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CONVERTIBLE SECURITIES MERGER INTO HARBOR FUND Q&A
Q. WHY HAS THIS MERGER BEEN RECOMMENDED?
A. As with many closed-end investment companies, Van Kampen Convertible
Securities Fund's shares have traded at a discount to their net asset
value. The reorganization would eliminate this discount for Van Kampen
Convertible Securities Fund shareholders and allow shareholder to convert
their shares, at net asset value, into Class A Shares of the Harbor Fund.
The Board of Trustees of the Fund believes that the reorganization will
provide its shareholders with the benefits of the open-end investment
company form of organization, while also providing shareholders with
potential economies of scale and other benefits combining with a larger,
existing open-end fund that has substantially similar investment objectives
and policies and is managed by the same portfolio management team.
For instance,
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COMMON GROUND CONVERTIBLE SECURITIES HARBOR
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PORTFOLIO MANAGER Christine Drusch Christine Drusch
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INVESTMENT Objective is to seek current Objective is to seek to
OBJECTIVE income and capital preservation. provide current income,
capital appreciation and
conservation of capital.
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INVESTMENT Invests at least 65% of total Invests principally in a
STRATEGIES assets in securities that are portfolio of debt
convertible into common stock securities, primarily
or have other equity features. convertible equity bonds
and convertible
preferred stocks.
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PORTFOLIO
CHARACTERISTICS BETA: 1.2 BETA: 1.2
NUMBER OF SECURITIES: 93 NUMBER OF SECURITIES: 94
TOP 5 HOLDINGS: TOP 5 HOLDINGS:
Comverse Technology Comverse Technology
LSI Logic Corp LSI Logic Corp
Veritas Software Veritas Software
Enron Corp Siebel Systems
America Online Calpine Corp
(as of 5/31/00) (as of 5/31/00)
ASSET ALLOCATION: ASSET ALLOCATION:
Convertible-76% Convertible-70%
Common & Preferred-16.8% Common & Preferred-15.6%
Cash-7% Cash-14.2%
(as of 5/31/00) (as of 5/31/00)
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.
Q. WILL SHAREHOLDERS BE ABLE TO VOTE ON THE MERGER/REORGANIZATION?
A. Yes, the reorganization is subject to approval by the shareholders
of the Convertible Securities Fund, but not the Van Kampen Harbor
Fund shareholders.
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Q. IF I VOTE NO, AND THE MERGER IS APPROVED, WHAT ARE MY OPTIONS?
A. Assuming the merger is approved, the conversion will take place shortly
thereafter. Once the conversion is completed, you will hold Class A Shares
of the Harbor Fund and may choose to continue to hold such shares or you
may choose to liquidate your account. If you choose to continue to hold
your shares you will be sent a New Investors pamphlet explaining in more
detail the options you have in an open-end investment company structure.
Redeeming your account is a personal decision that can only be made
by you. It should be noted that such a redemption will ordinarily be a
taxable event. Accordingly, we suggest you consult with your financial
and tax advisor.
Q. HOW WILL I BENEFIT FROM THIS MERGER?
A. If the plan is approved, the benefits to you would be:
- Elimination of the market discount, if any, with respect to shares of the
Convertible Securities Fund; o The potential realization of economies of
scale;
- The advantages of an open-end investment company structure such as,
- ability to buy and sell shares daily at net asset value
- accessibility to other open-end funds through the exchange feature
- ability to view account(s) on-line at www.vankampen.com
Q. HOW DO THE FUNDS' FEES COMPARE?
A. The Convertible Securities Management fee is 50 basis points while the
Harbor Fund's Management fee is currently 53 basis points. The Harbor Fund
also has a distribution and/or service (12b-1) fee of 25 basis points. The
Convertible Securities Fund has no such fee. For the fiscal year ended
December 31, 1999, the Convertible Securities Fund had other expenses
equaling 26 basis points while the Harbor Fund had other expense equaling
23 basis points.
Q. WHO IS PAYING THE COST OF THE REORGANIZATION?
A. The Convertible Securities Fund generally will bear the cost of soliciting
approval of the Reorganization by its shareholders and related costs of the
Reorganization, including expenses, if any, incurred by the Harbor Fund
because the Convertible Securities Fund shareholders are anticipated to be
the primary beneficiaries of the Reorganization.
Q. WILL I HAVE TO PAY A SALES LOAD, OR OTHER TRANSACTION FEES IN CONNECTION
WITH THIS MERGER?
A. No. You will not pay a sales load, commissions or transaction fees in
connection with the reorganization.
Q. HOW WILL THE REORGANIZATION AFFECT MY CONVERTIBLE SECURITIES ACCOUNT?
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A. Assuming shareholders of the Convertible Securities Fund approve the
reorganization, the assets and liabilities of the Convertible Securities
Fund will be combined with those of the Harbor Fund. The value of your
Convertible Securities Fund account will be exchanged for shares of the
Harbor Fund Class A shares at NAV.
Q. AT WHAT PRICE WILL MY CONVERTIBLE SECURITIES SHARES BE CONVERTED?
A. Convertible Securities Fund shares will be converted at their net asset
value immediately prior to the Reorganization.
Q. WILL THIS BE A TAXABLE EVENT?
A. It is our present expectation that the Reorganization should qualify as a
"no gain or loss" transaction and should not be a taxable event to the
shareholders, and we have no knowledge or information that would lead us to
believe otherwise. It is a condition to the closing of the Reorganization
that each Fund receives an opinion from the legal counsel to the
Convertible Securities Fund regarding the characterization of the
Reorganization as a "no gain or loss" transaction.
Q. WILL I BE ABLE TO REDEEM OUT OF THE HARBOR FUND?
A. Assuming the reorganization is approved, redemptions can be processed after
the reorganization is complete.
Q. WHAT HAS BEEN THE PERFORMANCE OF THE HARBOR FUND?
A. The Harbor Fund Class A performance is reflected as follows as of 6/12/00:
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TIMEFRAME NAV OFFERING
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YTD 1.96% -3.9%
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1 Year 40.8% 32.73%
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3 Year 21.3% 18.92%
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5 Year 19.04% 17.64%
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10 Year 13.82% 13.14%
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Inception to Date 10.66% 10.51%
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Q. WILL YOU BE REORGANIZING ANY OTHER CLOSED-END FUNDS INTO OPEN-END FUNDS?
A. The Board reviews on a quarterly basis market discounts, if any, of the
Van Kampen Closed-End Funds and whether steps may be taken to seek to
reduce any such discounts.
Q. SINCE THE ANNOUNCEMENT OF THE PROPOSED MERGER, THE MARKET DISCOUNT HAS
NARROWED ON SHARES OF THE CONVERTIBLE SECURITIES FUND. DO YOU EXPECT THE
DISCOUNT TO INCREASE AND WHAT WAS IT BEFORE THE ANNOUNCEMENT?
A. The market discount as of June 30, 2000 was 4.56 %, and was 23.4% the day
before the Reorganization was announced. We can not speculate on movements
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in the market price since market forces dictate the price at which the
shares may be purchased or sold.
Q. WHAT REGULATORY APPROVALS ARE NEEDED?
A. At this time, no regulatory approval is needed.
Q. HAVE YOU RECEIVED ANY INDICATION FROM DEEP DISCOUNT ADVISERS OR RON OLIN
REGARDING THEIR RESPECTIVE VOTING PREFERENCES?
A. We have not received any indications of Deep Discount Advisers or Ron
Olin's voting preferences.
Q. IS THERE A RECORD DATE FOR THE SPECIAL DIVIDEND TO BE DISTRIBUTED BY THE
CONVERTIBLE SECURITIES FUND, AND DO YOU HAVE AN ESTIMATE OF THAT DIVIDEND?
A. We have yet to set the record date for the special dividend, if any, of the
Convertible Securities Fund in connection with the reorganization. And,
presently, we do not have an estimate of this dividend.