICABLE
(d) INAPPLICABLE
(e) INAPPLICABLE
(f) INAPPLICABLE
(g) INAPPLICABLE
(h) The custodian of all the Fund's assets is State Street Bank and Trust
Company located at 225 Franklin Street, Boston, Massachusetts 02110.
KPMG Peat Marwick LLP, Chicago, Illinois, are the independent
accountants for the Fund.
(i) ACCESS serves as shareholder service agent for the Fund. These services
are provided at a charge of $15,000 per annum.
B-11
<PAGE> 19
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
(a) The Adviser will place orders for portfolio transactions for the Fund
with broker/dealer firms giving consideration to the quality, quantity
and nature of each firm's professional services. These services include
execution, clearance procedures, wire service quotations and statistical
and other research information provided to the Fund and the investment
adviser, including quotations necessary to determine the value of the
Fund's net assets. Any research benefits derived are available for all
clients of the investment adviser. Since statistical and other research
information is only supplementary to the research efforts of the Adviser
and still must be analyzed and reviewed by its staff, the receipt of
research information is not expected to materially reduce its expenses.
If it is believed to be in the best interests of the Fund, the Adviser
may place portfolio transactions with brokers who provide the types of
research service described above, even if it means the Fund will have to
pay a higher commission (or, if the broker's profit is part of the cost
of the security, will have to pay a higher price for the security) than
would be the case if no weight were given to the broker's furnishing of
those research services. This will be done, however, only if, in the
opinion of the Adviser, the amount of additional commission or increased
cost is reasonable in relation to the value of such services.
(b) INAPPLICABLE
(c) In selecting among the firms believed to meet the criteria for handling
a particular transaction, the Adviser may take into consideration that
certain firms (i) provide market, statistical or other research
information such as that set forth above to the Fund and the Adviser,
(ii) have sold or are selling shares of the Fund and (iii) may be firms
that are affiliated with the Fund, its investment adviser or its
distributor and other principal underwriters. If purchases or sales of
securities of the Fund and of one or more other investment companies or
clients advised by the Adviser are considered at or about the same time,
transactions in such securities will be allocated among the several
investment companies and clients in a manner deemed equitable to all by
the Adviser, taking into account the respective sizes of the funds and
the amount of securities to be purchased or sold. Although it is
possible that in some cases this procedure could have a detrimental
effect on the price or volume of the security as far as the Fund is
concerned, it is also possible that the ability to participate in volume
transactions and to negotiate lower brokerage commissions will be
beneficial to the Fund.
While the Adviser will be primarily responsible for the placement of the
Fund's business, the policies and practices in this regard must be
consistent with the foregoing and will at all times be subject to review
by the Trustees of the Fund.
The Trustees have adopted certain policies incorporating the standards
of Rule 17e-1 issued by the SEC under the 1940 Act which requires that
the commission paid to the Distributor and other affiliates of the Fund
must be reasonable and fair compared to the commissions, fees or other
remuneration received or to be received by other brokers in connection
with comparable transactions involving similar securities during a
comparable period of time. The rule and procedures also contain review
requirements and require the Adviser to furnish reports to the Trustees
and to maintain records in connection with such reviews. After
consideration of all factors deemed relevant, the Trustees will consider
from time to time whether the advisory fee will be reduced by all or a
portion of the brokerage commission given to brokers that are affiliated
with the Fund.
(d) INAPPLICABLE
(e) INAPPLICABLE
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
See Item 6.
B-12
<PAGE> 20
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.
(a) See Item 7.
(b) See Item 8.
(c) INAPPLICABLE
ITEM 20. TAX STATUS.
See Item 6(g).
ITEM 21. UNDERWRITERS.
(a) INAPPLICABLE
(b) INAPPLICABLE
(c) INAPPLICABLE
ITEM 22. CALCULATION OF PERFORMANCE DATA.
INAPPLICABLE
ITEM 23. FINANCIAL STATEMENTS.
See Independent Accountants' Report and Statement of Assets and Liabilities
attached, respectively.
B-13
<PAGE> 21
VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 1, 1996
<TABLE>
<S> <C>
ASSETS:
Cash.............................................................................. $100,000
Unamortized Organizational Expenses (Note 2)...................................... 65,000
--------
Total Assets............................................................ 165,000
LIABILITIES:
Payable for Organizational Expenses............................................... 65,000
--------
Net Assets........................................................................ $100,000
--------
NET ASSETS CONSIST OF:
Capital (Note 1).................................................................. $100,000
========
Net asset value, offering price and redemption price per share (based upon net
assets of $100,000 and 10,000 shares outstanding)............................... $ 10.00
========
</TABLE>
Note 1: The Fund was organized as a Delaware business trust and has had no
operations other than those relating or organization matters and the
issuance of 10,000 shares of capital stock for $100,000 to Van Kampen
American Capital Distributors, Inc. There are an unlimited number of
shares authorized with a par value of $0.01 per share.
Note 2: The Adviser of the Fund will incur approximately $65,000 of expenses in
connection with the organization of the Fund. These expenses will be
reimbursed to the Adviser and will be charged against operations over a
period of 60 months from the commencement of investment operations by
the Fund.
B-14
<PAGE> 22
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Trustees and Shareholder of
Van Kampen American Capital Foreign Securities Fund
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital Foreign Securities Fund (the "Fund") as of July 1,
1996. This financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the financial position of the Fund as of July 1, 1996 in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
Chicago, Illinois
July 1, 1996
B-15
<PAGE> 23
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Included in the Statement of Additional Information:
Independent Accountants' Report
Statement of Assets and Liabilities
(b) Exhibits
<TABLE>
<S> <C>
1 -- Agreement and Declaration of Trust.*
2 -- Bylaws.*
3 -- INAPPLICABLE.
4 -- INAPPLICABLE.
5 -- Form of Investment Advisory Agreement between the Fund and the
Adviser.*
6 -- INAPPLICABLE. (omitted pursuant to Item F.4. of the General
Instructions to Form N-1A)
7 -- INAPPLICABLE.
8.1 -- Custodian Agreement. (To be filed by amendment)
8.2 -- Transfer Agency and Service Agreement.*
9.1 -- Data Access Services Agreement. (To be filed by amendment)
9.2 -- Form of Amended and Restated Fund Accounting Agreement.+
9.3 -- Form of Amended and Restated Legal Services Agreement.+
10 -- INAPPLICABLE. (omitted pursuant to Item F.4. of the General
Instructions to Form N-1A)
11 -- Consent of KPMG Peat Marwick LLP.+
12 -- INAPPLICABLE. (omitted pursuant to Item F.4. of the General
Instructions to Form N-1A)
13 -- INAPPLICABLE.
14 -- INAPPLICABLE.
15 -- INAPPLICABLE.
16 -- INAPPLICABLE.
27 -- Financial Data Schedule.+
</TABLE>
- ---------------
* Incorporated herein by reference to initial Registrant's Registration
Statement on Form N-1A, filed March 26, 1996.
+ Filed Herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
<TABLE>
<CAPTION>
AS OF JULY 1, 1996:
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
--------------------------------------------- ------------------------
<S> <C>
Shares of Beneficial Interest, $0.01 par
value 1
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Article 8, Section 8.4 of the Registrant's Agreement
and Declaration of Trust.
C-1
<PAGE> 24
Article 8; Section 8.4 of the Agreement and Declaration of Trust provides
that each officer and trustee of the Registrant shall be indemnified by the
Registrant against all liabilities incurred in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which the officer or trustee may be or may have been involved by reason of
being or having been an officer or trustee, except that such indemnity shall not
protect any such person against a liability to the Registrant or any shareholder
thereof to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. Absent a court determination that
an officer or trustee seeking indemnification was not liable on the merits or
guilty of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office, the decision by the
Registrant to indemnify such person must be based upon the reasonable
determination of independent counsel or non-party independent trustees, after
review of the facts, that such officer or trustee is not guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
The Registrant has purchased insurance on behalf of its officers and
trustees protecting such persons from liability arising from their activities as
officers or trustees of the Registrant. The insurance does not protect or
purport to protect such persons from liability to the Registrant or to its
shareholders to which such officer or trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of their office.
Conditional advancing of indemnification monies may be made if the trustee
or officer undertakes to repay the advance unless it is ultimately determined
that he or she is entitled to the indemnification and only if the following
conditions are met: (1) the trustee or officer provides a security for the
undertaking; (2) the Registrant is insured against losses arising from lawful
advances; or (3) a majority of a quorum of the Registrant's disinterested,
non-party trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that a recipient of
the advance ultimately will be found entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by the trustee, officer, or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See "Management of the Fund" in Part A and "Management of the Fund" in the
Statement of Additional Information for information regarding the business of
the Adviser. For information as to the business, profession, vocation and
employment of a substantial nature of directors and officers of the Adviser,
reference is made to the Adviser's current Form ADV (File No. 801-18161) filed
under the Investment Advisers Act of 1940, as amended, incorporated herein by
reference.
ITEM 29. PRINCIPAL UNDERWRITERS.
INAPPLICABLE
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder to be maintained (i) by
Registrant will be maintained at its offices, located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, ACCESS Investor Services, Inc., 7501 Tiffany
Springs Parkway, Kansas City, Missouri 64153, or at the State Street Bank and
Trust Company, 1776
C-2
<PAGE> 25
Heritage Drive, North Quincy, MA; and (ii) by the Adviser, will be maintained at
its offices, located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
ITEM 31. MANAGEMENT SERVICES.
INAPPLICABLE
ITEM 32. UNDERTAKINGS.
INAPPLICABLE
C-3
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Houston,
State of Texas, on the 1st day of July, 1996.
VAN KAMPEN AMERICAN CAPITAL
FOREIGN SECURITIES FUND
By /s/ ALAN T. SACHTLEBEN
---------------------------------
(Alan T. Sachtleben, Vice President)
<PAGE> 27
VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
INDEX TO EXHIBITS TO FORM N-1A
AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION
ON JULY 1, 1996
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------------------- --------------------------------------------------------------
<S> <C> <C>
9.2 -- Form of Amended and Restated Fund Accounting Agreement.
9.3 -- Form of Amended and Restated Legal Services Agreement.
11 -- Consent of KPMG Peat Marwick LLP.
27 -- Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 9.2
FORM OF
AMENDED AND RESTATED
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT, dated _____, 19__, by and between the parties set
forth in Schedule A hereto (designated collectively hereafter as the "Funds")
and VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP., a Delaware
corporation ("Advisory Corp.").
W I T N E S S E T H:
WHEREAS, each of the Funds is registered as a management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Advisory Corp. has the capability of providing certain
accounting services to the Funds; and
WHEREAS, each desires to utilize Advisory Corp. in the provision of
such accounting services; and
WHEREAS, Advisory Corp. intends to maintain its staff in order to
accommodate the provision of all such services.
NOW THEREFORE, in consideration of the premises and the mutual
covenants spelled out herein, it is agreed between the parties hereto as
follows:
1. Appointment of Advisory Corp. As agent, Advisory Corp. shall provide
each of the Funds the accounting services ("Accounting Services") as set forth
in Paragraph 2 of this Agreement. Advisory Corp. accepts such appointment and
agrees to furnish the Accounting Services in return for the compensation
provided in Paragraph 3 of this Agreement.
2. Accounting Services to be Provided. Advisory Corp. will provide to
each respective Fund accounting related services in connection with the
maintenance of the financial records of such Fund, including without
limitation: (i) maintenance of the general ledger and other financial books and
records; (ii) processing of portfolio transactions; (iii) coordination of the
valuation of portfolio securities; (iv) calculation of the Fund's net asset
value; (v) coordination of financial and regulatory reporting; (vi) preparation
of financial reports for each Fund's Board of Trustees; (vii) coordination of
tax and financial compliance issues; (viii) the establishment and maintenance
of accounting policies; (ix) recommendations with respect to dividend policies;
(x) preparation of each Fund's financial reports and other accounting and tax
related notice information to shareholders; and (xi) the assimilation and
interpretation of accounting data for meaningful management review. Advisory
Corp. shall provide accurate maintenance of each Fund's financial books and
records as required by the applicable securities statutes and regulations, and
shall hire persons (collectively the "Accounting Service Group") as needed to
provide such Accounting Services.
<PAGE> 2
3. Expenses and Reimbursements. Advisory Corp. shall be reimbursed by
the Funds for all costs and services incurred in connection with the provision
of the aforementioned Accounting Services ("Accounting Service Expenses"),
including but not limited to all salary and related benefits paid to the
personnel of the Accounting Service Group, overhead and expenses related to
office space and related equipment and out-of-pocket expenses.
The Accounting Services Expenses will be paid by Advisory Corp. and
reimbursed by the Funds. Advisory Corp. will tender to each Fund a monthly
invoice as of the last business day of each month which shall certify the total
support service expenses expended. Except as provided herein, Advisory Corp.
will receive no other compensation in connection with Accounting Services
rendered in accordance with this Agreement.
4. Payment for Accounting Service Expenses Among the Funds. As to one
quarter (25%) of the Accounting Service Expenses incurred under the Agreement,
the expenses shall be allocated between all Funds based on the number of classes
of shares of beneficial interest that each respective Fund has issued. As to
the remaining three quarters (75%) of the Accounting Service Expenses incurred
under the Agreement, the expense shall be allocated between all Funds based on
their relative net assets. For purposes of determining the percentage of
expenses to be allocated to any Fund, the liquidation preference of any
preferred shares issued by any such Fund shall not be considered a liability of
such Fund for the purposes of calculating relative net assets of such Fund.
5. Maintenance of Records. All records maintained by Advisory Corp. in
connection with the performance of its duties under this Agreement will remain
the property of each respective Fund and will be preserved by Advisory Corp.
for the periods prescribed in Section 31 of the 1940 Act and the rules
thereunder or such other applicable rules that may be adopted from time to time
under the act. In the event of termination of the Agreement, such records will
be promptly delivered to the respective Funds. Such records may be inspected
by the respective Funds at reasonable times.
6. Liability of Advisory Corp. Advisory Corp. shall not be liable to any
Fund for any action taken or thing done by it or its agents or contractors on
behalf of the fund in carrying out the terms and provisions of the Agreement if
done in good faith and without gross negligence or misconduct on the part of
Advisory Corp., its agents or contractors.
7. Indemnification By Funds. Each Fund will indemnify and hold Advisory
Corp. harmless from all lost, cost, damage and expense, including reasonable
expenses for legal counsel, incurred by Advisory Corp. resulting from: (a) any
claim, demand, action or suit in connection with Advisory Corp.'s acceptance of
this Agreement; (b) any action or omission by Advisory Corp. in the performance
of its duties hereunder; (c) Advisory Corp.'s acting upon instructions believed
by it to have been executed by a duly authorized officer of the Fund; or (d)
Advisory Corp.'s acting upon information provided by the Fund in form and under
policies agreed to by Advisory Corp. and the Fund. Advisory Corp. shall not be
entitled to such indemnification in respect of actions or omissions
constituting gross negligence or willful misconduct of Advisory Corp. or its
agents or contractors. Prior to confessing any claim against it which may be
subject to this indemnification, Advisory Corp. shall give the Fund reasonable
opportunity to defend against said claim in its own name or in the name of
Advisory Corp.
8. Indemnification By Advisory Corp. Advisory Corp. will indemnify and
hold harmless each Fund from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by the Fund resulting from any
claim, demand, action or suit arising out of Advisory Corp.'s failure to comply
with the terms of this Agreement or which arises out of the gross negligence or
willful misconduct of Advisory Corp. or its agents or contractors; provided
that such negligence or misconduct is not attributable to the Funds, their
agents or contractors. Prior to confessing any claim against it which may be
subject to this indemnification, the Fund shall give Advisory Corp. reasonable
opportunity to defend against said claim in its own name or in the name of such
Fund.
<PAGE> 3
9. Further Assurances. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
10. Dual Interests. It is understood that some person or persons may be
directors, trustees, officers or shareholders of both the Funds and Advisory
Corp. (including Advisory Corp.'s affiliates), and that the existence of any
such dual interest shall not affect the validity hereof or of any transactions
hereunder except as otherwise provided by a specific provision of applicable
law.
11. Execution, Amendment and Termination. The term of this Agreement shall
begin as of the date first above written, and unless sooner terminated as
herein provided, this Agreement shall remain in effect through , and
thereafter from year to year, if such continuation is specifically approved at
least annually by the Board of Trustees of each Fund, including a majority of
the independent Trustees of each Fund. This Agreement may be modified or
amended from time to time by mutual agreement between the parties hereto and
may be terminated after , by at least sixty (60) days' written notice
given by one party to the others. Upon termination hereof, each Fund shall pay
to Advisory Corp. such compensation as may be due as of the date of such
termination and shall likewise reimburse Advisory Corp. for its costs, expenses
and disbursements payable under this Agreement to such date. This Agreement
may be amended in the future to include as additional parties to the Agreement
other investment companies for with Advisory Corp., any subsidiary or affiliate
serves as investment advisor or distributor if such amendment is approved by
the President of each Fund.
12. Assignment. Any interest of Advisory Corp. under this Agreement shall
not be assigned or transferred, either voluntarily or involuntarily, by
operation of law or otherwise, without the prior written consent of the Funds.
This Agreement shall automatically and immediately terminate in the event of
its assignment without the prior written consent of the Funds.
13. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or sent by registered or certified mail, postage prepaid, to the
other party at such address as such other party may designate for the receipt
of such notices. Until further notice to the other parties, it is agreed that
for this purpose the address of each Fund is One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, Attention: President and that of Advisory Corp. for
this purpose is One Parkview Plaza, Oakbrook Terrace, Illinois 60181,
Attention: President.
14. Personal Liability. As provided for in the Agreement and Declaration
of Trust of the various Funds, under which the Funds are organized as
unincorporated trusts, the shareholders, trustees, officers, employees and
other agents of the Fund shall not personally be found by or liable for the
matters set forth hereto, nor shall resort be had to their private property for
the satisfaction of any obligation or claim hereunder.
15. Interpretative Provisions. In connection with the operation of this
Agreement, Advisory Corp. and the Funds may agree from time to time on such
provisions interpretative of or in addition to the provisions of this Agreement
as may in their joint opinion be consistent with the general tenor of this
Agreement.
16. State Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Illinois.
17. Captions. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this amended and restated
Agreement to be executed as of the day and year first above written.
ALL OF THE PARTIES SET FORTH IN SCHEDULE A
By:
-----------------------------------
Dennis J. McDonnell, President
VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
By:
-----------------------------------
Dennis J. McDonnell, President
<PAGE> 1
EXHIBIT 9.3
FORM OF
AMENDED AND RESTATED
LEGAL SERVICES AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT, dated as of
_________________________, by and between the parties as set forth in Schedule
1, attached hereto and incorporated by reference (designated collectively
hereafter as the "Funds"), and VAN KAMPEN AMERICAN CAPITAL, INC. (formerly Van
Kampen Merritt Holdings Corp.), a Delaware corporation ("Van Kampen").
W I T N E S S E T H:
WHEREAS, each of the Funds is registered as a management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Van Kampen has the capability of providing certain legal
services to the Funds; and
WHEREAS, each Fund desires to utilize Van Kampen in the provision of
such legal services; and
WHEREAS, Van Kampen intends to increase its staff in order to
accommodate the provision of all such services.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants spelled out herein, it is agreed between the parties hereto as
follows:
1. Appointment of Van Kampen. As agent, Van Kampen shall provide each of
the Funds the legal services (the "Legal Services") as set forth in Paragraph 2
of this Agreement. Van Kampen accepts such appointments and agrees to furnish
the Legal Services in return for the compensation provided in Paragraph 3 of
this Agreement.
2. Legal Services to be Provided. Van Kampen will provide to the Funds
the following legal services, including without limitation: accurate
maintenance of the Funds' Corporate Minute books and records, preparation and
oversight of each Fund's regulatory reports and other information provided to
shareholders as well as responding to day-to-day legal issues on behalf of the
Funds. Van Kampen shall hire persons (collectively the "Legal Services Group")
as needed to provide such Legal Services and in such numbers as may be agreed
from time to time.
3. Expenses and Reimbursement. The Legal Services expenses (the "Legal
Services Expenses") for which Van Kampen may be reimbursed are salary and
salary related benefits, including but not limited to bonuses, group insurance
and other
<PAGE> 2
regular wages paid to the personnel of the Legal Services Group, as well as
overhead and expenses related to office space and necessary equipment. The
Legal Services Expenses will be paid by Van Kampen and reimbursed by the Funds.
Van Kampen will tender to each Fund a monthly invoice as of the last business
day of each month which shall certify the total Legal Service Expenses
expended. Except as provided herein, Van Kampen will receive no other
compensation in connection with Legal Services rendered in accordance with this
Agreement, and Van Kampen will be responsible for all other expenses relating
to the providing of Legal Services.
4. Payment for Legal Services Expenses Among the Funds. One half (50%) of
the Legal Services Expenses incurred under the Agreement shall be attributable
equally to each respective Fund and all other funds to whom Van Kampen provides
Legal Services, including all other Funds for which Van Kampen serves as
investment adviser and distributor and The Govett Funds (the "Non-Participating
Funds"). Van Kampen shall assume the costs of Legal Services for the
Non-Participating Funds for which reimbursement is not received. The remaining
one half (50%) of the Legal Services Expenses shall be allocated (a) in the
event services are attributable to specific funds (including the
Non-Participating Funds) based on such specific time allocations; and (b) in the
event services are attributable only to types of funds (i.e. closed-end and
open-end funds), the relative amount of time spent on each type of fund and then
further allocated between funds of that type on the basis of relative net assets
at the end of the period.
5. Maintenance of Records. All records maintained by Van Kampen in
connection with the performance of its duties under this Agreement will remain
the property of each respective Fund and will be preserved by Van Kampen for
the periods prescribed in Section 31 of the 1940 Act and the rules thereunder
or such other applicable rules that may be adopted from time to time under the
Act. In the event of termination of the Agreement, such records will be
promptly delivered to the respective Funds. Such records may be inspected by
the respective Funds at reasonable times.
6. Liability of Van Kampen. Van Kampen shall not be liable to any Fund
for any action taken or thing done by it or its agents or contractors on behalf
of the Fund in carrying out the terms and provisions of the Agreement if done
in good faith and without negligence or misconduct on the part of Van Kampen,
its agents or contractors.
7. Indemnification By Funds. Each Fund will indemnify and hold Van Kampen
harmless from all loss, cost, damage and expense, including reasonable expenses
for legal counsel, incurred by Van Kampen resulting from (a) any claim, demand,
action or suit in connection with Van Kampen's acceptance of this Agreement;
(b) an action or omission by Van Kampen in the performance of its duties
hereunder; (c) Van Kampen's acting upon instructions believed by it to have
been executed by a duly authorized officer of the Fund; or (d) Van Kampen's
acting upon information provided by the Fund in form and under policies agreed
to by Van Kampen and the Fund. Van Kampen shall
<PAGE> 3
not be entitled to such indemnification in respect of action or omissions
constituting negligence or willful misconduct of Van Kampen or its agents or
contractors. Prior to confessing any claim against it which may be subject to
this indemnification, Van Kampen shall give the Fund reasonable opportunity to
defend against said claim on its own name or in the name of Van Kampen.
8. Indemnification By Van Kampen. Van Kampen will indemnify and hold
harmless each Fund from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by the Fund resulting from any
claim, demand, action or suit arising out of Van Kampen's failure to comply
with the terms of this Agreement or which arises out of the negligence or
willful misconduct of Van Kampen or its agents or contractors; provided, that
such negligence or misconduct is not attributable to the Funds, their agents or
contractors. Prior to confessing any claim against it which may be subject to
this indemnification, the Fund shall give Van Kampen reasonable opportunity to
defend against said claim in its own name or in the name of such Fund.
9. Further Assurances. Each party agrees to perform such further acts and
execute such further documents as necessary to effectuate the purposes hereof.
10. Dual Interests. It is understood that some person or persons may be
directors, trustees, officers, or shareholders of both the Funds and Van Kampen
(including Van Kampen's affiliates), and that the existence of any such dual
interest shall not affect the validity hereof or of any transactions hereunder
except as otherwise provided by a specific provision of applicable law.
11. Execution, Amendment and Termination. The term of this Agreement shall
begin as of the date first above written, and unless sooner terminated as
herein provided, this Agreement shall remain in effect through
and thereafter from year to year if such continuation is specifically approved
at least annually by the Board of Trustees of each Fund, including a majority
of the independent Trustees of each Fund. The Agreement may be modified or
amended from time to time by mutual agreement between the parties and shall
likewise reimburse Van Kampen for its costs, expenses and disbursements
payable under this Agreement to such date. This Agreement may be amended in the
future to include as additional parties to the Agreement other investment
companies for which Van Kampen, any subsidiary or affiliate serves as
investment advisor or distributor.
12. Assignment. Any interest of Van Kampen under this Agreement shall not
be assigned or transferred, either voluntarily or involuntarily, by operation
of law or otherwise, without the prior written consent of the Fund. This
Agreement shall automatically and immediately terminate in the event of its
assignment without the prior written consent of the Fund.
<PAGE> 4
13. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or sent by registered or certified mail, postage prepaid, to the
other party at such address as such other party may designate for the receipt
of such notices. Until further notice to the other parties, it is agreed that
for this purpose the address of each Fund is One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, Attention: President and the address of Van Kampen
for this purpose is One Parkview Plaza, Oakbrook Terrace, Illinois 60181,
Attention: General Counsel.
14. Personal Liability. As provided for in the Declaration of Trust of the
various Funds, under which the Funds are organized as unincorporated trusts
under the laws of the State of Delaware and Pennsylvania, as the case may be,
the shareholders, trustees, officers, employees and other agents of the Fund
shall not personally be found by or liable for the matters set forth hereunder,
nor shall resort be had to their private property for the satisfaction of any
obligation or claim hereunder.
15. Interpretative Provisions. In connection with the operation of this
Agreement, Van Kampen and the Funds may agree from time to time on such
provisions interpretative of or in addition to the provisions of this Agreement
as may in their opinion be consistent with the general tenor of this Agreement.
16. State Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Illinois.
17. Captions. The captions in the Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction effect.
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
ALL OF THE PARTIES SET FORTH IN SCHEDULE 1
ATTACHED HERETO
By:
-----------------------------------
Dennis J. McDonnell
President
VAN KAMPEN AMERICAN CAPITAL, INC.
By:
-----------------------------------
Ronald A. Nyberg
Executive Vice President
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholder
Van Kampen American Capital Foreign Securities Fund:
We consent to the use of our report included herein and to the reference to our
Firm in the Statement of Additional Information under the heading "Investment
Advisory and Other Services".
/s/ KPMG PEAT MARWICK LLP
Chicago, Illinois
July 1, 1996
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