<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1999
REGISTRATION NOS. 33-8122
811-4805
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 32 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 33 [X]
</TABLE>
VAN KAMPEN EQUITY TRUST
(Exact Name of Registrant as Specified in Declaration of Trust)
1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555
(Address of Principal Executive Offices) (Zip Code)
(630) 684-6000
Registrant's Telephone Number, including Area Code
A. THOMAS SMITH III
Executive Vice President,
General Counsel, Secretary
Van Kampen Investments Inc.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, Illinois 60181-5555
(Name and Address of Agent for Service)
------------------------
Copies to:
WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0700
------------------------
Approximate Date of Proposed Public Offering: As soon as practicable
following effectiveness of this Registration Statement.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
[X] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (B)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(1)
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(2) OF RULE 485
IF APPROPRIATE CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR
A PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
TITLE OF SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST, PAR VALUE
$0.01 PER SHARE.
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<PAGE> 2
EXPLANATORY NOTE
The Registrant currently has seven series. The purpose of this Post-Effective
Amendment 32 under the Securities Act of 1933, as amended (the "1933 Act") is to
update the prospectus and the statement or additional information of one series,
the Small Cap Value Fund. The six prospectuses and statements of additional
information of the other series of the Registrant are incorporated herein by
reference to Post-Effective Amendment No. 31 under the 1933 Act, which was filed
with the Securities and Exchange Commission on May 28, 1999. This Amendment is
not intended to amend the six other prospectuses and statements of additional
information incorporated herein. The Registration Statement is organized as
follows:
Facing Page
Prospectus of the Small Cap Value Fund
Statement of Additional Information of the Small Cap Value Fund
Part C Information
Exhibits
<PAGE> 3
VAN KAMPEN
SMALL CAP VALUE FUND
Van Kampen Small Cap Value Fund is a mutual fund with an investment objective of
capital appreciation. The Fund's management seeks to achieve the investment
objective by investing primarily in a diversified portfolio of equity securities
of small capitalization companies that the Fund's investment adviser believes
are undervalued.
Shares of the Fund have not been approved or disapproved by the Securities and
Exchange Commission (SEC) or any state regulators, and neither the SEC nor any
state regulator has passed upon the accuracy or adequacy of this prospectus. It
is a criminal offense to state otherwise.
This prospectus is dated JUNE 16, 1999.
[VAN KAMPEN FUNDS LOGO]
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk/Return Summary................................ 3
Fees and Expenses of the Fund...................... 4
Investment Objective, Policies and Risks........... 5
Investment Advisory Services....................... 9
Purchase of Shares................................. 10
Redemption of Shares............................... 16
Distributions from the Fund........................ 17
Shareholder Services............................... 18
Federal Income Taxation............................ 19
</TABLE>
No dealer, salesperson, or any other person has been authorized to give any
information or to make any representations, other than those contained in this
prospectus, in connection with the offer contained in this prospectus and, if
given or made, such other information or representation must not be relied upon
as having been authorized by the fund, the adviser, or the distributor. This
prospectus does not constitute an offer by the fund or by the distributor to
sell or a solicitation of an offer to buy any of the securities offered hereby
in any jurisdiction to any person to whom it is unlawful for the fund to make
such an offer in such jurisdiction.
<PAGE> 5
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE
The Fund is a mutual fund with an investment objective of capital appreciation.
Any income received from the investment of portfolio securities is incidental to
the Fund's investment objective.
INVESTMENT STRATEGIES
The Fund's management seeks to achieve the investment objective by investing
primarily in a diversified portfolio of equity securities of small
capitalization companies that the Fund's investment adviser believes are
undervalued. Under normal market conditions, the Fund invests at least 65% of
the Fund's total assets in equity securities of small capitalization companies.
The Fund's investments in equity securities include common and preferred stocks
and securities convertible into common and preferred stocks. The Fund emphasizes
a "value" style of investing seeking companies that the Fund's investment
adviser believes are undervalued with characteristics for improved valuations
relative to other companies. In selecting securities for investment, the Fund
uses a "bottom up" approach that focuses on individual stock selection over
economic and industry trends. The Fund generally sells a security when it has
become overvalued or the company shows deteriorating fundamentals. The Fund may
invest up to 10% of its total assets in securities of foreign issuers. The Fund
may invest in certain derivatives, such as options and futures, which may
subject the Fund to additional risks.
INVESTMENT RISKS
With its portfolio of equity securities of smaller capitalization companies, the
Fund has greater risks than a fund that invests only in larger-sized companies.
An investment in the Fund is subject to investment risks, and you could lose
money on your investment in the Fund. There can be no assurance that the Fund
will achieve its investment objective.
MARKET RISK. Market risk is the possibility that the market values of securities
owned by the Fund will decline. Market risk may affect a single issuer,
industry, sector of the economy, or the market as a whole. A "value" style of
investing emphasizes undervalued companies with characteristics for improved
valuations. This style of investing is subject to the risk that the valuations
never improve or that the returns on "value" equity securities are less than
returns on other styles of investing or the overall stock market. Investments in
common stocks generally are affected by changes in the stock markets, which
fluctuate substantially over time, sometimes suddenly and sharply. Different
types of stocks, tend to shift in and out of favor depending on market and
economic conditions. Thus, the value of the Fund's investments will vary and at
times may be lower or higher than that of other types of funds. During an
overall market decline, stock prices of smaller-sized companies often fluctuate
more than the stock prices of larger-sized companies. It is possible that the
stocks of smaller-sized companies will be more volatile and underperform the
overall stock market. Historically, smaller-sized company stocks have sometimes
gone through extended periods when they did not perform as well as larger-sized
company stocks.
RISKS OF SMALL CAPITALIZATION COMPANIES. The Fund focuses its investments on
small capitalization companies which often are newer, less established
companies. Investing in such companies involves risks not ordinarily associated
with investments in large capitalization companies. Small capitalization
companies carry additional risks because their earnings generally tend to be
less predictable, they often have limited product lines, markets, distribution
channels or financial resources and the management of such companies may be
dependent upon one or a few key people. The market movements of equity
securities of small capitalization companies may be more abrupt or erratic than
the market movements of stocks of larger, more established companies or the
stock market in general. In addition, equity securities of small capitalization
companies generally are less liquid than those of larger capitalization
companies. This means that the Fund could have greater difficulty selling such
securities at the time and price that the Fund would like.
FOREIGN RISKS. Because the Fund may own securities of foreign issuers, it may be
subject to risks not usually associated with owning securities of U.S. issuers.
These risks can include fluctuations in foreign currencies, foreign currency
exchange controls, political and economic instability, differences in financial
reporting, differences in securities regulation and trading, and foreign
taxation issues.
3
<PAGE> 6
RISKS OF USING DERIVATIVE INVESTMENTS. In general terms, a derivative investment
is one whose value depends on (or is derived from) the value of an underlying
asset, interest rate or index. Options and futures are examples of derivatives.
Such transactions involve risks different from the direct investment in
underlying securities such as imperfect correlation between the value of the
instruments and the underlying assets; risks of default by the other party to
certain transactions; risks that the transactions may incur losses that
partially or completely offset gains in portfolio positions; risks that the
transactions may not be liquid; and manager risk.
MANAGER RISK. As with any managed fund, the Fund's management may not be
successful in selecting the best-performing securities and the Fund's
performance may lag behind that of similar funds.
An investment in the Fund is not a deposit of any bank or other insured
depository institution. Your investment is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
INVESTOR PROFILE
In light of its objective and investment strategies, the Fund may be appropriate
for investors who:
- - Seek capital appreciation over the long term.
- - Do not seek current income from their investment.
- - Are willing to take on the increased risks of investing in smaller-sized, less
established companies in exchange for potentially higher capital appreciation.
- - Can withstand volatility in the value of their shares of the Fund.
- - Wish to add to their personal investment portfolio a fund that emphasizes a
"value" style of investing in equity securities of small capitalization
companies.
An investment in the Fund may not be appropriate for all investors. The Fund is
not intended to be a complete investment program, and investors should consider
their long-term investment goals and financial needs when making an investment
decision about the Fund. An investment in the Fund is intended to be a long-term
investment and the Fund should not be used as a trading vehicle.
FEES AND EXPENSES
OF THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge
(load) imposed on
purchases (as a
percentage of
offering price) 5.75%(1) None None
..............................................................
Maximum deferred
sales charge (load)
(as a percentage of
the lesser of
original purchase
price or redemption None(2) 5.00%(3) 1.00%(4)
proceeds)
..............................................................
Maximum sales charge
(load) imposed on
reinvested dividends
(as a percentage of
offering price) None None None
..............................................................
Redemption fees (as a
percentage of amount None None None
redeemed)
..............................................................
Exchange fee None None None
..............................................................
</TABLE>
(1) Reduced for purchases of $50,000 and over. See "Purchase of Shares -- Class
A Shares."
(2) Investments of $1 million or more are not subject to any sales charge at the
time of purchase, but a deferred sales charge of 1.00% may be imposed on
certain redemptions made within one year of the purchase. See "Purchase of
Shares -- Class A Shares."
(3) The maximum deferred sales charge is 5.00% in the first year after purchase
and declining thereafter as follows:
Year 1-5.00%
Year 2-4.00%
Year 3-3.00%
Year 4-2.50%
Year 5-1.50%
After-None
See "Purchase of Shares -- Class B Shares."
(4) The maximum deferred sales charge is 1.00% in the first year after purchase
and 0.00% thereafter. See "Purchase of Shares -- Class C Shares."
4
<PAGE> 7
ANNUAL FUND
OPERATING EXPENSES
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
Class A Class B Class C
Shares Shares Shares
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
..............................................................
Distribution and/or 0.25% 1.00%(2) 1.00%(2)
Service (12b-1)
Fees(1)
..............................................................
Other Expenses(3) 0.50% 0.50% 0.50%
..............................................................
Total Annual Fund 1.50% 2.25% 2.25%
Operating Expenses
..............................................................
</TABLE>
(1) Class A Shares are subject to an annual service fee of up to 0.25% of the
average daily net assets attributable to such class of shares. Class B
Shares and Class C Shares are each subject to a combined annual distribution
and service fee of up to 1.00% of the average daily net assets attributable
to such class of shares. See "Purchase of Shares."
(2) Because Distribution and/or Service (12b-1) Fees are paid out of the Fund's
assets on an ongoing basis, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales
charges.
(3) "Other Expenses" have been estimated for the Fund's current fiscal year.
Example:
The following example is intended to help you compare the cost of investing in
the Fund with the costs of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% annual return each year and
that the Fund's operating expenses remain the same each year. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
One Three
Year Years
- -----------------------------------------------------
<S> <C> <C> <C>
Class A Shares $719 $1,022
.....................................................
Class B Shares $728 $1,003
.....................................................
Class C Shares $328 $703
.....................................................
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
One Three
Year Years
- -----------------------------------------------------
<S> <C> <C> <C>
Class A Shares $719 $1,022
.....................................................
Class B Shares $228 $703
.....................................................
Class C Shares $228 $703
.....................................................
</TABLE>
INVESTMENT OBJECTIVE,
POLICIES AND RISKS
The Fund's investment objective is to seek capital appreciation. Any income
received from the investment of portfolio securities is incidental to the Fund's
investment objective. The Fund's investment objective may be changed by the
Fund's Board of Trustees without shareholder approval, but no change is
anticipated. If there is a change in the investment objective of the Fund,
shareholders should consider whether the Fund remains an appropriate investment
in light of their then current financial positions and needs. There are risks
inherent in all investments in securities; accordingly there can be no assurance
that the Fund will achieve its investment objective.
The Fund's investment adviser seeks to achieve the investment objective by
investing primarily in a diversified portfolio of equity securities of small
capitalization companies that the Fund's investment adviser believes are
undervalued. Under normal market conditions, the Fund invests at least 65% of
the Fund's total assets in equity securities of small capitalization companies.
Under current market conditions, the Fund's investment adviser defines small
capitalization companies by reference to those companies having market
capitalizations in the range of companies represented in the Russell 2000 Index,
a small capitalization company index (which currently consists of companies in
the market capitalization range of approximately $7.6 million to $8.8 billion as
of May 31, 1999). Under normal market conditions, the Fund invests substantially
all of its assets in such companies. Investments in smaller-sized companies may
offer greater opportunities for capital growth than larger-sized companies, but
also may involve special risks. Because prices of common stocks and other equity
securities fluctuate, the value of an investment in the Fund will vary based
upon the Fund's investment performance. The Fund attempts
5
<PAGE> 8
to reduce overall exposure to risk from declines in securities prices by
spreading its investments over many different companies in a variety of
industries.
In selecting securities for investment, the Fund emphasizes a "value" style of
investing focusing on companies with promising growth prospects and attractive
valuations. The Fund seeks to identify those companies that are undervalued with
characteristics that might lead to improved valuation relative to other
companies. The catalyst for improved valuations could include, among other
things, changes in management, new product introductions or new industry
regulations. Stocks of different types, such as "value" or "growth" stocks tend
to shift in and out of favor depending on market and economic conditions. Thus,
the value of the Fund's investments will vary and at times may be lower or
higher than that of other types of funds. The Fund's investment adviser uses a
"bottom-up" investment approach, seeking attractive valuations and growth
opportunities on an individual company basis. This approach focuses on selecting
particular companies before looking at economic and industry trends.
The Fund invests primarily in common stocks. Common stocks are shares of a
corporation or other entity that entitle the holder to a pro rata share of the
profits of the corporation, if any, without preference over any other class of
securities, including such entity's debt securities, preferred stock and other
senior equity securities. Common stock usually carries with it the right to vote
and frequently an exclusive right to do so.
While the Fund invests primarily in common stocks, the Fund may invest in
preferred stocks and securities convertible into common and preferred stocks.
Preferred stock generally has a preference as to dividends and liquidation over
an issuer's common stock but ranks junior to debt securities in an issuer's
capital structure. Unlike interest payments on debt securities, preferred stock
dividends are payable only if declared by the issuer's board of directors.
Preferred stock also may be subject to optional or mandatory redemption
provisions. A convertible security is a bond, debenture, note, preferred stock,
warrant or other security that may be converted into or exchanged for a
prescribed amount of common stock or other equity security of the same or a
different issuer within a particular period of time at a specified price or
formula. A convertible security generally entitles the holder to receive
interest paid or accrued on debt securities or the dividend paid on preferred
stock until the convertible security matures or is redeemed, converted or
exchanged. Before conversion, convertible securities generally have
characteristics similar to both debt and equity securities. The value of
convertible securities tends to decline as interest rates rise and, because of
the conversion feature, tends to vary with fluctuations in the market value of
the underlying equity securities. Convertible securities ordinarily provide a
stream of income with generally higher yields than those of common stock of the
same or similar issuers. Convertible securities generally rank senior to common
stock in a corporation's capital structure but are usually subordinated to
comparable nonconvertible securities.
The Fund does not limit its investments to any single group or type of security.
The Fund may invest in unseasoned companies and companies with special
situations or unusual developments such as initial public offerings, changes in
management, mergers, liquidations or leveraged buyouts. Investments in
unseasoned companies and special situations often involve much greater risks
than are inherent in other types of investments, and securities of such
companies may be more likely to experience unexpected significant fluctuations
in price. In addition, investments made in anticipation of future events may, if
delayed or never achieved, cause stock prices to fall.
Investments in small capitalization companies may offer greater opportunities
for capital appreciation than larger, more established companies, but also may
involve certain special risks. Small capitalization companies typically are
subject to a greater degree of change in earnings and business prospects than
are larger companies and often have limited product lines, markets, distribution
channels or financial resources, and they may be dependent upon one or a few key
people for management. The securities of such companies may be subject to more
abrupt or erratic market movements than securities of larger companies or the
market averages in general.
The Fund may dispose of a security whenever, in the opinion of the Fund's
investment adviser, factors indicate it is desirable to do so. The Fund
generally sells a security when it has become overvalued or the company shows
deteriorating fundamentals. Other factors include changes in the relative market
performance or appreciation possibilities offered by individual securities, a
change in the market trend or other factors affecting an individual security, a
change in economic or market factors in general or with respect to a particular
industry, and other circumstances bearing on the desirability of a given
investment.
6
<PAGE> 9
RISKS OF INVESTING IN
SECURITIES OF FOREIGN ISSUERS
The Fund may invest up to 10% of its total assets in securities of foreign
issuers. Such securities may be denominated in U.S. dollars or in currencies
other than U.S. dollars. Investments in foreign securities present certain risks
not ordinarily associated with investments in securities of U.S. issuers. These
risks include fluctuations in foreign exchange rates, political and economic
developments (including war or other instability, expropriation of assets,
nationalization and confiscatory taxation), the imposition of foreign exchange
limitations, withholding taxes on income or capital transactions or other
restrictions, higher transaction costs and difficulty in taking judicial action.
In addition, there generally is less publicly available information about many
foreign issuers, and auditing, accounting and financial reporting requirements
are less stringent and less uniform in many foreign countries. Such securities
may be less liquid than the securities of domestic issuers. Such securities may
also be subject to greater fluctuations in price than securities of domestic
issuers. There is generally less government regulation of stock exchanges,
brokers and listed companies abroad than in the U. S., and, with respect to
certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, or diplomatic developments which could affect investment
in those countries. Because there is usually less supervision and governmental
regulation of exchanges, brokers and dealers than there is in the U.S., the Fund
may experience settlement difficulties or delays not usually encountered in the
U.S. The risks of foreign investments should be considered carefully by an
investor in the Fund.
USING OPTIONS, FUTURES CONTRACTS
AND RELATED OPTIONS
The Fund may, but is not required to, use various investment strategies,
including options, futures contracts and options on futures contracts, depending
upon the status of the Fund's portfolio and the investment adviser's
expectations concerning the securities markets.
In times of stable or rising stock prices, the Fund generally seeks to be fully
invested in equity securities. Even when the Fund is fully invested, however,
prudent management requires that at least a small portion of assets be available
as cash to honor redemption requests and for other short-term needs. The Fund
may also have cash on hand that has not yet been invested. The portion of the
Fund's assets that is invested in cash or cash equivalents does not fluctuate
with stock market prices, so that, in times of rising market prices, the Fund
may underperform the market in proportion to the amount of cash or cash
equivalents in its portfolio. By purchasing stock index futures contracts,
however, the Fund can compensate for the cash portion of its assets and may
obtain performance equivalent to investing 100% of its assets in equity
securities.
If the Fund's investment adviser forecasts a market decline, the Fund may seek
to reduce its exposure to the securities markets by increasing its cash
position. By selling stock index futures contracts instead of portfolio
securities, a similar result can be achieved to the extent that the performance
of the futures contracts correlates to the performance of the Fund's portfolio
securities. Sales of futures contracts frequently may be accomplished more
rapidly and at less cost than the actual sale of securities. Once the desired
hedged position has been effected, the Fund could then liquidate securities in a
more deliberate manner, reducing its futures position simultaneously to maintain
the desired balance, or it could maintain the hedged position.
As an alternative to futures contracts, the Fund can engage in options (or stock
index options or stock index futures options) to manage the portfolio's risk in
advancing or declining markets. For example, the value of a put option generally
increases as the underlying security declines below a specified level, value is
protected against a market decline to the degree the performance of the put
correlates with the performance of the Fund's investment portfolio. If the
market remains stable or advances, the Fund can refrain from exercising the put
and its portfolio will participate in the advance, having incurred only the
premium cost for the put.
The Fund is authorized to purchase and sell listed and over-the-counter options
("OTC Options"). OTC Options are subject to certain additional risks including
default by the other party to the transaction and the liquidity of the
transactions.
In certain cases, the options and futures markets provide investment or risk
management opportunities that are not available from direct investments in
securities. In addition, some strategies can be performed with greater ease and
at lower cost by utilizing the options and futures markets rather than
7
<PAGE> 10
purchasing or selling portfolio securities. However, such transactions involve
risks different from the direct investment in underlying securities. For
example, there may be imperfect correlation between the value of the instruments
and the underlying assets. In addition, the use of such instruments includes the
risks of default by the other party to certain transactions. The Fund may incur
losses in using these instruments that partially or completely offset gains in
portfolio positions. These transactions may not be liquid and involve manager
risk. In addition, such transactions may involve commissions and other costs,
which may increase the Fund's expenses and reduce its return. A more complete
discussion of options, futures contracts and related options and their risks is
contained in the Fund's Statement of Additional Information which can be
obtained by investors free of charge as described on the back cover of this
prospectus.
OTHER INVESTMENTS AND RISK FACTORS
For cash management purposes, the Fund may engage in repurchase agreements with
banks and broker-dealers to earn a return on temporarily available cash. Such
transactions are subject to the risk of default by the other party.
The Fund may invest up to 15% of the Fund's net assets in illiquid and certain
restricted securities. Such securities may be difficult or impossible to sell at
the time and the price that the Fund would like. Thus, the Fund may have to sell
such securities at a lower price, sell other securities instead to obtain cash
or forego other investment opportunities.
Further information about these types of investments and other investment
practices that may be used by the Fund is contained in the Statement of
Additional Information.
Although the Fund does not intend to engage in substantial short-term trading,
it may sell securities without regard to the length of time they have been held
in order to take advantage of new investment opportunities or when the Fund's
investment adviser believes the potential for capital appreciation has lessened
or otherwise. The portfolio turnover rate may be expected to vary from year to
year. A high portfolio turnover rate (100% or more) increases the Fund's
transactions costs, including brokerage commissions or dealer costs, and may
result in the realization of more short-term capital gains than if the Fund had
lower portfolio turnover. Increases in the Fund's transactions costs would
impact the Fund's performance. The turnover rate will not be a limiting factor,
however, if the Fund's investment adviser considers portfolio changes
appropriate.
TEMPORARY DEFENSIVE STRATEGY. When market conditions dictate a more "defensive"
investment strategy, the Fund may invest on a temporary basis a portion or all
of its assets in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, prime commercial paper, certificates of deposit,
bankers' acceptances and other obligations of domestic banks having total assets
of at least $500 million, and repurchase agreements. Under normal market
conditions, the potential for capital appreciation on these securities will tend
to be lower than the potential for capital appreciation on other securities that
may be owned by the Fund. The Fund may not achieve its investment objective if
it takes a defensive position.
YEAR 2000 RISKS. Like other mutual funds, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by the Fund's investment adviser and other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." The Fund's investment adviser is taking steps that it believes are
reasonably designed to address the Year 2000 Problem with respect to computer
systems that it uses and to obtain reasonable assurances that comparable steps
are being taken by the Fund's other major service providers. At this time, there
can be no assurances that these steps will be sufficient to avoid any adverse
impact to the Fund. In addition, the Year 2000 Problem may adversely affect the
markets and the issuers of securities in which the Fund may invest which, in
turn, may adversely affect the net asset value of the Fund. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production problems for individual companies or issuers and overall
economic uncertainty. Earnings of individual issuers will be affected by
remediation costs, which may be substantial and may be reported inconsistently
in U.S. and foreign financial statements. Accordingly, the Fund's investments
may be adversely affected. The statements above are subject to the Year 2000
Information and Readiness Disclosure Act which Act may limit the legal rights
regarding the use of such statements in the case of a dispute.
8
<PAGE> 11
INVESTMENT ADVISORY SERVICES
THE ADVISER. Van Kampen Investment Advisory Corp. is the Fund's investment
adviser (the "Adviser" or "Advisory Corp."). The Adviser is a wholly owned
subsidiary of Van Kampen Investments Inc. ("Van Kampen Investments"). Van Kampen
Investments is a diversified asset management company with more than two million
retail investor accounts, extensive capabilities for managing institutional
portfolios, and more than $75 billion under management or supervision. Van
Kampen Investments' more than 50 open-end and 39 closed-end funds and more than
2,500 unit investment trusts are professionally distributed by leading financial
advisers nationwide. Van Kampen Funds Inc., the distributor of the Fund (the
"Distributor") and the sponsor of the funds mentioned above, is also a wholly
owned subsidiary of Van Kampen Investments. Van Kampen Investments is an
indirect wholly owned subsidiary of Morgan Stanley Dean Witter & Co. The
Adviser's principal office is located at 1 Parkview Plaza, PO Box 5555, Oakbrook
Terrace, Illinois 60181-5555.
ADVISORY AGREEMENT. The Fund retains the Adviser to manage the investment of its
assets and to place orders for the purchase and sale of its portfolio
securities. Under an investment advisory agreement between the Adviser and the
Fund (the "Advisory Agreement"), the Fund pays the Adviser a monthly fee
computed based upon an annual rate applied to average daily net assets of the
Fund as follows:
<TABLE>
<CAPTION>
Average Daily Net Assets % Per Annum
- -----------------------------------------------
<S> <C> <C> <C>
First $500 million 0.75 of 1.00%
...............................................
Next $500 million 0.70 of 1.00%
...............................................
Over $1 billion 0.65 of 1.00%
...............................................
</TABLE>
Under the Advisory Agreement, the Adviser furnishes offices, necessary
facilities and equipment, provides administrative services, and permits its
officers and employees to serve without compensation as trustees of the Trust or
officers of the Fund if elected to such positions. The Fund pays all charges and
expenses of its day-to-day operations, including the compensation of trustees of
the Trust (other than those who are affiliated persons of the Adviser,
Distributor or Van Kampen Investments), the charges and expenses of legal
counsel and independent accountants, distribution fees, service fees, custodian
fees, the costs of providing reports to shareholders, and all other ordinary
business expenses not specifically assumed by the Adviser.
From time to time, the Adviser or the Distributor may voluntarily undertake to
reduce the Fund's expenses by reducing the fees payable to them or by reducing
other expenses of the Fund in accordance with such limitations as the Adviser or
Distributor may establish.
The Adviser may utilize, at its own expense, credit analysis, research and
trading support services provided by its affiliate, Van Kampen Asset Management
Inc. ("Asset Management").
PERSONAL INVESTMENT POLICIES. The Fund and the Adviser have adopted Codes of
Ethics designed to recognize the fiduciary relationship between the Fund and the
Adviser and its employees. The Codes of Ethics permit directors, trustees,
officers and employees to buy and sell securities for their personal accounts
subject to certain restrictions. Persons with access to certain sensitive
information are subject to pre-clearance and other procedures designed to
prevent conflicts of interest.
PORTFOLIO MANAGEMENT. The Fund is managed by a management team headed by John
Cunniff. Mr. Cunniff has been Vice President and Senior Portfolio Manager of the
Adviser and Asset Management since October 1995. Prior to that time, Mr. Cunniff
was Vice President and Portfolio Manager of Templeton Quantitative Advisors. Mr.
Cunniff received his BS from Johns Hopkins University, his MSE from Princeton
University, and his MBA in finance from Columbia University. He is a Chartered
Financial Analyst and a member of the Association for Investment Management and
Research. Thomas Copper is co-manager for the day-to-day management of the
Fund's investment portfolio. Mr. Copper has been Vice President and Portfolio
Manager of the Adviser and Asset Management since March 1998, Assistant Vice
President of the Adviser and Asset Management since June 1995, and has been
employed by Asset Management since 1986. Prior to that time, Mr. Copper was a
high yield bond analyst for Tenneco Financial Services. Mr. Copper received his
BA degree in Economics from Tulane University and his MBA in Finance from Baylor
University. He is a Chartered Financial Analyst and a member of the Association
for Investment Management Research.
9
<PAGE> 12
PURCHASE OF SHARES
GENERAL
The Fund offers three classes of shares designated as Class A Shares, Class B
Shares and Class C Shares. By offering three classes of shares, the Fund permits
each investor to choose the class of shares that is most beneficial given the
amount to be invested and the length of time the investor expects to hold the
shares.
Initial investments must be at least $1,000 for each class of shares, and
subsequent investments must be at least $25 for each class of shares. Both
minimums may be waived by the Distributor for plans involving periodic
investments.
Each class of shares represents an interest in the same portfolio of investments
of the Fund and has the same rights except that (i) Class A Shares generally
bear the sales charge expenses at the time of purchase while Class B Shares and
Class C Shares bear the sales charge expenses at the time of redemption and any
expenses (including higher distribution fees and transfer agency costs)
resulting from such deferred sales charge arrangement, (ii) generally, each
class of shares has exclusive voting rights with respect to approvals of the
Rule 12b-1 distribution plan (described below) pursuant to which its
distribution fee or service fee is paid, (iii) each class of shares has
different exchange privileges, (iv) certain classes of shares are subject to a
conversion feature and (v) certain classes of shares have different shareholder
service options available.
The offering price of the Fund's shares is based upon the Fund's net asset value
per share (plus sales charges, where applicable). The net asset values per share
of the Class A Shares, Class B Shares and Class C Shares are generally expected
to be substantially the same. In certain circumstances, however, the per share
net asset values of the classes of shares may differ from one another,
reflecting the daily expense accruals of the higher distribution fees and
transfer agency costs applicable to the Class B Shares and Class C Shares and
the differential in the dividends that may be paid on each class of shares.
The net asset value per share for each class of shares of the Fund is determined
once daily as of the close of trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m., New York time) each day the Exchange is open
for trading except on any day in which no purchase or redemption orders are
received or there is not a sufficient degree of trading in the Fund's portfolio
securities such that the Fund's net asset value per share might be materially
affected. The Fund reserves the right to calculate net asset value per share and
adjust the offering price more frequently than once a day if deemed desirable.
Net asset value per share for each class is determined by dividing the value of
the Fund's portfolio securities, cash and other assets (including accrued
interest) attributable to such class, less all liabilities (including accrued
expenses) attributable to such class, by the total number of shares of the class
outstanding. Such computation is made by using prices as of the close of trading
on the Exchange and (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 mean between the last reported bid and asked prices, (ii)
valuing over-the-counter securities at the last reported sale price from the
National Association of Securities Dealers Automated Quotations ("NASDAQ"),
(iii) valuing unlisted securities at the last quoted bid price and (iv) 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 Adviser in
accordance with procedures established by the Board of Trustees. Securities with
remaining maturity of 60 days or less are valued on an amortized cost basis,
which approximates market value.
The Fund has adopted a distribution plan (the "Distribution Plan") with respect
to each class of its shares pursuant to Rule 12b-1 under the 1940 Act. The Fund
also has adopted a service plan (the "Service Plan") with respect to each class
of its shares. Under the Distribution Plan and the Service Plan, the Fund pays
distribution fees in connection with the sale and distribution of its shares and
service fees in connection with the provision of ongoing services to
shareholders of each class.
The amount of distribution and service fees varies among the classes offered by
the Fund. Because these fees are paid out of the Fund's assets on an ongoing
basis, these fees will increase the cost of your investment in the Fund. By
purchasing a class of shares subject to higher distribution and service fees,
you may pay more over time than on a class of shares with other types of sales
charge arrangements. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charges permitted by the rules of the
National Association of Securities Dealers, Inc. ("NASD").
10
<PAGE> 13
The net income attributable to a class of shares and the dividends payable on
such class of shares will be reduced by the amount of the distribution fees and
other expenses associated with such class of shares. To assist investors in
comparing classes of shares, the tables under the heading "Fees and Expenses of
the Fund" provide a summary of sales charges and expenses and an example of the
sales charges and expenses of the Fund applicable to each class of shares.
The shares are offered to the public on a continuous basis through the
Distributor as principal underwriter, which is located at 1 Parkview Plaza, PO
Box 5555, Oakbrook Terrace, Illinois 60181-5555. Shares also are offered through
members of the NASD who are acting as securities dealers ("dealers") and NASD
members or eligible non-NASD members who are acting as brokers or agents or
investors ("brokers"). "Dealers" and "brokers" are sometimes referred to herein
as "authorized dealers."
Shares may be purchased on any business day by completing the application
accompanying this prospectus and forwarding the application, directly or through
an authorized dealer, to the Fund's shareholder service agent, Van Kampen
Investor Services Inc. ("Investor Services"), a wholly owned subsidiary of Van
Kampen Investments. When purchasing shares of the Fund, investors must specify
whether the purchase is for Class A Shares, Class B Shares or Class C Shares.
Sales personnel of authorized dealers distributing the Fund's shares are
entitled to receive compensation for selling such shares and may receive
differing compensation for selling Class A Shares, Class B Shares or Class C
Shares.
The offering price for shares is based on the next calculation of net asset
value per share (plus sales charges, where applicable) after an order is
received by Investor Services. Orders received by authorized dealers prior to
the close of the Exchange are priced based on the date of receipt provided such
order is transmitted to Investor Services prior to Investor Services' close of
business on such date. Orders received by authorized dealers after the close of
the Exchange or transmitted to Investor Services after its close of business are
priced based on the date of the next computed net asset value per share provided
they are received by Investor Services prior to Investor Services' close of
business on such date. It is the responsibility of authorized dealers to
transmit orders received by them to Investor Services so they will be received
in a timely manner.
The Fund and the Distributor reserve the right to refuse any order for the
purchase of shares. The Fund also reserves the right to suspend the sale of the
Fund's shares in response to conditions in the securities markets or for other
reasons. Shares of the Fund may be sold in foreign countries where permissible.
Investor accounts will automatically be credited with additional shares of the
Fund after any Fund distributions, such as dividends and capital gains
distributions, unless the investor instructs the Fund otherwise. Investors
wishing to receive cash instead of additional shares should contact the Fund at
(800) 341-2911 or by writing to the Fund, c/o Van Kampen Investors Services
Inc., PO Box 418256, Kansas City, MO 64141-9256.
CLASS A SHARES
Class A Shares of the Fund are sold at net asset value plus an initial maximum
sales charge of up to 5.75% of the offering price (or 6.10% of the net amount
invested), reduced on investments of $50,000 or more as follows:
CLASS A SHARES
SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
As % of As % of
Size of Offering Net Amount
Investment Price Invested
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $50,000 5.75% 6.10%
..........................................................
$50,000 but less than
$100,000 4.75% 4.99%
..........................................................
$100,000 but less than
$250,000 3.75% 3.90%
..........................................................
$250,000 but less than
$500,000 2.75% 2.83%
..........................................................
$500,000 but less than
$1,000,000 2.00% 2.04%
..........................................................
$1,000,000 or more * *
..........................................................
</TABLE>
* No sales charge is payable at the time of purchase on investments of $1
million or more, although for such investments the Fund imposes a contingent
deferred sales charge of 1.00% on certain redemptions made within one year of
the purchase. The contingent deferred sales charge is assessed on an amount
equal to the lesser of the then current market value or the cost of the shares
being redeemed. Accordingly, no sales charge is imposed on increases in net
asset value above the initial purchase price.
No sales charge is imposed on Class A Shares received from reinvestment of
dividends or capital gains distributions.
11
<PAGE> 14
Under the Distribution Plan and Service Plan, the Fund may spend a total of
0.25% per year of the average daily net assets with respect to the Class A
Shares of the Fund. From such amount, under the Service Plan, the Fund may spend
up to 0.25% per year of the Fund's average daily net assets with respect to the
Class A Shares for the ongoing provision of services to Class A shareholders by
the Distributor and by brokers, dealers or financial intermediaries and for the
maintenance of such shareholders' accounts.
CLASS B SHARES
Class B Shares of the Fund are sold at net asset value and are subject to a
deferred sales charge if redeemed within five years of purchase as shown in the
table as follows:
CLASS B SHARES
SALES CHARGE SCHEDULE
<TABLE>
<CAPTION>
Contingent Deferred
Sales Charge
as a Percentage of
Dollar Amount
Year Since Purchase Subject to Charge
- ------------------------------------------------
<S> <C> <C> <C>
First 5.00%
................................................
Second 4.00%
................................................
Third 3.00%
................................................
Fourth 2.50%
................................................
Fifth 1.50%
................................................
Sixth and After None
................................................
</TABLE>
The contingent deferred sales charge is assessed on an amount equal to the
lesser of the then current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no sales charge is assessed
on shares derived from reinvestment of dividends or capital gains distributions.
It is presently the policy of the Distributor not to accept any order for Class
B Shares in an amount of $500,000 or more because it ordinarily will be more
advantageous for an investor making such an investment to purchase Class A
Shares.
The amount of the contingent deferred sales charge, if any, varies depending on
the number of years from the time of payment for the purchase of Class B Shares
until the time of redemption of such shares. Solely for purposes of determining
the number of years from the time of any payment for the purchase of shares, all
payments during a month are totaled and deemed to have been made on the last day
of the month.
In determining whether a contingent deferred sales charge applies to a
redemption, it is assumed that the redemption is first of any shares in the
shareholder's Fund account that are not subject to a contingent deferred sales
charge and then of shares held the longest in the shareholder's account.
Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
average daily net assets with respect to the Class B Shares of the Fund. In
addition, under the Service Plan, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets with respect to the Class B Shares for the
ongoing provision of services to Class B shareholders by the Distributor and by
brokers, dealers or financial intermediaries and for the maintenance of such
shareholders' accounts.
CLASS C SHARES
Class C Shares of the Fund are sold at net asset value and are subject to a
deferred sales charge of 1.00% of the dollar amount subject to charge if
redeemed within one year of purchase.
The contingent deferred sales charge is assessed on an amount equal to the
lesser of the then current market value or the cost of the shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no sales charge is assessed
on shares derived from reinvestment of dividends or capital gains distributions.
It is presently the policy of the Distributor not to accept any order for Class
C Shares in an amount of $1 million or more because it ordinarily will be more
advantageous for an investor making such an investment to purchase Class A
Shares.
In determining whether a contingent deferred sales charge is applicable to a
redemption, it is assumed that the redemption is first of any shares in the
shareholder's Fund account that are not subject to a contingent deferred sales
charge and then of shares held the longest in the shareholder's account.
Under the Distribution Plan, the Fund may spend up to 0.75% per year of the
average daily net assets with respect to the Class C Shares of the Fund. In
12
<PAGE> 15
addition, under the Service Plan, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets with respect to the Class C Shares for ongoing
provision of services to Class C shareholders by the Distributor and by brokers,
dealers or financial intermediaries and for the maintenance of such
shareholders' accounts.
CONVERSION FEATURE
Class B Shares and any dividend reinvestment plan Class B Shares received on
such shares automatically convert to Class A Shares eight years after the end of
the calendar month in which the shares were purchased. Such conversion will be
on the basis of the relative net asset values per share, without the imposition
of any sales load, fee or other charge. The conversion schedule applicable to a
share of the Fund acquired through the exchange privilege from another Van
Kampen fund participating in the exchange program is determined by reference to
the Van Kampen fund from which such share was originally purchased.
The conversion of such shares to Class A Shares is subject to the continuing
availability of an opinion of counsel to the effect that (i) the assessment of
the higher distribution fee and transfer agency costs with respect to such
shares does not result in the Fund's dividends or distributions constituting
"preferential dividends" under the federal income tax law and (ii) the
conversion of shares does not constitute a taxable event under federal income
tax law. The conversion may be suspended if such an opinion is no longer
available and such shares might continue to be subject to the higher aggregate
fees applicable to such shares for an indefinite period.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE
The contingent deferred sales charge is waived on redemptions of Class B Shares
and Class C Shares (i) within one year following the death or disability (as
disability is defined by federal income tax law) of a shareholder, (ii) for
required minimum distributions from an individual retirement account ("IRA") or
certain other retirement plan distributions, (iii) for withdrawals under the
Fund's systematic withdrawal plan but limited to 12% annually of the initial
value of the account, (iv) if no commission or transaction fee is paid to
authorized dealers at the time of purchase of such shares and (v) if made by
involuntary liquidation by the Fund of a shareholder's account as described
under the heading "Redemption of Shares." The contingent deferred sales charge
also is waived on redemptions of Class C Shares as it relates to the
reinvestment of redemption proceeds in shares of the same class of the Fund
within 180 days after redemption. For a more complete description of contingent
deferred sales charge waivers, please refer to the Fund's Statement of
Additional Information or contact your authorized dealer.
QUANTITY DISCOUNTS
Investors purchasing Class A Shares may, under certain circumstances described
below, be entitled to pay reduced sales charges. Investors, or their authorized
dealers, must notify the Fund at the time of the purchase order whenever a
quantity discount is applicable to purchases. Upon such notification, an
investor will receive the lowest applicable sales charge. Quantity discounts may
be modified or terminated at any time. For more information about quantity
discounts, investors should contact their authorized dealer or the Distributor.
A person eligible for a reduced sales charge includes an individual, his or her
spouse and children under 21 years of age and any corporation, partnership or
sole proprietorship which is 100% owned, either alone or in combination, by any
of the foregoing; a trustee or other fiduciary purchasing for a single trust or
for a single fiduciary account, or a "company" as defined in Section 2(a)(8) of
the 1940 Act.
As used herein, "Participating Funds" refers to certain open-end investment
companies advised by Asset Management or Advisory Corp. and distributed by the
Distributor as determined from time to time by the Fund's Board of Trustees.
VOLUME DISCOUNTS. The size of investment shown in the Class A Shares sales
charge table applies to the total dollar amount being invested by any person in
shares of the Fund, or in any combination of shares of the Fund and shares of
other Participating Funds, although other Participating Funds may have different
sales charges.
CUMULATIVE PURCHASE DISCOUNT. The size of investment shown in the Class A Shares
sales charge table may also be determined by combining the amount being invested
in shares of the Participating Funds plus the current offering price of all
shares of the Participating Funds which have been previously purchased and are
still owned.
13
<PAGE> 16
LETTER OF INTENT. A Letter of Intent provides an opportunity for an investor to
obtain a reduced sales charge by aggregating the investments over a 13-month
period to determine the sales charge as outlined in the Class A Shares sales
charge table. The size of investment shown in the Class A Shares sales charge
table includes purchases of shares of the Participating Funds over a 13-month
period based on the total amount of intended purchases plus the value of all
shares of the Participating Funds previously purchased and still owned. An
investor may elect to compute the 13-month period starting up to 90 days before
the date of execution of a Letter of Intent. Each investment made during the
period receives the reduced sales charge applicable to the total amount of the
investment goal. The initial purchase must be for an amount equal to at least 5%
of the minimum total purchase amount of the level selected. If trades not
initially made under a Letter of Intent subsequently qualify for a lower sales
charge through the 90-day backdating provisions, an adjustment will be made at
the time of the expiration of the Letter of Intent to give effect to the lower
charge. Such adjustment in sales charge will be used to purchase additional
shares for the shareholder at the applicable discount category. The Fund
initially will escrow shares totaling 5% of the dollar amount of the Letter of
Intent to be held by Investor Services in the name of the shareholder. In the
event the Letter of Intent goal is not achieved within the specified period, the
investor must pay the difference between the sales charge applicable to the
purchases made and the reduced sales charge previously paid. Such payments may
be made directly to the Distributor or, if not paid, the Distributor will
liquidate sufficient escrowed shares to obtain the difference.
OTHER PURCHASE PROGRAMS
Purchasers of Class A Shares may be entitled to reduced initial sales charges in
connection with the unit investment trust reinvestment program and purchases by
registered representatives of selling firms or purchases by persons affiliated
with the Fund or the Distributor. The Fund reserves the right to modify or
terminate these arrangements at any time.
UNIT INVESTMENT TRUST REINVESTMENT PROGRAM. The Fund permits unitholders of unit
investment trusts to reinvest distributions from such trusts in Class A Shares
of the Fund at net asset value per share and with no minimum initial or
subsequent investment requirement, if the administrator of an investor's unit
investment trust program meets certain uniform criteria relating to cost savings
by the Fund and the Distributor. The total sales charge for all other
investments made from unit trust distributions will be 1.00% of the offering
price (1.01% of net asset value). Of this amount, the Distributor will pay to
the authorized dealer, if any, through which such participation in the
qualifying program was initiated 0.50% of the offering price as a dealer
concession or agency commission. Persons desiring more information with respect
to this program, including the terms and conditions that apply to the program,
should contact their authorized dealer or the Distributor.
The administrator of such a unit investment trust must have an agreement with
the Distributor pursuant to which the administrator will (1) submit a single
bulk order and make payment with a single remittance for all investments in the
Fund during each distribution period by all investors who choose to invest in
the Fund through the program and (2) provide Investor Services with appropriate
backup data for each investor participating in the program in a computerized
format fully compatible with Investor Services' processing system.
As further requirements for obtaining these special benefits, the Fund also
requires that all dividends and other distributions by the Fund be reinvested in
additional shares without any systematic withdrawal program. There will be no
minimum for reinvestments from unit investment trusts. The Fund will send
account activity statements to such participants on a quarterly basis only, even
if their investments are made more frequently. The Fund reserves the right to
modify or terminate this program at any time.
NET ASSET VALUE PURCHASE OPTIONS. Class A Shares of the Fund may be purchased at
net asset value, upon written assurance that the purchase is made for investment
purposes and that such shares will not be resold except through redemption by
the Fund, by:
(1) Current or retired trustees or directors of funds advised by Morgan Stanley
Dean Witter and any of its subsidiaries and such persons' families and their
beneficial accounts.
(2) Current or retired directors, officers and employees of Morgan Stanley Dean
Witter and any of its subsidiaries, employees of an investment subadviser to
any fund described in (1) above or an affiliate of such subadviser,
14
<PAGE> 17
and such persons' families and their beneficial accounts.
(3) Directors, officers, employees and, when permitted, registered
representatives, of financial institutions that have a selling group
agreement with the Distributor and their spouses and children under 21 years
of age when purchasing for any accounts they beneficially own, or, in the
case of any such financial institution, when purchasing for retirement plans
for such institution's employees; provided that such purchases are otherwise
permitted by such institutions.
(4) Registered investment advisers who charge a fee for their services, trust
companies and bank trust departments investing on their own behalf or on
behalf of their clients. The Distributor may pay authorized dealers through
which purchases are made an amount up to 0.50% of the amount invested, over
a 12-month period.
(5) Trustees and other fiduciaries purchasing shares for retirement plans which
invest in multiple fund families through broker-dealer retirement plan
alliance programs that have entered into agreements with the Distributor and
which are subject to certain minimum size and operational requirements.
Trustees and other fiduciaries should refer to the Statement of Additional
Information for further details with respect to such alliance programs.
(6) Beneficial owners of shares of Participating Funds held by a retirement plan
or held in a tax-advantaged retirement account who purchase shares of the
Fund with proceeds from distributions from such a plan or retirement account
other than distributions taken to correct an excess contribution.
(7) Accounts as to which a bank or broker-dealer charges an account management
fee ("wrap accounts"), provided the bank or broker-dealer has a separate
agreement with the Distributor.
(8) Trusts created under pension, profit sharing or other employee benefit plans
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), or custodial accounts held by a bank created pursuant
to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code and assets held by an employer
or trustee in connection with an eligible deferred compensation plan under
Section 457 of the Code. Such plans will qualify for purchases at net asset
value provided, for plans initially establishing accounts with the
Distributor in the Participating Funds after February 1, 1997, that (1) the
initial amount invested in the Participating Funds is at least $500,000 or
(2) such shares are purchased by an employer sponsored plan with more than
100 eligible employees. Such plans that have been established with a
Participating Fund or have received proposals from the Distributor prior to
February 1, 1997 based on net asset value purchase privileges previously in
effect will be qualified to purchase shares of the Participating Funds at
net asset value for accounts established on or before May 1, 1997. Section
403(b) and similar accounts for which Van Kampen Trust Company serves as
custodian will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees,
except under certain uniform criteria established by the Distributor from
time to time. Prior to February 1, 1997, a commission will be paid to
authorized dealers who initiate and are responsible for such purchases
within a rolling twelve-month period as follows: 1.00% on sales to $5
million, plus 0.50% on the next $5 million, plus 0.25% on the excess over
$10 million. For purchases on February 1, 1997 and thereafter, a commission
will be paid as follows: 1.00% on sales to $2 million, plus 0.80% on the
next $1 million, plus 0.50% on the next $47 million, plus 0.25% on the
excess over $50 million.
(9) Individuals who are members of a "qualified group." For this purpose, a
qualified group is one which (i) has been in existence for more than six
months, (ii) has a purpose other than to acquire shares of the Fund or
similar investments, (iii) has given and continues to give its endorsement
or authorization, on behalf of the group, for purchase of shares of the Fund
and Participating Funds, (iv) has a membership that the authorized dealer
can certify as to the group's members and (v) satisfies other uniform
criteria established by the Distributor for the purpose of realizing
economies of scale in distributing such shares. A qualified group does not
include one whose sole organizational nexus, for example, is that its
participants are credit card holders of the same institution, policy holders
of an insurance
15
<PAGE> 18
company, customers of a bank or broker-dealer, clients of an investment
adviser or other similar groups. Shares purchased in each group's
participants account in connection with this privilege will be subject to a
contingent deferred sales charge of 1.00% in the event of redemption within
one year of purchase, and a commission will be paid to authorized dealers
who initiate and are responsible for such sales to each individual as
follows: 1.00% on sales to $2 million, plus 0.80% on the next $1 million and
0.50% on the excess over $3 million.
The term "families" includes a person's spouse, children under 21 years of age
and grandchildren, parents, and a person's spouse's parents.
Purchase orders made pursuant to clause (4) may be placed either through
authorized dealers as described above or directly with Investor Services by the
investment adviser, trust company or bank trust department, provided that
Investor Services receives federal funds for the purchase by the close of
business on the next business day following acceptance of the order. An
authorized dealer may charge a transaction fee for placing an order to purchase
shares pursuant to this provision or for placing a redemption order with respect
to such shares. Authorized dealers will be paid a service fee as described on
purchases made as described in (3) through (9) above. The Fund may terminate, or
amend the terms of, offering shares of the Fund at net asset value to such
groups at any time.
REDEMPTION OF
SHARES
Generally shareholders may redeem for cash some or all of their shares without
charge by the Fund (other than applicable sales charge) at any time. As
described under the heading "Purchase of Shares," redemptions of Class B Shares
and Class C Shares may be subject to a contingent deferred sales charge. In
addition, certain redemptions of Class A Shares for shareholder accounts of $1
million or more may be subject to a contingent deferred sales charge.
Redemptions completed through an authorized dealer or a custodian of a
retirement plan account may involve additional fees charged by the dealer or
custodian.
Except as specified below under "Telephone Redemption Requests," payment for
shares redeemed generally will be made by check mailed within seven days after
receipt by Investor Services of the request and any other necessary documents in
proper order. Such payment may be postponed or the right of redemption suspended
as provided by the rules of the SEC. Such payment may, under certain
circumstances, be paid wholly or in part by a distribution-in-kind of portfolio
securities. If the shares to be redeemed have been recently purchased by check,
Investor Services may delay the payment of redemption proceeds until it confirms
the purchase check has cleared, which may take up to 15 days. A taxable gain or
loss will be recognized by the shareholder upon redemption of shares.
WRITTEN REDEMPTION REQUESTS. Shareholders may request a redemption of shares by
written request in proper form sent directly to Van Kampen Investor Services
Inc., PO Box 418256, Kansas City, MO 64141-9256. The request for redemption
should indicate the number of shares to be redeemed, the class designation of
such shares and the shareholder's account number. The redemption request must be
signed by all persons in whose names the shares are registered. Signatures must
conform exactly to the account registration. If the proceeds of the redemption
exceed $50,000, or if the proceeds are not to be paid to the record owner at the
record address, or if the record address has changed within the previous 30
days, signature(s) must be guaranteed by one of the following: a bank or trust
company; a broker-dealer; a credit union; a national securities exchange,
registered securities association or clearing agency; a savings and loan
association; or a federal savings bank.
Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption. In some cases, however,
other documents may be necessary. In the case of shareholders holding
certificates, the certificates for the shares being redeemed properly endorsed
for transfer must accompany the redemption request. In the event the redemption
is requested by a corporation, partnership, trust, fiduciary, executor or
administrator, and the name and title of the individual(s) authorizing such
redemption is not shown in the account registration, a copy of the corporate
resolution or other legal documentation appointing the authorized signer and
certified within the prior 120 days must accompany the redemption request. IRA
redemption requests should be sent to the IRA custodian to be forwarded to
Investor
16
<PAGE> 19
Services. Contact the IRA custodian for further information.
In the case of written redemption requests sent directly to Investor Services,
the redemption price is the net asset value per share next determined after the
request in proper form is received by Investor Services.
AUTHORIZED DEALER REDEMPTION REQUESTS. Shareholders may place redemption
requests through an authorized dealer. Orders sent through authorized dealers
must be at least $500 (unless transmitted by your authorized dealer via the
FUNDSERV network). The redemption price for such shares is the net asset value
per share next calculated after an order in proper form is received by an
authorized dealer provided such order is transmitted to the Distributor prior to
the Distributor's close of business on such day. It is the responsibility of
authorized dealers to transmit redemption requests received by them to the
Distributor so they will be received prior to such time. Redemptions completed
through an authorized dealer may involve additional fees charged by the dealer.
TELEPHONE REDEMPTION REQUESTS. The Fund permits redemption of shares by
telephone and for redemption proceeds to be sent to the address of record for
the account or to the bank account of record as described below. To establish
such privilege, a shareholder must complete the appropriate section of the
application form accompanying this prospectus or call the Fund at (800) 341-2911
to request that a copy of the Telephone Redemption Authorization form be sent to
them for completion. To redeem shares, contact the telephone transaction line at
(800) 421-5684. Van Kampen Investments, Investor Services and the Fund employ
procedures considered by them to be reasonable to confirm that instructions
communicated by telephone are genuine. Such procedures include requiring certain
personal identification information prior to acting upon telephone instructions,
tape recording telephone communications and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed,
neither Van Kampen Investments, Investor Services nor the Fund will be liable
for following telephone instructions which it reasonably believes to be genuine.
Telephone redemptions may not be available if the shareholder cannot reach
Investor Services by telephone, whether because all telephone lines are busy or
for any other reason; in such case, a shareholder would have to use the Fund's
other redemption procedure previously described. Requests received by Investor
Services prior to 4:00 p.m., New York time, will be processed at the next
determined net asset value per share. These privileges are available for all
accounts other than retirement accounts or accounts with shares represented by
certificates. If an account has multiple owners, Investor Services may rely on
the instructions of any one owner.
For redemptions authorized by telephone, amounts of $50,000 or less may be
redeemed daily if the proceeds are to be paid by check and amounts of at least
$1,000 up to $1 million may be redeemed daily if the proceeds are to be paid by
wire. The proceeds must be payable to the shareholder(s) of record and sent to
the address of record for the account or wired directly to their predesignated
bank account. This privilege is not available if the address of record has been
changed within 30 days prior to a telephone redemption request. Proceeds from
redemptions payable by wire transfer are expected to be wired on the next
business day following the date of redemption. The Fund reserves the right at
any time to terminate, limit or otherwise modify this redemption privilege.
OTHER REDEMPTION INFORMATION. The Fund may redeem shares of any shareholder
account that has a value on the date of the notice of redemption less than the
minimum initial investment as specified in this prospectus. At least 60 days'
advance written notice of any such involuntary redemption will be provided to
the shareholder and such shareholder will be given an opportunity to purchase
the required value of additional shares at the next determined net asset value
without sales charge. Any involuntary redemption may only occur if the
shareholder account is less than the minimum initial investment due to
shareholder redemptions.
DISTRIBUTIONS FROM THE FUND
In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive two kinds of return from the Fund: dividends and
capital gains distributions.
17
<PAGE> 20
DIVIDENDS. Dividends from stocks and interest earned from other investments are
the Fund's main sources of income. The Fund's present policy, which may be
changed at any time by the Board of Trustees, is to distribute all or
substantially all of this income, less expenses, at least annually as dividends
to shareholders. Dividends are automatically applied to purchase additional
shares of the Fund at the next determined net asset value unless the shareholder
instructs otherwise.
The per share dividends on Class B Shares and Class C Shares may be lower than
the per share dividends on Class A Shares as a result of the higher distribution
fees and transfer agency costs applicable to such classes of shares.
CAPITAL GAINS. The Fund may realize capital gains or losses when it sells
securities, depending on whether the sales prices for the securities are higher
or lower than purchase prices. Net realized capital gains represent the total
profit from sales of securities minus total losses from sales of securities
including losses carried forward from prior years. The Fund distributes any
taxable net realized capital gains to shareholders as capital gains
distributions at least annually. As in the case of dividends, capital gains
distributions are automatically reinvested in additional shares of the Fund at
net asset value unless the shareholder instructs otherwise.
SHAREHOLDER SERVICES
Listed below are some of the shareholder services the Fund offers to investors.
For a more complete description of the Fund's shareholder services, such as
investment accounts, share certificates, retirement plans, automated clearing
house deposits, dividend diversification and the systematic withdrawal plan,
please refer to the Statement of Additional Information or contact your
authorized dealer.
REINVESTMENT PLAN. A convenient way for investors to accumulate additional
shares is by accepting dividends and capital gains distributions in shares of
the Fund. Such shares are acquired at net asset value per share (without sales
charge) on the applicable payable date of the dividend or capital gains
distribution. Unless the shareholder instructs otherwise, the reinvestment plan
is automatic. This instruction may be made by telephone by calling (800)
341-2911 ((800) 421-2833 for the hearing impaired) or by writing to Investor
Services. The investor may, on the initial application or prior to any
declaration, instruct that dividends be paid in cash and capital gains
distributions be reinvested at net asset value, or that both dividends and
capital gains distributions be paid in cash.
AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under which
a shareholder can authorize Investor Services to charge a bank account on a
regular basis to invest predetermined amounts in the Fund. Additional
information is available from the Distributor or your authorized dealer.
EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares of the same
class of any Participating Fund based on the next computed net asset value per
share of each fund after requesting the exchange without any sales charge,
subject to certain limitations. Shares of the Fund may be exchanged for shares
of any Participating Fund only if shares of that Participating Fund are
available for sale; however, during periods of suspension of sales, shares of a
Participating Fund may be available for sale only to existing shareholders of a
Participating Fund. Shareholders seeking an exchange into a Participating Fund
should obtain and read the current prospectus for such fund.
To be eligible for exchange, shares of the Fund must have been registered in the
shareholder's name for at least 30 days prior to an exchange. Shares of the Fund
registered in a shareholder's name for less than 30 days may only be exchanged
upon receipt of prior approval of the Adviser. It is the policy of the Adviser,
under normal circumstances, not to approve such requests.
When Class B Shares and Class C Shares are exchanged among Participating Funds,
the holding period for purposes of computing the contingent deferred sales
charge is based upon the date of the initial purchase of such shares from a
Participating Fund. If such Class B Shares or Class C Shares are redeemed and
not exchanged for shares of another Participating Fund, Class B Shares and Class
C Shares are subject to the contingent deferred sales charge schedule imposed by
the Participating Fund from which such shares were originally purchased.
Exchanges of shares are sales and may result in a gain or loss for federal
income tax purposes. If the shares
18
<PAGE> 21
exchanged have been held for less than 91 days, the sales charge paid on such
shares is carried over and included in the tax basis of the shares acquired.
A shareholder wishing to make an exchange may do so by sending a written request
to Investor Services or by contacting the telephone transaction line at (800)
421-5684. A shareholder automatically has telephone exchange privileges unless
otherwise designated in the application form accompanying the prospectus. Van
Kampen Investments, Investor Services and the Fund employ procedures considered
by them to be reasonable to confirm that instructions communicated by telephone
are genuine. Such procedures include requiring certain personal identification
information prior to acting upon telephone instructions, tape recording
telephone communications, and providing written confirmation of instructions
communicated by telephone. If reasonable procedures are employed, neither Van
Kampen Investments, Investor Services nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. If the
exchanging shareholder does not have an account in the fund whose shares are
being acquired, a new account will be established with the same registration,
dividend and capital gains options (except dividend diversification) and
authorized dealer of record as the account from which shares are exchanged,
unless otherwise specified by the shareholder. In order to establish a
systematic withdrawal plan for the new account or reinvest dividends from the
new account into another fund, however, an exchanging shareholder must submit a
specific request. The Fund reserves the right to reject any order to acquire its
shares through exchange. In addition, the Fund and other Participating Funds may
restrict exchanges by shareholders engaged in excessive trading by limiting or
disallowing the exchange privileges to such shareholders. In addition, the Fund
may modify, restrict or terminate the exchange privilege at any time on 60 days'
notice to its shareholders of any termination or material amendment.
For purposes of determining the sales charge rate previously paid on Class A
Shares, all sales charges paid on the exchanged security and on any security
previously exchanged for such security or for any of its predecessors shall be
included. If the exchanged security was acquired through reinvestment, that
security is deemed to have been sold with a sales charge rate equal to the rate
previously paid on the security on which the dividend or distribution was paid.
If a shareholder exchanges less than all of such shareholder's securities, the
security upon which the highest sales charge rate was previously paid is deemed
exchanged first.
Exchange requests received on a business day prior to the time shares of the
funds involved in the request are priced will be processed on the date of
receipt. "Processing" a request means that shares in the fund from which the
shareholder is withdrawing an investment will be redeemed at the net asset value
per share next determined on the date of receipt. Shares of the new fund into
which the shareholder is investing will also normally be purchased at the net
asset value per share, plus any applicable sales charge, next determined on the
date of receipt. Exchange requests received on a business day after the time
shares of the funds involved in the request are priced will be processed on the
next business day in the manner described herein.
A prospectus of any of these Participating Funds may be obtained from any
authorized dealer or the Distributor. An investor considering an exchange to one
of such funds should refer to the prospectus for additional information
regarding such fund prior to investing.
INTERNET TRANSACTIONS. In addition to performing transactions on your account
through written instruction or by telephone, you may also perform certain
transactions through the internet. Please refer to our web site at
www.vankampen.com for further instruction. Van Kampen Investments, Investor
Services and the Fund employ procedures considered by them to be reasonable to
confirm that instructions communicated through the internet are genuine. Such
procedures include requiring use of a personal identification number prior to
acting upon internet instructions and providing written confirmation of
instructions communicated through the internet. If reasonable procedures are
employed, neither Van Kampen Investments, Investor Services nor the Fund will be
liable for following instructions through the internet which it reasonably
believes to be genuine. If an account has multiple owners, Investor Services may
rely on the instructions of any one owner.
FEDERAL INCOME TAXATION
Distributions of the Fund's net investment income (consisting generally of
taxable income and net short-
19
<PAGE> 22
term capital gains) are taxable to shareholders as ordinary income to the extent
of the Fund's earnings and profits, whether paid in cash or reinvested in
additional shares. Distributions of the Fund's net capital gains (which are the
excess of net long-term capital gains over net short-term capital losses) as
capital gains dividends, if any, are taxable to shareholders as long-term
capital gains, whether paid in cash or reinvested in additional shares, and
regardless of how long the shares of the Fund have been held by such
shareholders. Capital gains distributions may be taxed at different rates
depending on how long the Fund held the securities. The Fund expects that its
distributions will consist of ordinary income and capital gains dividends.
Distributions in excess of the Fund's earnings and profits will first reduce the
adjusted tax basis of a holder's shares and, after such adjusted tax basis is
reduced to zero, will constitute capital gains to such holder (assuming such
shares are held as a capital asset). Although distributions generally are
treated as taxable in the year they are paid, distributions declared in October,
November or December, payable to shareholders of record on a specified date in
such month and paid during January of the following year will be treated as
having been distributed by the Fund and received by the shareholders on the
December 31st prior to the date of payment. The Fund will inform shareholders of
the source and tax status of all distributions promptly after the close of each
calendar year.
The sale or exchange of shares is a taxable transaction for federal income tax
purposes. Shareholders who sell their shares will generally recognize gain or
loss in an amount equal to the difference between their adjusted tax basis in
the shares and the amount received. If the shares are held as a capital asset,
the gain or loss will be a capital gain or loss. Any capital gains may be taxed
at different rates depending on how long the shareholder held such shares.
The Fund is required, in certain circumstances, to withhold 31% of dividends and
certain other payments, including redemptions, paid to shareholders who do not
furnish to the Fund their correct taxpayer identification number (in the case of
individuals, their social security number) and certain required certifications
or who are otherwise subject to backup withholding.
Foreign shareholders, including shareholders who are non-resident aliens, may be
subject to U.S. withholding tax on certain distributions (whether received in
cash or in shares) at a rate of 30% or such lower rate as prescribed by an
applicable treaty. Prospective foreign investors should consult their U.S. tax
advisers concerning the tax consequences to them of an investment in shares.
The Fund intends to qualify as a regulated investment company under the federal
income tax law. If the Fund so qualifies and distributes each year to its
shareholders at least 90% of its net investment income, the Fund will not be
required to pay federal income taxes on any income it distributed to
shareholders. If the Fund distributes less than the sum of 98% of its ordinary
income and 98% of its capital gains net income, then the Fund will be subject to
a 4% excise tax on the undistributed amounts.
The federal income tax discussion set forth above is for general information
only. Prospective investors should consult their own tax advisers regarding the
specific federal tax consequences of purchasing, holding, exchanging or selling
shares, as well as the effects of state, local and foreign tax law and any
proposed tax law changes.
20
<PAGE> 23
FOR MORE INFORMATION
EXISTING SHAREHOLDERS OR PROSPECTIVE INVESTORS
Call your broker or (800) 341-2911
7:00 a.m. to 7:00 p.m. Central time Monday through Friday
DEALERS
For dealer information, selling agreements, wire orders, or redemptions, call
the Distributor at (800) 421-5666
TELECOMMUNICATIONS DEVICE FOR THE DEAF
For shareholder and dealer inquiries through Telecommunications Device for the
Deaf (TDD), call (800) 421-2833
FUND INFO(R)
For automated telephone services, call (800) 847-2424
WEB SITE
www.vankampen.com
VAN KAMPEN SMALL CAP VALUE FUND
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555
Investment Adviser
VAN KAMPEN INVESTMENT ADVISORY CORP.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555
Distributor
VAN KAMPEN FUNDS INC.
1 Parkview Plaza
PO Box 5555
Oakbrook Terrace, IL 60181-5555
Transfer Agent
VAN KAMPEN INVESTOR SERVICES INC.
PO Box 418256
Kansas City, MO 64141-9256
Attn: Van Kampen Small Cap Value Fund
Custodian
STATE STREET BANK AND TRUST COMPANY
225 West Franklin Street, PO Box 1713
Boston, MA 02105-1713
Attn: Van Kampen Small Cap Value Fund
Legal Counsel
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, IL 60606
Independent Accountants
KPMG LLP
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 24
VAN KAMPEN
SMALL CAP VALUE FUND
PROSPECTUS
JUNE 16, 1999
A Statement of Additional Information, which
contains more details about the Fund, is
incorporated by reference in its entirety into
this prospectus.
You will find additional information about the
Fund in its annual and semiannual reports to
shareholders. The annual report explains the
market conditions and investment strategies
affecting the Fund's performance during its
last fiscal year.
You can ask questions or obtain a free copy of
the Fund's reports or its Statement of
Additional Information by calling (800)
341-2911 from 7:00 a.m. to 7:00 p.m., Central
time, Monday through Friday.
Telecommunications Device for the Deaf users
may call (800) 421-2833. A free copy of the
Fund's reports can also be ordered from our
web site at www.vankampen.com.
Information about the Fund, including its
reports and Statement of Additional
Information, has been filed with the
Securities and Exchange Commission (SEC). It
can be reviewed and copied at the SEC Public
Reference Room in Washington, DC or online at
the SEC's web site (http://www.sec.gov). For
more information, please call the SEC at (800)
SEC-0330. You can also request these materials
by writing the Public Reference Section of the
SEC, Washington DC, 20549-6009, and paying a
duplication fee.
[VAN KAMPEN FUNDS LOGO]
Investment Company Act File No. 811-4805.
SCV PRO 6/99
<PAGE> 25
STATEMENT OF ADDITIONAL INFORMATION
VAN KAMPEN
SMALL CAP VALUE FUND
Van Kampen Small Cap Value Fund (the "Fund") is a mutual fund with an
investment objective of capital appreciation. The Fund's management seeks to
achieve the investment objective by investing primarily in a diversified
portfolio of equity securities of small capitalization companies that the Fund's
investment adviser believes are undervalued.
The Fund is organized as a diversified series of the Van Kampen Equity
Trust, an open-end, management investment company (the "Trust").
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information should be read in conjunction with the
Fund's prospectus (the "Prospectus") dated as of the same date as this Statement
of Additional Information. This Statement of Additional Information does not
include all the information that a prospective investor should consider before
purchasing shares of the Fund. Investors should obtain and read the Prospectus
prior to purchasing shares of the Fund. A Prospectus may be obtained without
charge by writing or calling Van Kampen Funds Inc. at 1 Parkview Plaza, PO Box
5555, Oakbrook Terrace, Illinois 60181-5555 or (800) 341-2911 (or (800) 421-2833
for the hearing impaired).
---------------------------------------------
TABLE OF CONTENTS
---------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information......................................... B-2
Investment Objective and Policies........................... B-4
Options, Futures Contracts and Related Options.............. B-6
Investment Restrictions..................................... B-12
Trustees and Officers....................................... B-14
Investment Advisory Agreement............................... B-26
Other Agreements............................................ B-27
Distribution and Service.................................... B-28
Transfer Agent.............................................. B-31
Portfolio Transactions and Brokerage Allocation............. B-31
Shareholder Services........................................ B-32
Redemption of Shares........................................ B-35
Contingent Deferred Sales Charge-Class A.................... B-35
Waiver of Class B and Class C Contingent Deferred Sales
Charge.................................................... B-35
Taxation.................................................... B-37
Fund Performance............................................ B-42
Other Information........................................... B-44
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED JUNE 16, 1999.
SCV SAI 6/99
<PAGE> 26
GENERAL INFORMATION
The Fund is a separate diversified series of the Trust. The Trust is an
unincorporated business trust established under the laws of the State of
Delaware by an Agreement and Declaration of Trust (the "Declaration of Trust")
dated May 10, 1995. The Declaration of Trust permits the Trustees to create one
or more separate investment portfolios and issue a series of shares for each
portfolio, such as the Fund. The Trustees can further sub-divide each series of
shares into one or more classes of shares for each portfolio.
The Trust was originally organized in 1987 under the name Van Kampen
Merritt Equity Trust as a Massachusetts business trust (the "Massachusetts
Trust"). The Massachusetts Trust was reorganized into the Trust under the name
Van Kampen American Capital Equity Trust on July 31, 1995. The Trust was created
for the purpose of facilitating the Massachusetts Trust reorganization into a
Delaware business trust. On July 14, 1998, the Trust adopted its current name.
Van Kampen Investment Advisory Corp. (the "Adviser" or "Advisory Corp."),
Van Kampen Funds Inc. (the "Distributor") and Van Kampen Investor Services Inc.
("Investor Services") are wholly owned subsidiaries of Van Kampen Investments
Inc. ("Van Kampen Investments"), which is an indirect wholly owned subsidiary of
Morgan Stanley Dean Witter & Co. ("Morgan Stanley Dean Witter"). The principal
office of the Fund, the Adviser, the Distributor and Van Kampen Investments is
located at 1 Parkview Plaza, PO Box 5555, Oakbrook Terrace, Illinois 60181-5555.
Morgan Stanley Dean Witter and various of its directly or indirectly owned
subsidiaries, including Morgan Stanley Dean Witter Investment Management Inc.,
an investment adviser, Morgan Stanley & Co. Incorporated, a registered
broker-dealer and investment adviser, and Morgan Stanley International, are
engaged in a wide range of financial services. Their principal businesses
include securities underwriting, distribution and trading; merger, acquisition,
restructuring and other corporate finance advisory activities; merchant banking;
stock brokerage and research services; credit services; asset management;
trading of futures, options, foreign exchange, commodities and swaps (involving
foreign exchange, commodities, indices and interest rates); real estate advice,
financing and investing; and securities lending.
The authorized capitalization of the Trust consists of an unlimited number
of shares of beneficial interest, par value $0.01 per share, which can be
divided into series, such as the Fund, and further subdivided into classes of
each series. Each share represents an equal proportionate interest in the assets
of the series with each other share in such series and no interest in any other
series. No series is subject to the liabilities of any other series. The
Declaration of Trust provides that shareholders are not liable for any
liabilities of the Trust or any of its series, requires inclusion of a clause to
that effect in every agreement entered into by the Trust or any of its series
and indemnifies shareholders against any such liability.
The Fund currently offers three classes of shares, designated Class A
Shares, Class B Shares and Class C Shares. Other classes may be established from
time to time in accordance with provisions of the Declaration of Trust. Each
class of shares of the Fund generally are identical in all respects except that
each class bears certain distribution expenses and has exclusive voting rights
with respect to its distribution fee. Shares of the Trust entitle their holders
to one vote per share; however, separate votes are taken by each
B-2
<PAGE> 27
series on matters affecting an individual series and separate votes are taken by
each class of a series on matters affecting an individual class of such series.
For example, a change in investment policy for a series would be voted upon by
shareholders of only the series involved and a change in the distribution fee
for a class of a series would be voted upon by shareholders of only the class of
such series involved. Except as otherwise described in the Prospectus or herein,
shares do not have cumulative voting rights, preemptive rights or any
conversion, subscription or exchange rights.
The Trust does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of two-thirds of the shares then outstanding cast
in person or by proxy at such meeting. The Fund will assist such holders in
communicating with other shareholders of the Fund to the extent required by the
Investment Company Act of 1940, as amended (the "1940 Act"), or rules or
regulations promulgated by the Securities and Exchange Commission ("SEC").
In the event of liquidation, each of the shares of the Fund is entitled to
its portion of all of the Fund's net assets after all debts and expenses of the
Fund have been paid. Since Class B Shares and Class C Shares have higher
distribution fees and transfer agency costs, the liquidation proceeds to holders
of Class B Shares and Class C Shares are likely to be lower than to holders of
Class A Shares.
The Trustees may amend the Declaration of Trust (including with respect to
any series) in any manner without shareholder approval, except that the Trustees
may not adopt any amendment adversely affecting the rights of shareholders of
any series without approval by a majority of the shares of each affected series
present at a meeting of shareholders (or such higher vote as may be required by
the 1940 Act or other applicable law) and except that the Trustees cannot amend
the Declaration of Trust to impose any liability on shareholders, make any
assessment on shares or impose liabilities on the Trustees without approval from
each affected shareholder or Trustee, as the case may be.
Statements contained in this Statement of Additional Information as to the
contents of any contract or other document referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement of which
this Statement of Additional Information forms a part, each such statement being
qualified in all respects by such reference.
As of the date of this Statement of Additional Information, no person was
known by the Fund to own beneficially or to hold of record 5% or more of the
outstanding Class A Shares, Class B Shares or Class C Shares of the Fund.
B-3
<PAGE> 28
INVESTMENT OBJECTIVE AND POLICIES
The following disclosures supplement disclosures set forth under the same
caption in the Prospectus and do not, standing alone, present a complete or
accurate explanation of the matters disclosed. Readers must refer also to this
caption in the Prospectus for a complete presentation of the matters disclosed
below.
REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreements with banks or broker-dealers
in order to earn a return on temporarily available cash. A repurchase agreement
is a short-term investment in which the purchaser (i.e., the Fund) acquires
ownership of a debt security and the seller agrees to repurchase the obligation
at a future time and set price, thereby determining the yield during the holding
period. Repurchase agreements involve certain risks in the event of default by
the other party. The Fund may enter into repurchase agreements with banks or
broker-dealers deemed to be creditworthy by the Adviser under guidelines
approved by the Trustees. 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, would exceed the Fund's limitation on
illiquid securities described below. In the event of the bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience both
delays in liquidating the underlying securities and losses including: (a)
possible decline in the value of the underlying security during the period while
the Fund seeks to enforce its rights thereto; (b) possible lack of access to
income on the underlying security during this period; and (c) expenses of
enforcing its rights.
For the purpose of investing in repurchase agreements, the Adviser may
aggregate the cash that certain funds advised or subadvised by the Adviser or
certain of its affiliates would otherwise invest separately into a joint
account. The cash in the joint account is then invested in repurchase agreements
and the funds that contributed to the joint account share pro rata in the net
revenue generated. The Adviser believes that the joint account produces
efficiencies and economies of scale that may contribute to reduced transaction
costs, higher returns, higher quality investments and greater diversity of
investments for the Fund than would be available to the Fund investing
separately. The manner in which the joint account is managed is subject to
conditions set forth in an exemptive order from the SEC authorizing this
practice, which conditions are designed to ensure the fair administration of the
joint account and to protect the amounts in that account.
Repurchase agreements are fully collateralized by the underlying debt
securities and are considered to be loans under the 1940 Act. The Fund pays for
such securities only upon physical delivery or evidence of book entry transfer
to the account of a custodian or bank acting as agent. The seller under a
repurchase agreement will be required to maintain the value of the underlying
securities marked-to-market daily at not less than the repurchase price. The
underlying securities (normally securities of the U.S. government, or its
agencies and instrumentalities) may have maturity dates exceeding one year. The
Fund does not bear the risk of a decline in value of the underlying security
unless the seller defaults under its repurchase obligation.
B-4
<PAGE> 29
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for a fiscal year by the average
monthly value of the Fund's portfolio securities during such fiscal year. The
turnover rate may vary greatly from year to year as well as within a year. The
Fund's portfolio turnover rate is the lesser of the value of the securities
purchased or securities sold divided by the average value of the securities held
in the Fund's portfolio excluding all securities whose maturities at acquisition
were one year or less. A high portfolio turnover rate (100% or more) increases
the Fund's transaction costs, including brokerage commissions, and may result in
the realization of more short-term capital gains than if the Fund had a lower
portfolio turnover. The turnover rate will not be a limiting factor, however, if
the Adviser deems portfolio changes appropriate.
ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities,
which includes securities that are not readily marketable, repurchase agreements
which have a maturity of longer than seven days, and generally includes
securities that are restricted from sale to the public without registration
under the Securities Act of 1933, as amended (the "1933 Act"). The sale of such
securities often requires more time and results in higher brokerage charges or
dealer discounts and other selling expenses than does the sale of liquid
securities trading on national securities exchanges or in the over-the-counter
markets. Restricted securities are often purchased at a discount from the market
price of unrestricted securities of the same issuer reflecting the fact that
such securities may not be readily marketable without some time delay.
Investments in securities which have no ready market are valued at fair value as
determined in good faith by the Adviser in accordance with procedures approved
by the Fund's Trustees. Ordinarily, the Fund would invest in restricted
securities only when it receives the issuer's commitment to register the
securities without expense to the Fund. However, registration and underwriting
expenses (which may range from 7% to 15% of the gross proceeds of the securities
sold) may be paid by the Fund. Restricted securities which can be offered and
sold to qualified institutional buyers under Rule 144A under the 1933 Act ("144A
Securities") and are determined to be liquid under guidelines adopted by and
subject to the supervision of the Fund's Board of Trustees are not subject to
the limitation on illiquid securities. Such 144A Securities are subject to
monitoring and may become illiquid to the extent qualified institutional buyers
become, for a time, uninterested in purchasing such securities. Factors used to
determine whether 144A Securities are liquid include, among other things, a
security's trading history, the availability of reliable pricing information,
the number of dealers making quotes or making a market in such security and the
number of potential purchasers in the market for such security. For purposes
hereof, investments by the Fund in securities of other investment companies will
not be considered investments in restricted securities to the extent permitted
by (i) the 1940 Act, (ii) the rules and regulations promulgated by the SEC under
the 1940 Act, as amended from time to time, or (iii) an exemption or other
relief from the provisions of the 1940 Act.
B-5
<PAGE> 30
WARRANTS
Warrants are in effect longer-term call options. They give the holder the
right to purchase a given number of shares of a particular company at specified
prices within certain periods of time. The purchaser of a warrant expects that
the market price of the security will exceed the purchase price of the warrant
plus the exercise price of the warrant, thus giving him a profit. Of course,
since the market price may never exceed the exercise price before the expiration
date of the warrant, the purchaser of the warrant risks the loss of the entire
purchase price of the warrant. Warrants generally trade in the open market and
may be sold rather than exercised. Warrants are sometimes sold in unit form with
other securities of an issuer. Units of warrants and common stock may be
employed in financing young, unseasoned companies. The purchase price of a
warrant varies with the exercise price of the warrant, the current market value
of the underlying security, the life of the warrant and various other investment
factors.
OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS
The Fund may, but is not required to, use various investment strategies as
described below to earn income, facilitate portfolio management, and mitigate
risks. Such strategies are generally accepted under modern portfolio management
and are regularly used by many mutual funds and other institutional investors.
Techniques and instruments may change over time as new instruments and
strategies are developed or regulatory changes occur.
SELLING CALL AND PUT OPTIONS
Purpose. The principal reason for selling options is to obtain, through
receipt of premiums, a greater current return than would be realized on the
underlying securities alone. Such current return could be expected to fluctuate
because premiums earned from an option selling program and dividend or interest
income yields on portfolio securities vary as economic and market conditions
change. Selling options on portfolio securities is likely to result in a higher
portfolio turnover rate.
Selling Options. The purchaser of a call option pays a premium to the
seller (i.e., the writer) for the right to buy the underlying security from the
seller at a specified price during a certain period. The Fund would write call
options only on a covered basis or for cross-hedging purposes. A call option is
covered if, at all times during the option period, the Fund would own or have
the right to acquire securities of the type that it would be obligated to
deliver if any outstanding option were exercised. An option is for cross-hedging
purposes if it is not covered by the security subject to the option, but is
designed to provide a hedge against another security which the Fund owns or has
the right to acquire. In such circumstances, the Fund collateralizes the option
by maintaining in a segregated account with the Fund's custodian cash or liquid
securities in an amount not less than the market value of the underlying
security, marked to market daily, while the option is outstanding.
The purchaser of a put option pays a premium to the seller (i.e., the
writer) for the right to sell the underlying security to the writer at a
specified price during a certain period. The Fund would sell put options only on
a secured basis, which means that, at all times during the option period, the
Fund would maintain in a segregated account with its
B-6
<PAGE> 31
custodian cash or liquid securities in an amount of not less than the exercise
price of the option, or would hold a put on the same underlying security at an
equal or greater exercise price.
Closing Purchase Transactions and Offsetting Transactions. In order to
terminate its position as a writer of a call or put option, the Fund could enter
into a "closing purchase transaction," which is the purchase of a call (put) on
the same underlying security and having the same exercise price and expiration
date as the call (put) previously sold by the Fund. The Fund would realize a
gain (loss) if the premium plus commission paid in the closing purchase
transaction is less (greater) than the premium it received on the sale of the
option. The Fund would also realize a gain if an option it has written lapses
unexercised.
The Fund could sell options that are listed on an exchange as well as
options which are privately negotiated in over-the-counter transactions. The
Fund could close out its position as a seller of an option only if a liquid
secondary market exists for options of that series, but there is no assurance
that such a market will exist, particularly in the case of over-the-counter
options, since they can be closed out only with the other party to the
transaction. Alternatively, the Fund could purchase an offsetting option, which
would not close out its position as a seller, but would provide an asset of
equal value to its obligation under the option sold. If the Fund is not able to
enter into a closing purchase transaction or to purchase an offsetting option
with respect to an option it has sold, it will be required to maintain the
securities subject to the call or the collateral securing the option until a
closing purchase transaction can be entered into (or the option is exercised or
expires) even though it might not be advantageous to do so.
Risks of Writing Options. By selling a call option, the Fund loses the
potential for gain on the underlying security above the exercise price while the
option is outstanding; by selling a put option the Fund might become obligated
to purchase the underlying security at an exercise price that exceeds the then
current market price.
PURCHASING CALL AND PUT OPTIONS
The Fund could purchase call options to protect (i.e., hedge) against
anticipated increases in the prices of securities it wishes to acquire.
Alternatively, call options could be purchased for capital appreciation. Since
the premium paid for a call option is typically a small fraction of the price of
the underlying security, a given amount of funds will purchase call options
covering a much larger quantity of such security than could be purchased
directly. By purchasing call options, the Fund could benefit from any
significant increase in the price of the underlying security to a greater extent
than had it invested the same amount in the security directly. However, because
of the very high volatility of option premiums, the Fund would bear a
significant risk of losing the entire premium if the price of the underlying
security did not rise sufficiently, or if it did not do so before the option
expired.
Put options may be purchased to protect (i.e., hedge) against anticipated
declines in the market value of either specific portfolio securities or of the
Fund's assets generally. Alternatively, put options may be purchased for capital
appreciation in anticipation of a price decline in the underlying security and a
corresponding increase in the value of the
B-7
<PAGE> 32
put option. The purchase of put options for capital appreciation involves the
same significant risk of loss as described above for call options.
In any case, the purchase of options for capital appreciation would
increase the Fund's volatility by increasing the impact of changes in the market
price of the underlying securities on the Fund's net asset value.
OPTIONS ON STOCK INDICES
Options on stock indices are similar to options on stock, but the delivery
requirements are different. Instead of giving the right to take or make delivery
of stock at a specified price, an option on a stock index gives the holder the
right to receive an amount of cash which amount will depend upon the closing
level of the stock index upon which the option is based being greater than (in
the case of a call) or less than (in the case of a put) the exercise price of
the option. The amount of cash received will be the difference between the
closing price of the index and the exercise price of the option, multiplied by a
specified dollar multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount.
Some stock index options are based on a broad market index such as the
Standard & Poor's 500 or the New York Stock Exchange Composite Index, or a
narrower index such as the Standard & Poor's 100. Indices are also based on an
industry or market segment such as the AMEX Oil and Gas Index or the Computer
and Business Equipment Index. A stock index fluctuates with changes in the
market values of the stocks included in the index. Options are currently traded
on several exchanges.
Gain or loss to the Fund on transactions in stock index options will depend
on price movements in the stock market generally (or in a particular industry or
segment of the market) rather than price movements of individual securities. As
with stock options, the Fund may offset its position in stock index options
prior to expiration by entering into a closing transaction on an exchange, or it
may let the option expire unexercised.
FUTURES CONTRACTS
The Fund may engage in transactions involving futures contracts and related
options in accordance with the rules and interpretations of the Commodity
Futures Trading Commission ("CFTC") under which the Fund would be exempt from
registration as a "commodity pool."
A stock index futures contract is an agreement pursuant to which a party
agrees to take or make delivery of an amount of cash equal to a specified dollar
amount multiplied by the difference between the stock index value at a specified
time and the price at which the futures contract originally was struck. No
physical delivery of the underlying stocks in the index is made.
Currently, stock index futures contracts can be purchased with respect to
several indices on various exchanges. Differences in the stocks included in the
indices may result in differences in correlation of the futures contracts with
movements in the value of the securities being hedged.
B-8
<PAGE> 33
An interest rate futures contract is an agreement pursuant to which a party
agrees to take or make delivery of a specified debt security (such as U.S.
Treasury bonds or notes) at a specified future time and at a specified price.
Initial and Variation Margin. In contrast to the purchase or sale of a
security, no price is paid or received upon the purchase or sale of a futures
contract. Initially, the Fund is required to deposit with its custodian in an
account in the broker's name an amount of cash or liquid securities equal to a
percentage (which will normally range between 2% and 10%) of the contract
amount. This amount is known as initial margin. The nature of initial margin in
futures transactions is different from that of margin in securities transactions
in that futures contract margin does not involve the borrowing of funds by the
customer to finance the transaction. Rather, the initial margin is in the nature
of a performance bond or good faith deposit on the contract, which is returned
to the Fund upon termination of the futures contract and satisfaction of its
contractual obligations. Subsequent payments to and from the broker, called
variation margin, are made on a daily basis as the price of the underlying
securities or index fluctuates, making the long and short positions in the
futures contract more or less valuable, a process known as marking to market.
For example, when the Fund purchases a futures contract and the price of
the underlying security or index rises, that position increases in value, and
the Fund receives from the broker a variation margin payment equal to that
increase in value. Conversely, where the Fund purchases a futures contract and
the value of the underlying security or index declines, the position is less
valuable, and the Fund is required to make a variation margin payment to the
broker.
At any time prior to expiration of the futures contract, the Fund may elect
to terminate the position by taking an opposite position. A final determination
of variation margin is then made, additional cash is required to be paid by or
released to the Fund, and the Fund realizes a loss or a gain.
Futures Strategies. When the Fund anticipates a significant market or
market sector advance, the purchase of a futures contract affords a hedge
against not participating in the advance at a time when the Fund is otherwise
fully invested ("anticipatory hedge"). Such purchase of a futures contract would
serve as a temporary substitute for the purchase of individual securities, which
may be purchased in an orderly fashion once the market has stabilized. As
individual securities are purchased, an equivalent amount of futures contracts
could be terminated by offsetting sales. The Fund may sell futures contracts in
anticipation of or in a general market or market sector decline that may
adversely affect the market value of the Fund's securities ("defensive hedge").
To the extent that the Fund's portfolio of securities changes in value in
correlation with the underlying security or index, the sale of futures contracts
would substantially reduce the risk to the Fund of a market decline and, by so
doing, provides an alternative to the liquidation of securities positions in the
Fund. Ordinarily commissions on futures transactions are lower than transaction
costs incurred in the purchase and sale of securities.
The Fund also may invest in foreign stock index futures traded outside the
United States which involve additional risks including fluctuations in foreign
exchange rates, foreign currency exchange controls, political and economic
instability, differences in financial reporting and securities regulation and
trading, and foreign taxation issues.
Special Risks Associated with Futures Transactions. There are several risks
connected with the use of futures contracts as a hedging device. These include
the risk of imperfect
B-9
<PAGE> 34
correlation between movements in the price of the futures contracts and of the
underlying securities, the risk of market distortion, the illiquidity risk and
the risk of error in anticipating price movement.
There may be an imperfect correlation (or no correlation) between movements
in the price of the futures contracts and of the securities being hedged. The
risk of imperfect correlation increases as the composition of the securities
being hedged diverges from the securities upon which the futures contract is
based. If the price of the futures contract moves less than the price of the
securities being hedged, the hedge will not be fully effective. To compensate
for the imperfect correlation, the Fund could buy or sell futures contracts in a
greater dollar amount than the dollar amount of securities being hedged if the
historical volatility of the securities being hedged is greater than the
historical volatility of the securities underlying the futures contract.
Conversely, the Fund could buy or sell futures contracts in a lesser dollar
amount than the dollar amount of securities being hedged if the historical
volatility of the securities being hedged is less than the historical volatility
of the securities underlying the futures contracts. It is also possible that the
value of futures contracts held by the Fund could decline at the same time as
portfolio securities being hedged; if this occurred, the Fund would lose money
on the futures contract in addition to suffering a decline in value in the
portfolio securities being hedged.
There is also the risk that the price of futures contracts may not
correlate perfectly with movements in the securities or index underlying the
futures contract due to certain market distortions. First, all participants in
the futures market are subject to margin depository and maintenance
requirements. Rather than meet additional margin depository requirements,
investors may close futures contracts through offsetting transactions, which
could distort the normal relationship between the futures market and the
securities or index underlying the futures contract. Second, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities markets. Therefore, increased
participation by speculators in the futures markets may cause temporary price
distortions. Due to the possibility of price distortion in the futures markets
and because of the imperfect correlation between movements in futures contracts
and movements in the securities underlying them, a correct forecast of general
market trends by the Adviser may still not result in a successful hedging
transaction.
There is also the risk that futures markets may not be sufficiently liquid.
Futures contracts may be closed out only on an exchange or board of trade that
provides a market for such futures contracts. Although the Fund intends to
purchase or sell futures only on exchanges and boards of trade where there
appears to be an active secondary market, there can be no assurance that an
active secondary market will exist for any particular contract or at any
particular time. In the event of such illiquidity, it might not be possible to
close a futures position and, in the event of adverse price movement, the Fund
would continue to be required to make daily payments of variation margin. Since
the securities being hedged would not be sold until the related futures contract
is sold, an increase, if any, in the price of the securities may to some extent
offset losses on the related futures contract. In such event, the Fund would
lose the benefit of the appreciation in value of the securities.
Successful use of futures is also subject to the Adviser's ability to
correctly predict the direction of movements in the market. For example, if the
Fund hedges against a decline in the market, and market prices instead advance,
the Fund will lose part or all of the
B-10
<PAGE> 35
benefit of the increase in value of its securities holdings because it will have
offsetting losses in futures contracts. In such cases, if the Fund has
insufficient cash, it may have to sell portfolio securities at a time when it is
disadvantageous to do so in order to meet the daily variation margin.
Although the Fund intends to enter into futures contracts only if there is
an active market for such contracts, there is no assurance that an active market
will exist for the contracts at any particular time. Most U.S. futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. Once the daily limit has been
reached in a particular contract, no trades may be made that day at a price
beyond that limit. It is possible that futures contract prices would move to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses. In such event, and in the event of
adverse price movements, the Fund would be required to make daily cash payments
of variation margin. In such circumstances, an increase in the value of the
portion of the portfolio being hedged, if any, may partially or completely
offset losses on the futures contract. However, as described above, there is no
guarantee that the price of the securities being hedged will, in fact, correlate
with the price movements in a futures contract and thus provide an offset to
losses on the futures contract.
The Fund will not enter into futures contracts or options transactions
(except for closing transactions) other than for bona fide hedging purposes if,
immediately thereafter, the sum of its initial margin and premiums on open
futures contracts and options exceed 5% of the fair market value of the Fund's
assets; however, in the case of an option that is in-the-money at the time of
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation. In order to prevent leverage in connection with the purchase of
futures contracts by the Fund, an amount of cash or liquid securities equal to
the market value of the obligation under the futures contracts (less any related
margin deposits) will be maintained in a segregated account with the custodian.
OPTIONS ON FUTURES CONTRACTS
The Fund could also purchase and write options on futures contracts. An
option on a futures contract gives the purchaser the right, in return for the
premium paid, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) at a specified
exercise price at any time during the option period. As a writer of an option on
a futures contract, the Fund would be subject to initial margin and maintenance
requirements similar to those applicable to futures contracts. In addition, net
option premiums received by the Fund are required to be included as initial
margin deposits. When an option on a futures contract is exercised, delivery of
the futures position is accompanied by cash representing the difference between
the current market price of the futures contract and the exercise price of the
option. The Fund could purchase put options on futures contracts in lieu of, and
for the same purposes as, the sale of a futures contract; at the same time, it
could write put options at a lower strike price (a "put bear spread") to offset
part of the cost of the strategy to the Fund. The purchase of call options on
futures contracts is intended to serve the same purpose as the actual purchase
of the futures contracts.
Risks of Transactions in Options on Futures Contracts. In addition to the
risks described above which apply to all options transactions, there are several
special risks
B-11
<PAGE> 36
relating to options on futures. The Adviser will not purchase options on futures
on any exchange unless in the Adviser's opinion, a liquid secondary exchange
market for such options exists. Compared to the use of futures, the purchase of
options on futures involves less potential risk to the Fund because the maximum
amount at risk is the premium paid for the options (plus transaction costs).
However, there may be circumstances, such as when there is no movement in the
price of the underlying security or index, when the use of an option on a future
would result in a loss to the Fund when the use of a future would not.
ADDITIONAL RISKS OF OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
TRANSACTIONS
Each of the exchanges has established limitations governing the maximum
number of call or put options on the same underlying security or futures
contract (whether or not covered) which may be written by a single investor,
whether acting alone or in concert with others (regardless of whether such
options are written on the same or different exchanges or are held or written on
one or more accounts or through one or more brokers). Option positions of all
investment companies advised by the Adviser are combined for purposes of these
limits. An exchange may order the liquidation of positions found to be in
violation of these limits and it may impose other sanctions or restrictions.
These position limits may restrict the number of listed options which the Fund
may write.
In the event of the bankruptcy of a broker through which the Fund engages
in transactions in options, futures or related options, the Fund could
experience delays or losses in liquidating open positions purchased or incur a
loss of all or part of its margin deposits with the broker. Transactions are
entered into by the Fund only with brokers or financial institutions deemed
creditworthy by the Adviser.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment restrictions
which may not be changed without approval by the vote of a majority of its
outstanding voting securities which is defined by the 1940 Act as the lesser of
(i) 67% or more of the voting securities present at a meeting, if the holders of
more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy; or (ii) more than 50% of the Fund's outstanding voting
securities. The percentage limitations contained in the restrictions and
policies set forth herein apply at the time of purchase of securities. These
restrictions provide that the Fund shall not:
1. With respect to 75% of the Fund's total assets, invest more than 5% of
the value of its total assets in the securities of any one issuer (not
including federal government securities) or acquire more than 10% of
any class of the outstanding voting securities of any one issuer,
except that the Fund may purchase securities of other investment
companies to the extent permitted by (i) the 1940 Act, as amended from
time to time, (ii) the rules and regulations promulgated by the SEC
under the 1940 Act, as amended from time to time, or (iii) an exemption
or other relief from the provisions of the 1940 Act.
2. Issue senior securities and shall not borrow money except for temporary
purposes in an amount not exceeding 5% of the Fund's total assets.
Notwithstanding the
B-12
<PAGE> 37
foregoing, the Fund may enter into transactions in options, futures
contracts and related options and may make margin deposits and payments
in connection therewith.
3. Underwrite securities of other issuers, except that the Fund may
acquire restricted securities and other securities which, if sold,
might make the Fund an underwriter under federal securities laws.
4. Invest more than 25% of the value of its assets in any one industry,
provided, that this limitation excludes shares of other open-end
investment companies.
5. Make loans of money or property to any person, except (i) to the extent
the securities in which the Fund may invest are considered to be loans,
(ii) through the loan of portfolio securities, and (iii) to the extent
that the Fund may lend money or property in connection with maintenance
of the value of, or the Fund's interest with respect to, the securities
owned by the Fund.
6. Invest in real estate interests, although the Fund may invest
indirectly through media such as real estate investment trusts.
7. Invest in commodities or commodity contracts, except that the Fund may
enter into transactions in options, futures contracts or related
options.
8. Invest in securities issued by other investment companies except as
part of a merger, reorganization or other acquisition and except to the
extent permitted by (i) the 1940 Act, as amended from time to time,
(ii) the rules and regulations promulgated by the SEC under the 1940
Act, as amended from time to time, or (iii) an exemption or other
relief from the provisions of the 1940 Act.
B-13
<PAGE> 38
TRUSTEES AND OFFICERS
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Trustees and the Fund's officers appointed by the Board of
Trustees. The tables below list the trustees and officers of the Fund and
executive officers of the Fund's investment adviser and their principal
occupations for the last five years and their affiliations, if any, with Van
Kampen Investments Inc. ("Van Kampen Investments"), Van Kampen Investment
Advisory Corp. ("Advisory Corp."), Van Kampen Asset Management Inc. ("Asset
Management"), Van Kampen Funds Inc. (the "Distributor"), Van Kampen Management
Inc., Van Kampen Advisors Inc., Van Kampen Insurance Agency of Illinois Inc.,
Van Kampen Insurance Agency of Texas Inc., Van Kampen System Inc., Van Kampen
Recordkeeping Services Inc., American Capital Contractual Services, Inc., Van
Kampen Trust Company, Van Kampen Exchange Corp. and Van Kampen Investor Services
Inc. ("Investor Services"). Advisory Corp. and Asset Management sometimes are
referred to herein collectively as the "Advisers". For purposes hereof, the term
"Fund Complex" includes each of the open-end investment companies advised by the
Advisers (excluding Van Kampen Exchange Fund).
TRUSTEES
<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Trustee/Director of each of
1632 Morning Mountain Road the funds in the Fund Complex. Co-founder,
Raleigh, NC 27614 and prior to August 1996, Chairman, Chief
Date of Birth: 07/14/32 Executive Officer and President, MDT
Corporation (now known as Getinge/Castle,
Inc., a subsidiary of Getinge Industrier AB),
a company which develops, manufactures,
markets and services medical and scientific
equipment.
Jerry D. Choate........................... Director of Amgen Inc., a biotechnological
Barrington Place, Building 4 company, Insurance Institute for Highway
18 E. Dundee Road, Suite 101 Safety and Catalyst, a research and
Barrington, IL 60010 consulting group. Trustee for AICPCU-the
Date of Birth: 09/16/38 Insurance Institute of America, The
Conference Board, Inc. of New York, The
Chicago Committee-the Chicago Council on
Foreign Relations. Member of the Advisory
Board of J.L. Kellogg Graduate School of
Management-Northwestern University, Chair of
the Corporate Steering Committee for
America's Promise-the Alliance for Youth and
a member of the Northwestern University
Associates and the Commercial Club of
Chicago. Trustee/Director of each of the
funds in the Fund Complex. Prior to January
1999, Chairman and Chief Executive Officer of
The Allstate Corporation ("Allstate") and
Allstate Insurance Company. Prior to January
1995, President and Chief Executive Officer
of Allstate. Prior to August 1994, Mr. Choate
held various management positions at
Allstate.
</TABLE>
B-14
<PAGE> 39
<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Richard M. DeMartini*..................... Chairman and Chief Executive Officer of
Two World Trade Center International Private Client Group, a
66th Floor division of Morgan Stanley Dean Witter.
New York, NY 10048 Chairman of Dean Witter Futures & Currency
Date of Birth: 10/12/52 Management Inc. and Demeter Management
Corporation. Director of Dean Witter Reynolds
Inc. Chairman and Director of Dean Witter
Capital Corporation. Chairman, Chief
Executive Officer, President and Director of
Dean Witter Alliance Capital Corporation,
Director of the National Healthcare
Resources, Inc., Morgan Stanley Dean Witter
Distributors, Inc., Dean Witter Realty Inc.,
Dean Witter Reynolds Venture Equities Inc.,
DW Window Covering Holding, Inc. and is a
member of the Morgan Stanley Dean Witter
Management Committee. Trustee of the TCW/DW
Funds, Director of the Morgan Stanley Dean
Witter Funds and Trustee/Director of each of
the funds in the Fund Complex. Prior to March
of 1999, Director of Morgan Stanley Dean
Witter Distributors, Inc. Prior to January
1999, Chairman of Dean Witter Futures &
Currency Management Inc. and Demeter
Management Corporation. Prior to December of
1998, Mr. DeMartini was President and Chief
Operating Officer of Morgan Stanley Dean
Witter Individual Asset Management and
Director of Morgan Stanley Dean Witter Trust
FSB. Formerly Vice Chairman of the Board of
the National Association of Securities
Dealers, Inc. and Chairman of the Board of
the Nasdaq Stock Market, Inc.
Linda Hutton Heagy........................ Managing Partner of Heidrick & Stuggles, an
Sears Tower executive search firm. Trustee/Director of
233 South Wacker Drive each of the funds in the Fund Complex. Prior
Suite 7000 to 1997, Partner, Ray & Berndtson, Inc., an
Chicago, IL 60606 executive recruiting and management
Date of Birth: 06/03/48 consulting firm. Formerly, Executive Vice
President of ABN AMRO, N.A., a Dutch bank
holding company. Prior to 1992, Executive
Vice President of La Salle National Bank.
Trustee on the University of Chicago
Hospitals Board, Vice Chair of the Board of
The YMCA of Metropolitan Chicago and a member
of the Women's Board of the University of
Chicago. Prior to 1996, Trustee of The
International House Board.
R. Craig Kennedy.......................... President and Director, German Marshall Fund
11 DuPont Circle, N.W. of the United States. Trustee/Director of
Washington, D.C. 20036 each of the funds in the Fund Complex.
Date of Birth: 02/29/52 Formerly, advisor to the Dennis Trading Group
Inc. Prior to 1992, President and Chief
Executive Officer, Director and Member of the
Investment Committee of the Joyce Foundation,
a private foundation.
</TABLE>
B-15
<PAGE> 40
<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Jack E. Nelson............................ President, Nelson Investment Planning
423 Country Club Drive Services, Inc., a financial planning company
Winter Park, FL 32789 and registered investment adviser. President,
Date of Birth: 02/13/36 Nelson Ivest Brokerage Services Inc., a
member of the National Association of
Securities Dealers, Inc. and Securities
Investors Protection Corp. ("SIPC").
Trustee/Director of each of the funds in the
Fund Complex.
Don G. Powell*............................ Currently a member of the board of governors
2800 Post Oak Blvd. and executive committee for the Investment
Houston, TX 77056 Company Institute, and a member of the Board
Date of Birth: 10/19/39 of Trustees of the Houston Museum of Natural
Science. Trustee/ Director of each of the
funds in the Fund Complex and Trustee of
other funds advised by the Advisers or Van
Kampen Management Inc. Prior to January 1999,
Chairman of the Investment Company Institute
and Chairman and Director of Van Kampen
Investments, the Advisers, the Distributor,
Investor Services, Van Kampen Advisors Inc.,
Van Kampen Recordkeeping Services, Inc.,
American Capital Contractual Services, Inc.,
Van Kampen Merritt Equity Advisors Corp., Van
Kampen Insurance Agency of Illinois Inc., Van
Kampen System Inc., Van Kampen Trust Company,
Van Kampen Services Inc. and Van Kampen
Exchange Corp. Prior to July 1998, Director
and Chairman of VK/AC Holding, Inc. Prior to
April 1997, Chairman, President and Director
of Van Kampen Merritt Equity Holdings Corp.
Prior to November 1996, President, Chief
Executive Officer and Director of VK/AC
Holding, Inc. Prior to September 1996,
Chairman and Director of McCarthy, Crisanti &
Maffei, Inc., a financial research company,
and McCarthy, Crisanti & Maffei Acquisition
Corporation.
Phillip B. Rooney......................... Vice Chairman and Director of The
One ServiceMaster Way ServiceMaster Company, a business and
Downers Grove, IL 60515 consumer services company. Director of
Date of Birth: 07/08/44 Illinois Tool Works, Inc., a manufacturing
company and the Urban Shopping Centers Inc.,
a retail mall management company. Trustee,
University of Notre Dame. Trustee/ Director
of each of the funds in the Fund Complex.
Prior to 1998, Director of Stone Smurfit
Container Corp., a paper manufacturing
company. Formerly, President, Chief Executive
Officer and Chief Operating Officer of Waste
Management, Inc., an environmental services
company.
</TABLE>
B-16
<PAGE> 41
<TABLE>
<CAPTION>
Principal Occupations or
Name, Address and Age Employment in Past 5 Years
--------------------- --------------------------
<S> <C>
Fernando Sisto............................ Professor Emeritus and, prior to 1995, Dean
155 Hickory Lane of the Graduate School, Stevens Institute of
Closter, NJ 07624 Technology. Director, Dynalysis of Princeton,
Date of Birth: 08/02/24 a firm engaged in engineering research.
Trustee/Director of each of the funds in the
Fund Complex.
Wayne W. Whalen*.......................... Partner in the law firm of Skadden, Arps,
333 West Wacker Drive Slate, Meagher & Flom (Illinois), legal
Chicago, IL 60606 counsel to the funds in the Fund Complex, and
Date of Birth: 08/22/39 other open-end and closed-end funds advised
by the Advisers or Van Kampen Management Inc.
Trustee/Director of each of the funds in the
Fund Complex, and Trustee/Managing General
Partner of other open-end and closed-end
funds advised by the Advisers or Van Kampen
Management Inc.
Suzanne H. Woolsey, Ph.D.................. Chief Operating Officer of the National
2101 Constitution Ave., N.W. Academy of Sciences/National Research
Room 206 Council, an independent, federally chartered
Washington, D.C. 20418 policy institution. Director of Neurogen
Date of Birth: 12/27/41 Corporation, a pharmaceutical company.
Director and former Chairman of the German
Marshall Fund of the United States.
Trustee/Director of each of the funds in the
Fund Complex. Prior to 1993, Executive
Director of the Commission on Behavioral and
Social Sciences and Education at the National
Academy of Sciences/ National Research
Council. Prior to 1989, Partner of Coopers &
Lybrand.
Paul G. Yovovich.......................... Private investor. Director of 3Com
Sears Tower Corporation, a wireless communication
233 South Wacker Drive products company, APAC Customer Services,
Suite 9700 Inc., an outsourced call center service, and
Chicago, IL 60606 COMARCO, Inc., a telecommunications
Date of Birth: 10/29/53 networking company. Trustee/Director of each
of the funds in the Fund Complex. Prior to
April 1996, President of Advance Ross
Corporation, an international transaction
services and pollution control manufacturing
company.
</TABLE>
- ------------------------------------
* Such trustee is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. Whalen is an interested person of the Fund by reason of
his firm currently acting as legal counsel to the Fund. Messrs. DeMartini and
Powell are interested persons of the Fund and the Advisers by reason of their
current or former positions with Morgan Stanley Dean Witter or its affiliates.
B-17
<PAGE> 42
OFFICERS
Messrs. Powers, McDonnell, Smith, Hegel, Sullivan, Wood, Dalmaso, Martin,
Wetherell and Hill are located at 1 Parkview Plaza, PO Box 5555, Oakbrook
Terrace, IL 60181-5555. The Fund's other officers are located at 2800 Post Oak
Blvd., Houston, TX 77056.
<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Richard F. Powers III................ President and Chief Executive Officer of Van
Date of Birth: 02/02/46 Kampen Investments. President of each of the
President Funds in the Fund Complex. Prior to May 1998,
Executive Vice President and Director of
Marketing at Morgan Stanley Dean Witter and
Director of Dean Witter Discover & Co. and Dean
Witter Realty. Prior to 1996, Director of Dean
Witter Reynolds Inc.
Dennis J. McDonnell.................. Executive Vice President and Director of Van
Date of Birth: 05/20/42 Kampen Investments. President, Chief Operating
Chief Investment Officer and Officer and Director of the Advisers, Van Kampen
Executive Vice President Advisors Inc., and Van Kampen Management Inc.
Chief Investment Officer and Executive Vice
President of each of the funds in the Fund
Complex. President, Chairman of the Board and
Trustee/Managing General Partner of other
investment companies advised by the Advisers or
Van Kampen Management Inc. Prior to July 1998,
Director and Executive Vice President of VK/AC
Holding, Inc. Prior to April 1998, President and
Director of Van Kampen Merritt Equity Advisors
Corp. Prior to April 1997, Mr. McDonnell was
Director of Van Kampen Merritt Equity Holdings
Corp. Prior to September 1996, Mr. McDonnell was
Chief Executive Officer and Director of MCM
Group, Inc. and McCarthy, Crisanti & Maffei, Inc.
a financial research firm, and Chairman and
Director of MCM Asia Pacific Company, Limited and
MCM (Europe) Limited.
</TABLE>
B-18
<PAGE> 43
<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
A. Thomas Smith III.................. Executive Vice President, General Counsel,
Date of Birth: 12/14/56 Secretary and Director of Van Kampen Advisors
Vice President and Secretary Inc., Asset Management, Van Kampen Management
Inc., Advisory Corp., the Distributor, American
Capital Contractual Services, Inc., Van Kampen
Exchange Corp., Van Kampen Recordkeeping Services
Inc., Investor Services, Van Kampen Insurance
Agency of Illinois Inc. and Van Kampen System
Inc. Vice President and Secretary of each of the
funds in the Fund Complex and certain other
investment companies advised by the Advisers or
their affiliates. Prior to January 1999, counsel
to New York Life Insurance Company ("New York
Life"), and prior to March 1997, Vice President
and Associate General Counsel of New York Life.
Prior to December 1993, Assistant General Counsel
of The Dreyfus Corporation. Prior to August 1991,
Senior Associate, Willkie Farr & Gallagher. Prior
to January 1989, Mr. Smith was a Staff Attorney
at the Securities and Exchange Commission,
Division of Investment Management, Office of
Chief Counsel.
Peter W. Hegel....................... Executive Vice President of the Advisers, Van
Date of Birth: 06/25/56 Kampen Management Inc. and Van Kampen Advisors
Vice President Inc. Vice President of each of the funds in the
Fund Complex and certain other investment
companies advised by the Advisers or their
affiliates. Prior to September 1996, Director of
McCarthy, Crisanti & Maffei, Inc, a financial
research company.
Stephen L. Boyd...................... Vice President and Chief Investment Officer for
Date of Birth: 11/16/40 equity investments at the Advisers. Vice
Vice President President of each of the funds in the Fund
Complex and certain other investment companies
advised by the Advisers or their affiliates.
Prior to October 1998, Vice President, Senior
Portfolio Manager with AIM Capital Management,
Inc. Prior to February 1998, Senior Vice
President of Van Kampen American Capital Asset
Management, Inc., Van Kampen American Capital
Investment Advisory Corp. and Van Kampen American
Capital Management, Inc.
John L. Sullivan..................... Senior Vice President of Van Kampen Investments
Date of Birth: 08/20/55 and the Advisers. Treasurer, Vice President and
Treasurer, Vice President and Chief Chief Financial Officer of each of the funds in
Financial Officer the Fund Complex and certain other investment
companies advised by the Advisers or their
affiliates.
</TABLE>
B-19
<PAGE> 44
<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Curtis W. Morell..................... Senior Vice President of the Advisers, Vice
Date of Birth: 08/04/46 President and Chief Accounting Officer of each of
Vice President and Chief Accounting the funds in the Fund Complex and certain other
Officer investment companies advised by the Advisers or
their affiliates.
Paul R. Wolkenberg................... Executive Vice President and Director of Van
Date of Birth: 11/10/44 Kampen Investments. Executive Vice President of
Vice President the Advisers and the Distributor. President and
Director of Investor Services. President, Chief
Operating Officer and Director of Van Kampen
Recordkeeping Services Inc. President, Chief
Executive Officer and Director of Van Kampen
Trust Company. Vice President of each of the
funds in the Fund Complex and certain other
investment companies advised by the Advisers or
their affiliates. Prior to July 1998, Director
and Executive Vice President of VK/AC Holding,
Inc.
Edward C. Wood III................... Senior Vice President of the Advisers, Van Kampen
Date of Birth: 01/11/56 Investments and Van Kampen Management Inc. Senior
Vice President Vice President and Chief Operating Officer of the
Distributor. Vice President of each of the funds
in the Fund Complex and certain other investment
companies advised by the Advisers or their
affiliates.
Tanya M. Loden....................... Vice President of Van Kampen Investments and the
Date of Birth: 11/19/59 Advisers. Controller of each of the funds in the
Controller Fund Complex and other investment companies
advised by the Advisers or their affiliates.
Nicholas Dalmaso..................... Vice President, Associate General Counsel and
Date of Birth: 03/01/65 Assistant Secretary of Van Kampen Investments,
Assistant Secretary the Advisers, the Distributor, Van Kampen
Advisors Inc. and Van Kampen Management Inc.
Assistant Secretary of each of the funds in the
Fund Complex and other investment companies
advised by the Advisers or their affiliates.
</TABLE>
B-20
<PAGE> 45
<TABLE>
<CAPTION>
Name, Age, Positions and Principal Occupations
Offices with Fund During Past 5 Years
------------------------ ---------------------
<S> <C>
Scott E. Martin...................... Senior Vice President, Deputy General Counsel and
Date of Birth: 08/20/56 Assistant Secretary of Van Kampen Investments,
Assistant Secretary the Advisers, the Distributor, Investor Services,
American Capital Contractual Services, Inc., Van
Kampen Management Inc., Van Kampen Exchange
Corp., Van Kampen Advisors Inc., Van Kampen
Insurance Agency of Illinois Inc., Van Kampen
System Inc. and Van Kampen Recordkeeping Services
Inc. Assistant Secretary of each of the funds in
the Fund Complex and other investment companies
advised by the Advisers or their affiliates.
Prior to July 1998, Senior Vice President, Deputy
General Counsel and Assistant Secretary of VK/AC
Holding, Inc. Prior to April of 1998, Senior Vice
President, Deputy General Counsel and Secretary
of Van Kampen Merritt Equity Advisors Corp. Prior
to April 1997, Senior Vice President, Deputy
General Counsel and Secretary of Van Kampen
American Capital Services, Inc. and Van Kampen
Merritt Holdings Corp. Prior to September 1996,
Deputy General Counsel and Secretary of McCarthy,
Crisanti & Maffei, Inc., a financial research
firm.
Weston B. Wetherell.................. Vice President, Associate General Counsel and
Date of Birth: 06/15/56 Assistant Secretary of Van Kampen Investments,
Assistant Secretary the Advisers, the Distributor, Van Kampen
Management Inc. and Van Kampen Advisors Inc.
Assistant Secretary of each of the funds in the
Fund Complex and other investment companies
advised by the Advisers or their affiliates.
Steven M. Hill....................... Vice President of Van Kampen Investments, Van
Date of Birth: 10/16/64 Kampen Management Inc. and the Advisers.
Assistant Treasurer Assistant Treasurer of each of the funds in the
Fund Complex and other investment companies
advised by the Advisers or their affiliates.
Michael Robert Sullivan.............. Assistant Vice President of Van Kampen
Date of Birth: 03/30/33 Investments, the Advisers and Van Kampen
Assistant Controller Management Inc. Assistant Controller of each of
the funds in the Fund Complex and other
investment companies advised by the Advisers or
their affiliates.
</TABLE>
Each trustee/director who is not an affiliated person of Van Kampen
Investments, the Advisers or the Distributor (each a "Non-Affiliated Trustee")
holds the same position with each of the funds in the Fund Complex. Messrs.
DeMartini and Powell hold the same position with each of the Funds in the Fund
Complex except for the Van Kampen Technology Fund. As of the date of this
Statement of Additional Information, there are
B-21
<PAGE> 46
64 operating funds in the Fund Complex. Each 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 (except the money market series
of the Van Kampen Series Fund, Inc.) provides a deferred compensation plan to
its Non-Affiliated Trustees that allows trustees/directors to defer receipt of
their compensation and earn a return on such deferred amounts. Deferring
compensation has the economic effect as if the Non-Affiliated Trustee reinvested
his or her compensation into the funds. Each fund in the Fund Complex (except
the money market series of the Van Kampen Series Fund, Inc.) provides a
retirement plan to its Non-Affiliated Trustees that provides Non-Affiliated
Trustees with compensation after retirement, provided that certain eligibility
requirements are met as more fully described below.
The compensation of each Non-Affiliated Trustee includes an annual retainer
in an amount equal to $50,000 per calendar year, due in four quarterly
installments on the first business day of each quarter. Payment of the annual
retainer is allocated among the funds in the Fund Complex (except the money
market series of the Van Kampen Series Fund, Inc.) on the basis of the relative
net assets of each fund as of the last business day of the preceding calendar
quarter. The compensation of each Non-Affiliated Trustee includes a per meeting
fee from each fund in the Fund Complex (except the money market series of the
Van Kampen Series Fund, Inc.) in the amount of $200 per quarterly or special
meeting attended by the Non-Affiliated Trustee, due on the date of the 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.
Under the deferred compensation plan, each Non-Affiliated Trustee generally
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 the return on the
common shares of such Fund or other funds in the Fund Complex as selected by the
respective Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund Complex. To
the extent permitted by the 1940 Act, the Fund may invest in securities of those
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 retirement plan, a Non-Affiliated Trustee who is receiving
compensation from such Fund prior to such Non-Affiliated Trustee's retirement,
has at least 10 years of service (including years of service prior to adoption
of the retirement plan) and retires at or after attaining the age of 60, is
eligible to receive a retirement benefit equal to $2,500 per year for each of
the ten years following such retirement from such Fund. Non-Affiliated Trustees
retiring prior to the age of 60 or with fewer than 10 years but more than 5
years of service may receive reduced retirement benefits from such Fund. Each
trustee/director has served as a member of the Board of Trustees of the Fund
since he or she was first appointed or elected in the year set forth below. The
retirement plan contains a Fund Complex retirement benefit cap of $60,000 per
year.
B-22
<PAGE> 47
Additional information regarding compensation and benefits for trustees is
set forth below for the periods described in the notes accompanying the table.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Fund Complex
-------------------------------------------
Aggregate
Aggregate Estimated
Pension or Maximum Total
Aggregate Retirement Annual Compensation
Compensation Benefits Benefits from before
before Accrued as the Fund Deferral from
Deferral from Part of Upon Fund
Name(1) the Trust(2) Expenses(3) Retirement(4) Complex(5)
------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
J. Miles Branagan $5,456 $35,691 $60,000 $125,200
Jerry D. Choate(5) 0 0 60,000 0
Linda Hutton Heagy 5,456 3,861 60,000 112,800
R. Craig Kennedy 5,456 2,652 60,000 125,200
Jack E. Nelson 5,456 18,385 60,000 125,200
Phillip B. Rooney 4,256 6,002 60,000 125,200
Dr. Fernando Sisto 5,456 68,615 60,000 125,200
Wayne W. Whalen 5,456 12,658 60,000 125,200
Suzanne H. Woolsey(5) 0 0 60,000 0
Paul G. Yovovich(5) 2,834 0 60,000 25,300
</TABLE>
- ------------------------------------
(1) Trustees not eligible for compensation are not included in the Compensation
Table.
(2) The amounts shown in this column represent the Aggregate Compensation before
Deferral from all six operating series of the Trust with respect to the
Trust's fiscal period ended March 31, 1999. As of March 31, 1999, the Fund
had not commenced investment operations and, accordingly, no trustees
received compensation related to the Fund other than organizational meeting
fees which were paid by the Adviser. For the first fiscal year following the
commencement of operations of the Fund, the estimated aggregate compensation
per trustee from the Fund is anticipated to be approximately $1,000. The
details of aggregate compensation before deferral for each series are shown
in Table A below. Certain trustees deferred compensation from the Trust
during the fiscal period ended March 31, 1999; the aggregate compensation
deferred from all six operating series of the Trust is as follows: Mr.
Branagan, $5,456; Ms. Heagy, $5,456; Mr. Kennedy, $2,730; Mr. Nelson,
$5,456; Mr. Rooney, $4,256; Dr. Sisto, $2,730; Mr. Whalen, $5,456 and Mr.
Yovovich, $1,430. The details of amounts deferred for each series are shown
in Table B below. Amounts deferred are retained by the respective fund and
earn a rate of return determined by reference to either the return on the
common shares of the Fund or other funds in the Fund Complex as selected by
the respective Non-Affiliated Trustee, with the same economic effect as if
such Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, each fund may invest in
securities of those funds selected by the Non-Affiliated Trustees in order
to match the deferred compensation obligation. The cumulative deferred
compensation (including interest) accrued with respect to each trustee,
including former trustees, from all six operating series of the Trust as of
the Trust's fiscal period ended
B-23
<PAGE> 48
March 31, 1999 is as follows: Mr. Branagan, $33,086; Dr. Caruso, $465; Mr.
Gaughan, $2,107; Ms. Heagy, $29,949; Mr. Kennedy, $31,482; Mr. Miller,
$18,270; Mr. Nelson, $59,582; Mr. Rees, $4,276; Mr. Robinson, $38,377; Mr.
Rooney, $18,730; Dr. Sisto, $13,897; Mr. Whalen, $50,755; and Mr. Yovovich,
$1,489. The details of cumulative deferred compensation (including interest)
for each series of the Trust are shown in Table C. The deferred compensation
plan is described above the Compensation Table.
(3) The amounts shown in this column represent the sum of the retirement
benefits accrued by the operating investment companies in the Fund Complex
for each of the trustees for the Funds' respective fiscal years ended in
1998. The retirement plan is described above the Compensation Table.
(4) For each trustee, this is the sum of the estimated maximum annual benefits
payable by the funds in the Fund Complex for each year of the 10-year period
commencing in the year of such trustee's anticipated retirement. The
Retirement Plan is described above the Compensation Table. Each
Non-Affiliated Trustee has served as a member of the Board of Trustees since
the year set forth in Table D below.
(5) Mr. Yovovich became a member of the Board of Trustees for other funds in the
Fund Complex on October 22, 1998 and therefore does not have a full calendar
year of information to report. Mr. Choate and Ms. Woolsey became members of
the Board of Trustees for the Fund and other funds in the Fund Complex on
May 26, 1999 and therefore do not have any 1998 calendar year information to
report. The amounts shown in this column represent the aggregate
compensation paid by all funds in the Fund Complex as of December 31, 1998
before deferral by the trustees under the deferred compensation plan.
Because the funds in the Fund Complex have different fiscal year ends, the
amounts shown in this column are presented on a calendar year basis. Certain
trustees deferred all or a portion of their aggregate compensation from the
Fund Complex during the calendar year ended December 31, 1998. The deferred
compensation earns a rate of return determined by reference to the return on
the shares of the funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, the Fund may invest in
securities of those investment companies selected by the Non-Affiliated
Trustees in order to match the deferred compensation obligation. The
Advisers and their affiliates also serve as investment adviser for other
investment companies; however, with the exception of Mr. Whalen, the
Non-Affiliated Trustees were not trustees of such investment companies.
Combining the Fund Complex with other investment companies advised by the
Advisers and their affiliates, Mr. Whalen received Total Compensation of
$285,825 during the calendar year ended December 31, 1998.
As of the date of this Statement of Additional Information, the trustees
and officers of the Fund as a group owned less than 1% of the shares of the
Fund.
B-24
<PAGE> 49
TABLE A
1999 AGGREGATE COMPENSATION FROM THE TRUST AND EACH SERIES
<TABLE>
<CAPTION>
TRUSTEE
FISCAL ---------------------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth
Fund.................. 3/31 $1,127 $0 $1,127 $1,127 $1,127 $ 927 $1,127 $1,127 $0 $ 620
Great American Companies
Fund.................. 3/31 801 0 801 801 801 601 801 801 0 400
Growth Fund............. 3/31 951 0 951 951 951 751 951 951 0 495
Mid Cap Value Fund...... 3/31 801 0 801 801 801 601 801 801 0 400
Prospector Fund......... 3/31 802 0 802 802 802 602 802 802 0 401
Small Cap Value Fund.... 3/31 ** 0 ** ** ** ** ** ** 0 **
Utility Fund............ 3/31 974 0 974 974 974 774 974 974 0 518
------ -- ------ ------ ------ ------ ------ ------ -- ------
Equity Trust Total.... $5,456 $0 $5,456 $5,456 $5,456 $4,256 $5,456 $5,456 $0 $2,834
</TABLE>
- ------------------------------------
* Each Fund recently changed its fiscal year-end from June 30 to March 31.
Accordingly, the information reported in this column represents information
for the nine-month fiscal period ended March 31, 1999. The Small Cap Value
Fund has not commenced investment operations as of March 31, 1999.
** Such trustees received an organizational meeting fee of $200/trustee paid by
the Adviser in connection with the Fund's organization.
TABLE B
1999 AGGREGATE COMPENSATION DEFERRED FROM
THE TRUST AND EACH SERIES
<TABLE>
<CAPTION>
TRUSTEE
FISCAL ---------------------------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth
Fund.................. 3/31 $1,127 $0 $1,127 $ 564 $1,127 $ 927 $ 564 $1,127 $0 $ 321
Great American Companies
Fund.................. 3/31 801 0 801 401 801 601 401 801 0 200
Growth Fund............. 3/31 951 0 951 476 951 751 476 951 0 250
Mid Cap Value Fund...... 3/31 801 0 801 401 801 601 401 801 0 200
Prospector Fund......... 3/31 802 0 802 401 802 602 401 802 0 200
Small Cap Value Fund.... 3/31 0 0 0 0 0 0 0 0 0 0
Utility Fund............ 3/31 974 0 974 487 974 774 487 974 0 259
------ -- ------ ------ ------ ------ ------ ------ -- ------
Equity Trust Total.... $5,456 $0 $5,456 $2,730 $5,456 $4,256 $2,730 $5,456 $0 $1,430
</TABLE>
- ------------------------------------
* Each Fund recently changed its fiscal year-end from June 30 to March 31.
Accordingly, the information reported in this column represents information
for the nine-month fiscal period ended March 31, 1999. The Small Cap Value
Fund has not commenced investment operations as of March 31, 1999.
B-25
<PAGE> 50
TABLE C
1999 CUMULATIVE COMPENSATION DEFERRED
(PLUS INTEREST) FROM THE TRUST AND EACH SERIES
<TABLE>
<CAPTION>
CURRENT TRUSTEES
FISCAL -----------------------------------------------------------------------------
FUND NAME YEAR-END* BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN
--------- --------- -------- ------ ----- ------- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund... 3/31 $ 8,513 $0 $ 8,065 $3,763 $12,023 $ 4,418 $ 3,091 $10,063
Great American Companies
Fund.................... 3/31 3,651 0 2,543 2,534 5,695 2,130 1,331 4,975
Growth Fund.............. 3/31 6,400 0 5,121 4,047 8,966 4,106 2,557 7,753
Mid Cap Value Fund....... 3/31 3,651 0 2,543 2,534 5,695 2,130 1,331 4,975
Prospector Fund.......... 3/31 3,652 0 2,544 2,535 5,696 2,131 1,331 4,976
Small Cap Value Fund..... 3/31 0 0 0 0 0 0 0 0
Utility Fund............. 3/31 7,219 0 9,133 16,069 21,507 3,815 4,256 18,013
------- -- ------- ------- ------- ------- ------- -------
Equity Trust Total...... $33,086 $0 $29,949 $31,482 $59,582 $18,730 $13,897 $50,755
<CAPTION>
CURRENT TRUSTEES FORMER TRUSTEES
------------------ ----------------------------------------------
FUND NAME WOOLSEY YOVOVICH CARUSO GAUGHAN MILLER REES ROBINSON
--------- ------- -------- ------ ------- ------ ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund... $0 $ 335 $ 0 $ 0 $ 2,309 $ 0 $ 7,291
Great American Companies
Fund.................... 0 208 0 0 1,474 335 3,098
Growth Fund.............. 0 260 0 0 1,474 335 5,415
Mid Cap Value Fund....... 0 208 0 0 1,474 335 3,098
Prospector Fund.......... 0 208 0 0 1,474 335 3,098
Small Cap Value Fund..... 0 0 0 0 0 0 0
Utility Fund............. 0 270 465 2,107 10,065 2,936 16,377
-- ------ ---- ------ ------- ------ -------
Equity Trust Total...... $0 $1,489 $465 $2,107 $18,270 $4,276 $38,377
</TABLE>
- ------------------------------------
* Each Fund recently changed its fiscal year-end from June 30 to March 31.
Accordingly, the information reported in this column represents information
for the nine-month fiscal period ended March 31, 1999. The Small Cap Value
Fund has not commenced investment operations as of March 31, 1999.
TABLE D
YEAR OF ELECTION OR APPOINTMENT TO EACH SERIES OF THE TRUST
<TABLE>
<CAPTION>
TRUSTEE
-------------------------------------------------------------------------------------------
FUND NAME BRANAGAN CHOATE HEAGY KENNEDY NELSON ROONEY SISTO WHALEN WOOLSEY YOVOVICH
--------- -------- ------ ----- ------- ------ ------ ----- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund............. 1996 1999 1996 1996 1996 1997 1996 1996 1999 1998
Great American Companies Fund...... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Growth Fund........................ 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Mid Cap Value Fund................. 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Prospector Fund.................... 1995 1999 1995 1995 1995 1997 1995 1995 1999 1998
Small Cap Value Fund............... 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999
Utility Fund....................... 1995 1999 1995 1993 1993 1997 1995 1993 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>
INVESTMENT ADVISORY AGREEMENT
The Fund and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Fund retains the
Adviser to manage the investment of the Fund's assets, including the placing of
orders for the purchase and sale of portfolio securities. The Adviser obtains
and evaluates economic, statistical and financial information to formulate and
implement the Fund's investment objectives. The Adviser also furnishes offices,
necessary facilities and equipment, provides administrative services, and
permits its officers and employees to serve without compensation as trustees of
the Trust or officers of the Fund if elected to such positions. The Fund pays
all charges and expenses of its day-to-day operations, including the
compensation of trustees of the Trust (other than those who are affiliated
persons of the Adviser, Distributor or Van Kampen Investments), the charges and
expenses of legal counsel and independent accountants, distribution fees,
service fees, custodian fees, the costs of providing reports to shareholders,
and all other ordinary business expenses not specifically assumed by the
Adviser. The Advisory Agreement also provides that the
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<PAGE> 51
Adviser shall not be liable to the Fund for any actions or omissions if it acted
without willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations.
Under the Advisory Agreement, the Fund pays to the Adviser, as compensation
for the services rendered, facilities furnished, and expenses paid by it, a
monthly fee payable computed based upon an annual rate applied to the average
daily net assets of the Fund as follows: 0.75% on the first $500 million of
average daily net assets; 0.70% on the next $500 million of average daily net
assets; and 0.65% on the average daily net assets over $1 billion.
The Fund's average daily net assets are determined by taking the average of
all of the determinations of the net assets during a given calendar month. Such
fee is payable for each calendar month as soon as practicable after the end of
that month.
The Advisory Agreement also provides that, in the event the expenses of the
Fund for any fiscal year exceed the most restrictive expense limitation
applicable in the states where the Fund's shares are qualified for sale, the
compensation due the Adviser will be reduced by the amount of such excess and
that, if a reduction in and refund of the advisory fee is insufficient, the
Adviser will pay the Fund monthly an amount sufficient to make up the
deficiency, subject to readjustment during the year.
The Advisory Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by the Fund's Trustees or (ii) by a 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 such purpose. The Advisory Agreement provides that it shall terminate
automatically if assigned and that it may be terminated without penalty by
either party on 60 days' written notice.
OTHER AGREEMENTS
Accounting Services Agreement. The Fund has entered into an accounting
services agreement pursuant to which Advisory Corp. provides accounting services
to the Fund, which include, maintaining the books and records of the Fund,
calculating the Fund's net asset value and coordinating tax compliance and other
regulatory issues. The Fund pays all costs and expenses related to such
services, including all salary and related benefits of accounting personnel, as
well as the overhead and expenses of office space and the equipment necessary to
render such services. The Fund shares together with the other Van Kampen funds
in the cost of providing such services with 25% of such costs shared
proportionately based on the respective number of classes of securities issued
per fund and the remaining 75% of such costs based proportionally on their
respective net assets per fund.
Legal Services Agreement. The Fund and certain of the other Van Kampen
funds advised by the Adviser or it affiliates and distributed by the Distributor
have entered into legal services agreements pursuant to which Van Kampen
Investments provides legal services, including without limitation: accurate
maintenance of the Fund's minute books and records, preparation and oversight of
the 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. Payment
by the Fund for such services is made on a cost basis for the
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<PAGE> 52
salary and salary related benefits, including but not limited to bonuses, group
insurance and other regular wages for the employment of personnel, as well as
overhead and the expenses related to the office space and the equipment
necessary to render the legal services. Other funds distributed by the
Distributor also receive legal services from Van Kampen Investments. Of the
total costs for legal services provided to funds distributed by the Distributor,
one half of such costs are allocated equally to each fund and the remaining one
half of such costs are allocated to specific funds based on monthly time
records.
DISTRIBUTION AND SERVICE
The Distributor acts as the principal underwriter of the Fund's shares
pursuant to a written agreement (the "Distribution and Service Agreement"). The
Distributor has the exclusive right to distribute shares of the Fund through
authorized dealers on a continuous basis. The Distributor's obligation is an
agency or "best efforts" arrangement under which the Distributor is required to
take and pay for only such shares of the Fund as may be sold to the public. The
Distributor is not obligated to sell any stated number of shares. The
Distributor bears the cost of printing (but not typesetting) prospectuses used
in connection with this offering and certain other costs including the cost of
supplemental sales literature and advertising. The Distribution and Service
Agreement is renewable from year to year if approved (a)(i) by the Fund's
Trustees or (ii) by a vote of a majority of the Fund's outstanding voting
securities and (b) by the affirmative vote of a majority of Trustees who are not
parties to the Distribution and Service Agreement or interested persons of any
party, by votes cast in person at a meeting called for such purpose. The
Distribution and Service Agreement provides that it will terminate if assigned,
and that it may be terminated without penalty by either party on 90 days'
written notice.
With respect to sales of Class A Shares of the Fund, the total sales
charges and concessions reallowed to authorized dealers at the time of purchase
are as follows:
CLASS A SHARES SALES CHARGE TABLE
<TABLE>
<CAPTION>
Total Sales Charge
------------------------- Reallowed
As % of As % of Net To Dealers
Size of Offering Amount As a % of
Investment Price Invested Offering Price
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000........................... 5.75% 6.10% 5.00%
$50,000 but less than $100,000.............. 4.75% 4.99% 4.00%
$100,000 but less than $250,000............. 3.75% 3.90% 3.00%
$250,000 but less than $500,000............. 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000........... 2.00% 2.04% 1.75%
$1,000,000 or more.......................... * * *
- ------------------------------------------------------------------------------------------------
</TABLE>
* No sales charge is payable at the time of purchase on investments of $1
million or more, although for such investments the Fund imposes a contingent
deferred sales charge of 1.00% on certain redemptions made within one year of
the purchase. A commission or transaction fee will be paid by the Distributor
at the time of purchase directly out of the Distributor's assets (and not out
of the Fund's assets) to authorized dealers who initiate and are responsible
for purchases of $1 million or more computed based on a percentage
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<PAGE> 53
of the dollar value of such shares sold as follows: 1.00% on sales to $2
million, plus 0.80% on the next $1 million and 0.50% on the excess over $3
million.
With respect to sales of Class B Shares and Class C Shares of the Fund, a
commission or transaction fee generally will be paid by the Distributor at the
time of purchase directly out of the Distributor's assets (and not out of the
Fund's assets) to authorized dealers who initiate and are responsible for such
purchases computed based on a percentage of the dollar value of such shares sold
of 4.00% on Class B Shares and 1.00% on Class C Shares.
Proceeds from any contingent deferred sales charge and any distribution
fees on Class B Shares and Class C Shares of the Fund are paid to the
Distributor and are used by the Distributor to defray its distribution related
expenses in connection with the sale of the Fund's shares, such as the payment
to authorized dealers for selling such shares. With respect to Class C Shares,
the authorized dealers generally are paid the ongoing commission and transaction
fees of up to 0.75% of the average daily net assets of the Fund's Class C Shares
annually commencing in the second year after purchase.
In addition to reallowances or commissions described above, the Distributor
may from time to time implement programs under which an authorized dealer's
sales force may be eligible to win nominal awards for certain sales efforts or
under which the Distributor will reallow to any authorized dealer that sponsors
sales contests or recognition programs conforming to criteria established by the
Distributor, or participates in sales programs sponsored by the Distributor, an
amount not exceeding the total applicable sales charges on the sales generated
by the authorized dealer at the public offering price during such programs.
Other programs provide, among other things and subject to certain conditions,
for certain favorable distribution arrangements for shares of the Fund. Also,
the Distributor in its discretion may from time to time, pursuant to objective
criteria established by the Distributor, pay fees to, and sponsor business
seminars for, qualifying authorized dealers for certain services or activities
which are primarily intended to result in sales of shares of the Fund or other
Van Kampen funds. Fees may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives for meetings or seminars of a business nature. In some instances
additional compensation or promotional incentives may be offered to brokers,
dealers or financial intermediaries that have sold or may sell significant
amounts of shares during specified periods of time. The Distributor may provide
additional compensation to Edward D. Jones & Co. or an affiliate thereof based
on a combination of its sales of shares and increases in assets under
management. All of the foregoing payments are made by the Distributor out of its
own assets. Such fees paid for such services and activities with respect to the
Fund will not exceed in the aggregate 1.25% of the average total daily net
assets of the Fund on an annual basis. These programs will not change the price
an investor will pay for shares or the amount that a Fund will receive from such
sale.
Banks are currently prohibited under the Glass-Steagall Act from providing
certain underwriting or distribution services. If banking firms were prohibited
from acting in any capacity or providing any of the described services, the
Distributor would consider what action, if any, would be appropriate. The
Distributor does not believe that termination of a relationship with a bank
would result in any material adverse consequences to the Fund. State securities
laws regarding registration of banks and other financial institutions may
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<PAGE> 54
differ from the interpretations of federal law expressed herein, and banks and
other financial institutions may be required to register as dealers pursuant to
certain state laws.
The Fund has adopted a distribution plan (the "Distribution Plan") with
respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act.
The Fund also has adopted a service plan (the "Service Plan") with respect to
each class of its shares. The Distribution Plan and the Service Plan sometimes
are referred to herein as the "Plans". The Plans provide that the Fund may spend
a portion of the Fund's average daily net assets attributable to each class of
shares in connection with distribution of the respective class of shares and in
connection with the provision of ongoing services to shareholders of such class,
respectively. The Distribution Plan and the Service Plan are being implemented
through the Distribution and Service Agreement with the Distributor of each
class of the Fund's shares, sub-agreements between the Distributor and members
of the NASD who are acting as securities dealers and NASD members or eligible
non-members who are acting as brokers or agents and similar agreements between
the Fund and financial intermediaries who are acting as brokers (collectively,
"Selling Agreements") that may provide for their customers or clients certain
services or assistance, which may include, but not be limited to, processing
purchase and redemption transactions, establishing and maintaining shareholder
accounts regarding the Fund, and such other services as may be agreed to from
time to time and as may be permitted by applicable statute, rule or regulation.
Brokers, dealers and financial intermediaries that have entered into
sub-agreements with the Distributor and sell shares of the Fund are referred to
herein as "financial intermediaries."
The Distributor must submit quarterly reports to the Board of Trustees of
the Trust, of which the Fund is a series, setting forth separately by class of
shares all amounts paid under the Distribution Plan and the purposes for which
such expenditures were made, together with such other information as from time
to time is reasonably requested by the Trustees. The Plans provide that they
will continue in full force and effect from year to year so long as such
continuance is specifically approved by a vote of the Trustees, and also by a
vote of the disinterested Trustees, cast in person at a meeting called for the
purpose of voting on the Plans. Each of the Plans may not be amended to increase
materially the amount to be spent for the services described therein with
respect to any class of shares without approval by a vote of a majority of the
outstanding voting shares of such class, and all material amendments to either
of the Plans must be approved by the Trustees and also by the disinterested
Trustees. Each of the Plans may be terminated with respect to any class of
shares at any time by a vote of a majority of the disinterested Trustees or by a
vote of a majority of the outstanding voting shares of such class.
The Plans generally provide for the Fund to reimburse the lesser of (i) the
distribution and service fees at the rates specified in the Prospectus or (ii)
the amount of the Distributor's actual expenses incurred less any contingent
deferred sales charges it received. For Class A Shares, to the extent the
Distributor is not fully reimbursed in a given year, there is no carryover of
such unreimbursed amounts to succeeding years. For each of the Class B Shares
and Class C Shares, to the extent the Distributor is not fully reimbursed in a
given year, any unreimbursed expenses for such class will be carried forward and
paid by the Fund in future years so long as such Plans are in effect. Except as
mandated by applicable law, the Fund does not impose any limit with respect to
the number of years into the future that such unreimbursed expenses may be
carried forward (on a Fund level basis). Because such expenses are accounted for
on a Fund level basis, in
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<PAGE> 55
periods of extreme net asset value fluctuation such amounts with respect to a
particular Class B Share or Class C Share may be greater or less than the amount
of the initial commission (including carrying cost) paid by the Distributor with
respect to such share. In such circumstances, a shareholder of a share may be
deemed to incur expenses attributable to other shareholders of such class. If
the Plans were terminated or not continued, the Fund would not be contractually
obligated to pay the Distributor for any expenses not previously reimbursed by
the Fund or recovered through contingent deferred sales charges.
TRANSFER AGENT
The Fund's transfer agent is Van Kampen Investor Services Inc., PO Box
418256, Kansas City, MO 64141-9256. The transfer agency prices are determined
through negotiations with the Fund's Board of Trustees and are based on
competitive benchmarks.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
The Adviser is responsible for decisions to buy and sell securities for the
Fund, the selection of brokers and dealers to effect the transactions and the
negotiation of prices and any brokerage commissions on such transactions. While
the Adviser will be primarily responsible for the placement of the Fund's
portfolio business, the policies and practices in this regard will at all times
be subject to review by the Trustees of the Fund.
The Adviser is responsible for placing portfolio transactions and does so
in a manner deemed fair and reasonable to the Fund and not according to any
formula. The primary consideration in all portfolio transactions is prompt
execution of orders in an effective manner at the most favorable price. In
selecting broker/dealers and in negotiating prices and any brokerage commissions
on such transactions, the Adviser considers the firm's reliability, integrity
and financial condition and the firm's execution capability, the size and
breadth of the market for the security, the size of and difficulty in executing
the order, and the best net price. There are many instances when, in the
judgment of the Adviser, more than one firm can offer comparable execution
services. In selecting among such firms, consideration may be given to those
firms which supply research and other services in addition to execution
services. The Adviser is authorized to pay higher commissions to brokerage firms
that provide it with investment and research information than to firms which do
not provide such services if the Adviser determines that such commissions are
reasonable in relation to the overall services provided. No specific value can
be assigned to such research services which are furnished without cost to the
Adviser. Since statistical and other research information is only supplementary
to the research efforts of the Adviser to the Fund and still must be analyzed
and reviewed by its staff, the receipt of research information is not expected
to reduce its expenses materially. The investment advisory fee is not reduced as
a result of the Adviser's receipt of such research services. Services provided
may include (a) furnishing advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement and custody). Research
services furnished by firms through which the Fund effects its securities
transactions may be used by the Adviser in servicing all of its advisory
accounts; not all of such services may be used by the Adviser in connection with
the Fund. The Adviser also
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<PAGE> 56
may place portfolio transactions, to the extent permitted by law, with brokerage
firms affiliated with the Fund, the Adviser or the Distributor and with
brokerage firms participating in the distribution of the Fund's shares if it
reasonably believes that the quality of execution and the commission are
comparable to that available from other qualified firms. Similarly, to the
extent permitted by law and subject to the same considerations on quality of
execution and comparable commission rates, the Adviser may direct an executing
broker to pay a portion or all of any commissions, concessions or discounts to a
firm supplying research or other services or to a firm participating in the
distribution of the Fund's shares.
The Adviser may place portfolio transactions at or about the same time for
other advisory accounts, including other investment companies. The Adviser seeks
to allocate portfolio transactions equitably whenever concurrent decisions are
made to purchase or sell securities for the Fund and another advisory account.
In some cases, this procedure could have an adverse effect on the price or the
amount of securities available to the Fund. In making such allocations among the
Fund and other advisory accounts, the main factors considered by the Adviser are
the respective sizes of the Fund and other advisory accounts, the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and opinions of the persons responsible
for recommending the investment.
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
commissions paid to 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 for the Fund will be reduced by all or a
portion of the brokerage commission given to affiliated brokers.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services designed to facilitate
investment in its shares at little or no extra cost to the investor. Below is a
description of such services. The following information supplements the section
in the Fund's Prospectus captioned "Shareholder Services."
INVESTMENT ACCOUNT
Each shareholder has an investment account under which the investor's
shares of the Fund are held by Investor Services, the Fund's transfer agent.
Investor Services performs bookkeeping, data processing and administrative
services related to the maintenance of shareholder accounts. Except as described
in the Prospectus and this Statement of Additional Information, after each share
transaction in an account, the shareholder receives a statement showing the
activity in the account. Each shareholder who has an account in any of the
Participating Funds will receive statements quarterly from Investor Services
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<PAGE> 57
showing any reinvestments of dividends and capital gains distributions and any
other activity in the account since the preceding statement. Such shareholders
also will receive separate confirmations for each purchase or sale transaction
other than reinvestment of dividends and capital gains distributions and
systematic purchases or redemptions. Additions to an investment account may be
made at any time by purchasing shares through authorized dealers or by mailing a
check directly to Investor Services.
SHARE CERTIFICATES
Generally, the Fund will not issue share certificates. However, upon
written or telephone request to the Fund, a share certificate will be issued
representing shares (with the exception of fractional shares) of the Fund. A
shareholder will be required to surrender such certificates upon redemption
thereof. In addition, if such certificates are lost the shareholder must write
to Van Kampen Funds, c/o Investor Services, PO Box 418256, Kansas City, MO
64141-9256, requesting an "affidavit of loss" and obtain a Surety Bond in a form
acceptable to Investor Services. On the date the letter is received, Investor
Services will calculate a fee for replacing the lost certificate equal to no
more than 2.00% of the net asset value of the issued shares, and bill the party
to whom the replacement certificate was mailed.
RETIREMENT PLANS
Eligible investors may establish individual retirement accounts ("IRAs");
SEP; 401(k) plans; Section 403(b)(7) plans in the case of employees of public
school systems and certain non-profit organizations; or other pension or profit
sharing plans. Documents and forms containing detailed information regarding
these plans are available from the Distributor. Van Kampen Trust Company serves
as custodian under the IRA, 403(b)(7) and Keogh plans. Details regarding fees,
as well as full plan administration for profit sharing, pension and 401(k)
plans, are available from the Distributor.
AUTOMATED CLEARING HOUSE("ACH") DEPOSITS
Holders of Class A Shares can use ACH to have redemption proceeds deposited
electronically into their bank accounts. Redemptions transferred to a bank
account via the ACH plan are available to be credited to the account on the
second business day following normal payment. In order to utilize this option,
the shareholder's bank must be a member of ACH. In addition, the shareholder
must fill out the appropriate section of the account application. The
shareholder must also include a voided check or deposit slip from the bank
account into which redemptions are to be deposited together with the completed
application. Once Investor Services has received the application and the voided
check or deposit slip, such shareholder's designated bank account, following any
redemption, will be credited with the proceeds of such redemption. Once enrolled
in the ACH plan, a shareholder may terminate participation at any time by
writing Investor Services.
DIVIDEND DIVERSIFICATION
A shareholder may, upon written request or by completing the appropriate
section of the application form accompanying the Prospectus or by calling (800)
341-2911 ((800) 421-2833 for the hearing impaired), elect to have all dividends
and other
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distributions paid on a class of shares of the Fund invested into shares of the
same class of any Participating Fund so long as the investor has a pre-existing
account for such class of shares of the other fund. Both accounts must be of the
same type, either non-retirement or retirement. If the accounts are retirement
accounts, they must both be for the same class and of the same type of
retirement plan (e.g. IRA, 403(b)(7), 401(k), Keogh) and for the benefit of the
same individual. If a qualified, pre-existing account does not exist, the
shareholder must establish a new account subject to minimum investment and other
requirements of the fund into which distributions would be invested.
Distributions are invested into the selected fund at its net asset value per
share as of the payable date of the distribution.
SYSTEMATIC WITHDRAWAL PLAN
Any investor whose shares in a single account total $10,000 or more at the
offering price next computed after receipt of instructions may establish a
monthly, quarterly, semi-annual or annual withdrawal plan. Any investor whose
shares in a single account total $5,000 or more at the offering price next
computed after receipt of instructions may establish a quarterly, semiannual or
annual withdrawal plan. This plan provides for the orderly use of the entire
account, not only the income but also the capital, if necessary. Each withdrawal
constitutes a redemption of shares on which any capital gain or loss will be
recognized. The planholder may arrange for monthly, quarterly, semi-annual or
annual checks in any amount, not less than $25. Such a systematic withdrawal
plan may also be maintained by an investor purchasing shares for a retirement
plan established on a form made available by the Fund. See "Shareholder Services
- -- Retirement Plans."
Class B shareholders and Class C shareholders who establish a withdrawal
plan may redeem up to 12% annually of the shareholder's initial account balance
without incurring a contingent deferred sales charge. Initial account balance
means the amount of the shareholder's investment at the time the election to
participate in the plan is made.
Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. Dividends and capital gains
distributions on shares held under the plans are reinvested in additional shares
at the next determined net asset value per share. If periodic withdrawals
continuously exceed reinvested dividends and capital gains distributions, the
shareholder's original investment will be correspondingly reduced and ultimately
exhausted. Withdrawals made concurrently with the purchase of additional shares
ordinarily will be disadvantageous to the shareholder because of the duplication
of sales charges. Any gain or loss realized by the shareholder upon redemption
of shares is a taxable event. The Fund reserves the right to amend or terminate
the systematic withdrawal program on 30 days' notice to its shareholders.
REINSTATEMENT PRIVILEGE
A Class A shareholder or Class B shareholder who has redeemed shares of the
Fund may reinstate any portion or all of the net proceeds of such redemption in
Class A Shares of the Fund. A Class C shareholder who has redeemed shares of the
Fund may reinstate any portion or all of the net proceeds of such redemption in
Class C Shares of the Fund with credit given for any contingent deferred sales
charge paid upon such redemption. Such reinstatement is made at the net asset
value per share (without sales charge) next
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<PAGE> 59
determined after the order is received, which must be within 180 days after the
date of the redemption. Reinstatement at net asset value per share is also
offered to participants in those eligible retirement plans held or administered
by Van Kampen Trust Company for repayment of principal (and interest) on their
borrowings on such plans.
REDEMPTION OF SHARES
Redemptions are not made on days during which the New York Stock Exchange
(the "Exchange") is closed. The right of redemption may be suspended and the
payment therefor may be postponed for more than seven days during any period
when (a) the Exchange is closed for other than customary weekends or holidays;
(b) trading on the Exchange is restricted; (c) an emergency exists as a result
of which disposal by the Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Fund to fairly determine
the value of its net assets; or (d) the SEC, by order, so permits.
Additionally, if the Board of Trustees determines that payment wholly or
partly in cash would be detrimental to the best interests of the remaining
shareholders of the Fund, the Fund may pay the redemption proceeds in whole or
in part by a distribution-in-kind of portfolio securities held by the Fund in
lieu of cash in conformity with applicable rules of the SEC. Shareholders may
incur brokerage charges upon the sale of portfolio securities so received in
payment of redemptions.
CONTINGENT DEFERRED SALES CHARGE-CLASS A ("CDSC-CLASS A")
As described in the Prospectus under "Purchase of Shares -- Class A
Shares," there is no sales charge payable on Class A Shares at the time of
purchase on investments of $1 million or more, but a contingent deferred sales
charge ("CDSC -- Class A") may be imposed on certain redemptions made within one
year of purchase. For purposes of the CDSC-Class A, when shares of one fund are
exchanged for shares of another fund, the purchase date for the shares of the
fund exchanged into will be assumed to be the date on which shares were
purchased in the fund from which the exchange was made. If the exchanged shares
themselves are acquired through an exchange, the purchase date is assumed to
carry over from the date of the original election to purchase shares subject to
a CDSC-Class A rather than a front-end load sales charge. In determining whether
a CDSC-Class A is payable, it is assumed that shares held the longest are the
first to be redeemed.
WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE ("CDSC-CLASS B
AND C")
As described in the Prospectus under "Redemption of Shares," redemptions of
Class B Shares and Class C Shares will be subject to a contingent deferred sales
charge. The CDSC-Class B and C is waived on redemptions of Class B Shares and
Class C Shares in the circumstances described below:
REDEMPTION UPON DEATH OR DISABILITY
The Fund will waive the CDSC-Class B and C on redemptions following the
death or disability of a Class B shareholder and Class C shareholder. An
individual will be
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considered disabled for this purpose if he or she meets the definition thereof
in Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the
"Code"), which in pertinent part defines a person as disabled if such person "is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long-continued and indefinite duration." While the Fund does
not specifically adopt the balance of the Code's definition which pertains to
furnishing the Secretary of Treasury with such proof as he or she may require,
the Distributor will require satisfactory proof of death or disability before it
determines to waive the CDSC-Class B and C.
In cases of death or disability, the CDSC-Class B and C will be waived
where the decedent or disabled person is either an individual shareholder or
owns the shares as a joint tenant with right of survivorship or is the
beneficial owner of a custodial or fiduciary account, and where the redemption
is made within one year of the death or initial determination of disability.
This waiver of the CDSC-Class B and C applies to a total or partial redemption,
but only to redemptions of shares held at the time of the death or initial
determination of disability.
REDEMPTION IN CONNECTION WITH CERTAIN DISTRIBUTIONS FROM RETIREMENT PLANS
The Fund will waive the CDSC-Class B and C when a total or partial
redemption is made in connection with certain distributions from retirement
plans. The charge will be waived upon the tax-free rollover or transfer of
assets to another retirement plan invested in one or more Participating Funds;
in such event, as described below, the Fund will "tack" the period for which the
original shares were held on to the holding period of the shares acquired in the
transfer or rollover for purposes of determining what, if any, CDSC-Class B and
C is applicable in the event that such acquired shares are redeemed following
the transfer or rollover. The charge also will be waived on any redemption which
results from the return of an excess contribution pursuant to Section 408(d)(4)
or (5) of the Code, the return of excess deferral amounts pursuant to Code
Section 401(k)(8) or 402(g)(2), the financial hardship of the employer pursuant
to Code Section 401(k)-1(d)(2) or from the death or disability of the employee
(see Code Section 72(m)(7) and 72(t)(2)(A)(ii)). In addition, the charge will be
waived on any minimum distribution required to be distributed in accordance with
Code Section 401(a)(9).
The Fund does not intend to waive the CDSC-Class B and C for any
distributions from IRAs or other retirement plans not specifically described
above.
REDEMPTION PURSUANT TO THE FUND'S SYSTEMATIC WITHDRAWAL PLAN
A shareholder may elect to participate in a systematic withdrawal plan with
respect to the shareholder's investment in the Fund. Under the plan, a dollar
amount of a participating shareholder's investment in the Fund will be redeemed
systematically by the Fund on a periodic basis, and the proceeds mailed to the
shareholder. The amount to be redeemed and frequency of the systematic
withdrawals will be specified by the shareholder upon his or her election to
participate in the plan. The CDSC-Class B and C will be waived on redemptions
made under the plan.
The amount of the shareholder's investment in a Fund at the time the
election to participate in the plan is made with respect to the Fund is
hereinafter referred to as the "initial account balance." The amount to be
systematically redeemed from the Fund
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<PAGE> 61
without the imposition of a CDSC-Class B and C may not exceed a maximum of 12%
annually of the shareholder's initial account balance. The Fund reserves the
right to change the terms and conditions of the plan and the ability to offer
the plan.
NO INITIAL COMMISSION OR TRANSACTION FEE
The Fund will waive the CDSC-Class B and C in circumstances under which no
commission or transaction fee is paid to authorized dealers at the time of
purchase of shares.
INVOLUNTARY REDEMPTIONS OF SHARES
The Fund reserves the right to redeem shareholder accounts with balances of
less than a specified dollar amount as set forth in the Prospectus. Prior to
such redemptions, shareholders will be notified in writing and allowed a
specified period of time to purchase additional shares to bring the account up
to the required minimum balance. The Fund will waive the CDSC-Class B and C upon
such involuntary redemption.
REINVESTMENT OF REDEMPTION PROCEEDS
A shareholder who has redeemed Class C Shares of a Fund may reinvest at net
asset value, with credit for any CDSC-Class C paid on the redeemed shares, any
portion or all of his or her redemption proceeds (plus that amount necessary to
acquire a fractional share to round off his or her purchase to the nearest full
share) in Class C Shares of the Fund, provided that the reinvestment is effected
within 180 days after such redemption and the shareholder has not previously
exercised this reinvestment privilege with respect to Class C Shares of the
Fund. Shares acquired in this manner will be deemed to have the original cost
and purchase date of the redeemed shares for purposes of applying the CDSC-Class
C to subsequent redemptions.
REDEMPTION BY ADVISER
The Fund may waive the CDSC-Class B and C when a total or partial
redemption is made by the Adviser with respect to its investments in the Fund.
TAXATION
FEDERAL INCOME TAXATION
The Fund has elected and qualified, and intends to continue to qualify each
year, to be treated as a regulated investment company under Subchapter M of the
Code. To qualify as a regulated investment company, the Fund must comply with
certain requirements of the Code relating to, among other things, the source of
its income and diversification of its assets.
If the Fund so qualifies and distributes each year to its shareholders at
least 90% of its net investment income (including taxable income and net
short-term capital gain, but not net capital gains, which is the excess of net
long-term capital gains over net short-term capital losses), it will not be
required to pay federal income taxes on any income distributed to shareholders.
The Fund intends to distribute at least the minimum amount
B-37
<PAGE> 62
of net investment income necessary to satisfy the 90% distribution requirement.
The Fund will not be subject to federal income tax on any net capital gains
distributed to shareholders.
In order to avoid a 4% excise tax, the Fund will be required to distribute,
by December 31st of each year, at least an amount equal to the sum of (i) 98% of
its ordinary income for such year and (ii) 98% of its capital gain net income
(the latter of which generally is computed on the basis of the one-year period
ending on October 31st of such year), plus any amounts that were not distributed
in previous taxable years. For purposes of the excise tax, any ordinary income
or capital gain net income retained by, and subject to federal income tax in the
hands of, the Fund will be treated as having been distributed.
If the Fund failed to qualify as a regulated investment company or failed
to satisfy the 90% distribution requirement in any taxable year, the Fund would
be taxed as an ordinary corporation on its taxable income (even if such income
were distributed to its shareholders) and all distributions out of earnings and
profits would be taxed to shareholders as ordinary income. To qualify again as a
regulated investment company in a subsequent year, the Fund may be required to
pay an interest charge on 50% of its earnings and profits attributable to
non-regulated investment company years and would be required to distribute such
earnings and profits to shareholders (less any interest charge). In addition, if
the Fund failed to qualify as a regulated investment company for its first
taxable year or, if immediately after qualifying as a regulated investment
company for any taxable year, it failed to qualify for a period greater than one
taxable year, the Fund would be required to recognize any net built-in gains
(the excess of aggregate gains, including items of income, over aggregate losses
that would have been realized if it had been liquidated) in order to qualify as
a regulated investment company in a subsequent year.
Some of the Fund's investment practices are subject to special provisions
of the Code that, among other things, may defer the use of certain losses of the
Fund and affect the holding period of the securities held by the Fund and the
character of the gains or losses realized by the Fund. These provisions may also
require the Fund to recognize income or gain without receiving cash with which
to make distributions in amounts necessary to satisfy the 90% distribution
requirement and the distribution requirements for avoiding income and excise
taxes. The Fund will monitor its transactions and may make certain tax elections
in order to mitigate the effect of these rules and prevent disqualification of
the Fund as a regulated investment company.
Investments of the Fund in securities issued at a discount or providing for
deferred interest or payment of interest in kind are subject to special tax
rules that will affect the amount, timing and character of distributions to
shareholders. For example, with respect to securities issued at a discount, the
Fund will be required to accrue as income each year a portion of the discount
and to distribute such income each year in order to maintain its qualification
as a regulated investment company and to avoid income and excise taxes. In order
to generate sufficient cash to make distributions necessary to satisfy the 90%
distribution requirement and to avoid income and excise taxes, the Fund may have
to dispose of securities that it would otherwise have continued to hold.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Fund may invest in the stock of
"passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation that, in
B-38
<PAGE> 63
general, meets either of the following tests: (i) at least 75% of its gross
income is passive income or (ii) an average of at least 50% of its assets
produce, or are held for the production of, passive income. Under certain
circumstances, a regulated investment company that holds stock of a PFIC will be
subject to federal income tax on (i) a portion of any "excess distribution"
received on such stock or (ii) any gain from a sale or disposition of such stock
(collectively, "PFIC income"), plus interest on such amounts, even if the
regulated investment company distributes the PFIC income as a taxable dividend
to its shareholders. The balance of the PFIC income will be included in the
regulated investment company's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders. If the Fund invests in a PFIC and elects to treat the PFIC
as a "qualified electing fund," then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the qualified electing fund's annual ordinary earnings and net
capital gain, which most likely would have to be distributed to satisfy the 90%
distribution requirement and the distribution requirement for avoiding income
and excise taxes. In most instances it will be very difficult to make this
election due to certain requirements imposed with respect to the election.
As an alternative to making the above-described election to treat the PFIC
as a qualified electing fund, the Fund may make an election to annually
mark-to-market PFIC stock that it owns (a "PFIC Mark-to-Market Election").
"Marking-to-market," in this context, means recognizing as ordinary income or
loss each year an amount equal to the difference between the Fund's adjusted tax
basis in such PFIC stock and its fair market value. Losses will be allowed only
to the extent of net mark-to-market gain previously included by the Fund
pursuant to the election for prior taxable years. The Fund may be required to
include in its taxable income for the first taxable year in which it makes a
PFIC Mark-to-Market Election an amount equal to the interest charge that would
otherwise accrue with respect to distributions on, or dispositions of, the PFIC
stock. This amount would not be deductible from the Fund's taxable income. The
PFIC Mark-to-Market Election applies to the taxable year for which made and to
all subsequent taxable years, unless the Internal Revenue Service ("IRS")
consents to revocation of the election. By making the PFIC Mark-to-Market
Election, the Fund could ameliorate the adverse tax consequences arising from
its ownership of PFIC stock, but in any particular year may be required to
recognize income in excess of the distributions it receives from the PFIC and
proceeds from the dispositions of PFIC stock.
DISTRIBUTIONS
Distributions of the Fund's net investment income are taxable to
shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether paid in cash or reinvested in additional shares. Distributions
of the Fund's net capital gains ("capital gain dividends"), if any, are taxable
to shareholders as long-term capital gains regardless of the length of time
shares of the Fund have been held by such shareholders. Distributions in excess
of the Fund's earnings and profits will first reduce the adjusted tax basis of a
holder's shares and, after such adjusted tax basis is reduced to zero, will
constitute capital gains to such holder (assuming such shares are held as a
capital asset). For a summary of the tax rates applicable to capital gains
(including capital gain dividends), see "Capital Gains Rates" below. Tax-exempt
shareholders not subject to federal income tax on their income generally will
not be taxed on distributions from the Fund.
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<PAGE> 64
Shareholders receiving distributions in the form of additional shares
issued by the Fund will be treated for federal income tax purposes as receiving
a distribution in an amount equal to the fair market value of the shares
received, determined as of the distribution date. The basis of such shares will
equal the fair market value on the distribution date.
The Fund will inform shareholders of the source and tax status of all
distributions promptly after the close of each calendar year. Some portion of
the distributions from the Fund may be eligible for the dividends received
deduction for corporations if the Fund receives qualifying dividends during the
year and if certain other requirements of the Code are satisfied.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in such month and paid during January of the
following year will be treated as having been distributed by the Fund and
received by the shareholders on the December 31st prior to the date of payment.
In addition, certain other distributions made after the close of a taxable year
of the Fund may be "spilled back" and treated as paid by the Fund (except for
purposes of the 4% excise tax) during such taxable year. In such case,
shareholders will be treated as having received such dividends in the taxable
year in which the distribution was actually made.
Income from investments in foreign securities received by the Fund may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions. Such taxes will not be deductible or creditable by
shareholders. Tax conventions between certain countries and the United States
may reduce or eliminate such taxes.
Under Code Section 988, foreign currency gains or losses from certain
forward contracts not traded in the interbank market as well as certain other
gains or losses attributable to currency exchange rate fluctuations are
typically treated as ordinary income or loss. Such income or loss may increase
or decrease (or possibly eliminate) the Fund's income available for
distribution. If, under the rules governing the tax treatment of foreign
currency gains and losses, the Fund's income available for distribution is
decreased or eliminated, all or a portion of the dividends declared by the Fund
may be treated for federal income tax purposes as a return of capital or, in
some circumstances, as capital gain. Generally, a shareholder's tax basis in
Fund shares will be reduced to the extent that an amount distributed to such
shareholder is treated as a return of capital.
SALE OF SHARES
The sale of shares (including transfers in connection with a redemption or
repurchase of shares) will be a taxable transaction for federal income tax
purposes. Selling shareholders will generally recognize gain or loss in an
amount equal to the difference between their adjusted tax basis in the shares
and the amount received. If such shares are held as a capital asset, the gain or
loss will be a capital gain or loss. For a summary of the tax rates applicable
to capital gains, see "Capital Gains Rates" below. Any loss recognized upon a
taxable disposition of shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gain dividends received with
respect to such shares. For purposes of determining whether shares have been
held for six months or less, the holding period is suspended for any periods
during which the shareholder's risk of loss
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is diminished as a result of holding one or more other positions in
substantially similar or related property or through certain options or short
sales.
CAPITAL GAINS RATES
The maximum tax rate applicable to net capital gains recognized by
individuals and other non-corporate taxpayers is (i) the same as the maximum
ordinary income tax rate for capital assets held for one year or less or (ii)
20% for capital assets held for more than one year. The maximum long-term
capital gains rate for corporations is 35%.
Non-U.S. Shareholders. A shareholder who is not (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized
under the laws of the United States or any state thereof, (iii) an estate, the
income of which is subject to United States federal income taxation regardless
of its source or (iv) a trust whose administration is subject to the primary
supervision of a United States court and which has one or more United States
fiduciaries who have the authority to control all substantial decisions of the
trust (a "Non-U.S. Shareholder") generally will be subject to withholding of
United States federal income tax at a 30% rate (or lower applicable treaty rate)
on dividends from the Fund (other than capital gain dividends) that are not
"effectively connected" with a United States trade or business carried on by
such shareholder.
Non-effectively connected capital gain dividends and gains realized from
the sale of shares will not be subject to United States federal income tax in
the case of (i) a Non-U.S. Shareholder that is a corporation and (ii) a Non-U.S.
Shareholder that is not present in the United States for more than 182 days
during the taxable year (assuming that certain other conditions are met).
However, certain Non-U.S. Shareholders may nonetheless be subject to backup
withholding on capital gain dividends and gross proceeds paid to them upon the
sale of their shares. See "Backup Withholding" below.
If income from the Fund or gains realized from the sale of shares is
effectively connected with a Non-U.S. Shareholder's United States trade or
business, then such amounts will be subject to United States federal income tax
on a net basis at the tax rates applicable to United States citizens or domestic
corporations. Non-U.S. Shareholders that are corporations may also be subject to
an additional "branch profits tax" with respect to income from the Fund that is
effectively connected with a United States trade or business.
Final United States Treasury regulations, effective for payments made after
December 31, 2000, may affect the procedures to be followed by Non-U.S.
Shareholders in establishing foreign status for purposes of the withholding,
backup withholding and information reporting rules. Prospective investors should
consult their tax advisors concerning the applicability and effect of such
Treasury Regulations on an investment in shares of the Fund.
The tax consequences to a Non-U.S. Shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described in
this section. Non-U.S. Shareholders may be required to provide appropriate
documentation to establish their entitlement to the benefits of such a treaty.
Foreign investors are advised to consult their tax advisers with respect to the
tax implications of purchasing, holding and disposing of shares of the Fund.
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Backup Withholding. The Fund may be required to withhold federal income tax
at a rate of 31% ("backup withholding") from dividends and redemption proceeds
paid to non-corporate shareholders. This tax may be withheld from dividends if
(i) the shareholder fails to furnish the Fund with its correct taxpayer
identification number, (ii) the IRS notifies the Fund that the shareholder has
failed to properly report certain interest and dividend income to the IRS and to
respond to notices to that effect or (iii) when required to do so, the
shareholder fails to certify that he or she is not subject to backup
withholding. Redemption proceeds may be subject to withholding under the
circumstances described in (i) above.
The Fund must report annually to the IRS and to each Non-U.S. Shareholder
the amount of dividends paid to such shareholder and the amount, if any, of tax
withheld pursuant to backup withholding rules with respect to such dividends.
This information may also be made available to the tax authorities in the
Non-U.S. Shareholder's country of residence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from payments made to a Shareholder may be refunded or
credited against such shareholder's United States federal income tax liability,
if any, provided that the required information is furnished to the IRS.
GENERAL
The federal income tax discussion set forth above is for general
information only. Prospective investors should consult their advisors regarding
the specific federal tax consequences of purchasing, holding and disposing of
shares, as well as the effects of state, local and foreign tax law and any
proposed tax law changes.
FUND PERFORMANCE
From time to time the Fund may advertise its total return for prior
periods. Any such advertisement would include at least average annual total
return quotations for one year, five-year and ten-year periods. Other total
return quotations, aggregate or average, over other time periods may also be
included.
The total return of the Fund for a particular period represents the
increase (or decrease) in the value of a hypothetical investment in the Fund
from the beginning to the end of the period. Total return is calculated by
subtracting the value of the initial investment from the ending value and
showing the difference as a percentage of the initial investment; the
calculation assumes the initial investment is made at the current maximum public
offering price (which includes the maximum sales charge for Class A Shares);
that all income dividends or capital gains distributions during the period are
reinvested in Fund shares at net asset value; and that any applicable contingent
deferred sales charge has been paid. The Fund's total return will vary depending
on market conditions, the securities comprising the Fund's portfolio, the Fund's
operating expenses and unrealized net capital gains or losses during the period.
Total return is based on historical earnings and asset value fluctuations and is
not intended to indicate future performance. No adjustments are made to reflect
any income taxes payable by shareholders on dividends and distributions paid by
the Fund.
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Average annual total return quotations for periods of two or more years are
computed by finding the average annual compounded rate of return over the period
that would equate the initial amount invested to the ending redeemable value.
The Fund may, in supplemental sales literature, advertise non-standardized
total return figures representing the cumulative, non-annualized total return of
each class of shares of the Fund from a given date to a subsequent given date.
Cumulative non-standardized total return is calculated by measuring the value of
an initial investment in a given class of shares of the Fund at a given time,
deducting the maximum initial sales charge, if any, determining the value of all
subsequent reinvested distributions, and dividing the net change in the value of
the investment as of the end of the period by the amount of the initial
investment and expressing the result as a percentage. Non-standardized total
return will be calculated separately for each class of shares.
Non-standardized total return calculations do not reflect the imposition of
a contingent deferred sales charge, and if any such contingent deferred sales
charge imposed at the time of redemption were reflected, it would reduce the
performance quoted.
Total return is calculated separately for Class A Shares, Class B Shares
and Class C Shares. Total return figures for Class A Shares include the maximum
sales charge; total return figures for Class B Shares and Class C Shares include
any applicable contingent deferred sales charge. Because of the differences in
sales charges and distribution fees, the total returns for each class of shares
will differ.
From time to time, the Fund may include in its sales literature and
shareholder reports a quotation of the current "distribution rate" for each
class of shares of the Fund. Distribution rate is a measure of the level of
income and short-term capital gain dividends, if any, distributed for a
specified period. Distribution rate differs from yield, which is a measure of
the income actually earned by the Fund's investments, and from total return
which is a measure of the income actually earned by the Fund's investments plus
the effect of any realized and unrealized appreciation or depreciation of such
investments during a stated period. Distribution rate is, therefore, not
intended to be a complete measure of the Fund's performance. Distribution rate
may sometimes be greater than yield since, for instance, it may not include the
effect of amortization of bond premiums, and may include non-recurring
short-term capital gains and premiums from futures transactions engaged in by
the Fund. Distribution rates will be computed separately for each class of the
Fund's shares.
The Fund seeks to remain invested and diversified across many industries to
achieve consistent long-term performance. From time to time marketing materials
may provide a portfolio manager update, an Adviser update or discuss general
economic conditions and outlooks. The Fund's marketing materials may also show
the Fund's asset class diversification, top five sectors, ten largest holdings
and other Fund asset structures. The top 10 holdings of the Fund may also be
listed in marketing pieces. Materials may also mention how Van Kampen
Investments believes the Fund compares relative to other Van Kampen funds.
Materials may also discuss the Dalbar Financial Services study form 1984 to 1994
which examined investor cash flow into and out of all types of mutual funds. The
ten year study found the investors who bought mutual fund shares and held such
shares outperformed investors who bought and sold. The Dalbar study conclusions
were consistent regardless if shareholders purchased their funds in direct or
sales force distribution
B-43
<PAGE> 68
channels. The study showed that investors working with a professional
representative have tended over time to earn higher returns than those who
invested other than with a professional representative. The Fund may also be
marketed on the internet.
In reports or other communications to shareholders or in advertising
material, the Fund may compare its performance with that of other mutual funds
as listed in the rankings or ratings prepared by Lipper Analytical Services,
Inc., CDA, Morningstar Mutual Funds or similar independent services which
monitor the performance of mutual funds with the Consumer Price Index, the Dow
Jones Industrial Average, Standard & Poor's indices, NASDAQ Composite Index,
other appropriate indices of investment securities, or with investment or
savings vehicles. The performance information may also include evaluations of
the Fund published by nationally recognized ranking services and by nationally
recognized financial publications. Such comparative performance information will
be stated in the same terms in which the comparative data or indices are stated.
Such advertisements and sales material may also include a yield quotation as of
a current period. In each case, such total return and yield information, if any,
will be calculated pursuant to rules established by the SEC and will be computed
separately for each class of the Fund's shares. For these purposes, the
performance of the Fund, as well as the performance of other mutual funds or
indices, do not reflect sales charges, the inclusion of which would reduce the
Fund's performance. The Fund will include performance data for each class of
shares of the Fund in any advertisement or information including performance
data of the Fund.
The Fund may also utilize performance information in hypothetical
illustrations. For example, the Fund may, from time to time: (1) illustrate the
benefits of tax-deferral by comparing taxable investments to investments made
through tax-deferred retirement plans; (2) illustrate in graph or chart form, or
otherwise, the benefits of dollar cost averaging by comparing investments made
pursuant to a systematic investment plan to investments made in a rising market;
(3) illustrate allocations among different types of mutual funds for investors
at different stages of their lives; and (4) in reports or other communications
to shareholders or in advertising material, illustrate the benefits of
compounding at various assumed rates of return.
The Fund's Annual Report and Semiannual Report contain additional
performance information. A copy of the Annual Report or Semiannual Report may be
obtained without charge by calling or writing the Fund at the telephone number
and address printed on the back cover of the Prospectus.
OTHER INFORMATION
CUSTODY OF ASSETS
All securities owned by the Fund and all cash, including proceeds from the
sale of shares of the Fund and of securities in the Fund's investment portfolio,
are held by State Street Bank and Trust Company, 225 West Franklin Street,
Boston, Massachusetts 02110, as Custodian.
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<PAGE> 69
SHAREHOLDER REPORTS
Semiannual statements are furnished to shareholders, and annually such
statements are audited by the independent accountants.
INDEPENDENT ACCOUNTANTS
KPMG LLP, 303 East Wacker Drive, Chicago, Illinois 60601, the independent
accountants for the Fund, performs an annual audit of the Fund's financial
statements.
LEGAL COUNSEL
Counsel to the Fund is Skadden, Arps, Slate, Meagher & Flom (Illinois).
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PART C: OTHER INFORMATION
ITEM 23. EXHIBITS.
(a)(1) Agreement and Declaration of Trust(7)
(2) Certificate of Amendment(9)
(3) Certificate of Designation for:
<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(9)
(ii) Van Kampen Growth Fund(9)
(iii) Van Kampen Mid Cap Value Fund++
(iv) Van Kampen Great American Companies Fund(9)
(v) Van Kampen Prospector Fund(9)
(vi) Van Kampen Aggressive Growth Fund(9)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>
(b) By-Laws(7)
(c) Specimen share certificates of beneficial interest in:
<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(7)
(ii) Van Kampen Growth Fund(7)
(iii) Van Kampen Mid Cap Value Fund(7)
(iv) Van Kampen Great American Companies Fund(7)
(v) Van Kampen Prospector Fund(7)
(vi) Van Kampen Aggressive Growth Fund(7)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>
(d) Investment Advisory Agreement for:
<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(8)
(ii) Van Kampen Growth Fund(8)
(iii) Van Kampen Mid Cap Value Fund(8)
(iv) Van Kampen Great American Companies Fund(8)
(v) Van Kampen Prospector Fund(8)
(vi) Van Kampen Aggressive Growth Fund(8)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>
(e)(1) Distribution and Service Agreement for:
<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(8)
(ii) Van Kampen Growth Fund(8)
(iii) Van Kampen Mid Cap Value Fund(8)
(iv) Van Kampen Great American Companies Fund(8)
(v) Van Kampen Prospector Fund(8)
(vi) Van Kampen Aggressive Growth Fund(8)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>
(2) Form of Dealer Agreement+
(3) Form of Broker Fully Disclosed Clearing Agreement+
(4) Form of Bank Fully Disclosed Clearing Agreement+
(f)(1) Form of Trustee Deferred Compensation Agreement(11)
(2) Form of Trustee Retirement Plan(11)
(g)(1) Custodian Contract+
(2) Transfer Agency and Service Agreement(8)
(h)(1) Fund Accounting Agreement+
(2) Amended and Restated Legal Services Agreement+
(i) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois):
<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(3)
(ii) Van Kampen Growth Fund(5)
(iii) Van Kampen Mid Cap Value Fund(5)
(iv) Van Kampen Great American Companies Fund(5)
(v) Van Kampen Prospector Fund(5)
(vi) Van Kampen Aggressive Growth Fund(6)
(vii) Van Kampen Small Cap Value Fund+
</TABLE>
C-1
<PAGE> 71
(j) Consents of KPMG LLP:
<TABLE>
<C> <S>
(i) Van Kampen Utility Fund++
(ii) Van Kampen Growth Fund++
(iii) Van Kampen Mid Cap Value Fund++
(iv) Van Kampen Great American Companies Fund++
(v) Van Kampen Prospector Fund++
(vi) Van Kampen Aggressive Growth Fund++
(vii) Van Kampen Small Cap Value Fund+
</TABLE>
(k) Not Applicable
(l) Letter of Understanding relating to initial capital(7)
(m)(1) Distribution Plan pursuant to Rule 12b-1 for:
<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(7)
(ii) Van Kampen Growth Fund(7)
(iii) Van Kampen Mid Cap Value Fund(7)
(iv) Van Kampen Great American Companies Fund(7)
(v) Van Kampen Prospector Fund(7)
(vi) Van Kampen Aggressive Growth Fund(7)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>
(2) Form of Shareholder Assistance Agreement+
(3) Form of Administrative Services Agreement+
(4) Service Plan for:
<TABLE>
<C> <S>
(i) Van Kampen Utility Fund(7)
(ii) Van Kampen Growth Fund(7)
(iii) Van Kampen Mid Cap Value Fund(7)
(iv) Van Kampen Great American Companies Fund(7)
(v) Van Kampen Prospector Fund(7)
(vi) Van Kampen Aggressive Growth Fund(7)
(vii) Van Kampen Small Cap Value Fund(10)
</TABLE>
(n) Financial Data Schedules(9)
(o) (1) Amended Multi-Class Plan(8)
(2) Van Kampen Small Cap Value Fund Multi-Class Plan+
(p) Power of Attorney+
(z)(1) List of certain investment companies in response to Item
27(a)+
(2) List of Officers and Directors of Van Kampen Funds Inc. in
response to Item 27(b)+
- ---------------
(1) Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on October 29, 1986.
(2) Incorporated herein by reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on June 8, 1993.
(3) Incorporated herein by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on August 1, 1995.
(4) Incorporated herein by reference to Post-Effective Amendment No. 24 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on August 29, 1995.
(5) Incorporated herein by reference to Post-Effective Amendment No. 25 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on October 13, 1995.
(6) Incorporated herein by reference to Post-Effective Amendment No. 26 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on March 15, 1996.
(7) Incorporated herein by reference to Post-Effective Amendment No. 27 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on October 25, 1996.
(8) Incorporated herein by reference to Post-Effective Amendment No. 28 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on October 28, 1997.
(9) Incorporated herein by reference to Post-Effective Amendment No. 29 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
on September 30, 1998.
(10) Incorporated herein by reference to Post-Effective Amendment No. 30 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
On March 1, 1999.
C-2
<PAGE> 72
(11) Incorporated herein by reference to Post-Effective Amendment No. 81 to Van
Kampen Harbor Fund's Registration Statement on Form N-1A, File Numbers
2-12685 and 811-739, filed April 29, 1999.
(12) Incorporated herein by reference to Post-Effective Amendment No. 31 to
Registrant's Registration Statement on Form N-1A, File No. 33-8122, filed
On May 28, 1999.
+ Filed herewith.
++ To be filed by further amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 25. INDEMNIFICATION.
Pursuant to Del. Code Ann. Title 12 Section 3817, a Delaware business trust
may provide in its governing instrument for the indemnification of its officers
and trustees from and against any and all claims and demands whatsoever.
Reference is made to Article 8, Section 8.4 of the Registrant's Agreement
and Declaration of Trust. 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 (i) not acting in good faith in the reasonable
belief that such person's actions were not in the best interests of the Trust,
(ii) willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office or (iii) for a criminal
proceeding, not having a reasonable cause to believe that such conduct was
unlawful (collectively, "Disabling Conduct"). Absent a court determination that
an officer or trustee seeking indemnification was not liable on the merits or
guilty of Disabling Conduct 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 Disabling
Conduct, 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 officers or trustees 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 "1933 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
1933 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
C-3
<PAGE> 73
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
Pursuant to Section 7 of the Distribution and Service Agreement, the
Registrant agrees to indemnify and hold harmless Van Kampen Funds Inc. (the
"Distributor") and each of its trustees and officers and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damages or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damages,
or expense and reasonable counsel fees) arising by reason of any person
acquiring any shares, based upon the ground that the Registration Statement,
prospectus, shareholder reports or other information filed or made public by the
Registrant (as from time to time amended) included an untrue statement of a
material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements not misleading under the 1933 Act, or
any other statute or the common law. The Registrant does not agree to indemnify
the Distributor or hold it harmless to the extent that the statement or omission
was made in reliance upon, and in conformity with, information furnished to the
Registrant by or on behalf of the Distributor. In no case is the indemnity of
the Registrant in favor of the Distributor or any person indemnified to be
deemed to protect the Distributor or any person against any liability to the
Fund or its security holders to which the Distributor or such person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under the agreement.
See also "Investment Advisory Agreement" in the Statement of Additional
Information.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:
See "Investment Advisory Services" in each Prospectus and "Investment
Advisory Agreement," "Other Agreements" and "Trustees and Officers" in the
Statement of Additional Information for information regarding the business of
Van Kampen Investment Advisory Corp. (the "Adviser"). For information as to the
business, profession, vocation or employment of a substantial nature of each of
the officers and directors 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 27. PRINCIPAL UNDERWRITERS
(a) The sole principal underwriter is Van Kampen Funds Inc. which acts as
principal underwriter for certain investment companies and unit investment
trusts. See Exhibit (z)(1) incorporated by reference herein.
(b) Van Kampen Funds Inc. is an affiliated person of the Registrant and is
the only principal underwriter for the Registrant. The name, principal business
address and positions and offices with Van Kampen Funds Inc. of each of the
trustees and officers of the Registrant are disclosed in Exhibit (z)(2). Except
as disclosed under the heading, "Trustees and Officers" in Part B of this
Registration Statement, none of such persons has any position or office with the
Registrant.
(c) Not applicable.
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
the Registrant will be maintained at its offices located at 1 Parkview Plaza,
P.O. Box 5555, Oakbrook Terrace, Illinois 60181-5555; Van Kampen Investor
Services Inc., 7501 Tiffany Springs Parkway, Kansas City, Missouri, 64153; or at
State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy,
Massachusetts, 02171, (ii) by the Adviser will be maintained at its offices,
located at 1 Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, Illinois
60181-5555, and (iii) by Van Kampen Funds Inc., the principal underwriter, will
be maintained at its offices located at 1 Parkview Plaza, P.O. Box 5555,
Oakbrook Terrace, Illinois 60181-5555.
C-4
<PAGE> 74
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
Not applicable.
C-5
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act") and the Investment Company Act of 1940, as amended, the Registrant,
VAN KAMPEN EQUITY TRUST, has duly caused this amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Oakbrook Terrace, and State of Illinois on the 16th
day of June, 1999.
VAN KAMPEN EQUITY TRUST
By: /s/ A. THOMAS SMITH III
-------------------------------------
A. Thomas Smith III, Vice President
and Secretary
Pursuant to the requirements of the 1933 Act, this amendment to the
Registration Statement has been signed on June 16, 1999, by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<S> <C>
Principal Executive Officer:
/s/ RICHARD F. POWERS, III President
- ------------------------------------------------
Richard F. Powers, III
Principal Financial Officer:
/s/ JOHN L. SULLIVAN* Vice President, Chief Financial Officer and Treasurer
- ------------------------------------------------
John L. Sullivan
Trustees:
/s/ J. MILES BRANAGAN* Trustee
- ------------------------------------------------
J. Miles Branagan
/s/ JERRY D. CHOATE* Trustee
- ------------------------------------------------
Jerry D. Choate
Trustee
- ------------------------------------------------
Richard M. DeMartini
/s/ LINDA H. HEAGY* Trustee
- ------------------------------------------------
Linda H. Heagy
/s/ R. CRAIG KENNEDY* Trustee
- ------------------------------------------------
R. Craig Kennedy
/s/ JACK E. NELSON* Trustee
- ------------------------------------------------
Jack E. Nelson
/s/ DON G. POWELL* Trustee
- ------------------------------------------------
Don G. Powell
/s/ PHILLIP B. ROONEY* Trustee
- ------------------------------------------------
Phillip B. Rooney
/s/ FERNANDO SISTO* Trustee
- ------------------------------------------------
Fernando Sisto
/s/ WAYNE W. WHALEN* Trustee
- ------------------------------------------------
Wayne W. Whalen
/s/ SUZANNE H. WOOLSEY* Trustee
- ------------------------------------------------
Suzanne H. Woolsey
/s/ PAUL G. YOVOVICH* Trustee
- ------------------------------------------------
Paul G. Yovovich
- ---------------
* Signed by A. Thomas Smith III pursuant to a power of attorney filed herewith.
/s/ A. THOMAS SMITH III June 16, 1999
- ------------------------------------------------
A. Thomas Smith III
Attorney-in-Fact
</TABLE>
C-6
<PAGE> 76
SCHEDULE OF EXHIBITS TO
POST-EFFECTIVE AMENDMENT 32 TO FORM N-1A AS
SUBMITTED TO THE SECURITIES AND EXCHANGE
COMMISSION ON JUNE 16, 1999
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <S>
(e)(2) Form of Dealer Agreement
(3) Form of Broker Fully Disclosed Clearing Agreement
(4) Form of Bank Fully Disclosed Clearing Agreement
(g)(1) Custodian Contract
(h)(1) Fund Accounting Agreement
(2) Amended and Restated Legal Services Agreement
(i) Opinion and Consent of Skadden, Arps, Slate, Meagher & Flom
(Illinois)
(j) Consent of KPMG LLP
(m)(2) Form of Shareholder Assistance Agreement
(3) Form of Administrative Services Agreement
(o)(2) Van Kampen Small Cap Value Fund Multi-Class Plan
(p) Power of Attorney
(z)(1) List of certain investment companies in response to Item
27(a)
(2) List of Officers and Directors of Van Kampen Funds Inc. in
response to Item 27(b)
</TABLE>
<PAGE> 1
EXHIBIT (e(2))
FORM OF
DEALER AGREEMENT
WITH VAN KAMPEN FUNDS INC.
REGARDING VAN KAMPEN
OPEN-END AND CLOSED-END INVESTMENT COMPANIES
Ladies and Gentlemen:
As dealer for our own account, we offer to sell to you shares of any of
the Van Kampen open-end investment companies (the "Open-End Funds" or,
individually, an "Open-End Fund") and Van Kampen closed-end investment
companies (the "Closed-End Funds" or, individually, a "Closed-End Fund")
distributed by Van Kampen Funds Inc. ("VK Funds") pursuant to the terms and
conditions contained herein. Collectively, the Open-End Funds and Closed-End
Funds sometimes are referred to herein as the "Funds" or, individually,
as a "Fund".
VK Funds acts as the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) for each Fund with respect to its
offering of one or more classes of shares as described in each Fund's
Prospectus. Pursuant to this Agreement, VK Funds offers to sell to you shares
of each Open-End Fund and each Closed-End Fund prior to the Effective Date (as
defined herein) of each Fund's Registration Statement (as defined herein) (the
"Initial Offering Period") and after the Effective Date of each Fund's
Registration Statement (the "Continuous Offering Period") (if any) as described
in each respective Fund's Prospectus.
As used herein unless otherwise indicated, the term "Prospectus" means the
final prospectus and Statement of Additional Information included in the
registration statement for the fund on the effective date and as from time to
time thereafter amended or supplemented. As used herein unless otherwise
indicated, the term "Preliminary Prospectus" means any preliminary prospectus
and any preliminary Statement of Additional Information included at any time as
a part of the registration statement for any Fund prior to the effective date
and which is authorized by VK Funds for use in connection with the offering
of shares.
In consideration of the mutual obligations contained herein, the
sufficiency of which is hereby acknowledged by you, the terms of the Agreement
are as follows:
GENERAL TERMS AND CONDITIONS
1. Your acceptance of this Agreement constitutes a representation that
you are a broker-dealer registered with the Securities and Exchange Commission
(the "SEC") and a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") or, in the alternative, that you are a
foreign dealer or bank, not required to be registered as a broker-dealer with
the SEC and not required or eligible for membership in the NASD. If you are
such an NASD member, you agree that in making sales of shares of the one or
more classes of shares of each Fund you will comply with all applicable rules
of the NASD, including without limitation rules pertaining to the opening,
approval, supervision and monitoring of customer accounts, the NASD's
Interpretation with Respect to Free-Riding and Withholding and Sections 8, 24
and 36 of Article III of the NASD's Rules of Fair Practice. If you are such an
unregistered foreign dealer or bank, you agree not to offer or sell, or to
agree to offer or sell, directly or indirectly, except through VK Funds,
any shares to any party to whom such shares may not be sold unless you are
so registered and a member of the NASD, and in making sales of such shares
you agree to comply with the NASD's Interpretation with Respect to Free-Riding
and Withholding and Sections 8, 24 and 36 of Article III of the NASD's Rules
of Fair Practice as though you were a member in
1
<PAGE> 2
good standing of the NASD and to comply with Section 25 of such Article III as
it applies to a nonmember broker or dealer in a foreign country. You and we
agree to abide by all other Rules and Regulations of the NASD, including
Section 26 of its Rules of Fair Practice, and all applicable state and Federal
laws, rules and regulations. Your acceptance also constitutes a representation
that you have been duly authorized by proper corporate or partnership action to
enter into this Agreement and to perform your obligations hereunder. You will
not accept any orders from any broker, dealer or financial institution who is
purchasing from you with a view toward distribution unless you have obtained
such person's or entity's written consent to be bound by the terms of this
Agreement.
2. In all sales of shares of the Funds to the public you shall act as
dealer for your own account, and you shall have no authority in any transaction
to act as agent for the Fund or for VK Funds.
3. Each Fund has filed with the SEC and the securities commissions of one
or more states a Registration Statement (the "Registration Statement") on the
SEC Form applicable to the respective Fund. The date on which the Registration
Statement is declared effective by the SEC is referred to herein as the
"Effective Date". Prior to the Effective Date of the Registration Statement
with respect to a particular Fund, you expressly acknowledge and understand
that with respect to such Fund:
(a) Shares of such Fund may not be sold, nor may offers to buy be
accepted, (i) in any state prior to the Effective Date of the Registration
Statement with respect thereto or (ii) in any state in which such offer or sale
would be unlawful prior to registration or qualification under the securities
laws of such state.
(b) The Fund's Preliminary Prospectus, together with any sales material
distributed for use in connection with the offering of shares of such Fund,
does not constitute an offer to sell or the solicitation of an offer to buy
shares of such Fund and is subject to completion and modification by the
Prospectus. You agree that you will distribute to the public only (a) the
Preliminary Prospectus, the Prospectus and any amendment or supplement thereto
and (b) sales literature or other documents expressly authorized for such
distribution by VK Funds.
(c) In the event that you transmit indications of interest to VK Funds
for accumulation prior to the Effective Date, you will be responsible for
confirming such indications of interest with your customers following the
Effective Date. Indications of interest with respect to shares of a class of a
Fund's shares transmitted to VK Funds prior to the Effective Date will be
conditioned upon the occurrence of the Effective Date and the registration or
qualification of the respective class of shares in the respective state.
(d) Indications of interest with respect to shares of a class of a Fund's
shares which are not canceled by you prior to the latter of the Effective Date
and the registration or qualification of the respective class of the Fund's
shares in the respective state, and accepted by VK Funds will be deemed by
VK Funds to be orders for shares of such class of shares of the Fund.
(e) All indications of interest and orders transmitted to VK Funds are
subject to the terms and conditions of the Prospectus and this Agreement.
4. After the Effective Date, you will not offer shares of a class of the
Fund's shares for sale in any state where they are not qualified for sale under
the "blue sky" laws and regulations of such state or where you are not
qualified to act as a dealer, except for states in which they are exempt from
qualification.
5. In the event that you offer shares of the Fund for sale outside the
United States, you agree to comply with the applicable laws, rules and
regulations of the foreign government having jurisdiction over such sales,
including any regulations of the United States military authorities applicable
to solicitations to military personnel.
2
<PAGE> 3
6. Upon application to VK Funds, VK Funds will inform you as to the
jurisdictions in which VK Funds believes shares of a Fund have been qualified
for sale under the respective securities or "blue sky" laws of such
jurisdictions. VK Funds understands and agrees that qualification of any shares
of a Fund for sale in such jurisdictions shall be solely VK Funds'
responsibility and that you assume no responsibility or obligation with respect
to such eligibility. You understand and agree that your compliance with the
requirements of the securities or "blue sky" laws in each jurisdiction with
respect to your right to sell the shares in such jurisdiction shall be solely
your responsibility.
7. No person is authorized to make any representations concerning any
class of shares of a Fund except those contained in the Fund's current
Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares
from us you shall rely solely on the representations contained in such
Prospectus. VK Funds will furnish additional copies of a Fund's current
Prospectus and sales literature issued by VK Funds in reasonable quantities upon
request.
8. Orders received from you will be accepted by VK Funds only at the
public offering price applicable to each order as specified in the then-current
Fund Prospectus. The minimum dollar purchase of any shares of each Fund by any
person shall be the applicable minimum dollar amount described in the
then-current Fund Prospectus for that class of shares, and no order for less
than such amount will be accepted hereunder. The procedures relating to the
handling of orders shall be subject to instructions that VK Funds shall
communicate from time to time to you. All orders are subject to acceptance or
rejection by VKAC in its sole discretion.
9. Payment for Fund shares shall be made on or before the settlement date
specified in the VK Funds confirmation at the office of VK Funds' clearing
agent, or wire to the order of the Fund which reserves VK Funds' right to delay
issuance or transfer of shares until such check has cleared. If such payment is
not received by VK Funds, VK Funds reserves the right, without notice, forthwith
either to cancel the sale or, at its option, to sell the shares ordered back to
the Fund, and in either case, VK Funds may hold you responsible for any loss
suffered by the Fund. You agree that in transmitting investors' funds, you will
comply with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended.
10. You shall not withhold placing orders with VK Funds from your
customers so as to profit yourself as a result of such withholding; e.g., by a
change in the net asset value from that used in determining the public offering
price to your customers.
11. VK Funds will not accept from you any conditioned orders for shares,
except at a definite, specified price.
12. You represent that you are familiar with Release No. 4968 under the
Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, as it relates to the distribution of
Preliminary Prospectuses (and not Statements of Additional Information) and
Prospectuses (and not Statements of Additional Information) for each Fund and
agree that you will comply therewith. You agree that if an investor or
potential investor places a request with you to receive a Statement of
Additional Information, you will (i) provide such person with a Statement of
Additional Information without charge and notify the Fund that you have done so,
(ii) notify the Fund of the request so that the Fund can fulfill the request or
(iii) tell such person to request a Statement of Additional Information by
telephoning the Fund at the number set forth on the cover of the current
Prospectus or Preliminary Prospectus. You also agree to keep an accurate record
of your distribution (including dates, number of copies and persons to whom
sent) of copies of any Preliminary Prospectus (and any Statement of Additional
Information) and/or Prospectus (and any Statement of Additional Information) for
each Fund (or any amendment or supplement to either) and, promptly upon request
by VK Funds, to bring all subsequent changes to such Preliminary Prospectus or
Prospectus to the attention of anyone to whom such material shall have been
distributed. You further agree to furnish to persons who receive a confirmation
of sale of shares of any Fund a copy of the Prospectus (and not the Statement of
Additional Information) for such Fund filed pursuant to Rule 497 under the
Securities Act of 1933, as amended.
3
<PAGE> 4
13. Unless otherwise indicated in a Fund's Prospectus, stock certificates
for shares of Funds sold to you shall be issued only if specifically requested.
14. VK Funds will have no liability to you, except for lack of good faith
and for obligations expressly assumed by VK Funds in this Agreement.
15. All communications to VK Funds shall be sent to 1 Parkview Plaza,
PO Box 5555 Oakbrook Terrace, Illinois 60181-5555, Attention: Mutual Fund
Department. Any notice to you shall be duly given if sent to you at the address
specified by you below or such other address as you may designate to VK Funds in
writing.
16. Neither this Agreement nor the performance of the services hereunder
shall be considered to create a joint venture or partnership between VK Funds
and you.
17. This Agreement shall be construed in accordance with the laws of the
State of Illinois without reference to the choice-of-law principles thereof.
18. The Fund reserves the right in its discretion and VK Funds reserves
the right in its discretion, without notice, to suspend or withdraw the offering
of any shares of a Fund entirely. VK Funds reserves the right, without notice,
to amend, modify or cancel the Agreement. The Agreement may not be assigned by
either party without prior written consent of the other party.
19. This Agreement may be terminated at any time by either party.
TERMS AND CONDITIONS APPLICABLE ONLY TO OPEN-END FUNDS
20. Each of the Open-End Fund's is subject to an alternative distribution
plan (the "Alternative Distribution Plan") as described in such Fund's
then-current Prospectus pursuant to which the Open-End Fund may sell multiple
classes of its shares with varying combinations of front-end service charges
(each a "FESC"), distributions fees, service fees, contingent deferred sales
charges (each a "CDSC"), exchange features, conversion rights, voting rights,
expenses allocations and investment requirements. As used herein, classes of
shares of a Fund subject to a FESC will be referred to as FESC Shares, and
classes of shares of a Fund subject to a CDSC will be referred to as CDSC
Shares.
+
21.(a) With respect to any shares of a class of FESC Shares of an
Open-End Fund, the public offering price for such shares shall be the net asset
value per share plus a FESC, expressed as a percentage of the applicable public
offering price, as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. The dealer discount applicable
to any sale of shares of a class of FESC Shares of an Open-End Fund shall be a
percentage of the applicable public offering price for such shares as provided
for in the then-current Prospectus of such Open-End Fund or, if not so
provided, as provided to you from time to time in writing by VK Funds.
(b) With respect to any shares of a class of CDSC Shares of an Open-End
Fund, the public offering price for such shares shall be the net asset value per
share as determined and effective as of the time specified in the then-current
Prospectus of such Open-End Fund. The dealer sales compensation payable by VK
Funds applicable to any sale of shares of a class of CDSC Shares of an Open-End
Fund shall be the percentage of the applicable public offering price for such
shares as provided for in the then-current Prospectus of such Open-End Funds or,
if not so provided, as provided to you from time to time in writing by VK Funds.
22. Should you wish to participate in the Distribution Plan with respect
to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule
12b-1 Plan") under the Investment Company Act of 1940, as amended, or the
Service Plan with respect to a class of shares, it is understood that you must
be approved by the Board of Directors of such Open-End Fund and execute a
Distribution Assistance Agreement.
4
<PAGE> 5
23. With respect to the Open-End Funds, your acceptance of this Agreement
constitutes a representation that you will adopt policies and procedures to
comply with Rule 18f-3 under the Investment Company Act of 1940, with respect to
when you may appropriately sell the various classes of shares of the Open-End
Funds to investors and that you will sell such shares only in accordance
therewith.
24.(a) You agree to purchase shares of an Open-End Fund only from VK Funds
or from your customers. If you purchase shares of an Open-End Fund from VK
Funds, you agree that all such purchases shall be made only: (i) to cover
orders already received by you from your customers or (ii) for your own bona
fide investment. If you purchase shares of an Open-End Fund from your customers,
you agree to pay such customers not less than the applicable repurchase price
for such shares as established by the then-current Prospectus for such Open-End
Fund. VK Funds in turn agrees that it will not purchase any shares from an
Open-End Fund except for the purpose of covering purchase orders that it has
already received.
(b) With respect to shares of a class of CDSC Shares of an
Open-End Fund purchased from your customers, you additionally agree to resell
such shares only to VK Funds as agent for the Fund at the repurchase price for
such shares as established by the then-current Prospectus of such Open-End Fund.
You acknowledge and understand that shares of a class of CDSC Shares of an
Open-End Fund may be subject to a CDSC payable to VK Funds as set forth in the
Prospectus for such Open-End Fund in effect at the time of the original purchase
of such shares from the Open-End Fund and that the repurchase price for such
shares that will be paid by VK Funds will reflect the imposition of any
applicable CDSC.
25.(a) You shall sell shares of a class of shares of an Open-End Fund
only: (i) to customers at the applicable public offering price or (ii) to VK
Funds as agent for the Open-End Fund at the repurchase price in the then-current
Prospectus of such Open-End Fund. In such a sale to VK Funds, you may act
either as principal for your own account or as agent for your customer. If you
act as principal for your own account in purchasing shares of a class of shares
of an Open-End Fund for resale to VK Funds, you agree to pay your customer not
less than the price that you receive from VK Funds. If you act as agent for
your customer in selling shares of a class of shares of an Open-End Fund to VK
Funds, you agree not to charge your customer more than a fair commission for
handling the transaction. You acknowledge and understand that CDSC Shares of an
Open-End Fund may be subject to a CDSC payable to VK Funds as set forth in the
Prospectus of such Open-End Fund in effect at the time of the original purchase
of such CDSC Shares and that the repurchase price that will be paid by VK Funds
for such CDSC Shares will reflect the imposition of any such CDSC.
26. If any shares of a class of FESC Shares of an Open-End Fund sold to or
by you under the terms of this Agreement are repurchased by the Fund or by VK
Funds as agent for the Fund or are tendered for redemption within seven business
days after the date of VK Funds' confirmation of the original purchase, it is
agreed that you shall forfeit your right to any dealer discount received by you
on such FESC Shares. VK Funds will notify you of any such repurchase or
redemption within ten business days from the date on which the repurchase or
redemption order in proper form is delivered to VK Funds or to the Fund, and you
shall forthwith refund to VK Funds the full dealer discount allowed to you on
such sale. VK Funds agrees, in the event of any such repurchase or redemption,
to refund to the Fund its share of any discount allowed to VK Funds and, upon
receipt from you of the refund of the discount allowed to you, to pay such
refund forthwith to the Fund.
TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS
27. No Closed-End Fund will issue fractional shares.
28. VK Funds may, in its sole discretion, allocate shares of a Closed-End
Fund among brokers and dealers participating in the Initial Offering Period or
among brokers, dealers and banks in the Continuous Offering Period, as the case
may be, on other than a pro rata basis, which may result in
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<PAGE> 6
certain brokers, dealers and banks not being allocated the full amount of
shares of such fund sold by them while certain other brokers, dealers and banks
may receive their full allocation.
29. You agree that with respect to orders for shares of a Closed-End Fund,
you will transmit such orders received during the Initial Offering Period to VK
Funds within the time period as specified in such Closed-End Fund's Prospectus
(or in the time period as extended by VK Funds in writing). You also agree to
transmit any customer order received during the Continuous Offering Period to VK
Funds prior to the time that the public offering price for such Closed-End Fund
is next determined after your receipt of such order as set forth in the
Closed-End Fund's Prospectus. There is no assurance that each Closed-End Fund
will engage in a continuous offering of shares.
30. On each order accepted by VK Funds for shares of a Closed-End Fund,
you will be entitled to receive a concession paid out of VK Funds' own assets
as set forth in the then-current Prospectus of such Closed-End Fund (exclusive
of additional compensation that may be payable pursuant to sales programs, if
any, that may be established from time to time as described in the Prospectus
for such Closed-End Fund, which will be payable only as and to the extent the
requirements of such programs are satisfied). In no event will any Closed-End
Fund reimburse VK Funds for any such sales concessions or other additional
compensation or pay any such concession or other additional compensation or
allowance directly to you. VK Funds will specify for each Closed-End Fund a
period after the date that the shares of such Closed-End Fund are listed on the
New York Stock Exchange, the American Stock Exchange or another national
securities market system (which period will end no later that the first dividend
payment date with respect to such Closed-End Fund) during which sales
concessions and other additional compensation are subject to forfeiture as
provided in the following sentence (the "Forfeiture Period"). During the
Forfeiture Period for any Closed-End Fund, physical delivery of certificates
representing shares will be required to transfer ownership of such shares. In
the event that any shares of a Closed-End Fund sold through an order received
from you in the Initial Offering Period or the Continuous Offering Period are
resold in the open market or otherwise during the Forfeiture Period, VK Funds
reserves the right to require you to forfeit any sales concessions and other
additional compensation with respect to such shares. In the event of a
forfeiture, VK Funds may withhold any forfeited sales concessions and other
additional compensation that has not yet been paid or from other amounts yet to
be paid to you (whether or not payable with respect to such shares) and you
agree to repay to VK Funds, promptly upon demand, any forfeited sales
concessions and other compensation that has been paid. Determinations of the
amounts to be paid to you or by you to VK Funds shall be made by VK Funds and
shall be conclusive.
31. During the Initial Offering Period and any Continuous Offering Period
for any Closed-End Fund, you agree to supply VK Funds, not less frequently than
once a week by Friday, 5:00 p.m. Eastern Time, during such Closed-End Fund's
Initial Offering Period, a list setting forth by state and in the aggregate all
indications of interest and, during any Continuous Offering Period, all shares
sold by you of such Closed-End Fund during such week (or lesser period of time),
and a list setting forth by name and location each registered representative
making said sales and indicating the amount of all sales per Closed-End Fund to
date.
32. You expressly acknowledge and understand that there is no Rule 12b-1
Plan for the Closed-End Funds.
33. You expressly acknowledge and understand that shares of the Closed-End
Funds will not be repurchased by either the Closed-End Funds (other than through
tender offers from time to time, if any) or by VK Funds and that no secondary
market for such shares is expected to develop until the shares have begun
trading on a national exchange or national market system. You hereby covenant
that, until notified by VK Funds that the distribution of such shares has been
completed or that the Forfeiture Period has ended, you (a) will not make a
secondary market in any shares of such a Closed-End Fund, (b) will not purchase
or hold shares of such Closed-End Fund in inventory for the purpose of resale in
the open market or to your customers and (c) without VK Funds' consent, will
not repurchase shares of such Closed-End Fund in the open market or from your
customers for any account in which you have a beneficial interest.
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34. Unlike the other Closed-End Funds, the Continuous Offering period with
respect to the Van Kampen Prime Rate Income Trust (the "Prime Rate Fund") may
continue indefinitely. The offer to sell shares of the Prime Rate Fund is
subject to further terms and conditions in addition to those set forth above as
follows:
(a) You expressly acknowledge and understand that shares of the
Prime Rate Fund will not be repurchased by either the Prime Rate Fund (other
than through tender offers from time to time, if any) or VK Funds, and that no
secondary market for the shares of the Prime Rate Fund exists currently, or is
expected to develop. You also expressly acknowledge and agree that, in the
event your customer cancels their order for shares after confirmation, such
shares may not be repurchased, remarketed or otherwise disposed of by or
through VK Funds.
(b) You acknowledge and understand that, while the Board of
Trustees of the Prime Rate Fund intends to consider tendering for all or a
portion of the Prime Rate Fund's shares on a quarterly basis, there is no
assurance the Prime Rate Fund will tender for shares at any time or, following
such a tender offer, that shares so tendered will be repurchased by the Prime
Rate Fund. You acknowledge and understand that an early withdrawal charge
payable to VK Funds will be imposed on most shares accepted for tender by the
Prime Rate Fund which have been held for less than five years, as set forth in
the Prime Rate Fund's Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY
THE PRIME RATE FUND, OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S
CURRENT PROSPECTUS IS EXPRESSLY PROHIBITED.
Please accept the foregoing by signing this Dealer Agreement, keeping a
copy for your files and returning the original to us.
Accepted and Agreed to:
(PRINT OR TYPE)
Dated:_______________________________ By:
Its:
_______________________________
Broker-Dealer Name
________________________________
Broker-Dealer Taxpayer ID Number
_________________________________
Address VAN KAMPEN FUNDS INC.
__________________________________
City, State, Zip
By: __________________________________
Signature
__________________________________
Name
__________________________________
Title
__________________________________
Phone
7
<PAGE> 1
EXHIBIT (e(3))
FORM OF
BROKER FULLY DISCLOSED CLEARING AGREEMENT
WITH VAN KAMPEN FUNDS INC.
REGARDING VAN KAMPEN
OPEN-END AND CLOSED-END INVESTMENT COMPANIES
Ladies and Gentlemen:
As dealer for our own account, we offer to make available to you shares of
any of the Van Kampen open-end investment companies (the "Open-End Funds" or,
individually, an "Open-End Fund") and Van Kampen closed-end investment companies
(the "Closed-End Funds" or, individually, a "Closed-End Fund") distributed by
Van Kampen Funds Inc. ("VK Funds") pursuant to the terms and conditions
contained herein. Collectively, the Open-End Funds and Closed-End Funds
sometimes are referred to herein as the "Funds" or, individually, as a "Fund".
You are a broker-dealer that desires to make available shares of such Funds to
your customers on a fully disclosed basis wherein VK Funds would confirm
transactions of your customers in a Fund directly to them.
VK Funds acts as the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) for each Fund with respect to its
offering of one or more classes of shares as described in each Fund's
Prospectus. Pursuant to this Agreement, VK Funds offers to make available to
you shares of each Open-End Fund and each Closed-End Fund, prior to the
Effective Date (as defined herein) of each Fund's Registration Statement (the
"Initial Offering Period") and after the Effective Date of each Fund's
Registration Statement (as defined herein) (the "Continuous Offering Period")
(if any) as described in each respective Fund's Prospectus.
As used herein unless otherwise indicated, the term "Prospectus" means the
final prospectus and Statement of Additional Information included in the
registration statement for the fund on the effective date and as from time to
time thereafter amended or supplemented. As used herein unless otherwise
indicated, the term "Preliminary Prospectus" means any preliminary prospectus
and any preliminary Statement of Additional Information included at any time as
a part of the registration statement for any Fund prior to the effective date
and that is authorized by VK Funds for use in connection with the offering of
shares.
In consideration of the mutual obligations contained herein, the
sufficiency of which is hereby acknowledged by you, the terms of the Agreement
are as follows:
GENERAL TERMS AND CONDITIONS
1. Your acceptance of this Agreement constitutes a representation that
you are a securities broker-dealer registered with the Securities and Exchange
Commission (the "SEC") and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"). You agree to abide by
the laws, rules and regulations of the SEC and NASD, including without
limitation rules pertaining to the opening, approval, supervision and
monitoring of customer accounts, the NASD's Interpretation with Respect to
Free-Riding and Withholding and Sections 8, 24 and 36 of Article III of the
NASD's Rules of Fair Practice. You and we agree to abide by all other Rules
and Regulations of the NASD, including Section 26 of its Rules of Fair
Practice. Your acceptance also constitutes a representation that you have been
duly authorized by proper corporate or partnership action to enter into this
Agreement and to perform your obligations hereunder. You will not accept any
orders from any broker, dealer or financial institution who is purchasing from
you with a view toward distribution unless you have obtained such person's or
entity's written consent to be bound by the terms of this Agreement.
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<PAGE> 2
2. For the purposes of the Securities and Exchange Commission's Financial
Responsibility Rules and the Securities Investor's Protection Act, your
customers will be considered customers of VK Funds and not of your firm. VK
Funds has been granted an exemption from the NASD rules of Fair Practice,
Article III Section 45 requirements to send customer statements and thus will
not do so. Customer statements showing account activity and balances will be
mailed to the customer by the Funds each time a financial transaction occurs in
their account and on a monthly or quarterly basis. Nothing herein shall cause
your firm's customers to be interpreted as customers of VK Funds for any other
purpose, or to negate the intent of any other section of this agreement,
including, but not limited to, the delineation of responsibilities as set forth
elsewhere in this agreement.
3. In transactions where you make available shares of the Funds to the
public, you shall have no authority to act as agent for the Fund or for VK
Funds.
4. Each Fund has filed with the SEC and the securities commissions of one
or more states a Registration Statement (the "Registration Statement") on the
SEC form applicable to the respective Fund. The date on which the Registration
Statement is declared effective by the SEC is referred to herein as the
"Effective Date". Prior to the Effective Date of the Registration Statement
with respect to a particular Fund, you expressly acknowledge and understand
that with respect to such Fund:
(a) Shares of such Fund may not be sold, nor may offers to buy be
accepted, (i) prior to the Effective Date of the Registration Statement or (ii)
in any state in which such offer or sale would be unlawful prior to
registration or qualification under the securities laws of such state.
(b) The Fund's Preliminary Prospectus, together with any sales material
distributed for use in connection with the offering of shares of such Fund,
does not constitute an offer to sell or the solicitation of an offer to buy
shares of such Fund and is subject to completion and modification by the
Prospectus.
(c) In the event that you transmit indications of interest to VK Funds for
accumulation prior to the Effective Date, upon your instruction VK Funds will
send confirmation of such indications of interest directly to your customers in
writing, together with copies of the Preliminary Prospectus for the Fund, and
send copies of the confirmations to you. Indications of interest with respect
to shares of a class of a Fund's shares transmitted to VK Funds prior to the
Effective Date are subject to acceptance or rejection by VK Funds in its sole
discretion and are conditioned upon the occurrence of (i) the Effective Date and
(ii) the registration or qualification of the respective class of shares in the
respective state.
(d) Indications of interest with respect to shares of a class of a Fund's
shares not cancelled by you prior to or on the later of (i) the Effective Date
and (ii) the registration or qualification of the respective class of shares in
the respective state, and accepted by VK Funds will be deemed by VK Funds to be
orders for Shares.
(e) Upon your instruction, VK Funds will send confirmations of orders
accepted by VK Funds (including indications of interest deemed orders) directly
to your customers in writing, together with copies of the Prospectus for the
Fund, and send copies of the confirmations to you.
(f) Upon receipt of duplicate confirmations you will examine the same and
promptly notify VK Funds of any errors or discrepancies that you discover and
will promptly bring to VK Funds' attention any errors in such confirmations
claimed by your customers. All confirmations to your customers will indicate
that orders were placed on a fully disclosed basis.
(g) All indications of interest and orders transmitted to VK Funds are
subject to the terms and conditions of the Fund's Prospectus and this Agreement
and are subject to acceptance or rejection by VK Funds in its sole discretion.
5. After the Effective Date, you will not make shares of a class of the
Fund's shares available in any state where they are not qualified for sale
under the "blue sky" laws and regulations of such state, except for states in
which they are exempt from qualification.
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<PAGE> 3
6. In the event that you make shares of the Funds available outside the
United States, you agree to comply with the applicable laws, rules and
regulations of the foreign government having jurisdiction over such sales,
including any regulations of the United States military authorities applicable
to solicitations to military personnel.
7. Upon application to VK Funds, VK Funds will inform you as to the
jurisdictions in which VK Funds believes shares of a Fund have been qualified
for sale under the respective securities or "blue sky" laws of such
jurisdictions. VK Funds understands and agrees that qualification of any shares
of a Fund for sale in such jurisdictions shall be solely VK Funds'
responsibility and that you assume no responsibility or obligation with respect
to such eligibility. You understand and agree that your compliance with the
requirements of the securities or "blue sky" laws in each jurisdiction with
respect to your right to make the shares available in such jurisdiction shall be
solely your responsibility.
8. No person is authorized to make any representations concerning any
class of shares of a Fund except those contained in the Funds' current
Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares
from us you shall rely solely on the representations contained in such
Prospectus. VK Funds will furnish additional copies of a Funds' current
Prospectus and sales literature issued by VK Funds in reasonable quantities upon
request.
9. You agree that you will distribute to the public only (a) the
Preliminary Prospectus, the Prospectus and any amendment or supplement thereto
and (b) sales literature or other documents expressly authorized for such
distribution by VK Funds.
10. Orders received from you will be accepted by VK Funds only at the
public offering price applicable to each order as specified in the then-current
Fund Prospectus. The minimum dollar purchase of any shares of each Fund by any
person shall be the applicable minimum dollar amount described in the
then-current Fund Prospectus for that class of shares, and no order for less
than such amount will be accepted hereunder. The procedures relating to the
handling of orders shall be subject to instructions that VK Funds shall
communicate from time to time to you. All orders are subject to acceptance or
rejection by VK Funds in its sole discretion. Upon acceptance of an order, we
shall confirm directly to the customer in writing upon your instruction and send
a copy of the confirmation to you. In addition, we will send a Fund Prospectus
with the confirmation. You agree that upon receipt of duplicate confirmations
you will examine the same and promptly notify VK Funds of any errors or
discrepancies that you discover and shall promptly bring to VK Funds' attention
any errors in such confirmations claimed by your customers. All confirmations
to your customers will indicate that orders were placed on a fully disclosed
basis.
11. Payment for Fund shares shall be made on or before the settlement date
specified in the VK Funds confirmation at the office of VK Funds' clearing
agent, or wire to the order of the Fund which reserves VK Funds' right to delay
issuance of transfer of shares until such check has cleared. If such payment is
not received by VK Funds, VK Funds reserves the right, without notice, forthwith
either to cancel the trade at our option or as required by the provisions of
Regulation T, and in either case, VK Funds may hold you responsible for any loss
suffered by the Fund. You agree that in transmitting investors' funds, you will
comply with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended.
12. You shall not withhold placing orders with VK Funds from your
customers so as to profit yourself as a result of such withholding; e.g., by a
change in the net asset value from that used in determining the public offering
price to your customers.
13. VK Funds will not accept from you any conditioned orders for shares,
except at a definite, specified price.
14. You represent that you are familiar with Release No. 4968 under the
Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, as it relates to the distribution of
Preliminary Prospectuses (and not Statements of Additional Information) and
Prospectuses (and not Statements of Additional Information) for each Fund and
agree that you will comply therewith. You agree that if an investor or
potential investor places a request with you to receive a Statement of
Additional Information, you will (i) provide such person with a Statement of
Additional Information without charge and notify the Fund that you have done so,
(ii) notify the Fund of the request so that the Fund can fulfill the request or
(iii) tell such person to request a Statement of Additional Information by
telephoning the Fund at the number set forth on the cover of the current
Prospectus or Preliminary Prospectus. You also agree to keep an accurate record
of your distribution (including dates,
3
<PAGE> 4
number of copies and persons to whom sent) of copies of any Preliminary
Prospectus (and any Statement of Additional Information) and/or Prospectus (and
any Statement of Additional Information) for each Fund (or any amendment or
supplement to either) and, promptly upon request by VK Funds, to bring all
subsequent changes to such Preliminary Prospectus or Prospectus to the
attention of anyone to whom such material shall have been distributed. You
further agree to furnish to persons who receive a confirmation of sale of
shares of any Fund a copy of the Prospectus for such Fund filed pursuant to
Rule 497 under the Securities Act of 1933, as amended. Upon your request,
VK Funds will furnish to such persons a copy of the Prospectus for such Fund
filed pursuant to Rule 497 Under the Securities Act of 1993, as amended.
15. The names of your customers shall remain your sole property and shall
not be used by VK Funds for any purpose except for servicing and informational
mailings in the normal course of business to Fund shareholders.
16. Unless otherwise indicated in a Fund's Prospectus, stock certificates
for shares sold will be issued to your customers only if specifically
requested.
17. VK Funds will have no liability to you, except for lack of good faith
and for obligations expressly assumed by VK Funds in this Agreement.
18. All communications to VK Funds shall be sent to 1 Parkview Plaza, P.O.
Box 5555, Oakbrook Terrace, Illinois 60181-5555, Attention: Mutual Fund
Department. Any notice to you shall be duly given if sent to you at the address
specified by you below or such other address as you may designate to VK Funds in
writing.
19. Neither this Agreement nor the performance of the services hereunder
shall be considered to create a joint venture or partnership between VK Funds
and you.
20. This Agreement shall be construed in accordance with the laws of the
State of Illinois without reference to the choice-of-law principles thereof.
21. The Fund reserves the right in its discretion and VK Funds reserves
the right in its discretion, without notice, to suspend or withdraw the offering
of any shares of a Fund entirely. VK Funds reserves the right, without notice,
to amend, modify or cancel the Agreement. The Agreement may not be assigned by
either party without prior written consent of the other party.
22. This Agreement may be terminated at any time by either party.
TERMS AND CONDITIONS APPLICABLE TO OPEN-END FUNDS
23. Each of the Open-End Funds is subject to an alternative distribution
plan (the "Alternative Distribution Plan") as described in such Fund's
then-current Prospectus pursuant to which the Open-End Fund may sell multiple
classes of its shares with varying combinations of front-end service charges
(each a "FESC"), distributions fees, service fees, contingent deferred sales
charges (each a "CDSC"), exchange features, conversion rights, voting rights,
expenses allocations and investment requirements. As used herein, classes of
shares of a Fund subject to a FESC will be referred to as FESC Shares, and
classes of shares of a Fund subject to a CDSC will be referred to as CDSC
Shares.
24.(a) With respect to any shares of a class of FESC Shares of an
Open-End Fund, the public offering price for such shares shall be the net asset
value per share plus a FESC, expressed as a percentage of the applicable public
offering price, as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. On each order for shares of a
class of FESC Shares of an Open-End Fund accepted by us, you will be entitled
to receive the applicable agency commission for such shares as provided for in
the then-current Prospectus of such Open-End Fund or, if not so provided, as
provided to you from time to time in writing by VK Funds.
(b) With respect to any shares of a class of CDSC Shares of an Open-End Fund,
the public offering price for such shares shall be the net asset value per
share as determined and effective as of the time specified in the then-current
Prospectus of such Open-End Fund. You will remit payment of the aggregate
public offering price to VK Funds for the CDSC Shares sold, and on each order
accepted by us, you will be entitled to receive the applicable selling
compensation for such shares as
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<PAGE> 5
provided for in the then-current Prospectus of such Open-End Fund or,
if not so provided, as provided to you from time to time in writing by VK Funds.
25. Should you wish to participate in the Distribution Plan with respect
to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule
12b-1 Plan") under the Investment Company Act of 1940, as amended, or the
Service Plan with respect to a class of shares, it is understood that you must
be approved by the Board of Directors of such Open-End Fund and execute a
Distribution Assistance Agreement.
26. With respect to the Open-End Funds, your acceptance of this Agreement
constitutes a representation that you will adopt policies and procedures to
comply with Rule 18f-3 under the Investment Company Act of 1940, with respect
to when you may appropriately make available the various classes of shares of
the Open-End Funds to investors and that you will make available such shares
only in accordance therewith.
27. You agree to make shares of an Open-End Fund available to your
customers only: (i) at the applicable public offering price, (ii) from VK Funds
and (iii) to cover orders already received by you from your customers. VK Funds
in turn agrees that it will not purchase any shares from an Open-End Fund except
for the purpose of covering purchase orders that it has already received.
28.(a) If any shares of a class of FESC Shares of an Open-End Fund sold
to your customers under the terms of this Agreement are repurchased by the Fund
or by VK Funds as agent for the Fund or are tendered for redemption within seven
business days after the date of VK Funds' confirmation of the original purchase,
it is agreed that you shall forfeit your right to any agency commission
received by you on such FESC Shares. VK Funds will notify you of any such
repurchase or redemption within ten business days from the date on which the
repurchase or redemption order in proper form is delivered to VK Funds or to the
Fund, and you shall forthwith refund to VK Funds the full agency commission
allowed to you on such sale. VK Funds agrees, in the event of any such
repurchase or redemption, to refund to the Fund its share of any discount
allowed to VK Funds and, upon receipt from you of the refund of the agency
commission allowed to you, to pay such refund forthwith to the Fund.
(b) If any shares of a class of CDSC Shares sold to your customers under
the terms of this Agreement are repurchased by the Fund or by VK Funds as agent
for the Fund or are tendered for redemption within seven business days after the
date of VK Funds' confirmation of the original purchase, it is agreed that you
shall forfeit your right to any sales compensation received by you on such CDSC
Shares. We will notify you of any such repurchase or redemption within ten
business days from the date on which the repurchase or redemption order in
proper form is delivered to VK Funds or to the Fund, and you shall forthwith
refund to VK Funds the full sales compensation paid to you.
TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS
29. No Closed-End Fund will issue fractional shares.
30. VK Funds may, in its sole discretion, allocate shares of a Closed-End
Fund among brokers, dealers and, if permitted by applicable laws, banks
participating in the Initial Offering Period or among brokers, dealers and
banks in the Continuous Offering Period, as the case may be, on other than a
pro rata basis, which may result in certain brokers, dealers and banks not
being allocated the full amount of shares of such Fund sold by them while
certain other brokers, dealers and banks may receive their full allocation.
31. You agree that with respect to orders for shares of a Closed-End
Fund, you will transmit such orders received during the Initial Offering Period
to VK Funds within the time period as specified in such Closed-End Fund's
Prospectus (or in the time period as extended by VK Funds in writing). You also
agree to transmit any customer order received during the Continuous Offering
Period to VK Funds prior to the time that the public offering price for such
Closed-End Fund is next determined after your receipt of such order, as set
forth in the Closed-End Fund's Prospectus. There is no assurance that each
Closed-End Fund will engage in a continuous offering of shares.
32. On each order accepted by VK Funds for shares of a Closed-End Fund, you
will be entitled to receive a concession paid out of VK Funds' own assets as
set forth in the then-current Prospectus of such Closed-End Fund (exclusive of
additional compensation that may be payable pursuant to sales programs, if any,
that may be established from time to time as described in the Prospectus for
such Closed-End Fund, which will be payable only as and to the extent the
requirements
5
<PAGE> 6
of such programs are satisfied). In no event will any Closed-End Fund reimburse
VK Funds for any such sales concessions or other additional compensation or pay
any such concession or other additional compensation or allowance directly to
you. VK Funds will specify for each Closed-End Fund a period after the date
that the shares of such Closed-End Fund are listed on the New York Stock
Exchange, the American Stock Exchange or another national securities market
system (which period will end no later than the first dividend payment date with
respect to such Closed-End Fund) during which sales concessions and other
additional compensation are subject to forfeiture as provided in the following
sentence (the "Forfeiture Period"). During the Forfeiture Period for any
Closed-End Fund, physical delivery of certificates representing shares will be
required to transfer ownership of such shares. In the event that any shares of
a Closed-End Fund sold through an order received from you in the Initial
Offering Period or the Continuous Offering Period are resold in the open market
or otherwise during the Forfeiture Period, VK Funds reserves the right to
require you to forfeit any sales concessions and other additional compensation
with respect to such shares. In the event of a forfeiture, VK Funds may
withhold any forfeited sales concessions and other additional compensation that
has not yet been paid or from other amounts yet to be paid to you (whether or
not payable with respect to such shares), and you agree to repay to VK Funds,
promptly upon demand, any forfeited sales concessions and other compensation
that has been paid. Determinations of the amounts to be paid to you or by you to
VK Funds shall be made by VK Funds and shall be conclusive.
33. During the Initial Offering Period and any Continuous Offering Period
for any Closed-End Fund, you agree to supply VK Funds, not less frequently than
once a week by Friday, 5:00 p.m. Eastern Time, during such Closed-End Fund's
Initial Offering Period, a list setting forth by state and in the aggregate all
indications of interest and, during any Continuous Offering Period, all shares
sold by you of such Closed-End Fund during such week (or lesser period of time)
and a list setting forth by name and location each registered representative
making said sales and indicating the amount of all sales per Closed-End Fund to
date.
34. You expressly acknowledge and understand that there is no Rule 12b-1
Plan for the Closed-End Funds.
35. You expressly acknowledge and understand that shares of the Closed-End
Funds will not be repurchased by either the Closed-End Funds (other than through
tender offers from time to time, if any) or by VK Funds and that no secondary
market for such shares is expected to develop until the shares have begun
trading on a national exchange or national market system. You hereby covenant
that, until notified by VK Funds that the distribution of such shares has been
completed or that the Forfeiture Period has ended, you (a) will not make a
secondary market in any shares of such a Closed-End Fund, (b) will not purchase
or hold shares of such Closed-End Fund in inventory for the purpose of resale in
the open market or to your customers and, (c) without VK Funds' consent, will
not repurchase shares of such Closed-End Fund in the open market or from your
customers for any account in which you have a beneficial interest.
36. Unlike the other Closed-End Funds, the Continuous Offering period with
respect to the Van Kampen Prime Rate Income Trust (the "Prime Rate Fund") may
continue indefinitely. The offer to make available to you shares of the Prime
Rate Fund is subject to further terms and conditions in addition to those set
out above, as follows:
(a) You expressly acknowledge and understand that shares of the Prime Rate
Fund will not be repurchased by either the Prime Rate Fund (other than through
tender offers from time to time, if any) or VK Funds and that no secondary
market for the shares of the Prime Rate Fund exists currently or is expected to
develop. You also expressly acknowledge and agree that, in the event your
customer cancels their order for shares after confirmation, such shares may not
be repurchased, remarketed or otherwise disposed of by or through VK Funds.
(b) You acknowledge and understand that, while the Board of Trustees of
the Prime Rate Fund intends to consider tendering for all or a portion of the
Prime Rate Fund's shares on a quarterly basis, there is no assurance the Prime
Rate Fund will tender for shares at any time or, following such a tender offer,
that shares so tendered will be repurchased by the Prime Rate Fund. You
acknowledge and understand that an early withdrawal charge payable to VK Funds
will be imposed on most shares accepted for tender by the Prime Rate Fund that
have been held for less than five years, as set forth in the Prime Rate Fund's
Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY
6
<PAGE> 7
THE PRIME RATE FUND, OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S
CURRENT PROSPECTUS, IS EXTREMELY PROHIBITED.
Please accept the foregoing by signing this Broker Fully Disclosed Clearing
Agreement, keeping a copy for your files and returning the original to us.
Accepted and Agreed to: (PRINT OR TYPE)
Dated:_______________________ By:
Its:
_______________________
Bank Name VAN KAMPEN FUNDS INC.
_______________________
Bank Taxpayer ID Number
_______________________
Address
_______________________
City, State, Zip
_______________________
Phone
_______________________
Signature
_______________________
Name
_______________________
Title
7
<PAGE> 1
EXHIBIT(e(4))
FORM OF
BANK FULLY DISCLOSED CLEARING AGREEMENT
WITH VAN KAMPEN FUNDS INC.
REGARDING VAN KAMPEN
OPEN-END AND CLOSED-END INVESTMENT COMPANIES
Ladies and Gentlemen:
As dealer for our own account, we offer to make available to you shares of
any of the Van Kampen open-end investment companies (the "Open-End Funds" or,
individually, an "Open-End Fund") and Van Kampen Funds closed-end investment
companies (the "Closed-End Funds" or, individually, a "Closed-End Fund")
distributed by Van Kampen Funds, Inc. ("VK Funds") pursuant to the terms and
conditions contained herein. Collectively, the Open-End Funds and Closed-End
Funds sometimes are referred to herein as the "Funds" or, individually, as a
"Fund". You are a bank that desires to make available shares of such Funds to
your customers on a fully disclosed basis wherein VK Funds would confirm
transactions of your customers in a Fund directly to them. You agree not to
make available shares of such Funds during any fixed price offering of such
shares.
VK Funds acts as the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) for each Fund with respect to its
offering of one or more classes of shares as described in each Fund's
Prospectus. Pursuant to this Agreement, VK Funds offers to make available to
you shares of each Open-End Fund and each Closed-End Fund prior to the Effective
Date (as defined herein) of each Fund's Registration Statement (as defined
herein) (the "Initial Offering Period"), to the extent permitted by applicable
law, and after the Effective Date of each Fund's Registration Statement (the
"Continuous Offering Period") (if any) as described in such Closed-End Fund's
Prospectus.
As used herein unless otherwise indicated, the term "Prospectus" means the
final prospectus and Statement of Additional Information included in the
Registration Statement for the Fund on the Effective Date and as from time to
time thereafter amended or supplemented. As used herein unless otherwise
indicated, the term "Preliminary Prospectus" means any preliminary prospectus
and any Statement of Additional Information included at any time as a part of
the Registration Statement for any Fund prior to the Effective Date and that is
authorized by VK Funds for use in connection with the offering of shares.
In consideration of the mutual obligations contained herein, the
sufficiency of which is hereby acknowledged by you, the terms of the Agreement
are as follows:
GENERAL TERMS AND CONDITIONS
1. Your acceptance of this Agreement constitutes a representation that you
are a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934,
as amended, and have been duly authorized to enter into this Agreement and
perform your obligations hereunder. This Agreement as well as your authority to
make shares available to your customers will automatically terminate if you
shall cease to be a bank as defined above. You agree not to offer or sell
shares of any Fund except through VK Funds. You will not accept any orders from
any broker, dealer or financial institution who is purchasing from you with a
view toward distribution unless you have obtained such person's or entity's
written consent to be bound by the terms of this Agreement.
2. For the purposes of the Securities and Exchange Commission's Financial
Responsibility Rules and the Securities Investor's Protection Act, your
customers will be considered customers of VK Funds and not of your firm. VK
Funds has been granted an exemption from the NASD rules of Fair Practice,
Article III Section 45 requirements to send customer statements and thus will
not do so. Customer statements showing account activity and balances will be
mailed to the customer by the Funds each time a financial transaction occurs in
their account and on a monthly or quarterly basis. Nothing
1
<PAGE> 2
herein shall cause your firm's customers to be interpreted as customers of VK
Funds for any other purpose, or to negate the intent of any other section of
this agreement, including, but not limited to, the delineation of
responsibilities as set forth elsewhere in this agreement.
3. In transactions where you make available shares of the Funds to the
public, you shall have no authority to act as agent for the Fund or for VK
Funds. The customers in question are for all purposes your customers and not
customers of VK Funds. We will clear transactions for each of your customers
only upon your authorization, it being understood in all cases that (a) you are
acting as the agent for the customer; (b) the transactions are without recourse
against you by the customer except to the extent that your failure to transmit
orders in a timely fashion results in a loss to your customer; (c) as between
you and the customer, the customer will have full beneficial ownership of the
Fund shares; (d) each transaction is initiated solely upon the order of the
customer; and (e) each transaction is for the account of the customer and not
for your account.
4. Each Fund has filed with the Securities and Exchange Commission (the
"SEC") and the securities commissions of one or more states a Registration
Statement (the "Registration Statement") on the SEC form applicable to the
respective Fund. The date on which the Registration Statement is declared
effective by the SEC is hereinafter referred to as the "Effective Date". Prior
to the Effective Date of the Registration Statement with respect to a particular
Fund, you expressly acknowledge and understand that with respect to such Fund:
(a) Shares of such Fund may not be sold, nor may offers to buy be
accepted, (i) prior to the Effective Date of the Registration Statement or (ii)
in any state in which such offer or sale would be unlawful prior to registration
or qualification under the securities laws of such state.
(b) Except to the extent permitted by law, you will not solicit or
transmit to VK Funds any indications of interest to purchase shares during any
fixed-price offering.
(c) The Fund's Preliminary Prospectus, together with any sales
material distributed for use in connection with the offering of shares of such
Fund, does not constitute an offer to sell or the solicitation of an offer to
buy shares of such Fund and is subject to completion and modification by the
Prospectus.
(d) In the event and to the extent permitted by applicable law you
transmit indications of interest to VK Funds for accumulation prior to the
Effective Date, upon your instruction VK Funds will send confirmation of such
indications of interest directly to your customers in writing, together with
copies of the Preliminary Prospectus for the Fund, and send copies of the
confirmations to you. Indications of interest with respect to shares of a class
of a Fund's shares transmitted to VK Funds prior to the Effective Date are
subject to acceptance or rejection by VK Funds in its sole discretion and are
conditioned upon the occurrence of (i) the Effective Date and (ii) the
registration or qualification of the respective class of shares in the
respective state.
(e) Indications of interest with respect to shares of a class of a
Fund's shares not canceled by you prior to or on the later of (i) the Effective
Date and (ii) the registration or qualification of the respective class of
shares in the respective state, and accepted by VK Funds will be deemed by VK
Funds to be orders for Shares solely to the extent permitted by applicable law.
(f) Upon your instruction, VK Funds will send confirmations of
orders accepted by VK Funds (including indications of interest deemed orders)
directly to your customers in writing, together with copies of the Prospectus
for the Fund, and send copies of the confirmations to you.
(g) Upon receipt of duplicate confirmations you will examine the
same and promptly notify VK Funds of any errors or discrepancies that you
discover and will promptly bring to VK Funds' attention any errors in such
confirmations claimed by your customers. All confirmations to your customers
will indicate that orders were placed on a fully disclosed basis.
(h) All indications of interest and orders transmitted to VK Funds
are subject to the terms and conditions of the Fund's Prospectus and this
Agreement and are subject to acceptance or rejection by VK Funds in its sole
discretion.
2
<PAGE> 3
5. After the Effective Date, you will not make shares of a class of the
Fund's shares available in any state where they are not qualified for sale
under the "blue sky" laws and regulations of such state, except for states in
which they are exempt from qualification.
6. In the event that you make shares of the Fund available outside the
United States, you agree to comply with the applicable laws, rules and
regulations of the foreign government having jurisdiction over such sales,
including any regulations of the United States military authorities applicable
to solicitations to military personnel.
7. Upon application to VK Funds, VK Funds will inform you as to the
jurisdictions in which VK Funds believes shares of a Fund have been qualified
for sale under the respective securities or "blue sky" laws of such
jurisdictions. VK Funds understands and agrees that qualification of any shares
of a Fund for sale in such jurisdictions shall be solely VK Funds'
responsibility and that you assume no responsibility or obligation with respect
to such eligibility. You understand and agree that your compliance with the
requirements of the securities or "blue sky" laws in each jurisdiction with
respect to your right to make the shares available in such jurisdiction shall be
solely your responsibility.
8. No person is authorized to make any representations concerning any
class of shares of a Fund except those contained in the Fund's current
Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares
from us you shall rely solely on the representations contained in such
Prospectus. VK Funds will furnish additional copies of a Fund's current
Prospectus and sales literature issued by VK Funds in reasonable quantities
upon request.
9. You agree that you will distribute to the public only (i) the
Prospectus and any amendment or supplement thereto and (ii) sales literature or
other documents expressly authorized for such distribution by VK Funds.
10. Orders received from you will be accepted by VK Funds only at the
public offering price applicable to each order as specified in the then-current
Fund Prospectus. The minimum dollar purchase of any shares of each Fund by any
person shall be the applicable minimum dollar amount described in the
then-current Fund Prospectus for that class of shares, and no order for less
than such amount will be accepted hereunder. The procedures relating to the
handling of orders shall be subject to instructions that VK Funds shall
communicate from time to time to you. All orders are subject to acceptance
or rejection by VK Funds in its sole discretion. Upon acceptance of an order,
we shall confirm directly to the customer in writing upon your instruction and
send a copy of the confirmation to you. In addition, we will send a Fund
Prospectus with the confirmation. You agree that upon receipt of duplicate
confirmations you will examine the same and promptly notify VK Funds of any
errors or discrepancies that you discover and shall promptly bring to VK Funds'
attention any errors in such confirmations claimed by your customers. All
confirmations to your customers will indicate that orders were placed on a fully
disclosed basis.
11. Payment for Fund shares shall be made on or before the settlement
date specified in the VK Funds confirmation at the office of VK Funds' clearing
agent, or wire to the order of the Fund which reserves VK Funds' right to delay
issuance or transfer of shares until such check has cleared. If such payment
is not received by VK Funds, VK Funds reserves the right, without notice,
forthwith either to cancel the trade at our option or as required by the
provisions of Regulation T, and in either case, VK Funds may hold you
responsible for any loss suffered by the Fund. You agree that in transmitting
investors' funds, you will comply with Rule 15c2-4 under the Securities Exchange
Act of 1934, as amended.
12. You shall not withhold placing orders with VK Funds from your
customers so as to profit yourself as a result of such withholding; e.g., by
a change in the net asset value from that used in determining the public
offering price to your customers.
13. VK Funds will not accept from you any conditioned orders for shares,
except at a definite, specified price.
14. You represent that you are familiar with Release No. 4968 under the
Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, as it relates to the distribution of
Preliminary Prospectuses (and not Statements of Additional Information) and
Prospectuses (and not Statements of Additional Information) for each Fund and
agree that you will comply therewith. You agree that if an investor or
potential investor places a request with you to receive
3
<PAGE> 4
a Statement of Additional Information, you will (i) provide such person with a
Statement of Additional Information without charge and notify the Fund that you
have done so, (ii) notify the Fund of the request so that the Fund can fulfill
the request or (iii) tell such person to request a Statement of Additional
Information by telephoning the Fund at the number set forth on the cover of the
current Prospectus or Preliminary Prospectus. You also agree to keep an
accurate record of your distribution (including dates, number of copies and
persons to whom sent) of copies of any Preliminary Prospectus (and any
Statement of Additional Information) and/or Prospectus (and any Statement of
Additional Information) for each Fund (or any amendment or supplement to
either) and, promptly upon request by VK Funds, to bring all subsequent changes
to such Preliminary Prospectus or Prospectus to the attention of anyone to whom
such material shall have been distributed. You further agree to furnish to
persons who receive a confirmation of sale of shares of any Fund a copy of the
Prospectus for such Fund filed pursuant to Rule 497 under the Securities Act of
1933, as amended. Upon your request, VK Funds will furnish to such persons
a copy of the Prospectus for such Fund filed pursuant to Rule 497 Under the
Securities Act of 1993, as amended.
15. The names of your customers shall remain your sole property and shall
not be used by VK Funds for any purpose except for servicing and informational
mailings in the normal course of business to Fund shareholders.
16. Unless otherwise indicated in a Fund's Prospectus, stock certificates
for shares sold will be issued to your customers only if specifically
requested.
17. VK Funds will have no liability to you, except for lack of good faith
and for obligations expressly assumed by VK Funds in this Agreement.
18. All communications to VK Funds shall be sent to 1 Parkview Plaza, P.O.
Box 5555, Oakbrook Terrace, Illinois 60181-5555, Attention: Mutual Fund
Department. Any notice to you shall be duly given if sent to you at the address
specified by you below or such other address as you may designate to VK Funds in
writing.
19. Neither this Agreement nor the performance of the services hereunder
shall be considered to create a joint venture or partnership between VK Funds
and you.
20. This Agreement shall be construed in accordance with the laws of the
State of Illinois without reference to the choice-of-law principles thereof.
21. The Fund reserves the right in its discretion and VK Funds reserves
the right in its discretion, without notice, to suspend or withdraw the offering
of any shares of a Fund entirely. VK Funds reserves the right, without notice,
to amend, modify or cancel the Agreement. The Agreement may not be assigned by
either party without prior written consent of the other party.
22. This Agreement may be terminated at any time by either party.
TERMS AND CONDITIONS APPLICABLE TO OPEN-END FUNDS
23. Each of the Open-End Funds is subject to an alternative distribution
plan (the "Alternative Distribution Plan") as described in such Fund's
then-current Prospectus pursuant to which the Open-End Fund may sell multiple
classes of its shares with varying combinations of front-end service charges
(each a "FESC"), distributions fees, service fees, contingent deferred sales
charges (each a "CDSC"), exchange features, conversion rights, voting rights,
expenses allocations and investment requirements. As used herein, classes of
shares of a Fund subject to a FESC will be referred to as FESC Shares, and
classes of shares of a Fund subject to a CDSC will be referred to as CDSC
Shares.
24. (a) With respect to any shares of a class of FESC Shares of an
Open-End Fund, the public offering price for such shares shall be the net asset
value per share plus a FESC, expressed as a percentage of the applicable public
offering price, as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. On each order for shares of a
class of FESC Shares of an Open-End Fund accepted by us, you will be entitled
to receive the applicable agency commission for such shares as provided for in
the then-current Prospectus of such Open-End Fund or, if not so provided, as
provided to you from time to time in writing by VK Funds.
4
<PAGE> 5
(b) With respect to any shares of a class of CDSC Shares of an Open-End
Fund, the public offering price for such shares shall be the net asset value per
share as determined and effective as of the time specified in the then-current
Prospectus of such Open-End Fund. You will remit payment of the aggregate
public offering price to VK Funds for the CDSC Shares sold, and on each order
accepted by us, you will be entitled to receive the applicable selling
compensation for such shares as provided for in the then-current Prospectus of
such Open-End Fund or, if not so provided, as provided to you from time to time
in writing by VK Funds.
25. Should you wish to participate in the Distribution Plan with respect
to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule
12b-1 Plan") under the Investment Company Act of 1940, as amended, or the
Service Plan with respect to a class of shares, it is understood that you must
be approved by the Board of Directors of such Open-End Fund and execute an
Administrative Service Agreement.
26. With respect to the Open-End Funds, your acceptance of this Agreement
constitutes a representation that you will adopt policies and procedures to
comply with Rule 18f-3 under the Investment Company Act of 1940, with respect
to when you may appropriately make available the various classes of shares of
the Open-End Funds to investors and that you will make available such shares
only in accordance therewith.
27. You agree to make shares of an Open-End Fund available to your
customers only: (i) at the applicable public offering price, (ii) from VK Funds
and (iii) to cover orders already received by you from your customers. VK Funds
in turn agrees that it will not purchase any shares from an Open-End Fund except
for the purpose of covering purchase orders that it has already received.
28. (a) If any shares of a class of FESC Shares of an Open-End Fund sold
to your customers under the terms of this Agreement are repurchased by the Fund
or by VK Funds as agent for the Fund or are tendered for redemption within seven
business days after the date of VK Funds' confirmation of the original purchase,
it is agreed that you shall forfeit your right to any agency commission received
by you on such FESC Shares. VK Funds will notify you of any such repurchase or
redemption within ten business days from the date on which the repurchase or
redemption order in proper form is delivered to VK Funds or to the Fund, and you
shall forthwith refund to VK Funds the full agency commission allowed to you on
such sale. VK Funds agrees, in the event of any such repurchase or redemption,
to refund to the Fund its share of any discount allowed to VK Funds and, upon
receipt from you of the refund of the agency commission allowed to you, to pay
such refund forthwith to the Fund.
(b) If any shares of a class of CDSC Shares sold to your customers
under the terms of this Agreement are repurchased by the Fund or by VK Funds as
agent for the Fund or are tendered for redemption within seven business days
after the date of VK Funds' confirmation of the original purchase, it is agreed
that you shall forfeit your right to any sales compensation received by you on
such CDSC Shares. We will notify you of any such repurchase or redemption
within ten business days from the date on which the repurchase or redemption
order in proper form is delivered to VK Funds or to the Fund, and you shall
forthwith refund to VK Funds the full sales compensation paid to you.
TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS
29. No Closed-End Fund will issue fractional shares.
30. VK Funds may, in its sole discretion, allocate shares of a Closed-End
Fund among brokers, dealers and, to the extent permitted by applicable law,
banks participating in the Initial Offering Period or among brokers, dealers and
banks participating in the Continuous Offering Period, as the case may be, on
other than a pro rata basis, which may result in certain brokers, dealers and
banks not being allocated the full amount of shares of such Fund sold by them
while certain other brokers, dealers and banks may receive their full
allocation.
31. You agree that with respect to orders for shares of a Closed-End Fund,
you will transmit such orders received, to the extent permitted by applicable
law, during the Initial Offering Period to VK Funds within the time period as
specified in such Closed-End Fund's Prospectus (or in the time period as
extended by VK Funds in writing). You also agree to transmit any customer order
received during the
5
<PAGE> 6
Continuous Offering Period to VK Funds prior to the time that the public
offering price for such Closed-End Fund is next determined after your receipt
of such order, as set forth in the Closed-End Fund's Prospectus. There is
no assurance that each Closed-End Fund will engage in a continuous offering of
shares.
32. On each order accepted by VK Funds for shares of a Closed-End
Fund, you will be entitled to receive a concession paid out of VK Funds' own
assets as set forth in the then-current Prospectus of such Closed-End Fund
(exclusive of additional compensation that may be payable pursuant to sales
programs, if any, that may be established from time to time as described in the
Prospectus for such Closed-End Fund, which will be payable only as and to the
extent the requirements of such programs are satisfied). In no event will any
Closed-End Fund reimburse VK Funds for any such sales concessions or other
additional compensation or pay any such concession or other additional
compensation or allowance directly to you. VK Funds will specify for each
Closed-End Fund a period after the date that the shares of such Closed-End Fund
are listed on the New York Stock Exchange, the American Stock Exchange or
another national securities market system (which period will end no later than
the first dividend payment date with respect to such Closed-End Fund) during
which sales concessions and other additional compensation are subject to
forfeiture as provided in the following sentence (the "Forfeiture Period").
During the Forfeiture Period for any Closed-End Fund, physical delivery of
certificates representing shares will be required to transfer ownership of such
shares. In the event that any shares of a Closed-End Fund sold through an
order received from you, to the extent permitted by applicable law, in the
Initial Offering Period or the Continuous Offering Period are resold in the
open market or otherwise during the Forfeiture Period, VK Funds reserves the
right to require you to forfeit any sales concessions and other additional
compensation with respect to such shares. In the event of a forfeiture, VK
Funds may withhold any forfeited sales concessions and other additional
compensation that has not yet been paid or from other amounts yet to be paid to
you (whether or not payable with respect to such shares), and you agree to
repay to VK Funds, promptly upon demand, any forfeited sales concessions and
other compensation that has been paid. Determinations of the amounts to be
paid to you or by you to VK Funds shall be made by VK Funds and shall be
conclusive.
33. During the Initial Offering Period or any Continuous Offering Period
for any Closed-End Fund, you agree to supply VK Funds, not less frequently than
once a week by Friday, 5:00 p.m. Eastern Time, during such Closed-End Fund's
Initial Offering Period, a list setting forth by state and in the aggregate all
indications of interest and, during any Continuous Offering Period, all shares
sold by you of such Closed-End Fund during such week (or lesser period of time)
and a list setting forth by name and location each registered representative
making said sales and indicating the amount of all sales per Closed-End Fund to
date.
34. You expressly acknowledge and understand that there is no Rule 12b-1
Plan for the Closed-End Funds.
35. You expressly acknowledge and understand that shares of the Closed-End
Funds will not be repurchased by either the Closed-End Funds (other than through
tender offers from time to time, if any) or by VK Funds and that no secondary
market for such shares is expected to develop until the shares have begun
trading on a national exchange or national market system. You hereby covenant
that, until notified by VK Funds that the distribution of such shares has been
completed or that the Forfeiture Period has ended, you (a) will not make a
secondary market in any shares of such a Closed-End Fund, (b) will not purchase
or hold shares of such Closed-End Fund in inventory for the purpose of resale in
the open market or to your customers and, (c) without VK Funds' consent, will
not repurchase shares of such Closed-End Fund in the open market or from your
customers for any account in which you have a beneficial interest.
36. Unlike the other Closed-End Funds, the Continuous Offering period with
respect to the Van Kampen Prime Rate Income Trust (the "Prime
Rate Fund") may continue indefinitely. The offer to make available to you
shares of the Prime Rate Fund is subject to further terms and conditions in
addition to those set out above, as follows:
(a) You expressly acknowledge and understand that shares of the
Prime Rate Fund will not be repurchased by either the Prime Rate Fund (other
than through tender offers from time to time, if any) or VK Funds and that no
secondary market for the shares of the Prime Rate Fund exists currently or is
expected to develop. You also expressly acknowledge and agree that, in the
event your
6
<PAGE> 7
customer cancels their order for shares after confirmation, such
shares may not be repurchased, remarketed or otherwise disposed of by or
through VK Funds.
(b) You acknowledge and understand that, while the Board of
Trustees of the Prime Rate Fund intends to consider tendering for all or a
portion of the Prime Rate Fund's shares on a quarterly basis, there is no
assurance the Prime Rate Fund will tender for shares at any time or, following
such a tender offer, that shares so tendered will be repurchased by the Prime
Rate Fund. You acknowledge and understand that an early withdrawal charge
payable to VK Funds will be imposed on most shares accepted for tender by the
Prime Rate Fund that have been held for less than five years, as set forth in
the Prime Rate Fund's Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY
THE PRIME RATE FUND, OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S
CURRENT PROSPECTUS, IS EXPRESSLY PROHIBITED.
Please accept the foregoing by signing this Bank Fully Disclosed Clearing
Agreement, keeping a copy for your files and returning the original to us.
Accepted and Agreed to: (PRINT OR TYPE)
Dated:_______________________ By:
Its:
_______________________
Bank Name VAN KAMPEN FUNDS INC.
_______________________
Bank Taxpayer ID Number
_______________________
Address
_______________________
City, State, Zip
_______________________
Phone
_______________________
Signature
_______________________
Name
_______________________
Title
7
<PAGE> 1
EXHIBIT (g)(1)
CUSTODIAN CONTRACT
Between
EACH OF THE PARTIES LISTED ON APPENDIX A
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Moneys . . . . . . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased . . . . . . . . . . . . . 7
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in Securities System . . . . . . . 8
2.11 Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . 10
2.13 Ownership Certificates for Tax Purposes . . . . . . . . . 10
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.15 Communications Relating to Fund Securities . . . . . . . . 11
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . . . 11
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . 11
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . 11
3.3 Foreign Securities Systems . . . . . . . . . . . . . . . . 12
3.4 Agreements with Foreign Banking Institutions . . . . . . . 12
3.5 Access of Independent Accountants of the Fund . . . . . . 12
3.6 Reports by Custodian . . . . . . . . . . . . . . . . . . . 12
3.7 Transactions in Foreign Custody Account . . . . . . . . . 13
3.8 Liability of Foreign Sub-Custodians . . . . . . . . . . . 13
3.9 Liability of Custodian . . . . . . . . . . . . . . . . . . 13
3.10 Reimbursement for Advances . . . . . . . . . . . . . . . . 14
3.11 Monitoring Responsibilities . . . . . . . . . . . . . . . 14
3.12 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.13 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . 15
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . 15
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . 16
6. Actions Permitted Without Express Authority . . . . . . . . . . . 16
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . 17
8. Duties of Custodian With Respect to the Books
of Account and Calculation of Net Asset Value
and Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10. Opinion of Fund's Independent Accountants . . . . . . . . . . . . 18
11. Reports to Fund by Independent Public Accountants . . . . . . . . 18
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . 18
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . 18
14. Effective Period, Termination and Amendment . . . . . . . . . . . 19
15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . 20
16. Interpretive and Additional Provisions . . . . . . . . . . . . . . 21
17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . . 21
18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . 22
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 22
20. Shareholder Communications . . . . . . . . . . . . . . . . . . . . 22
21. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 4
CUSTODIAN CONTRACT
This Contract between each fund or series of a fund listed on
Appendix A which evidences its agreement to be bound hereby by executing a copy
of this Contract (each such fund is individually hereafter referred to as
the "Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WITNESSETH THAT, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets
of the Fund, including securities which the Fund desires to be held in places
within the United States ("domestic securities") and securities it desires to
be held outside the United States ("foreign securities") pursuant to the
provisions of the Fund's governing documents. The Fund agrees to deliver to
the Custodian all securities and cash of the Fund, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Fund from time to time, and the cash consideration
received by it for such new or treasury shares of capital stock, beneficial
interest or partnership interest, as applicable, of the Fund, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be
responsible for any property of a Fund held or received by the Fund and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Fund from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of the Fund, and provided
that the Custodian shall have no more or less responsibility or liability to
the Fund on account of any actions or omissions of any sub-custodian so
employed than any such sub-custodian has to the Custodian. The Custodian may
employ as sub-custodian for the Fund's foreign securities the foreign banking
institutions and foreign securities depositories designated in Schedule A
hereto but only in accordance with the provisions of Article 3.
1
<PAGE> 5
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Fund all non-cash property, to be held by it
in the United States including all domestic securities owned by such
Fund, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S. Department
of the Treasury, collectively referred to herein as "Securities
System" and (b) commercial paper of an issuer for which State Street
Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian (the "Direct Paper System") pursuant to
Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Fund held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Fund, which may be
continuing instructions when deemed appropriate by the parties, and
only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee
2
<PAGE> 6
name of any agent appointed pursuant to Section 2.9 or into
the name or nominee name of any sub-custodian appointed
pursuant to Article 1; or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the account of the Fund,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned by
the Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed;
3
<PAGE> 7
12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding account
deposits in connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase
or redemption; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund, a
certified copy of a resolution of the Board or of the
Executive Committee of the Fund signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Fund to be delivered, setting
forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such
securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Fund or in the name of any nominee of the Fund or of any nominee of
the Custodian which nominee shall be assigned exclusively to the Fund,
unless the Fund has authorized in writing the appointment of a nominee
to be used in common with other registered investment companies having
the same investment adviser as the Fund, or in the name or nominee
name of any agent appointed pursuant to Section 2.9 or in the name or
nominee name of any sub-custodian appointed pursuant to
4
<PAGE> 8
Article 1. All securities accepted by the Custodian under the terms
of this Contract shall be in "street name" or other good delivery
form. If, however, the Fund directs the Custodian to maintain
securities in "street name", the Custodian shall utilize its best
efforts only to timely collect income due the Fund on such securities
and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Fund ,
subject only to draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for
the account of the Fund, other than cash maintained by the Fund in a
bank account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940. Funds held by the Custodian for a
Fund may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940 and that
each such bank or trust company and the funds to be deposited with
each such bank or trust company shall on behalf of each applicable
Fund be approved by vote of a majority of the Board of the Fund.
Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions from the Fund, make federal funds available to such Fund
as of specified times agreed upon from time to time by the Fund and
the Custodian in the amount of checks received in payment for Shares
of such Fund which are deposited into the Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held hereunder
to which each Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis
all income and other payments with respect to bearer domestic
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall credit such
income, as collected, to such Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when
5
<PAGE> 9
due on securities held hereunder. Income due each Fund on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions from the
Fund, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out moneys of a Fund in the
following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Fund but only (a) against the delivery of such securities
or evidence of title to such options, futures contracts or
options on futures contracts to the Custodian (or any bank,
banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of
a nominee of the Custodian referred to in Section 2.3 hereof
or in proper form for transfer; (b) in the case of a purchase
effected through a Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance
with the conditions set forth in Section 2.11; (d) in the case
of repurchase agreements entered into between the Fund and
the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Custodian
along with written evidence of the agreement by the Custodian
to repurchase such securities from the Fund or (e) for
transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund
as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
6
<PAGE> 10
3) For the redemption or repurchase of Shares issued by the Fund
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Fund
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund, a certified
copy of a resolution of the Board or of the Executive
Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
7
<PAGE> 11
2.10 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Fund in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon (i) receipt of advice
from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all
advices from the Securities System of transfers of securities
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to
the Fund at its request. Upon request, the Custodian shall
furnish the Fund confirmation of each transfer to or from the
account of the Fund in the form of a written advice or notice
and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities
System for the account of the Fund.
4) The Custodian shall provide the Fund with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
8
<PAGE> 12
5) The Custodian shall have received from the Fund the initial or
annual certificate, as the case may be, required by Article 14
hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Fund for any loss or damage to the Fund resulting from use of
the Securities System by reason of any negligence, misfeasance
or misconduct of the Custodian or any of its agents or of any
of its or their employees or from failure of the Custodian or
any such agent to enforce effectively such rights as it may
have against the Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claim against the Securities
System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent
that the Fund has not been made whole for any such loss or
damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a Fund in
the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund ;
2) The Custodian may keep securities of the Fund in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper
System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the
account of the Fund upon the making of an entry on the records
of the Custodian to reflect such payment and transfer of
securities to the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon the
making of an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account of the
Fund;
9
<PAGE> 13
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of a
written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the
Fund;
6) The Custodian shall provide the Fund with any report on its
system of internal accounting control as the Fund may
reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund establish and maintain a segregated account
or accounts for and on behalf of each such Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund , the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government securities
in connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold by
the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund , a certified copy of a
resolution of the Board or of the Executive Committee of the Fund
signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Fund held by it
and in connection with transfers of securities.
10
<PAGE> 14
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund all
written information (including, without limitation, pendency of calls
and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased
or sold by the Fund) received by the Custodian from issuers of the
securities being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Fund shall notify the Custodian at
least three business days prior to the date on which the Custodian is
to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of this
Contract, together with a certified resolution of the Fund's Board,
the Custodian and the Fund may agree to amend Schedule A hereto from
time to time to designate additional foreign banking institutions and
foreign securities depositories to act as sub-custodian. Upon receipt
of Proper Instructions, the Fund may instruct the Custodian to cease
the employment of any one or more such sub-custodians for maintaining
custody of the Fund's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to:
(a) "foreign securities", as defined in
11
<PAGE> 15
paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to
effect the Fund's foreign securities transactions. The Custodian
shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Funds shall be
maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving
as sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.4 hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
the Fund will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership for the assets of
the Fund will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the Fund;
(d) officers of or auditors employed by, or other representatives of
the Custodian, including to the extent permitted under applicable law
the independent public accountants for the Fund, will be given access
to the books and records of the foreign banking institution relating
to its actions under its agreement with the Custodian; and (e) assets
of the Fund held by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.
3.5 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Fund held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Fund securities and other assets and
advices or notifications of any transfers of securities to or from
each custodial account maintained by a foreign banking
12
<PAGE> 16
institution for the Custodian on behalf of the Fund indicating, as to
securities acquired for a Fund, the identity of the entity having
physical possession of such securities.
3.7 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Fund held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of the Fund and delivery of securities
maintained for the account of the Fund may be effected in accordance
with the customary established securities trading or securities
processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor
(or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a
foreign sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless from
any liability as a holder of record of such securities.
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable
care in the performance of its duties and to indemnify, and hold
harmless, the Custodian and each Fund from and against any loss,
damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At
the election of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a foreign
banking institution as a consequence of any such loss, damage, cost,
expense, liability or claim if and to the extent that the Fund has not
been made whole for any such loss, damage, cost, expense, liability or
claim.
3.9 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.12 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this
13
<PAGE> 17
paragraph 3.9, in delegating custody duties to State Street London
Ltd., the Custodian shall not be relieved of any responsibility to the
Fund for any loss due to such delegation, except such loss as may
result from (a) political risk (including, but not limited to,
exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.10 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a Fund
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable Fund shall
be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash
and to dispose of such Fund's assets to the extent necessary to obtain
reimbursement.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the
Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Fund's assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of
14
<PAGE> 18
said Act. The appointment of any such branch as a sub-custodian shall
be governed by paragraph 1 of this Contract. (b) Cash held for each
Fund in the United Kingdom shall be maintained in an interest bearing
account established for the Fund with the Custodian's London branch,
which account shall be subject to the direction of the Custodian,
State Street London Ltd. or both.
3.13 Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of the United States of
America or any state or political subdivision thereof. It shall be
the responsibility of the Fund to notify the Custodian of the
obligations imposed on the Fund or the Custodian as custodian of the
Fund by the tax law of jurisdictions other than those mentioned in the
above sentence, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts to assist
the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such
information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent of the Fund and deposit into the account of the
appropriate Fund such payments as are received for Shares of that Fund issued
or sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund and the Transfer Agent of any receipt by it of
payments for Shares of such Fund.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board
of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions
from the Transfer Agent, make funds available for payment to holders of Shares
who have delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of Shares of
a Fund, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by
a holder of Shares, which checks have been furnished by the Fund to the holder
of Shares, when presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time between the Fund and
the Custodian.
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<PAGE> 19
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of the Fund
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes
them to have been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all oral
instructions to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by the Board of the
Fund accompanied by a detailed description of procedures approved by the Board,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Funds' assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from
the Fund:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund ;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Fund except as otherwise directed by the Board of the
Fund.
16
<PAGE> 20
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of the Fund as conclusive evidence (a) of the authority of any person to
act in accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the governing documents of the Fund as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Fund to keep the books of
account of each Fund and/or compute the net asset value per share of the
outstanding shares of each Fund or, if the Custodian and the Fund execute the
applicable Price Source Authorization (the "Authorization"), the Custodian
shall keep such books of account and/or compute such net asset value per share
pursuant to the terms of the Authorization and the attachments thereto. If so
directed, the Custodian shall also calculate daily the net income of the Fund
as described in the Fund's currently effective Prospectus and shall advise the
Fund and the Transfer Agent daily of the total amounts of such net income and,
if instructed in writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share and the
daily income of each Fund shall be made at the time or times described from
time to time in the Fund's currently effective Prospectus.
9. Records
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Fund and held by the Custodian and shall, when requested to
17
<PAGE> 21
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and Form N-SAR or
other annual reports to the Securities and Exchange Commission and with respect
to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
the Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in
18
<PAGE> 22
good faith without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United states (except as specifically provided in Article 3.9)
and regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S.
bank, as contemplated by paragraph 3.12 hereof, the Custodian shall not be
liable for any loss, damage, cost, expense, liability or claim resulting from
or caused by, the direction or authorization by the Fund to maintain custody of
any securities or cash of the Fund in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions or acts of war or terrorism.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned
to the Fund being liable for the payment of money or incurring liability of
some other form, the Fund, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the
Fund assets to the extent necessary to obtain reimbursement.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30)
19
<PAGE> 23
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Fund act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of the Fund has approved the initial use of a
particular Securities System by such Fund and the receipt of a certificate of
the Secretary or an Assistant Secretary that the Board has reviewed any
subsequent change regarding the use by such Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act of 1940,
as amended and that the Custodian shall not with respect to a Fund act under
Section 2.11 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board has approved the initial use
of the Direct Paper System by such Fund and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Board of the
Fund has reviewed the use by such Fund of the Direct Paper System; provided
further, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any
time by action of its Board (i) substitute another bank or trust company for
the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund shall be appointed by the Board
of the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities of the Fund then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of the
Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such
20
<PAGE> 24
termination shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, doing business in Boston, Massachusetts, of its
own selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of the
Fund and all instruments held by the Custodian relative thereto and all other
property held by it under this Contract on behalf of the Fund and to transfer
to an account of such successor custodian all of the securities of the Fund
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision
of the governing documents of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
17. Additional Funds
In the event that Van Kampen American Capital Distributors , Inc.
establishes any funds in addition to the Funds listed on Appendix A with
respect to which it desires to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such fund shall become a
Fund hereunder, subject to the delivery by the new Fund of resolutions
authorizing the appointment of the Custodian and such other supporting or
related documentation as the Custodian may request. All references herein to
the "Fund" are to each of the Funds listed on Appendix A individually, as if
21
<PAGE> 25
this Contract were between each such individual Fund and the Custodian. With
respect to any Fund which issues shares in separate classes or series, each
class or series of such Fund shall be treated as a separate Fund hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Funds and the Custodian relating to the custody of
the Fund's assets.
20. Shareholder Communications
Securities and Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to respond to requests by issuers
of securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the
Custodian "no", the Custodian will not provide this information to requesting
companies. If the Fund tells the Custodian "yes" or does not check either
"yes" or "no" below, the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all securities owned by the
Fund. For the Fund's protection, the Rule prohibits the requesting company
from using the Fund's name and address for any purpose other than corporate
communications. Please indicate below whether the Fund consent or object by
checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the name,
address, and share positions of each Fund listed on
Exhibit A.
NO [X] The Custodian is not authorized to release the name,
address, and share positions of each Fund listed on
Exhibit A.
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<PAGE> 26
21. Limitation of Liability.
The execution of this Contract has been authorized by each Fund's
Board. This Contract is executed on behalf of each Fund or the trustees of
such Fund as trustees and not individually and the obligations of the Fund
under this Contract are not binding upon any of the Fund's trustees, officers
or shareholders individually but are binding only upon the assets and property
of the Fund. A Certificate of Trust in respect of each Fund is on file with
the Secretary of State of Delaware.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 21st day of June, 1995.
ATTEST EACH OF THE FUNDS LISTED ON APPENDIX A
/s/ HUEY P. FALGOUT, JR. By: /s/ NORI L. GABERT
- ------------------------ -----------------------------------
Nori L. Gabert, Vice President
ATTEST STATE STREET BANK AND TRUST COMPANY
[ILLEGIBLE] By: [ILLEGIBLE]
- ------------------------ -----------------------------------
Executive Vice President
23
<PAGE> 27
[Van Kampen Investments Inc. Letterhead]
February 4, 1999
VIA AIRBORNE
Mr. Stephen Brown
State Street Bank and Trust Company
1776 Heritage Drive, A4N
North Quincy, Massachusetts 02171-2197
Dear Mr. Brown,
This letter serves as written notification that Van Kampen Equity Trust (the
"Trust") has established a new series to be known as the Van Kampen Small Cap
Value Fund. Pursuant to Section 17 of the Custodian Contract between the Trust
and State Street Bank and Trust Company ("State Street"), the Trust hereby
requests that you act as Custodian for the new series under the terms of the
respective contract.
Please indicate your acceptance of providing custodial services to the above
referenced fund by having two copies of this Letter Agreement executed by the
appropriate person at State Street. Please return one copy to the Fund and
retain one copy for your records.
Very truly yours,
VAN KAMPEN EQUITY TRUST
on behalf of its series, VAN KAMPEN SMALL CAP VALUE FUND
By: /s/ Nicholas Dalmaso
------------------------
Name: Nicholas Dalmaso
----------------------
Its: Assistant Secretary
-------------------
ACKNOWLEDGED:
STATE STREET BANK AND TRUST COMPANY
By: /s/ Stephen F. Brown
--------------------------
Name: Stephen F. Brown
-----------------------
Its: Vice President
------------------------
<PAGE> 1
EXHIBIT (h) (1)
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT, dated May 31, 1997, 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 utilized 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.
1
<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
expense 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.
2
<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 May, 1998, 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 May, 1998, 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.
3
<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: /s/ Ronald A. Nyberg
------------------------------------------------
Ronald A. Nyberg, Vice President
VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
By: /s/ Dennis J. McDonnell
------------------------------------------------
Dennis J. McDonnell, President
4
<PAGE> 5
SCHEDULE A
I. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
CLOSED END FUNDS
Van Kampen American Capital Municipal Income Trust
Van Kampen American Capital California Municipal Trust
Van Kampen American Capital High Income Trust
Van Kampen American Capital High Income Trust II
Van Kampen American Capital Investment Grade Municipal Trust
Van Kampen American Capital Municipal Trust
Van Kampen American Capital California Quality Municipal Trust
Van Kampen American Capital Florida Quality Municipal Trust
Van Kampen American Capital New York Quality Municipal Trust
Van Kampen American Capital Ohio Quality Municipal Trust
Van Kampen American Capital Pennsylvania Quality Municipal Trust
Van Kampen American Capital Trust For Insured Municipals
Van Kampen American Capital Trust For Investment Grade Municipals
Van Kampen American Capital Trust For Investment Grade California Municipals
Van Kampen American Capital Trust For Investment Grade Florida Municipals
Van Kampen American Capital Trust For Investment Grade New Jersey Municipals
Van Kampen American Capital Trust For Investment Grade New York Municipals
Van Kampen American Capital Trust For Investment Grade Pennsylvania Municipals
Van Kampen American Capital Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust
Van Kampen American Capital Advantage Pennsylvania Municipal Income Trust
Van Kampen American Capital Strategic Sector Municipal Trust
Van Kampen American Capital Value Municipal Income Trust
Van Kampen American Capital California Value Municipal Income Trust
Van Kampen American Capital Massachusetts Value Municipal Income Trust
Van Kampen American Capital New Jersey Value Municipal Income Trust
Van Kampen American Capital New York Value Municipal Income Trust
Van Kampen American Capital Ohio Value Municipal Income Trust
Van Kampen American Capital Pennsylvania Value Municipal Income Trust
Van Kampen American Capital Municipal Opportunity Trust II
Van Kampen American Capital Florida Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust II
Van Kampen American Capital Select Sector Municipal Trust
INSTITUTIONAL FUNDS
II. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL MANAGEMENT, INC. ("MANAGEMENT,
INC.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
The Explorer Institutional Trust
on behalf of its Series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 6
OPEN END FUNDS
--------------
III. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT,
INC. ("ASSET MANAGEMENT, INC.") (COLLECTIVELY, THE "FORMER AMERICAN
CAPITAL FUNDS"):
Van Kampen American Capital Comstock Fund ("Comstock Fund")
Van Kampen American Capital Corporate Bond Fund ("Corporate Bond Fund")
Van Kampen American Capital Emerging Growth Fund ("Emerging Growth
Fund")
Van Kampen American Capital Enterprise Fund ("Enterprise Fund")
Van Kampen American Capital Equity Income Fund ("Equity Income Fund")
Van Kampen American Capital Global Managed Assets Fund ("Global Managed
Assets Funds")
Van Kampen American Capital Government Securities Fund ("Government
Securities Fund")
Van Kampen American Capital Government Target Fund ("Government Target
Fund")
Van Kampen American Capital Growth and Income Fund ("Growth and Income
Fund")
Van Kampen American Capital Harbor Fund ("Harbor Fund") Van Kampen
American Capital High Income Corporate Bond Fund ("High Income
Corporate Bond Fund")
Van Kampen American Capital Life Investment Trust ("Life Investment
Trust" or "LIT") on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Global Equity Portfolio ("LIT Global Equity Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation
Portfolio")
Money Market Portfolio ("LIT Money Market Portfolio")
Real Estate Securities Portfolio ("LIT Real Estate Securities
Portfolio")
Growth and Income Portfolio ("LIT Growth and Income Portfolio")
Van Kampen American Capital Limited Maturity Government Fund ("Limited
Maturity Government Fund")
Van Kampen American Capital Pace Fund ("Pace Fund")
Van Kampen American Capital Real Estate Securities Fund ("Real Estate
Securities Fund")
Van Kampen American Capital Reserve Fund ("Reserve Fund")
Van Kampen American Capital Small Capitalization Fund ("Small
Capitalization Fund")
Van Kampen American Capital Tax-Exempt Trust ("Tax-Exempt Trust") on
behalf of its Series
Van Kampen American Capital High Yield Municipal Fund ("High Yield
Municipal Fund")
Van Kampen American Capital U.S. Government Trust for Income ("U.S.
Government Trust for Income")
Van Kampen American Capital World Portfolio Series Trust ("World
Portfolio Series Trust") on behalf of its Series
Van Kampen American Capital Global Government Securities Fund
("Global Government Securities Fund")
Van Kampen American Capital Global Equity Fund ("Global Equity
Fund")
<PAGE> 7
IV. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
Van Kampen American Capital U.S. Government Trust ("U.S. Government Trust")
on behalf of its Series
Van Kampen American Capital U.S. Government Fund ("U.S. Government Fund")
Van Kampen American Capital Tax Free Trust ("Tax Free Trust")
on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund ("Insured Tax Free
Income Fund")
Van Kampen American Capital Tax Free High Income Fund ("Tax Free High
Income Fund")
Van Kampen American Capital California Insured Tax Free Fund ("California
Insured Tax Free Fund")
Van Kampen American Capital Municipal Income Fund ("Municipal Income Fund")
Van Kampen American Capital Intermediate Term Municipal Income Fund
(Intermediate TermMunicipal Income Fund")
Van Kampen American Capital Florida Insured Tax Free Income Fund ("Florida
Insured Tax Free Income Fund")
Van Kampen American Capital New Jersey Tax Free Income Fund ("New Jersey
Tax Free Income Fund")
Van Kampen American Capital New York Tax Free Income Fund ("New York Tax
Free Income Fund")
Van Kampen American Capital California Tax Free Income Fund ("California
Tax Free Income Fund")
Van Kampen American Capital Michigan Tax Free Income Fund ("Michigan Tax
Free Income Fund")
Van Kampen American Capital Missouri Tax Free Income Fund ("Missouri Tax
Free Income Fund")
Van Kampen American Capital Ohio Tax Free Income Fund ("Ohio Tax Free
Income Fund")
Van Kampen American Capital Trust ("VKAC Trust") on behalf of its Series
Van Kampen American Capital High Yield Fund ("High Yield Fund")
Van Kampen American Capital Short-Term Global Income Fund ("Short-Term
Global Income Fund")
Van Kampen American Capital Strategic Income Fund ("Strategic Income Fund")
Van Kampen American Capital Equity Trust ("Equity Trust") on behalf of its
Series
Van Kampen American Capital Utility Fund ("Utility Fund")
Van Kampen American Capital Growth Fund ("Growth Fund")
Van Kampen American Capital Value Fund ("Value Fund")
Van Kampen American Capital Great American Companies Fund ("Great American
Companies Fund")
Van Kampen American Capital Prospector Fund ("Prospector Fund")
Van Kampen American Capital Aggressive Growth Fund ("Aggressive Growth
Fund")
Van Kampen American Capital Foreign Securities Fund ("Foreign Securities Fund")
Van Kampen American Capital Pennsylvania Tax Free Income Fund ("Pennsylvania Tax
Free Income Fund")
Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund")
<PAGE> 8
AMENDMENT NUMBER ONE
--------------------
TO THE
FUND ACCOUNTING AGREEMENT
THIS AMENDMENT NUMBER ONE, dated July 24, 1997, to the Fund Accounting
Agreement dated May 31, 1997 (the "Agreement") by and between the parties set
forth in Schedule A, attached hereto and incorporated herein by reference and
VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP., a Delaware corporation
("Advisory Corp.").
W I T N E S S E T H
-------------------
WHEREAS, the following party, being an open-end management investment
company as that term is defined in the Investment Company Act of 1940, as
amended, wishes to become party to the Agreement:
ADVISED BY VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC. ("ASSET
MANAGEMENT, INC.") (COLLECTIVELY, THE "FORMER AMERICAN CAPITAL FUNDS"):
Van Kampen American Capital Life Investment Trust ("Life Investment
Trust" or "LIT") on behalf of its Series
Strategic Stock Portfolio ("LIT Strategic Stock Portfolio")
WHEREAS, the original parties desire to add the aforementioned
additional entity as party to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule A of
the Agreement be amended to add the party mentioned above as party to the
Agreement.
1
<PAGE> 9
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 A
By: /s/ Ronald A. Nyberg
----------------------------------------------
Ronald A. Nyberg, Vice President
VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
By: /s/ Dennis J. McDonnell
----------------------------------------------
Dennis J. McDonnell, President
2
<PAGE> 10
SCHEDULE A
I. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
CLOSED END FUNDS
Van Kampen American Capital Municipal Income Trust
Van Kampen American Capital California Municipal Trust
Van Kampen American Capital High Income Trust
Van Kampen American Capital High Income Trust II
Van Kampen American Capital Investment Grade Municipal Trust
Van Kampen American Capital Municipal Trust
Van Kampen American Capital California Quality Municipal Trust
Van Kampen American Capital Florida Quality Municipal Trust
Van Kampen American Capital New York Quality Municipal Trust
Van Kampen American Capital Ohio Quality Municipal Trust
Van Kampen American Capital Pennsylvania Quality Municipal Trust
Van Kampen American Capital Trust For Insured Municipals
Van Kampen American Capital Trust For Investment Grade Municipals
Van Kampen American Capital Trust For Investment Grade California Municipals
Van Kampen American Capital Trust For Investment Grade Florida Municipals
Van Kampen American Capital Trust For Investment Grade New Jersey Municipals
Van Kampen American Capital Trust For Investment Grade New York Municipals
Van Kampen American Capital Trust For Investment Grade Pennsylvania Municipals
Van Kampen American Capital Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust
Van Kampen American Capital Advantage Pennsylvania Municipal Income Trust
Van Kampen American Capital Strategic Sector Municipal Trust
Van Kampen American Capital Value Municipal Income Trust
Van Kampen American Capital California Value Municipal Income Trust
Van Kampen American Capital Massachusetts Value Municipal Income Trust
Van Kampen American Capital New Jersey Value Municipal Income Trust
Van Kampen American Capital New York Value Municipal Income Trust
Van Kampen American Capital Ohio Value Municipal Income Trust
Van Kampen American Capital Pennsylvania Value Municipal Income Trust
Van Kampen American Capital Municipal Opportunity Trust II
Van Kampen American Capital Florida Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust II
Van Kampen American Capital Select Sector Municipal Trust
INSTITUTIONAL FUNDS
II. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL MANAGEMENT, INC. ("MANAGEMENT,
INC.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
The Explorer Institutional Trust
on behalf of its Series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 11
OPEN END FUNDS
--------------
III. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT,
INC. ("ASSET MANAGEMENT, INC.") (COLLECTIVELY, THE "FORMER AMERICAN
CAPITAL FUNDS"):
Van Kampen American Capital Comstock Fund ("Comstock Fund")
Van Kampen American Capital Corporate Bond Fund ("Corporate Bond Fund")
Van Kampen American Capital Emerging Growth Fund ("Emerging Growth
Fund")
Van Kampen American Capital Enterprise Fund ("Enterprise Fund")
Van Kampen American Capital Equity Income Fund ("Equity Income Fund")
Van Kampen American Capital Global Managed Assets Fund ("Global Managed
Assets Funds")
Van Kampen American Capital Government Securities Fund ("Government
Securities Fund")
Van Kampen American Capital Government Target Fund ("Government Target
Fund")
Van Kampen American Capital Growth and Income Fund ("Growth and Income
Fund")
Van Kampen American Capital Harbor Fund ("Harbor Fund") Van Kampen
American Capital High Income Corporate Bond Fund ("High Income
Corporate Bond Fund")
Van Kampen American Capital Life Investment Trust ("Life Investment
Trust" or "LIT") on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Global Equity Portfolio ("LIT Global Equity Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation
Portfolio")
Money Market Portfolio ("LIT Money Market Portfolio")
Real Estate Securities Portfolio ("LIT Real Estate Securities
Portfolio")
Growth and Income Portfolio ("LIT Growth and Income Portfolio")
Strategic Stock Portfolio ("LIT Strategic Stock Portfolio")
Van Kampen American Capital Limited Maturity Government Fund ("Limited
Maturity Government Fund")
Van Kampen American Capital Pace Fund ("Pace Fund")
Van Kampen American Capital Real Estate Securities Fund ("Real Estate
Securities Fund")
Van Kampen American Capital Reserve Fund ("Reserve Fund")
Van Kampen American Capital Small Capitalization Fund ("Small
Capitalization Fund")
Van Kampen American Capital Tax-Exempt Trust ("Tax-Exempt Trust") on
behalf of its Series
Van Kampen American Capital High Yield Municipal Fund ("High Yield
Municipal Fund")
Van Kampen American Capital U.S. Government Trust for Income ("U.S.
Government Trust for Income")
Van Kampen American Capital World Portfolio Series Trust ("World
Portfolio Series Trust") on behalf of its Series
Van Kampen American Capital Global Government Securities Fund
("Global Government Securities Fund")
Van Kampen American Capital Global Equity Fund ("Global Equity
Fund")
<PAGE> 12
IV. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
Van Kampen American Capital U.S. Government Trust ("U.S. Government Trust")
on behalf of its Series
Van Kampen American Capital U.S. Government Fund ("U.S. Government Fund")
Van Kampen American Capital Tax Free Trust ("Tax Free Trust")
on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund ("Insured Tax Free
Income Fund")
Van Kampen American Capital Tax Free High Income Fund ("Tax Free High
Income Fund")
Van Kampen American Capital California Insured Tax Free Fund ("California
Insured Tax Free Fund")
Van Kampen American Capital Municipal Income Fund ("Municipal Income Fund")
Van Kampen American Capital Intermediate Term Municipal Income Fund
(Intermediate TermMunicipal Income Fund")
Van Kampen American Capital Florida Insured Tax Free Income Fund ("Florida
Insured Tax Free Income Fund")
Van Kampen American Capital New Jersey Tax Free Income Fund ("New Jersey
Tax Free Income Fund")
Van Kampen American Capital New York Tax Free Income Fund ("New York Tax
Free Income Fund")
Van Kampen American Capital California Tax Free Income Fund ("California
Tax Free Income Fund")
Van Kampen American Capital Michigan Tax Free Income Fund ("Michigan Tax
Free Income Fund")
Van Kampen American Capital Missouri Tax Free Income Fund ("Missouri Tax
Free Income Fund")
Van Kampen American Capital Ohio Tax Free Income Fund ("Ohio Tax Free
Income Fund")
Van Kampen American Capital Trust ("VKAC Trust") on behalf of its Series
Van Kampen American Capital High Yield Fund ("High Yield Fund")
Van Kampen American Capital Short-Term Global Income Fund ("Short-Term
Global Income Fund")
Van Kampen American Capital Strategic Income Fund ("Strategic Income Fund")
Van Kampen American Capital Equity Trust ("Equity Trust") on behalf of its
Series
Van Kampen American Capital Utility Fund ("Utility Fund")
Van Kampen American Capital Growth Fund ("Growth Fund")
Van Kampen American Capital Value Fund ("Value Fund")
Van Kampen American Capital Great American Companies Fund ("Great American
Companies Fund")
Van Kampen American Capital Prospector Fund ("Prospector Fund")
Van Kampen American Capital Aggressive Growth Fund ("Aggressive Growth
Fund")
Van Kampen American Capital Foreign Securities Fund ("Foreign Securities Fund")
Van Kampen American Capital Pennsylvania Tax Free Income Fund ("Pennsylvania Tax
Free Income Fund")
Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund")
<PAGE> 13
AMENDMENT NUMBER TWO
--------------------
TO THE
FUND ACCOUNTING AGREEMENT
THIS AMENDMENT NUMBER TWO, dated April 23, 1998, to the Fund Accounting
Agreement dated May 31, 1997 (the "Agreement") by and between the parties set
forth in Schedule A, attached hereto and incorporated herein by reference and
VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP., a Delaware corporation
("Advisory Corp.").
W I T N E S S E T H
-------------------
WHEREAS, the following party, being an open-end management investment
company as that term is defined in the Investment Company Act of 1940, as
amended, wishes to become party to the Agreement:
ADVISED BY VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
("ASSET MANAGEMENT, INC."):
Van Kampen American Capital Life Investment Trust ("Life Investment
Trust" or "LIT") on behalf of its Series
Comstock Portfolio ("LIT Comstock Portfolio")
WHEREAS, the original parties desire to add the aforementioned
additional entity as party to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule A of
the Agreement be amended to add the party mentioned above as party to the
Agreement.
1
<PAGE> 14
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 A
By: /s/ Ronald A. Nyberg
----------------------------------------
Ronald A. Nyberg, Vice President
VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
By: /s/ Dennis J. McDonnell
----------------------------------------
Dennis J. McDonnell, President
2
<PAGE> 15
SCHEDULE A
I. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
CLOSED END FUNDS
Van Kampen American Capital Municipal Income Trust
Van Kampen American Capital California Municipal Trust
Van Kampen American Capital High Income Trust
Van Kampen American Capital High Income Trust II
Van Kampen American Capital Investment Grade Municipal Trust
Van Kampen American Capital Municipal Trust
Van Kampen American Capital California Quality Municipal Trust
Van Kampen American Capital Florida Quality Municipal Trust
Van Kampen American Capital New York Quality Municipal Trust
Van Kampen American Capital Ohio Quality Municipal Trust
Van Kampen American Capital Pennsylvania Quality Municipal Trust
Van Kampen American Capital Trust For Insured Municipals
Van Kampen American Capital Trust For Investment Grade Municipals
Van Kampen American Capital Trust For Investment Grade California Municipals
Van Kampen American Capital Trust For Investment Grade Florida Municipals
Van Kampen American Capital Trust For Investment Grade New Jersey Municipals
Van Kampen American Capital Trust For Investment Grade New York Municipals
Van Kampen American Capital Trust For Investment Grade Pennsylvania Municipals
Van Kampen American Capital Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust
Van Kampen American Capital Advantage Pennsylvania Municipal Income Trust
Van Kampen American Capital Strategic Sector Municipal Trust
Van Kampen American Capital Value Municipal Income Trust
Van Kampen American Capital California Value Municipal Income Trust
Van Kampen American Capital Massachusetts Value Municipal Income Trust
Van Kampen American Capital New Jersey Value Municipal Income Trust
Van Kampen American Capital New York Value Municipal Income Trust
Van Kampen American Capital Ohio Value Municipal Income Trust
Van Kampen American Capital Pennsylvania Value Municipal Income Trust
Van Kampen American Capital Municipal Opportunity Trust II
Van Kampen American Capital Florida Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust II
Van Kampen American Capital Select Sector Municipal Trust
INSTITUTIONAL FUNDS
II. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL MANAGEMENT, INC. ("MANAGEMENT,
INC.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
The Explorer Institutional Trust
on behalf of its Series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 16
OPEN END FUNDS
--------------
III. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT,
INC. ("ASSET MANAGEMENT, INC.") (COLLECTIVELY, THE "FORMER AMERICAN
CAPITAL FUNDS"):
Van Kampen American Capital Comstock Fund ("Comstock Fund")
Van Kampen American Capital Corporate Bond Fund ("Corporate Bond Fund")
Van Kampen American Capital Emerging Growth Fund ("Emerging Growth
Fund")
Van Kampen American Capital Enterprise Fund ("Enterprise Fund")
Van Kampen American Capital Equity Income Fund ("Equity Income Fund")
Van Kampen American Capital Global Managed Assets Fund ("Global Managed
Assets Funds")
Van Kampen American Capital Government Securities Fund ("Government
Securities Fund")
Van Kampen American Capital Growth and Income Fund ("Growth and Income
Fund")
Van Kampen American Capital Harbor Fund ("Harbor Fund") Van Kampen
American Capital High Income Corporate Bond Fund ("High Income
Corporate Bond Fund")
Van Kampen American Capital Life Investment Trust ("Life Investment
Trust" or "LIT") on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Global Equity Portfolio ("LIT Global Equity Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation
Portfolio")
Money Market Portfolio ("LIT Money Market Portfolio")
Real Estate Securities Portfolio ("LIT Real Estate Securities
Portfolio")
Growth and Income Portfolio ("LIT Growth and Income Portfolio")
Strategic Stock Portfolio ("LIT Strategic Stock Portfolio")
Comstock Portfolio ("LIT Comstock Portfolio")
Van Kampen American Capital Limited Maturity Government Fund ("Limited
Maturity Government Fund")
Van Kampen American Capital Pace Fund ("Pace Fund")
Van Kampen American Capital Real Estate Securities Fund ("Real Estate
Securities Fund")
Van Kampen American Capital Reserve Fund ("Reserve Fund")
Van Kampen American Capital Small Capitalization Fund ("Small
Capitalization Fund")
Van Kampen American Capital Tax-Exempt Trust ("Tax-Exempt Trust") on
behalf of its Series
Van Kampen American Capital High Yield Municipal Fund ("High Yield
Municipal Fund")
Van Kampen American Capital U.S. Government Trust for Income ("U.S.
Government Trust for Income")
Van Kampen American Capital World Portfolio Series Trust ("World
Portfolio Series Trust") on behalf of its Series
Van Kampen American Capital Global Government Securities Fund
("Global Government Securities Fund")
Van Kampen American Capital Global Equity Fund ("Global Equity
Fund")
<PAGE> 17
IV. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
Van Kampen American Capital U.S. Government Trust ("U.S. Government Trust")
on behalf of its Series
Van Kampen American Capital U.S. Government Fund ("U.S. Government Fund")
Van Kampen American Capital Tax Free Trust ("Tax Free Trust")
on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund ("Insured Tax Free
Income Fund")
Van Kampen American Capital Tax Free High Income Fund ("Tax Free High
Income Fund")
Van Kampen American Capital California Insured Tax Free Fund ("California
Insured Tax Free Fund")
Van Kampen American Capital Municipal Income Fund ("Municipal Income Fund")
Van Kampen American Capital Intermediate Term Municipal Income Fund
(Intermediate TermMunicipal Income Fund")
Van Kampen American Capital Florida Insured Tax Free Income Fund ("Florida
Insured Tax Free Income Fund")
Van Kampen American Capital New York Tax Free Income Fund ("New York Tax
Free Income Fund")
Van Kampen American Capital California Tax Free Income Fund ("California
Tax Free Income Fund")
Van Kampen American Capital Michigan Tax Free Income Fund ("Michigan Tax
Free Income Fund")
Van Kampen American Capital Missouri Tax Free Income Fund ("Missouri Tax
Free Income Fund")
Van Kampen American Capital Ohio Tax Free Income Fund ("Ohio Tax Free
Income Fund")
Van Kampen American Capital Trust ("VKAC Trust") on behalf of its Series
Van Kampen American Capital High Yield Fund ("High Yield Fund")
Van Kampen American Capital Short-Term Global Income Fund ("Short-Term
Global Income Fund")
Van Kampen American Capital Strategic Income Fund ("Strategic Income Fund")
Van Kampen American Capital Equity Trust ("Equity Trust") on behalf of its
Series
Van Kampen American Capital Utility Fund ("Utility Fund")
Van Kampen American Capital Growth Fund ("Growth Fund")
Van Kampen American Capital Value Fund ("Value Fund")
Van Kampen American Capital Great American Companies Fund ("Great American
Companies Fund")
Van Kampen American Capital Prospector Fund ("Prospector Fund")
Van Kampen American Capital Aggressive Growth Fund ("Aggressive Growth
Fund")
Van Kampen American Capital Foreign Securities Fund ("Foreign Securities Fund")
Van Kampen American Capital Pennsylvania Tax Free Income Fund ("Pennsylvania Tax
Free Income Fund")
Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund")
<PAGE> 18
AMENDMENT NUMBER THREE
----------------------
TO THE
FUND ACCOUNTING AGREEMENT
THIS AMENDMENT NUMBER THREE, dated February 4, 1999, to the Fund
Accounting Agreement dated May 31, 1997 (the "Agreement") by and between the
parties set forth in Schedule A, attached hereto and incorporated herein by
reference and Van Kampen Investment Advisory Corp., a Delaware corporation
("Advisory Corp.").
W I T N E S S E T H
-------------------
WHEREAS, the following parties, each being an open-end management
investment company as that term is defined in the Investment Company Act of
1940, as amended, wishes to become party to the Agreement:
ADVISED BY VAN KAMPEN INVESTMENT ADVISORY CORP.
("ADVISORY CORP."):
Van Kampen Equity Trust
on behalf of its Series
Van Kampen Small Cap Value Fund ("Small Cap Value Fund")
Van Kampen Trust
on behalf of its Series
Van Kampen Managed Short Term Income Fund ("Managed Short Term
Income Fund")
WHEREAS, the original parties desire to add the aforementioned
additional entities as parties to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule A of
the Agreement be amended to add the parties mentioned above as parties to the
Agreement.
1
<PAGE> 19
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 A
By: /s/ Dennis J. McDonnell
----------------------------------------
Dennis J. McDonnell, President
VAN KAMPEN INVESTMENT ADVISORY CORP.
By: /s/ Dennis J. McDonnell
----------------------------------------
Dennis J. McDonnell, President
2
<PAGE> 20
SCHEDULE A
----------
I. FUNDS ADVISED BY VAN KAMPEN INVESTMENT ADVISORY CORP. ("INVESTMENT
ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
CLOSED END FUNDS
----------------
Van Kampen Municipal Income Trust
Van Kampen California Municipal Trust
Van Kampen High Income Trust
Van Kampen High Income Trust II
Van Kampen Investment Grade Municipal Trust
Van Kampen Municipal Trust
Van Kampen California Quality Municipal Trust
Van Kampen Florida Quality Municipal Trust
Van Kampen New York Quality Municipal Trust
Van Kampen Ohio Quality Municipal Trust
Van Kampen Pennsylvania Quality Municipal Trust
Van Kampen Trust For Insured Municipals
Van Kampen Trust For Investment Grade Municipals
Van Kampen Trust For Investment Grade California Municipals
Van Kampen Trust For Investment Grade Florida Municipals
Van Kampen Trust For Investment Grade New Jersey Municipals
Van Kampen Trust For Investment Grade New York Municipals
Van Kampen Trust For Investment Grade Pennsylvania Municipals
Van Kampen Municipal Opportunity Trust
Van Kampen Advantage Municipal Income Trust
Van Kampen Advantage Pennsylvania Municipal Income Trust
Van Kampen Strategic Sector Municipal Trust
Van Kampen Value Municipal Income Trust
Van Kampen California Value Municipal Income Trust
Van Kampen Massachusetts Value Municipal Income Trust
Van Kampen New Jersey Value Municipal Income Trust
Van Kampen New York Value Municipal Income Trust
Van Kampen Ohio Value Municipal Income Trust
Van Kampen Pennsylvania Value Municipal Income Trust
Van Kampen Municipal Opportunity Trust II
Van Kampen Florida Municipal Opportunity Trust
Van Kampen Advantage Municipal Income Trust II
Van Kampen Select Sector Municipal Trust
INSTITUTIONAL FUNDS
-------------------
II. FUNDS ADVISED BY VAN KAMPEN MANAGEMENT INC. ("MANAGEMENT INC.")
(COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
The Explorer Institutional Trust on behalf of its Series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 21
OPEN END FUNDS
III. FUNDS ADVISED BY VAN KAMPEN ASSET MANAGEMENT INC.
("ASSET MANAGEMENT INC.") (COLLECTIVELY, THE "FORMER AMERICAN CAPITAL
FUNDS"):
Van Kampen Comstock Fund ("Comstock Fund")
Van Kampen Corporate Bond Fund ("Corporate Bond Fund")
Van Kampen Emerging Growth Fund ("Emerging Growth Fund")
Van Kampen Enterprise Fund ("Enterprise Fund")
Van Kampen Equity Income Fund ("Equity Income Fund")
Van Kampen Global Managed Assets Fund ("Global Managed Assets Funds")
Van Kampen Government Securities Fund ("Government Securities Fund")
Van Kampen Growth and Income Fund ("Growth and Income Fund")
Van Kampen Harbor Fund ("Harbor Fund")
Van Kampen High Income Corporate Bond Fund ("High Income Corporate Bond
Fund")
Van Kampen Life Investment Trust ("Life Investment Trust" or "LIT")
on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Global Equity Portfolio ("LIT Global Equity Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation Portfolio")
Money Market Portfolio ("LIT Money Market Portfolio")
Morgan Stanley Real Estate Securities Portfolio ("LIT Morgan
Stanley Real Estate Securities Portfolio")
Growth and Income Portfolio ("LIT Growth and Income Portfolio")
Strategic Stock Portfolio ("LIT Strategic Stock Portfolio")
Comstock Portfolio ("LIT Comstock Portfolio")
Van Kampen Limited Maturity Government Fund ("Limited Maturity
Government Fund")
Van Kampen Pace Fund ("Pace Fund")
Van Kampen Real Estate Securities Fund ("Real Estate Securities Fund")
Van Kampen Reserve Fund ("Reserve Fund")
Van Kampen Tax-Exempt Trust ("Tax-Exempt Trust")
on behalf of its Series
Van Kampen High Yield Municipal Fund ("High Yield Municipal Fund")
Van Kampen U.S. Government Trust for Income ("U.S. Government Trust for
Income")
Van Kampen World Portfolio Series Trust ("World Portfolio
Series Trust") on behalf of its Series
Van Kampen Global Government Securities Fund ("Global
Government Securities Fund")
4
<PAGE> 22
IV. FUNDS ADVISED BY VAN KAMPEN INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN
FUNDS"):
Van Kampen U.S. Government Trust ("U.S. Government Trust")
on behalf of its series
Van Kampen U.S. Government Fund ("U.S. Government Fund")
Van Kampen Tax Free Trust ("Tax Free Trust")
on behalf of its series
Van Kampen Insured Tax Free Income Fund ("Insured Tax Free Income Fund")
Van Kampen Tax Free High Income Fund ("Tax Free High Income Fund")
Van Kampen California Insured Tax Free Fund ("California Insured Tax
Free Fund")
Van Kampen Municipal Income Fund ("Municipal Income Fund")
Van Kampen Intermediate Term Municipal Income Fund (Intermediate Term
Municipal Income Fund")
Van Kampen Florida Insured Tax Free Income Fund ("Florida Insured Tax
Free Income Fund")
Van Kampen New York Tax Free Income Fund ("New York Tax Free
Income Fund")
Van Kampen California Tax Free Income Fund ("California Tax Free Income
Fund")
Van Kampen Michigan Tax Free Income Fund ("Michigan Tax Free Income
Fund")
Van Kampen Missouri Tax Free Income Fund ("Missouri Tax Free Income
Fund")
Van Kampen Ohio Tax Free Income Fund ("Ohio Tax Free Income Fund")
Van Kampen Trust ("VK Trust")
on behalf of its series
Van Kampen High Yield Fund ("High Yield Fund")
Van Kampen Short-Term Global Income Fund ("Short-Term Global Income
Fund")
Van Kampen Strategic Income Fund ("Strategic Income Fund")
Van Kampen Managed Short Term Income Fund ("Managed Short Term Income
Fund")
Van Kampen Equity Trust ("Equity Trust")
on behalf of its series
Van Kampen Utility Fund ("Utility Fund")
Van Kampen Growth Fund ("Growth Fund")
Van Kampen Mid Cap Value Fund ("Mid Cap Value Fund")
Van Kampen Great American Companies Fund ("Great American Companies
Fund")
Van Kampen Prospector Fund ("Prospector Fund")
Van Kampen Aggressive Growth Fund ("Aggressive Growth Fund")
Van Kampen Small Cap Value Fund ("Small Cap Value Fund")
Van Kampen Pennsylvania Tax Free Income Fund ("Pennsylvania Tax Free
Income Fund")
Van Kampen Tax Free Money Fund ("Tax Free Money Fund")
5
<PAGE> 23
AMENDMENT NUMBER FOUR
TO THE
FUND ACCOUNTING AGREEMENT
THIS AMENDMENT NUMBER FOUR, dated May 26, 1999, to the Fund Accounting
Agreement dated May 31, 1997 (the "Agreement") by and between the parties set
forth in Schedule A, attached hereto and incorporated herein by reference and
Van Kampen Investment Advisory Corp., a Delaware corporation ("Advisory Corp.").
W I T N E S S E T H
WHEREAS, the following party, being an open-end management investment
company as that term is defined in the Investment Company Act of 1940, as
amended, wishes to become a party to the Agreement:
Van Kampen Equity Trust II ("Equity Trust II")
on behalf of its Series
Van Kampen Technology Fund ("Technology Fund")
WHEREAS, the original parties desire to add the aforementioned
additional entity as party to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule A of
the Agreement be amended to add the parties mentioned above as party to the
Agreement.
1
<PAGE> 24
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 A
By: /s/ John L. Sullivan
----------------------------------------------
John L. Sullivan
Treasurer, Vice President
and Chief Financial Officer
VAN KAMPEN INVESTMENT ADVISORY CORP.
By: /s/ Dennis J. McDonnell
----------------------------------------------
Dennis J. McDonnell
President
2
<PAGE> 25
SCHEDULE A
----------
I. FUNDS ADVISED BY VAN KAMPEN INVESTMENT ADVISORY CORP. ("INVESTMENT
ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
CLOSED END FUNDS
----------------
Van Kampen Municipal Income Trust
Van Kampen California Municipal Trust
Van Kampen High Income Trust
Van Kampen High Income Trust II
Van Kampen Investment Grade Municipal Trust
Van Kampen Municipal Trust
Van Kampen California Quality Municipal Trust
Van Kampen Florida Quality Municipal Trust
Van Kampen New York Quality Municipal Trust
Van Kampen Ohio Quality Municipal Trust
Van Kampen Pennsylvania Quality Municipal Trust
Van Kampen Trust For Insured Municipals
Van Kampen Trust For Investment Grade Municipals
Van Kampen Trust For Investment Grade California Municipals
Van Kampen Trust For Investment Grade Florida Municipals
Van Kampen Trust For Investment Grade New Jersey Municipals
Van Kampen Trust For Investment Grade New York Municipals
Van Kampen Trust For Investment Grade Pennsylvania Municipals
Van Kampen Municipal Opportunity Trust
Van Kampen Advantage Municipal Income Trust
Van Kampen Advantage Pennsylvania Municipal Income Trust
Van Kampen Strategic Sector Municipal Trust
Van Kampen Value Municipal Income Trust
Van Kampen California Value Municipal Income Trust
Van Kampen Massachusetts Value Municipal Income Trust
Van Kampen New Jersey Value Municipal Income Trust
Van Kampen New York Value Municipal Income Trust
Van Kampen Ohio Value Municipal Income Trust
Van Kampen Pennsylvania Value Municipal Income Trust
Van Kampen Municipal Opportunity Trust II
Van Kampen Florida Municipal Opportunity Trust
Van Kampen Advantage Municipal Income Trust II
Van Kampen Select Sector Municipal Trust
INSTITUTIONAL FUNDS
-------------------
II. FUNDS ADVISED BY VAN KAMPEN MANAGEMENT INC. ("MANAGEMENT INC.")
(COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
The Explorer Institutional Trust on behalf of its Series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 26
OPEN END FUNDS
III. FUNDS ADVISED BY VAN KAMPEN ASSET MANAGEMENT INC.
("ASSET MANAGEMENT INC.") (COLLECTIVELY, THE "FORMER AMERICAN CAPITAL
FUNDS"):
Van Kampen Comstock Fund ("Comstock Fund")
Van Kampen Corporate Bond Fund ("Corporate Bond Fund")
Van Kampen Emerging Growth Fund ("Emerging Growth Fund")
Van Kampen Enterprise Fund ("Enterprise Fund")
Van Kampen Equity Income Fund ("Equity Income Fund")
Van Kampen Global Managed Assets Fund ("Global Managed Assets Funds")
Van Kampen Government Securities Fund ("Government Securities Fund")
Van Kampen Growth and Income Fund ("Growth and Income Fund")
Van Kampen Harbor Fund ("Harbor Fund")
Van Kampen High Income Corporate Bond Fund ("High Income Corporate Bond
Fund")
Van Kampen Life Investment Trust ("Life Investment Trust" or "LIT")
on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Global Equity Portfolio ("LIT Global Equity Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation Portfolio")
Money Market Portfolio ("LIT Money Market Portfolio")
Morgan Stanley Real Estate Securities Portfolio ("LIT Morgan
Stanley Real Estate Securities Portfolio")
Growth and Income Portfolio ("LIT Growth and Income Portfolio")
Strategic Stock Portfolio ("LIT Strategic Stock Portfolio")
Comstock Portfolio ("LIT Comstock Portfolio")
Van Kampen Limited Maturity Government Fund ("Limited Maturity
Government Fund")
Van Kampen Pace Fund ("Pace Fund")
Van Kampen Real Estate Securities Fund ("Real Estate Securities Fund")
Van Kampen Reserve Fund ("Reserve Fund")
Van Kampen Tax-Exempt Trust ("Tax-Exempt Trust")
on behalf of its Series
Van Kampen High Yield Municipal Fund ("High Yield Municipal Fund")
Van Kampen U.S. Government Trust for Income ("U.S. Government Trust for
Income")
Van Kampen World Portfolio Series Trust ("World Portfolio
Series Trust") on behalf of its Series
Van Kampen Global Government Securities Fund ("Global
Government Securities Fund")
4
<PAGE> 27
IV. FUNDS ADVISED BY VAN KAMPEN INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN
FUNDS"):
Van Kampen U.S. Government Trust ("U.S. Government Trust")
on behalf of its series
Van Kampen U.S. Government Fund ("U.S. Government Fund")
Van Kampen Tax Free Trust ("Tax Free Trust")
on behalf of its series
Van Kampen Insured Tax Free Income Fund ("Insured Tax Free Income Fund")
Van Kampen Tax Free High Income Fund ("Tax Free High Income Fund")
Van Kampen California Insured Tax Free Fund ("California Insured Tax
Free Fund")
Van Kampen Municipal Income Fund ("Municipal Income Fund")
Van Kampen Intermediate Term Municipal Income Fund (Intermediate Term
Municipal Income Fund")
Van Kampen Florida Insured Tax Free Income Fund ("Florida Insured Tax
Free Income Fund")
Van Kampen New York Tax Free Income Fund ("New York Tax Free
Income Fund")
Van Kampen California Tax Free Income Fund ("California Tax Free Income
Fund")
Van Kampen Michigan Tax Free Income Fund ("Michigan Tax Free Income
Fund")
Van Kampen Missouri Tax Free Income Fund ("Missouri Tax Free Income
Fund")
Van Kampen Ohio Tax Free Income Fund ("Ohio Tax Free Income Fund")
Van Kampen Trust ("VK Trust")
on behalf of its series
Van Kampen High Yield Fund ("High Yield Fund")
Van Kampen Short-Term Global Income Fund ("Short-Term Global Income
Fund")
Van Kampen Strategic Income Fund ("Strategic Income Fund")
Van Kampen Managed Short Term Income Fund ("Managed Short Term Income
Fund")
Van Kampen Equity Trust ("Equity Trust")
on behalf of its series
Van Kampen Utility Fund ("Utility Fund")
Van Kampen Growth Fund ("Growth Fund")
Van Kampen Mid Cap Value Fund ("Mid Cap Value Fund")
Van Kampen Great American Companies Fund ("Great American Companies
Fund")
Van Kampen Prospector Fund ("Prospector Fund")
Van Kampen Aggressive Growth Fund ("Aggressive Growth Fund")
Van Kampen Small Cap Value Fund ("Small Cap Value Fund")
Van Kampen Equity Trust II ("Equity Trust II") on behalf of its series
Van Kampen Technology Fund ("Technology Fund")
Van Kampen Pennsylvania Tax Free Income Fund ("Pennsylvania Tax Free
Income Fund")
Van Kampen Tax Free Money Fund ("Tax Free Money Fund")
5
<PAGE> 1
EXHIBIT (h)(2)
AMENDED AND RESTATED
LEGAL SERVICES AGREEMENT
THIS AGREEMENT, dated as of May 31, 1997, 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., 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 regular
<PAGE> 2
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 Expense 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 in 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 not be entitled to such
indemnification in respect of action or
<PAGE> 3
omissions constituting negligence or willful misconduct of Van Kampen or its
agents or contractors. Prior to admitting 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 admitting 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 May 31, 1997,
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 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.
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
<PAGE> 4
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 or Pennsylvania, as the case may be,
the shareholders, trustees, officers, employees and other agents of the Fund
shall not personally be bound 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 operations 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: /s/ Ronald A. Nyberg
---------------------------------
Ronald A. Nyberg
Vice President & Secretary
VAN KAMPEN AMERICAN CAPITAL, INC.
By: /s/ Dennis J. McDonnell
---------------------------------
Dennis J. McDonnell
Executive Vice President
<PAGE> 6
SCHEDULE 1
1. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST, on behalf of its series
Van Kampen American Capital U.S. Government Fund
2. VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST, on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund
Van Kampen American Capital Tax Free High Income Fund
Van Kampen American Capital California Insured Tax Free Fund
Van Kampen American Capital Municipal Income Fund
Van Kampen American Capital Intermediate Term Municipal Income Fund
Van Kampen American Capital New York Tax Free Income Fund
Van Kampen American Capital New Jersey Tax Free Income Fund
Van Kampen American Capital Florida Insured Tax Free Income Fund
Van Kampen American Capital California Tax Free Income Fund
Van Kampen American Capital Michigan Tax Free Income Fund
Van Kampen American Capital Missouri Tax Free Income Fund and
Van Kampen American Capital Ohio Tax Free Income Fund
3. VAN KAMPEN AMERICAN CAPITAL TRUST, on behalf of its series
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund and
Van Kampen American Capital Strategic Income Fund
4. VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST, on behalf of its series
Van Kampen American Capital Utility Fund
Van Kampen American Capital Value Fund
Van Kampen American Capital Growth Fund
Van Kampen American Capital Great American Companies Fund
Van Kampen American Capital Prospector Fund and
Van Kampen American Capital Aggressive Growth Fund
5. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
6. VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
7. VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
8. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
9. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA MUNICIPAL TRUST
10. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST
11. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST II
12. VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
13. VAN KAMPEN AMERICAN CAPITAL INVESTMENT GRADE MUNICIPAL TRUST
14. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
15. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
16. VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
17. VAN KAMPEN AMERICAN CAPITAL NEW YORK QUALITY MUNICIPAL TRUST
18. VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
19. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA QUALITY MUNICIPAL TRUST
<PAGE> 7
20. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
21. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
22. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE CALIFORNIA
MUNICIPALS
23. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE FLORIDA
MUNICIPALS
24. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW JERSEY
MUNICIPALS
25. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW YORK
MUNICIPALS
26. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE PENNSYLVANIA
MUNICIPALS
27. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
28. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST
29. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME
TRUST
30. VAN KAMPEN AMERICAN CAPITAL STRATEGIC SECTOR MUNICIPAL TRUST
31. VAN KAMPEN AMERICAN CAPITAL VALUE MUNICIPAL INCOME TRUST
32. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
33. VAN KAMPEN AMERICAN CAPITAL MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
34. VAN KAMPEN AMERICAN CAPITAL NEW JERSEY VALUE MUNICIPAL INCOME TRUST
35. VAN KAMPEN AMERICAN CAPITAL NEW YORK VALUE MUNICIPAL INCOME TRUST
36. VAN KAMPEN AMERICAN CAPITAL OHIO VALUE MUNICIPAL INCOME TRUST
37. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
38. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST II
39. VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY TRUST
40. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST II
41. VAN KAMPEN AMERICAN CAPITAL SELECT SECTOR MUNICIPAL TRUST
42. THE EXPLORER INSTITUTIONAL TRUST, on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 8
AMENDMENT ONE
TO THE
AMENDED AND RESTATED LEGAL SERVICES AGREEMENT
DATED MAY 31, 1997
THIS AMENDMENT ONE to the Amended and Restated Legal Services Agreement
dated May 31, 1997 by and between the parties as set forth in Schedule 1,
attached hereto and incorporated herein by reference and VAN KAMPEN AMERICAN
CAPITAL, INC.
W I T N E S S E T H
WHEREAS, Morgan Stanley Fund, Inc. being an open-end management
investment company as that term is defined in the Investment Company Act of
1940, as amended, wishes to become a party to the Agreement; and
WHEREAS, the original parties desire to add the aforementioned
additional entity as a party to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule 1 of
the Agreement be amended to add Morgan Stanley Fund, Inc.
1
<PAGE> 9
IN WITNESS WHEREOF, the parties have caused this Amendment One to be
executed this 31st day of May, 1997.
ALL OF THE PARTIES SET FORTH IN SCHEDULE 1
ATTACHED HERETO
By: /s/ Ronald A. Nyberg
-------------------------------------
Ronald A. Nyberg
Executive Vice President
VAN KAMPEN AMERICAN CAPITAL, INC.
By: /s/ Dennis J. McDonnell
--------------------------------------
Dennis J. McDonnell
Executive Vice President
MORGAN STANLEY FUND, INC.
By:
--------------------------------------
Ronald A. Nyberg
Vice President, Secretary
2
<PAGE> 10
SCHEDULE 1
1. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST, on behalf of its series
Van Kampen American Capital U.S. Government Fund
2. VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST, on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund
Van Kampen American Capital Tax Free High Income Fund
Van Kampen American Capital California Insured Tax Free Fund
Van Kampen American Capital Municipal Income Fund
Van Kampen American Capital Intermediate Term Municipal Income Fund
Van Kampen American Capital New York Tax Free Income Fund
Van Kampen American Capital New Jersey Tax Free Income Fund
Van Kampen American Capital Florida Insured Tax Free Income Fund
Van Kampen American Capital California Tax Free Income Fund
Van Kampen American Capital Michigan Tax Free Income Fund
Van Kampen American Capital Missouri Tax Free Income Fund and
Van Kampen American Capital Ohio Tax Free Income Fund
3. VAN KAMPEN AMERICAN CAPITAL TRUST, on behalf of its series
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund and
Van Kampen American Capital Strategic Income Fund
4. VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST, on behalf of its series
Van Kampen American Capital Utility Fund
Van Kampen American Capital Value Fund
Van Kampen American Capital Growth Fund
Van Kampen American Capital Great American Companies Fund
Van Kampen American Capital Prospector Fund and
Van Kampen American Capital Aggressive Growth Fund
5. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
6. VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
7. VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
8. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
9. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA MUNICIPAL TRUST
10. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST
11. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST II
12. VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
13. VAN KAMPEN AMERICAN CAPITAL INVESTMENT GRADE MUNICIPAL TRUST
14. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
15. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
16. VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
17. VAN KAMPEN AMERICAN CAPITAL NEW YORK QUALITY MUNICIPAL TRUST
18. VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
19. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA QUALITY MUNICIPAL TRUST
<PAGE> 11
20. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
21. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
22. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE CALIFORNIA
MUNICIPALS
23. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE FLORIDA
MUNICIPALS
24. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW JERSEY
MUNICIPALS
25. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW YORK
MUNICIPALS
26. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE PENNSYLVANIA
MUNICIPALS
27. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
28. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST
29. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME
TRUST
30. VAN KAMPEN AMERICAN CAPITAL STRATEGIC SECTOR MUNICIPAL TRUST
31. VAN KAMPEN AMERICAN CAPITAL VALUE MUNICIPAL INCOME TRUST
32. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
33. VAN KAMPEN AMERICAN CAPITAL MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
34. VAN KAMPEN AMERICAN CAPITAL NEW JERSEY VALUE MUNICIPAL INCOME TRUST
35. VAN KAMPEN AMERICAN CAPITAL NEW YORK VALUE MUNICIPAL INCOME TRUST
36. VAN KAMPEN AMERICAN CAPITAL OHIO VALUE MUNICIPAL INCOME TRUST
37. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
38. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST II
39. VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY TRUST
40. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST II
41. VAN KAMPEN AMERICAN CAPITAL SELECT SECTOR MUNICIPAL TRUST
42. THE EXPLORER INSTITUTIONAL TRUST, on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 12
43. MORGAN STANLEY FUND INC., on behalf of its series
Morgan Stanley Global Fixed Income Fund
Morgan Stanley High Yield Fund
Morgan Stanley Worldwide High Income Fund
Morgan Stanley American Value Fund
Morgan Stanley Aggressive Equity Fund
Morgan Stanley U.S. Real Estate Fund
Morgan Stanley Equity Growth Fund
Morgan Stanley Value Fund
Morgan Stanley Global Equity Allocation Fund
Morgan Stanley Global Equity Fund
Morgan Stanley Asian Growth Fund
Morgan Stanley Emerging Markets Fund
Morgan Stanley Latin American Fund
Morgan Stanley International Magnum Fund
Morgan Stanley Money Market Fund
Morgan Stanley Government Obligations Money Market Fund.
<PAGE> 13
AMENDMENT TWO
TO THE
AMENDED AND RESTATED LEGAL SERVICES AGREEMENT
DATED MAY 31, 1997
THIS AMENDMENT TWO to the Amended and Restated Legal Services Agreement
dated May 31, 1997 by and between the parties as set forth in Schedule 1,
attached hereto and incorporated herein by reference and VAN KAMPEN AMERICAN
CAPITAL, INC.
W I T N E S S E T H
WHEREAS, Van Kampen American Capital Senior Floating Rate Fund, being a
closed-end registered investment company as that term is defined in the
Investment Company Act of 1940, as amended, wishes to become a party to the
Agreement; and
WHEREAS, the original parties desire to add the aforementioned
additional entity as a party to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule 1 of
the Agreement be amended to add Van Kampen American Capital Senior Floating Rate
Fund
1
<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this Amendment Two to be
executed this 19th day of December, 1997.
ALL OF THE PARTIES SET FORTH IN SCHEDULE 1
ATTACHED HERETO
By: /s/ Ronald A. Nyberg
---------------------------------
Ronald A. Nyberg
Executive Vice President
VAN KAMPEN AMERICAN CAPITAL, INC.
By: /s/ Dennis J. McDonnell
---------------------------------
Dennis J. McDonnell
Executive Vice President
2
<PAGE> 15
SCHEDULE 1
1. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST, on behalf of its series
Van Kampen American Capital U.S. Government Fund
2. VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST, on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund
Van Kampen American Capital Tax Free High Income Fund
Van Kampen American Capital California Insured Tax Free Fund
Van Kampen American Capital Municipal Income Fund
Van Kampen American Capital Intermediate Term Municipal Income Fund
Van Kampen American Capital New York Tax Free Income Fund
Van Kampen American Capital New Jersey Tax Free Income Fund
Van Kampen American Capital Florida Insured Tax Free Income Fund
Van Kampen American Capital California Tax Free Income Fund
Van Kampen American Capital Michigan Tax Free Income Fund
Van Kampen American Capital Missouri Tax Free Income Fund and
Van Kampen American Capital Ohio Tax Free Income Fund
3. VAN KAMPEN AMERICAN CAPITAL TRUST, on behalf of its series
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund and
Van Kampen American Capital Strategic Income Fund
4. VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST, on behalf of its series
Van Kampen American Capital Utility Fund
Van Kampen American Capital Value Fund
Van Kampen American Capital Growth Fund
Van Kampen American Capital Great American Companies Fund
Van Kampen American Capital Prospector Fund and
Van Kampen American Capital Aggressive Growth Fund
5. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
6. VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
7. VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
8. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
9. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA MUNICIPAL TRUST
10. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST
11. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST II
12. VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
13. VAN KAMPEN AMERICAN CAPITAL INVESTMENT GRADE MUNICIPAL TRUST
14. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
15. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
16. VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
17. VAN KAMPEN AMERICAN CAPITAL NEW YORK QUALITY MUNICIPAL TRUST
18. VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
19. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA QUALITY MUNICIPAL TRUST
<PAGE> 16
20. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
21. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
22. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE CALIFORNIA
MUNICIPALS
23. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE FLORIDA
MUNICIPALS
24. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW JERSEY
MUNICIPALS
25. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW YORK
MUNICIPALS
26. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE PENNSYLVANIA
MUNICIPALS
27. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
28. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST
29. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME
TRUST
30. VAN KAMPEN AMERICAN CAPITAL STRATEGIC SECTOR MUNICIPAL TRUST
31. VAN KAMPEN AMERICAN CAPITAL VALUE MUNICIPAL INCOME TRUST
32. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
33. VAN KAMPEN AMERICAN CAPITAL MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
34. VAN KAMPEN AMERICAN CAPITAL NEW JERSEY VALUE MUNICIPAL INCOME TRUST
35. VAN KAMPEN AMERICAN CAPITAL NEW YORK VALUE MUNICIPAL INCOME TRUST
36. VAN KAMPEN AMERICAN CAPITAL OHIO VALUE MUNICIPAL INCOME TRUST
37. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
38. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST II
39. VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY TRUST
40. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST II
41. VAN KAMPEN AMERICAN CAPITAL SELECT SECTOR MUNICIPAL TRUST
42. THE EXPLORER INSTITUTIONAL TRUST, on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
43. VAN KAMPEN AMERICAN CAPITAL SENIOR FLOATING RATE FUND
<PAGE> 17
44. MORGAN STANLEY FUND INC., on behalf of its series
Morgan Stanley Emerging Markets Debt Fund
Morgan Stanley Global Fixed Income Fund
Morgan Stanley High Yield Fund
Morgan Stanley Worldwide High Income Fund
Morgan Stanley American Value Fund
Morgan Stanley Aggressive Equity Fund
Morgan Stanley U.S. Real Estate Fund
Morgan Stanley Equity Growth Fund
Morgan Stanley Midcap Growth Fund
Morgan Stanley Value Fund
Morgan Stanley Global Equity Allocation Fund
Morgan Stanley Global Equity Fund
Morgan Stanley Asian Growth Fund
Morgan Stanley Emerging Markets Fund
Morgan Stanley Latin American Fund
Morgan Stanley International Magnum Fund
Morgan Stanley Japanese Equity Fund
Morgan Stanley Money Market Fund
Morgan Stanley Tax-Free Money Market Fund
Morgan Stanley Government Obligations Money Market Fund.
<PAGE> 18
AMENDMENT THREE
TO THE
AMENDED AND RESTATED LEGAL SERVICES AGREEMENT
DATED MAY 31, 1997
THIS AMENDMENT THREE to the Amended and Restated Legal Services
Agreement dated May 31, 1997 by and between the parties as set forth in Schedule
1, attached hereto and incorporated herein by reference and VAN KAMPEN AMERICAN
CAPITAL, INC.
W I T N E S S E T H
WHEREAS, Van Kampen American Capital Senior Income Trust, being a
closed-end registered investment company as that term is defined in the
Investment Company Act of 1940, as amended, wishes to become a party to the
Agreement; and
WHEREAS, the original parties desire to add the aforementioned
additional entity as a party to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule 1 of
the Agreement be amended to add Van Kampen American Capital Senior Income Trust.
1
<PAGE> 19
IN WITNESS WHEREOF, the parties have caused this Amendment Three to be
executed this 22nd day of April, 1998.
ALL OF THE PARTIES SET FORTH IN SCHEDULE 1
ATTACHED HERETO
By: /s/ Ronald A. Nyberg
----------------------------------
Ronald A. Nyberg
Executive Vice President
VAN KAMPEN AMERICAN CAPITAL, INC.
By: /s/ Dennis J. McDonnell
----------------------------------
Dennis J. McDonnell
Executive Vice President
2
<PAGE> 20
SCHEDULE 1
1. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST, on behalf of its series
Van Kampen American Capital U.S. Government Fund
2. VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST, on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund
Van Kampen American Capital Tax Free High Income Fund
Van Kampen American Capital California Insured Tax Free Fund
Van Kampen American Capital Municipal Income Fund
Van Kampen American Capital Intermediate Term Municipal Income Fund
Van Kampen American Capital New York Tax Free Income Fund
Van Kampen American Capital Florida Insured Tax Free Income Fund
Van Kampen American Capital California Tax Free Income Fund
Van Kampen American Capital Michigan Tax Free Income Fund
Van Kampen American Capital Missouri Tax Free Income Fund and
Van Kampen American Capital Ohio Tax Free Income Fund
3. VAN KAMPEN AMERICAN CAPITAL TRUST, on behalf of its series
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund and
Van Kampen American Capital Strategic Income Fund
4. VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST, on behalf of its series
Van Kampen American Capital Utility Fund
Van Kampen American Capital Value Fund
Van Kampen American Capital Growth Fund
Van Kampen American Capital Great American Companies Fund
Van Kampen American Capital Prospector Fund and
Van Kampen American Capital Aggressive Growth Fund
5. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
6. VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
7. VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
8. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
9. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA MUNICIPAL TRUST
10. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST
11. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST II
12. VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
13. VAN KAMPEN AMERICAN CAPITAL SENIOR FLOATING RATE FUND
14. VAN KAMPEN AMERICAN CAPITAL INVESTMENT GRADE MUNICIPAL TRUST
15. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
16. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
17. VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
18. VAN KAMPEN AMERICAN CAPITAL NEW YORK QUALITY MUNICIPAL TRUST
19. VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
20. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA QUALITY MUNICIPAL TRUST
<PAGE> 21
21. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
22. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
23. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE CALIFORNIA
MUNICIPALS
24. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE FLORIDA
MUNICIPALS
25. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW JERSEY
MUNICIPALS
26. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW YORK
MUNICIPALS
27. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE PENNSYLVANIA
MUNICIPALS
28. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
29. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST
30. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME
TRUST
31. VAN KAMPEN AMERICAN CAPITAL STRATEGIC SECTOR MUNICIPAL TRUST
32. VAN KAMPEN AMERICAN CAPITAL VALUE MUNICIPAL INCOME TRUST
33. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
34. VAN KAMPEN AMERICAN CAPITAL MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
35. VAN KAMPEN AMERICAN CAPITAL NEW JERSEY VALUE MUNICIPAL INCOME TRUST
36. VAN KAMPEN AMERICAN CAPITAL NEW YORK VALUE MUNICIPAL INCOME TRUST
37. VAN KAMPEN AMERICAN CAPITAL OHIO VALUE MUNICIPAL INCOME TRUST
38. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
39. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST II
40. VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY TRUST
41. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST II
42. VAN KAMPEN AMERICAN CAPITAL SELECT SECTOR MUNICIPAL TRUST
43. THE EXPLORER INSTITUTIONAL TRUST, on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
44. VAN KAMPEN AMERICAN CAPITAL SENIOR INCOME TRUST
<PAGE> 22
45. MORGAN STANLEY FUND INC., on behalf of its series
Morgan Stanley Emerging Markets Debt Fund
Morgan Stanley Global Fixed Income Fund
Morgan Stanley High Yield Fund
Morgan Stanley Worldwide High Income Fund
Morgan Stanley American Value Fund
Morgan Stanley Aggressive Equity Fund
Morgan Stanley U.S. Real Estate Fund
Morgan Stanley Equity Growth Fund
Morgan Stanley Midcap Growth Fund
Morgan Stanley Value Fund
Morgan Stanley Global Equity Allocation Fund
Morgan Stanley Global Equity Fund
Morgan Stanley Asian Growth Fund
Morgan Stanley Emerging Markets Fund
Morgan Stanley Latin American Fund
Morgan Stanley International Magnum Fund
Morgan Stanley Japanese Equity Fund
Morgan Stanley Money Market Fund
Morgan Stanley Tax-Free Money Market Fund
Morgan Stanley Government Obligations Money Market Fund.
<PAGE> 23
AMENDMENT FOUR
TO THE
AMENDED AND RESTATED LEGAL SERVICES AGREEMENT
DATED MAY 31, 1997
THIS AMENDMENT FOUR to the Amended and Restated Legal Services Agreement
dated May 31, 1997 by and between the parties as set forth in Schedule 1,
attached hereto and incorporated herein by reference and VAN KAMPEN INVESTMENTS
INC.
W I T N E S S E T H
WHEREAS, Van Kampen Global Franchise Fund, being an open-end management
investment company as that term is defined in the Investment Company Act of
1940, as amended, wishes to become a party to the Agreement; and
WHEREAS, the original parties desire to add the aforementioned
additional entity as a party to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule 1 of
the Agreement be amended to add Van Kampen Global Franchise Fund.
1
<PAGE> 24
IN WITNESS WHEREOF, the parties have caused this Amendment Four to be
executed this 30th day of July, 1998.
ALL OF THE PARTIES SET FORTH IN SCHEDULE 1
ATTACHED HERETO
By: /s/ Ronald A. Nyberg
--------------------------------
Ronald A. Nyberg
Executive Vice President
VAN KAMPEN INVESTMENTS INC.
By: /s/ Dennis J. McDonnell
--------------------------------
Dennis J. McDonnell
Executive Vice President
2
<PAGE> 25
SCHEDULE 1
1. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST, on behalf of its series
Van Kampen American Capital U.S. Government Fund
2. VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST, on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund
Van Kampen American Capital Tax Free High Income Fund
Van Kampen American Capital California Insured Tax Free Fund
Van Kampen American Capital Municipal Income Fund
Van Kampen American Capital Intermediate Term Municipal Income Fund
Van Kampen American Capital New York Tax Free Income Fund
Van Kampen American Capital Florida Insured Tax Free Income Fund
Van Kampen American Capital California Tax Free Income Fund
Van Kampen American Capital Michigan Tax Free Income Fund
Van Kampen American Capital Missouri Tax Free Income Fund and
Van Kampen American Capital Ohio Tax Free Income Fund
3. VAN KAMPEN AMERICAN CAPITAL TRUST, on behalf of its series
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund and
Van Kampen American Capital Strategic Income Fund
4. VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST, on behalf of its series
Van Kampen American Capital Utility Fund
Van Kampen American Capital Value Fund
Van Kampen American Capital Growth Fund
Van Kampen American Capital Great American Companies Fund
Van Kampen American Capital Prospector Fund and
Van Kampen American Capital Aggressive Growth Fund
5. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
6. VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
7. VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
8. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL INCOME TRUST
9. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA MUNICIPAL TRUST
10. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST
11. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME TRUST II
12. VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
13. VAN KAMPEN AMERICAN CAPITAL SENIOR FLOATING RATE FUND
14. VAN KAMPEN AMERICAN CAPITAL INVESTMENT GRADE MUNICIPAL TRUST
15. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL TRUST
16. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA QUALITY MUNICIPAL TRUST
17. VAN KAMPEN AMERICAN CAPITAL FLORIDA QUALITY MUNICIPAL TRUST
18. VAN KAMPEN AMERICAN CAPITAL NEW YORK QUALITY MUNICIPAL TRUST
19. VAN KAMPEN AMERICAN CAPITAL OHIO QUALITY MUNICIPAL TRUST
20. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA QUALITY MUNICIPAL TRUST
<PAGE> 26
21. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INSURED MUNICIPALS
22. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE MUNICIPALS
23. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE CALIFORNIA
MUNICIPALS
24. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE FLORIDA
MUNICIPALS
25. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW JERSEY
MUNICIPALS
26. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE NEW YORK
MUNICIPALS
27. VAN KAMPEN AMERICAN CAPITAL TRUST FOR INVESTMENT GRADE PENNSYLVANIA
MUNICIPALS
28. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST
29. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST
30. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME
TRUST
31. VAN KAMPEN AMERICAN CAPITAL STRATEGIC SECTOR MUNICIPAL TRUST
32. VAN KAMPEN AMERICAN CAPITAL VALUE MUNICIPAL INCOME TRUST
33. VAN KAMPEN AMERICAN CAPITAL CALIFORNIA VALUE MUNICIPAL INCOME TRUST
34. VAN KAMPEN AMERICAN CAPITAL MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
35. VAN KAMPEN AMERICAN CAPITAL NEW JERSEY VALUE MUNICIPAL INCOME TRUST
36. VAN KAMPEN AMERICAN CAPITAL NEW YORK VALUE MUNICIPAL INCOME TRUST
37. VAN KAMPEN AMERICAN CAPITAL OHIO VALUE MUNICIPAL INCOME TRUST
38. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
39. VAN KAMPEN AMERICAN CAPITAL MUNICIPAL OPPORTUNITY TRUST II
40. VAN KAMPEN AMERICAN CAPITAL FLORIDA MUNICIPAL OPPORTUNITY TRUST
41. VAN KAMPEN AMERICAN CAPITAL ADVANTAGE MUNICIPAL INCOME TRUST II
42. VAN KAMPEN AMERICAN CAPITAL SELECT SECTOR MUNICIPAL TRUST
43. THE EXPLORER INSTITUTIONAL TRUST, on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
44. VAN KAMPEN AMERICAN CAPITAL SENIOR INCOME TRUST
<PAGE> 27
45. VAN KAMPEN SERIES FUND, INC., on behalf of its series
Van Kampen Emerging Markets Debt Fund
Van Kampen Global Fixed Income Fund
Van Kampen High Yield & Total Return Fund
Van Kampen Worldwide High Income Fund
Van Kampen American Value Fund
Van Kampen Aggressive Equity Fund
Van Kampen U.S. Real Estate Fund
Van Kampen Equity Growth Fund
Van Kampen Mid Cap Growth Fund
Van Kampen Value Fund
Van Kampen Global Equity Allocation Fund
Van Kampen Global Equity Fund
Van Kampen Asian Growth Fund
Van Kampen Emerging Markets Fund
Van Kampen Latin American Fund
Van Kampen International Magnum Fund
Van Kampen Japanese Equity Fund
Morgan Stanley Money Market Fund
Morgan Stanley Tax-Free Money Market Fund
Morgan Stanley Government Obligations Money Market Fund
Van Kampen Growth & Income Fund II
Van Kampen Global Franchise Fund
Van Kampen European Equity Fund
<PAGE> 28
AMENDMENT FIVE
TO THE
AMENDED AND RESTATED LEGAL SERVICES AGREEMENT
DATED MAY 31, 1997
THIS AMENDMENT FIVE to the Amended and Restated Legal Services
Agreement dated May 31, 1997 by and between the parties as set forth in Schedule
1, attached hereto and incorporated by reference and VAN KAMPEN INVESTMENTS INC.
W I T N E S S E T H
WHEREAS, Van Kampen Small Cap Value Fund, a series of Van
Kampen Equity Trust and Van Kampen Managed Short Term Income Fund, a series of
Van Kampen Trust, each being an open-end management investment company as that
term is defined in the Investment Company Act of 1940, as amended, wish to
become a party to the Agreement; and
WHEREAS, the original parties desire to add the aforementioned
additional entities as parties to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule 1 of
the Agreement be amended to add Van Kampen Small Cap Value Fund and Van Kampen
Managed Short Term Income Fund.
1
<PAGE> 29
IN WITNESS WHEREOF, the parties have caused this Amendment Five to be
executed this 4th day of February, 1999.
ALL OF THE PARTIES SET FORTH IN SCHEDULE 1
ATTACHED HERETO
By: /s/ Dennis J. McDonnell
-----------------------------------
Dennis J. McDonnell
President
VAN KAMPEN INVESTMENTS INC.
By: /s/ Dennis J. McDonnell
-----------------------------------
Dennis J. McDonnell
Executive Vice President
2
<PAGE> 30
SCHEDULE 1
1. VAN KAMPEN U.S. GOVERNMENT TRUST, on behalf of its series
Van Kampen U.S. Government Fund
2. VAN KAMPEN TAX FREE TRUST, on behalf of its series
Van Kampen Insured Tax Free Income Fund
Van Kampen Tax Free High Income Fund
Van Kampen California Insured Tax Free Fund
Van Kampen Municipal Income Fund
Van Kampen Intermediate Term Municipal Income Fund
Van Kampen New York Tax Free Income Fund
Van Kampen Florida Insured Tax Free Income Fund
Van Kampen California Tax Free Income Fund
Van Kampen Michigan Tax Free Income Fund,
Van Kampen Missouri Tax Free Income Fund
Van Kampen Ohio Tax Free Income Fund
3. VAN KAMPEN TRUST, on behalf of its series
Van Kampen High Yield Fund
Van Kampen Short-Term Global Income Fund
Van Kampen Strategic Income Fund
Van Kampen Managed Short Term Income Fund
4. VAN KAMPEN EQUITY TRUST, on behalf of its series
Van Kampen Utility Fund
Van Kampen Mid Cap Value Fund
Van Kampen Growth Fund
Van Kampen Great American Companies Fund
Van Kampen Prospector Fund
Van Kampen Aggressive Growth Fund
Van Kampen Small Cap Value Fund
5. VAN KAMPEN PENNSYLVANIA TAX FREE INCOME FUND
6. VAN KAMPEN TAX FREE MONEY FUND
7. VAN KAMPEN MUNICIPAL INCOME TRUST
8. VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
9. VAN KAMPEN HIGH INCOME TRUST
10. VAN KAMPEN HIGH INCOME TRUST II
11. VAN KAMPEN PRIME RATE INCOME TRUST
12. VAN KAMPEN SENIOR FLOATING RATE FUND
13. VAN KAMPEN INVESTMENT GRADE MUNICIPAL TRUST
14. VAN KAMPEN MUNICIPAL TRUST
15. VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST
16. VAN KAMPEN FLORIDA QUALITY MUNICIPAL TRUST
17. VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
18. VAN KAMPEN OHIO QUALITY MUNICIPAL TRUST
19. VAN KAMPEN PENNSYLVANIA QUALITY MUNICIPAL TRUST
20. VAN KAMPEN TRUST FOR INSURED MUNICIPALS
21. VAN KAMPEN TRUST FOR INVESTMENT GRADE MUNICIPALS
3
<PAGE> 31
22. VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS
23. VAN KAMPEN TRUST FOR INVESTMENT GRADE FLORIDA MUNICIPALS
24. VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW JERSEY MUNICIPALS
25. VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
26. VAN KAMPEN TRUST FOR INVESTMENT GRADE PENNSYLVANIA MUNICIPALS
27. VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
28. VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
29. VAN KAMPEN ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME TRUST
30. VAN KAMPEN STRATEGIC SECTOR MUNICIPAL TRUST
31. VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
32. VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST
33. VAN KAMPEN MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
34. VAN KAMPEN NEW JERSEY VALUE MUNICIPAL INCOME TRUST
35. VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
36. VAN KAMPEN OHIO VALUE MUNICIPAL INCOME TRUST
37. VAN KAMPEN PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
38. VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II
39. VAN KAMPEN FLORIDA MUNICIPAL OPPORTUNITY TRUST
40. VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
41. VAN KAMPEN SELECT SECTOR MUNICIPAL TRUST
42. THE EXPLORER INSTITUTIONAL TRUST, on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
43. VAN KAMPEN SENIOR INCOME TRUST
<PAGE> 32
44. VAN KAMPEN SERIES FUND, INC., on behalf of its series
Van Kampen Emerging Markets Debt Fund
Van Kampen Global Fixed Income Fund
Van Kampen High Yield & Total Return Fund
Van Kampen Worldwide High Income Fund
Van Kampen American Value Fund
Van Kampen Aggressive Equity Fund
Van Kampen U.S. Real Estate Fund
Van Kampen Equity Growth Fund
Van Kampen Mid Cap Growth Fund
Van Kampen Value Fund
Van Kampen Global Equity Allocation Fund
Van Kampen Global Equity Fund
Van Kampen Asian Growth Fund
Van Kampen Emerging Markets Fund
Van Kampen Latin American Fund
Van Kampen International Magnum Fund
Van Kampen Japanese Equity Fund
Morgan Stanley Money Market Fund
Morgan Stanley Tax-Free Money Market Fund
Morgan Stanley Government Obligations Money Market Fund
Van Kampen Growth & Income Fund II
Van Kampen Global Franchise Fund
Van Kampen European Equity Fund
<PAGE> 33
AMENDMENT SIX
TO THE
AMENDED AND RESTATED LEGAL SERVICES AGREEMENT
DATED MAY 31, 1997
THIS AMENDMENT SIX to the Amended and Restated Legal Services Agreement
dated May 31, 1997 by and between the parties as set forth in Schedule 1,
attached hereto and incorporated herein by reference and VAN KAMPEN INVESTMENTS
INC.
W I T N E S S E T H
WHEREAS, Van Kampen Technology Fund, a series of Van Kampen Equity
Trust II, an open-end management investment company as that term is defined in
the Investment Company Act of 1940, as amended, wishes to become party to the
Agreement; and
WHEREAS, the original parties desire to add the aforementioned
additional entity as party to the Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
spelled out in the Agreement and herein, it is hereby agreed that Schedule 1 of
the Agreement be amended to add Van Kampen Technology Fund.
<PAGE> 34
IN WITNESS WHEREOF, the parties have caused this Amendment Six to be
executed this 26th day of May, 1999.
ALL OF THE PARTIES SET FORTH IN SCHEDULE 1
ATTACHED HERETO
By: /s/ A. Thomas Smith III
---------------------------------
A. Thomas Smith III
Vice President and Secretary
VAN KAMPEN INVESTMENTS INC.
By: /s/ Richard F. Powers, III
---------------------------------
Richard F. Powers, III
President and Chief Executive Officer
<PAGE> 35
SCHEDULE 1
1. VAN KAMPEN U.S. GOVERNMENT TRUST, on behalf of its series
Van Kampen U.S. Government Fund
2. VAN KAMPEN TAX FREE TRUST, on behalf of its series
Van Kampen Insured Tax Free Income Fund
Van Kampen Tax Free High Income Fund
Van Kampen California Insured Tax Free Fund
Van Kampen Municipal Income Fund
Van Kampen Intermediate Term Municipal Income Fund
Van Kampen New York Tax Free Income Fund
Van Kampen Florida Insured Tax Free Income Fund
Van Kampen California Tax Free Income Fund
Van Kampen Michigan Tax Free Income Fund,
Van Kampen Missouri Tax Free Income Fund
Van Kampen Ohio Tax Free Income Fund
3. VAN KAMPEN TRUST, on behalf of its series
Van Kampen High Yield Fund
Van Kampen Short-Term Global Income Fund
Van Kampen Strategic Income Fund
Van Kampen Managed Short Term Income Fund
4. VAN KAMPEN EQUITY TRUST, on behalf of its series
Van Kampen Utility Fund
Van Kampen Mid Cap Value Fund
Van Kampen Growth Fund
Van Kampen Great American Companies Fund
Van Kampen Prospector Fund
Van Kampen Aggressive Growth Fund
Van Kampen Small Cap Value Fund
5. VAN KAMPEN PENNSYLVANIA TAX FREE INCOME FUND
6. VAN KAMPEN TAX FREE MONEY FUND
7. VAN KAMPEN MUNICIPAL INCOME TRUST
8. VAN KAMPEN CALIFORNIA MUNICIPAL TRUST
9. VAN KAMPEN HIGH INCOME TRUST
10. VAN KAMPEN HIGH INCOME TRUST II
11. VAN KAMPEN PRIME RATE INCOME TRUST
12. VAN KAMPEN SENIOR FLOATING RATE FUND
13. VAN KAMPEN INVESTMENT GRADE MUNICIPAL TRUST
14. VAN KAMPEN MUNICIPAL TRUST
15. VAN KAMPEN CALIFORNIA QUALITY MUNICIPAL TRUST
16. VAN KAMPEN FLORIDA QUALITY MUNICIPAL TRUST
17. VAN KAMPEN NEW YORK QUALITY MUNICIPAL TRUST
18. VAN KAMPEN OHIO QUALITY MUNICIPAL TRUST
19. VAN KAMPEN PENNSYLVANIA QUALITY MUNICIPAL TRUST
20. VAN KAMPEN TRUST FOR INSURED MUNICIPALS
21. VAN KAMPEN TRUST FOR INVESTMENT GRADE MUNICIPALS
3
<PAGE> 36
22. VAN KAMPEN TRUST FOR INVESTMENT GRADE CALIFORNIA MUNICIPALS
23. VAN KAMPEN TRUST FOR INVESTMENT GRADE FLORIDA MUNICIPALS
24. VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW JERSEY MUNICIPALS
25. VAN KAMPEN TRUST FOR INVESTMENT GRADE NEW YORK MUNICIPALS
26. VAN KAMPEN TRUST FOR INVESTMENT GRADE PENNSYLVANIA MUNICIPALS
27. VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST
28. VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST
29. VAN KAMPEN ADVANTAGE PENNSYLVANIA MUNICIPAL INCOME TRUST
30. VAN KAMPEN STRATEGIC SECTOR MUNICIPAL TRUST
31. VAN KAMPEN VALUE MUNICIPAL INCOME TRUST
32. VAN KAMPEN CALIFORNIA VALUE MUNICIPAL INCOME TRUST
33. VAN KAMPEN MASSACHUSETTS VALUE MUNICIPAL INCOME TRUST
34. VAN KAMPEN NEW JERSEY VALUE MUNICIPAL INCOME TRUST
35. VAN KAMPEN NEW YORK VALUE MUNICIPAL INCOME TRUST
36. VAN KAMPEN OHIO VALUE MUNICIPAL INCOME TRUST
37. VAN KAMPEN PENNSYLVANIA VALUE MUNICIPAL INCOME TRUST
38. VAN KAMPEN MUNICIPAL OPPORTUNITY TRUST II
39. VAN KAMPEN FLORIDA MUNICIPAL OPPORTUNITY TRUST
40. VAN KAMPEN ADVANTAGE MUNICIPAL INCOME TRUST II
41. VAN KAMPEN SELECT SECTOR MUNICIPAL TRUST
42. THE EXPLORER INSTITUTIONAL TRUST, on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
43. VAN KAMPEN SENIOR INCOME TRUST
<PAGE> 37
44. VAN KAMPEN SERIES FUND, INC., on behalf of its series
Van Kampen Emerging Markets Debt Fund
Van Kampen Global Fixed Income Fund
Van Kampen High Yield & Total Return Fund
Van Kampen Worldwide High Income Fund
Van Kampen American Value Fund
Van Kampen Aggressive Equity Fund
Van Kampen Equity Growth Fund
Van Kampen Mid Cap Growth Fund
Van Kampen Value Fund
Van Kampen Global Equity Allocation Fund
Van Kampen Global Equity Fund
Van Kampen Asian Growth Fund
Van Kampen Emerging Markets Fund
Van Kampen Latin American Fund
Van Kampen International Magnum Fund
Van Kampen Japanese Equity Fund
Morgan Stanley Money Market Fund
Morgan Stanley Tax-Free Money Market Fund
Morgan Stanley Government Obligations Money Market Fund
Van Kampen Growth & Income Fund II
Van Kampen Global Franchise Fund
Van Kampen European Equity Fund
45. VAN KAMPEN EQUITY TRUST II, on behalf of its series
Van Kampen Technology Fund
<PAGE> 1
[Skadden, Arps, Slate, Meagher & Flom (ILLINOIS) LETTERHEAD]
EXHIBIT (i)
June 11, 1999
Van Kampen Equity Trust
1 Parkview Plaza
P.O. Box 5555
Oakbrook Terrace, Illinois 60181-5555
Re: Post-Effective Amendment No. 32 to the
Registration Statement on Form N-1A
for the Van Kampen Equity Trust, on
behalf of its series Van Kampen
Small Cap Value Fund
(File Nos. 33-8122 and 811-4805)
Ladies and Gentlemen:
We have acted as counsel to Van Kampen Equity Trust (the
"Trust"), a Delaware business trust, on behalf of its series Van Kampen Small
Cap Value Fund (the "Fund") in connection with the preparation of Post-
Effective Amendment No. 32 to the Trust's Registration Statement on Form N-1A
(as amended, the "Registration Statement") to be filed under the Securities Act
of 1933, as amended (the "1933 Act"), and the Investment Company Act of 1940, as
amended (the "1940 Act"), with the Securities and Exchange Commission (the
"Commission") on or about June 11, 1999. The Registration Statement relates to
the registration under the 1933 Act and the 1940 Act of an indefinite number of
each of Class A Shares of beneficial interest, $.01 par value per share, Class B
Shares of beneficial interest, $.01 par value per share, and Class C Shares of
beneficial interest, $.01 par value per share, of the Trust on behalf of the
Fund (collectively, the "Shares").
This opinion is delivered in accordance with the requirements
of Item 23(i) of Form N-1A under the 1933 Act and the 1940 Act.
<PAGE> 2
Van Kampen Equity Trust
June 11, 1999
Page 2
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Certificate of Trust filed with the Secretary of State of Delaware, as amended
to the date hereof, (ii) the Agreement and Declaration of Trust of the Trust, as
amended to the date hereof, (the "Declaration of Trust"), (iii) the By-Laws of
the Trust, as amended to the date hereof (the "By-Laws"), (iv) the Certificate
of Designation establishing the series of the Trust, (v) the resolutions adopted
by the Board of Trustees of the Trust relating to the authorization of the
issuance and sale of the Shares, the filing of the Registration Statement and
any amendments or supplements thereto and other related matters and (vi) such
other documents, certificates and records as we have deemed necessary or
appropriate as a basis for the opinions set forth herein.
In such examination we have assumed the legal capacity of
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed, photostatic, or other
copies and the authenticity of the originals of such latter documents. As to
any facts material to such opinion which were not independently established, we
have relied on statements or representations of officers and other
representatives of the Trust or others.
Members of our firm are admitted to the practice of law in the
State of Illinois and we do not express any opinion as to the law of any other
jurisdiction other than matters relating to the Delaware business organizational
statutes (including statutes relating to Delaware business trusts) and the
federal laws of the United States of America to the extent specifically referred
to herein.
Based upon and subject to the foregoing, we are of the opinion
that the issuance and sale of Shares by the Trust on behalf of the Fund have
been validly authorized and, assuming certificates therefor have been duly
executed, countersigned, registered and delivered or the shareholders' accounts
have been duly credited and the Shares represented thereby have been fully paid
for, such Shares will be validly issued, fully paid and nonassessable.
<PAGE> 3
Van Kampen Equity Trust
June 11, 1999
Page 3
We hereby consent to the filing of this opinion with the
Commission as Exhibit (i) to the Registration Statement. We also consent to the
reference to our firm under the heading "Legal Counsel" in the Registration
Statement. In giving this consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the 1933 Act
or the rules and regulations of the Commission.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom (Illinois)
<PAGE> 1
EXHIBIT (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders
Van Kampen Small Cap Value Fund:
We consent to the reference to our Firm under the heading "Other Information"
in the Statement of Additional Information.
/s/ KPMG LLP
Chicago, Illinois
June 9, 1999
<PAGE> 1
EXHIBIT (m)(2)
FORM OF
VAN KAMPEN FUNDS INC.
SHAREHOLDER ASSISTANCE AGREEMENT
This Agreement is entered into as of the _____day of _____, 199__, by and
between Van Kampen FUNDS Inc. (the "Company") and the undersigned (the
"Broker-Dealer").
WHEREAS, the Company is the principal underwriter of the open-end
investment companies listed on Schedule 1 to this Agreement (hereinafter
individually the "Fund" or collectively the "Funds"); and
WHEREAS, the Broker-Dealer is registered as a broker-dealer with the
National Association of Securities Dealers, Inc.; and
WHEREAS, each respective Fund has adopted a Distribution Plan (the
"Distribution Plan") and a service plan (the "Service Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"1940 Act"), relating to such Fund, the Distribution Plans being described in
the Fund's Prospectus and Statement of Additional Information; and
WHEREAS, each respective Fund's Distribution Plans authorize the Company
to enter into distribution assistance agreements such as this Agreement with
broker-dealers selected by the Company, and the Broker-Dealer has been so
selected; and
WHEREAS, each respective Fund's Distribution Plans authorize the Company
to make payments at a rate specified in an agreement such as this Agreement
varying directly with the aggregate average daily net asset value of shares of
each respective Fund sold by such broker-dealer on or after the effective date
of this Agreement, as determined pursuant to Section 4 hereof, and held at the
close of each day in accounts of clients or customers of a particular
broker-dealer, such amount being referred to herein as the "Holding Level"; for
purposes of calculating the Holding Level, shares of such Fund which are
redeemed or otherwise disposed of from any account existing prior to such
effective date shall be deemed to have been shares sold prior to such effective
date to the extent of the number of shares held in such account immediately
after the close of business on the day prior to such effective date; and
WHEREAS, this Agreement is a "related agreement" to the Distribution Plan
as that term is used in the Rule and is subject to all of the provisions of the
Rule as to such agreements;
NOW, THEREFORE, the Company and the Broker-Dealer agree as follows:
1. Subject to continuing compliance with its obligations pursuant to
Section 2 hereof, the Broker-Dealer shall be entitled distribution fee and
service fee to payments, if any, to be paid by the Company at the annual
percentage rate of the Holding Level set forth from time to time in the then
current Prospectus of the Fund on a quarterly basis (prorated for any portion
of such period during which this Agreement is in effect for less than the full
amount of such period); it is understood and agreed that the Company may make
final and binding determinations as to whether such continuing compliance and
as to whether or not any Fund shares are to be considered in determining the
Holding Level of any particular broker-dealer and what Fund shares, if any, are
to be attributed to such purpose to a particular broker-dealer, to a different
broker-dealer or to no broker-dealer. Payments shall be made to the
Broker-Dealer named above and portions of the payments may be, in the
discretion of the Broker-Dealer,
1
<PAGE> 2
paid over to individual registered representatives of said Broker-Dealer to
whom there have been assigned accounts of clients or customers of the
Broker-Dealer with respect to which the respective Holding Level was determined.
2. The distribution fee payments with respect to a class of the Fund's
shares to be made in accordance with Section 1 hereof, if any, shall be paid to
the Broker-Dealer as compensation for selling shares of the respective class.
3. In consideration for the service fee payments to be made in accordance
with Section 1 hereof, the Broker-Dealer shall provide to its clients or
customers who hold shares of each respective Fund with respect to which
payments to the Broker-dealer may be made under such Fund's Distribution Plan
such services and other assistance as may from time to time be reasonably
requested by the Company, including but not limited to answering inquiries
regarding the Fund, providing information programs regarding the fund, assisting
in selected dividend payment options, account designations and addresses and
maintaining the investment of such customer or client in the Fund.
4. The Company shall have the right at any time and from time to time
without notice to the Broker-Dealer to amend its Prospectus with respect to the
amount of the service free and the amount of the distribution fee to be paid
pursuant hereto. Such amendments shall be effective as of the date of the
amended Prospectus.
5. This Agreement shall go into effect on the later of the date set forth
above or the date on which it is approved by a vote of each Fund's Board of
Directors (or Trustees, as the case may be), and of those Directors/Trustees
(the "Qualified Directors/Trustees") who are not interested persons (as defined
in the 1940 Act), of the Fund and have no direct or indirect financial interest
in the operations of the Distribution Plan or any agreement related to the
Distribution Plan cast in person at a meeting called for the purpose of voting
on this Agreement and shall continue in effect (unless terminated) until the
June 30th next succeeding such effective date and will continue thereafter only
if such continuance is specifically approved at least annually in the manner
heretofore specified for initial approval. This agreement will terminate
automatically in the event of its assignment (as that term is used in the Rule)
or if the Distribution Plan is terminated. This Agreement may also be
terminated at any time, without the payment of any penalty, on sixty (60) days
written notice to the Broker-dealer, by vote of a majority of the Qualified
Directors/Trustees or by vote of a majority (as that term is used in the Rule)
of the outstanding voting securities of the Fund.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
VAN KAMPEN FUNDS INC.
- --------------------------
Broker-dealer Firm Name
- -------------------------- By:
Firm Address -------------------------
Senior Vice President
By:
-----------------------
Title:
--------------------
2
<PAGE> 1
EXHIBIT (m)(3)
FORM OF
VAN KAMPEN FUNDS INC.
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is entered into as of the ____ day of ____, 19__, by and
between Van Kampen Funds Inc. (the "Company") and the
undersigned (the "Intermediary").
WHEREAS, the Company is the principal underwriter of the open-end
investment companies listed on Schedule 1 to this Agreement (hereinafter
individually the "Fund" or collectively the "Funds"); and
WHEREAS, each respective Fund has adopted a Distribution Plan (the
"Distribution Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940, as amended (the "1940 Act"), and a Service Plan (the
"Service Plan") relating to such Fund, the Distribution Plans being described
in the Fund's Prospectus and Statement of Additional Information; and
WHEREAS, each respective Fund's Distribution Plans authorize the Company
to enter into distribution services agreements such as this Agreement with
certain financial intermediaries selected by the Company, and the Intermediary
has been so selected; and
WHEREAS, each respective Fund's Distribution Plans authorize the Company
to make payments at a rate specified in an agreement such as this Agreement
varying directly with the aggregate average daily net asset value of shares of
each respective Fund sold by such financial intermediary on or after the
effective date of this Agreement, as determined pursuant to Section 4 hereof,
and held at the close of each day in accounts of clients or customers of
particular intermediary, such amount being referred to herein as the "Holding
Level"; for purposes of calculating the Holding Level, shares of such Fund
which are redeemed or otherwise disposed of from any account existing prior to
such effective date shall be deemed to have been shares sold prior to such
effective date to the extent of the number of shares held in such account
immediately after the close of business on the day prior to such effective
date; and
WHEREAS, this Agreement is a "related agreement" to the Distribution Plan
as that term is used in the Rule and is subject to all of the provisions of the
Rule as to such agreements;
NOW, THEREFORE, the Company and the Intermediary agree as follows:
1. Subject to continuing compliance with its obligations pursuant to
Section 2 hereof, the Intermediary shall be entitled to distribution fee and
service fee payments, if any, to be paid by the Company with respect to each
class of the Fund's shares at the annual percentage rate of the Holding Level
set forth from time to time in the then current Prospect of the Fund on a
quarterly basis (prorated for any portion of such period during which this
Agreement is in effect for less than the full amount of such period); it is
understood and agreed that the Company may make final and binding
determinations as to whether such continuing compliance and as to whether or
not any Fund shares are to be considered in determining the Holding Level of
any particular financial intermediary and what Fund shares, if any, are to be
attributed to such purpose to a particular financial intermediary, to a
different financial intermediary or to no financial intermediary.
1
<PAGE> 2
2. The distribution fee payments with respect to a class of the Fund's
shares to be made in accordance with Section 1 hereof, if any, shall be paid to
the Broker-Dealer as compensation for selling shares of the respective class.
3. In consideration for the service fee payments to be made in accordance
with Section 1 hereof, the Intermediary shall provide to its clients or
customers who hold shares of each respective Fund with respect to which
payments to the Intermediary may be made under such Fund's Distribution Plan
such services and other assistance as may from time to time be reasonably
requested by the Company, including but not limited to answering inquiries
regarding the Fund, providing information programs regarding the Fund,
assisting in selected dividend payment options, account designations and
addresses and maintaining the investment of such customer or client in the
Fund.
4. The Company shall have the right at any time and from time to time
without notice to the Broker-Dealer to amend its Prospectus with respect to the
amount of the service free and the amount of the distribution fee to be paid
pursuant hereto. Such amendments shall be effective as of the date of the
amended Prospectus.
5. This Agreement shall go into effect on the later of the date set forth
above or the date on which it is approved by a vote of each Fund's Board of
Directors (or Trustees, as the case may be) and of those Directors/Trustees
(the "Qualified Directors/Trustees") who are not interested persons (as defined
in the 1940 Act) of the Fund and have no direct or indirect financial interest
in the operations of the Distribution Plan or any agreement related to the
Distribution Plan cast in person at a meeting called for the purpose of voting
on this Agreement and shall continue in effect (unless terminated) until the
June 30th next succeeding such effective date and will continue thereafter only
if such continuance is specifically approved at least annually in the manner
heretofore specified for initial approval. This agreement will terminate
automatically in the event of its assignment (as that term is used in the Rule)
or if the Distribution Plan is terminated. This Agreement may also be
terminated at any time, without the payment of any penalty, on sixty (60) days
written notice to the Intermediary, by vote of a majority of the Qualified
Directors/Trustees or by vote of a majority (as that term is used in the Rule)
of the outstanding voting securities of the Fund.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
VAN KAMPEN FUNDS INC.
By:
- ------------------------ ----------------------
Intermediary Senior Vice President
- ------------------------
Address
By:
---------------------
Title
2
<PAGE> 1
EXHIBIT (O)(2)
MULTI-CLASS PLAN
FOR
VAN KAMPEN SMALL CAP VALUE FUND
This Plan is adopted pursuant to Rule 18f-3 under the Act to provide for
the issuance and distribution of multiple classes of Shares by the Trust, on
behalf of its series, the Fund, in accordance with the terms, procedures and
conditions set forth below. A majority of the Trustees of the Trust, including
a majority of the Trustees who are not interested persons of the Fund within the
meaning of the Act, find the Plan, including the expense allocations, to be in
the best interests of the Fund and each class of Shares of the Fund.
A. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
1. the Act - Investment company Act of 1940, as amended.
2. CDSC - contingent deferred sales charge.
3. CDSC Period - the period of years following purchase of Shares
during which Shares are assessed a CDSC upon redemption.
4. Class - a class of Shares of the Fund.
5. Class A Shares - shall have the meaning ascribed in Section B. 1.
6. Class B Shares - shall have the meaning ascribed in Section B. 2.
<PAGE> 2
7. Class C Shares - shall have the meaning ascribed in Section B. 3.
8. Distribution Expenses - expenses incurred in activities which are
primarily intended to result in the distribution and sale of
Shares as defined in the Plan of Distribution and/or board
resolutions.
9. Distribution Fee - a fee paid by the Fund to the Distributor in
reimbursement of Distribution Expenses.
10. Distributor - Van Kampen Funds Inc.
11. Fund - Van Kampen Small Cap Value Fund, a series of the Trust.
11. Plan of Distribution - The plan adopted by the Fund under Rule
12b-1 of the Act with respect to payment of a Distribution Fee.
12. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of services to Fund shareholders and/or the
maintenance of shareholder accounts.
13. Share - a share of beneficial interest, par value $.01 per share,
of the Fund.
14. Trust - Van Kampen Equity Trust.
15. Trustee - the trustees of the Trust.
B. Classes. The Fund may offer three Classes as follows:
1. Class A Shares. Class A Shares shall be (i) offered at net asset
value plus a front-end sales charge, as approved from time to
time by the Trustees and set forth in the Fund's prospectus and
(ii) subject to ongoing Service Fees and Distribution Fees
approved from time to time by the Trustees and set forth in the
Fund's prospectus. The Class A Shares front-end sales charge may
be reduced or eliminated for larger purchases, under a combined
purchase privilege, under a right of accumulation, under a letter
of intent or for certain categories of purchasers as permitted by
Rule 22(d) of the Act and as set forth in the Fund's prospectus.
Class A Shares that are not subject to a front-end sales charge
as a result of the foregoing, may be subject to a CDSC for the
CDSC Period set forth in Section D.1. The offering price of
Class A Shares subject to a front-end sales charge shall be
computed in accordance with Rule 22c-1 and Section 22(d) of the
Act and the rules and regulations thereunder.
2. Class B Shares. Class B Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in
Section D. 1, (iii) subject to ongoing Service Fees and
Distribution Fees, approved from time to time by the Trustees and
set forth in the Fund's prospectus and (iv) automatically
converted to Class A Shares three to ten years after the calendar
month in which the Class B Shares were purchased, as approved
from time to time by the Trustees and set forth in the Fund's
prospectus.
3. Class C Shares. Class C Shares shall be (i) offered at net
asset value, (ii) subject to a CDSC for the CDSC Period set forth
in Section D. 1, and (iii) subject to ongoing Service Fees and
Distribution Fees, approved from time to time by the Trustees and
set forth in the Fund's prospectus.
<PAGE> 3
C. Rights and Privileges of Classes. Each Class of the Fund will represent an
interest in the same portfolio of investments of the Fund and will have
identical voting, dividend, liquidation and other rights, preferences,
powers, that restrictions, limitations, qualifications, designations and
terms and conditions except that each Class (i) bears certain Distribution
Expenses, (ii) has exclusive voting rights with respect to its Distribution
Fee, (iii) has different exchange privileges, (iv) has different service
options available and (v) as otherwise described herein.
D. CDSC. A CDSC may be imposed upon redemption of Class A Shares, Class B
Shares and Class C Shares that do not incur a front-end sales charge subject
to the following conditions:
1. CDSC Period. The CDSC Period of Class A Shares and Class C Shares
shall be one year. The CDSC Period for Class B Shares shall be
at least three but not more than ten years as recommended by the
Distributor and which number of years shall be approved from time to
time by the Trustees.
2. CDSC Rate. The CDSC Rate shall be recommended by the Distributor and
approved by the Trustees. If a CDSC is imposed for a period greater
than one year the CDSC Rate must decline during the CDSC Period such
that (i) the CDSC Rate is less in the last year of the CDSC Period than
in the first and (ii) in each succeeding year the CDSC Rate shall be
less than or equal to the CDSC Rate in the preceding year.
3. Disclosure and Changes. The CDSC Rates and CDSC Period shall be
disclosed in the Fund's prospectus and may be decreased at the
discretion of the Distributor but may not be increased unless
approved as set forth in Section L.
4. Method of Calculation. The CDSC shall be assessed on an amount
equal to the lesser of the then current market value or the
cost of the Shares being redeemed. No sales charge shall be
imposed on increases in the net asset value of the Shares being
redeemed above the initial purchase price. No CDSC shall be assessed
on Shares derived from reinvestment of dividends or capital gains
distributions. The order in which Class B Shares and Class C
Shares are to be redeemed when not all of such Shares would be
subject to a CDSC shall be as determined by the Distributor in
accordance with the provisions of Rule 6c-10 of the Act.
5. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares under circumstances
previously approved by the Trustees and disclosed in the Fund's
prospectus or statement of additional information and as allowed
under Rule 6c-10 of the Act.
6. Calculation of Offering Price. The offering price of Shares subject
to a CDSC shall be computed in accordance with Rule 22c-1 and
Section 22(d) of the Act and the rules and regulations thereunder.
7. Retention by Distributor. The CDSC paid with respect to Shares of
the Fund may be retained by the Distributor to reimburse the
Distributor for commissions paid by it in
<PAGE> 4
connection with the sale of Shares subject to a CDSC and for
Distribution Expenses to the extent such commissions and Distribution
Expenses are eligible for reimbursement and approved by the Trustees.
E. Service and Distribution Fees. Class A Shares shall be subject to a Service
Fee and Distribution Fee not to exceed in the aggregate 0.25% per annum of
the average daily net assets attributable to Class A Shares. Class B
Shares and Class C Shares shall be subject to (i) a Service Fee not to
exceed 0.25% per annum of the average daily net assets attributable to the
Class and (ii) a Distribution Fee not to exceed 0.75% per annum of the
average daily net assets attributable to the Class. All other terms and
conditions with respect to Service Fees and Distribution Fees shall be
governed by the Distribution Plan and the Service Plan adopted by the Fund
with respect to such fees and in accordance with Rule 12b-1 of the Act.
F. Conversion. Class B Shares purchased through the reinvestment of dividends
and capital gains distributions paid on Class B Shares shall be treated as
if held in a separate subaccount. Each time any Class B Shares in a
shareholder's account (other than Shares held in the subaccount) convert to
Class A Shares, a proportionate number of Class B Shares held in the
subaccount shall also convert to Class A Shares. All conversions shall be
effected on the basis of the relative net asset values of the Class A and
Class B Shares without the imposition of any sales load or other charge. So
long as any Class B Shares convert into Class A Shares, the Distributor
shall waive or reimburse the Fund, or take such other actions with the
approval of the Trustees as may be reasonably necessary, to ensure the
expenses, including payments authorized under the Distribution and Service
Plans, applicable to the Class A Shares are not higher than the expenses,
including payments authorized under the Distribution and Service Plans,
applicable to the Class B Shares converting into Class A Shares.
G. Allocation of Expenses, Income and Gains Among Classes.
1. Expenses Applicable to a Particular Class. Each Class of the Fund
shall pay any Service Fee, Distribution Fee and CDSC applicable to
that Class. Other expenses applicable to a particular Class such as
incremental transfer agency fees, but not including advisory or
custodial fees or other expenses related to the management of the
Fund's assets, shall be allocated among Classes in different amounts
if (i) they are actually incurred in different amounts by the Classes,
(ii) the Classes receive different services than other Classes or
(iii) the Classes receive services to a different degree than other
Classes.
2. Distribution Expenses. Distribution Expenses actually attributable to
the sales of all Classes shall be allocated to each Class upon the
basis of the sales of that Class in relation to the sales of all
Shares of the Fund. For this purpose, Shares issued upon reinvestment
of dividends or capital gains distributions or upon conversion of
Class B Shares to Class A Shares, will not be considered sales of
Shares.
3. Income, Capital Gains and Losses, and Other Expenses Applicable to
all Classes. Income, realized and unrealized capital gains and losses,
and expenses such as advisory fees applicable to all Classes shall be
allocated to each Class upon the basis of the net asset value of that
Class in relation to the total net asset value of the Fund.
4. Determination of Nature of Expenses. The Trustees shall determine in
their sole discretion whether any expense other than those listed
herein is properly treated as attributed to a particular
<PAGE> 5
Class or to all Classes of Shares.
H. Exchange Privilege. Exchanges of Shares shall be permitted between Van
Kampen funds as follows:
1. Shares of one Van Kampen fund may be exchanged for shares of the same
class of another Van Kampen fund at net asset value and without sales
charge, provided that the Distributor may require that shares of
certain funds not be exchanged for a designated period, which shall not
exceed 90 days, after purchase of such shares without prior approval by
the Distributor.
2. The shares acquired in the exchange will remain subject to the CDSC
Rate Schedule and CDSC Period of the original shares until the
redemption of the shares acquired in the exchange from the Van Kampen
funds. For purposes of computing the CDSC payable on a disposition the
shares, the holding period for the original shares shall be added to
the holding period of the newly acquired shares.
I. Voting Rights of Classes.
1. Shareholders of each Class shall have exclusive voting rights on any
matter submitted to them that relates solely to the Plan of
Distribution related to that Class, provided that
a. If any amendment is proposed to the Plan under which Service Fees
and Distribution Fees are paid with respect to Class A Shares of
the Fund that would increase materially the amount to be borne by
Class A Shares under the Plans, then no Class B Shares shall
convert into Class A Shares of the Fund until the holders of Class
B Shares have also approved the proposed amendment.
b. If the holders of the Class B Shares referred to in subparagraph a
do not approve the proposed amendment, the Trustees of the Fund
and the Distributor shall take such action as is necessary to
ensure that the Class B Shares voting against the amendment shall
convert into another class of Shares identical in all material
respects to Class A Shares as provided for prior to such amendment.
2. Shareholders shall have separate voting rights on any matter submitted
to shareholders in which the interest of one Class differs from the
interests of any other Class.
J. Dividends. Dividends paid by the Fund with respect to each Class, to
<PAGE> 6
the extent any dividends are paid, will be calculated in the same manner at
the same time on the same day and will be in substantially in the same
amount, except that any Distribution Fees, Service Fees or incremental
expenses relating to a particular Class will be borne exclusively by that
Class.
K. Reports to Trustees. The Distributor shall provide the Trustees of the
Fund with quarterly and annual statements concerning distribution and
shareholder servicing expenditures in compliance with paragraph (b)(3)(ii)
of Rule 12b-1 of the Act, as it may be amended from time to time. The
Distributors also shall provide the Trustees with such information as the
Trustees may from time to time deem to be reasonably necessary to evaluate
the Plan.
L. Amendment. Any material amendment to this Plan shall be approved by the
affirmative vote of a majority of the Trustees, including the affirmative
vote of the Trustees of the Trust who are not interested persons of the
Fund, except that any amendment that increases the CDSC Rate or CDSC Period
of a Class must also be approved by the affirmative vote of a majority
of the Shares of the affected Class. The Distributor shall provide the
Trustees with such information as may be reasonably necessary for the
Trustees to evaluate any amendment to the Plan.
<PAGE> 1
EXHIBIT (p)
POWER OF ATTORNEY
The undersigned, being officers and trustees of each of the Van Kampen
Open End Trusts (individually, a "Trust") as indicated on Schedule 1 attached
hereto and incorporated by reference, each a Delaware business trust except for
the Van Kampen Pennsylvania Tax Free Income Fund being a Pennsylvania business
trust (individually, a "Trust"), and being officers and directors of the Van
Kampen Series Fund, Inc. (the "Corporation"), a Maryland corporation, do hereby,
in the capacities shown below, appoint Dennis J. McDonnell and A. Thomas Smith
III, each of Oakbrook Terrace, Illinois, as agents and attorneys-in-fact with
full power of substitution and resubstitution, for each of the undersigned, to
execute and deliver, for and on behalf of the undersigned, any and all
amendments to the Registration Statement filed by each Trust or the Corporation
with the Securities and Exchange Commission pursuant to the provisions of the
Securities Act of 1933 and the Investment Company Act of 1940.
This Power of Attorney may be executed in multiple counterparts, each
of which shall be deemed an original, but which taken together shall constitute
one instrument.
Dated: May 26, 1999
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
President
---------------------------
Dennis J. McDonnell
/s/ JOHN L. SULLIVAN Vice President, Chief Financial Officer
--------------------------- and Treasurer
John L. Sullivan
/s/ J. MILES BRANAGAN Trustee/Director
---------------------------
J. Miles Branagan
/s/ JERRY D. CHOATE Trustee/Director
---------------------------
Jerry D. Choate
Trustee/Director
---------------------------
Richard M. Demartini
/s/ LINDA HUTTON HEAGY Trustee/Director
---------------------------
Linda Hutton Heagy
/s/ R. CRAIG KENNEDY Trustee/Director
---------------------------
R. Craig Kennedy
/s/ JACK E. NELSON Trustee/Director
---------------------------
Jack E. Nelson
/s/ DON G. POWELL Trustee/Director
---------------------------
Don G. Powell
/s/ PHILLIP B. ROONEY Trustee/Director
---------------------------
Phillip B. Rooney
/s/ FERNANDO SISTO, SC.D. Trustee/Director
---------------------------
Fernando Sisto, Sc. D.
/s/ WAYNE W. WHALEN Trustee/Director
---------------------------
Wayne W. Whalen
/s/ SUZANNE H. WOOLSEY Trustee/Director
----------------------------
Suzanne H. Woolsey
/s/ PAUL G. YOVOVICH Trustee/Director
---------------------------
Paul G. Yovovich
</TABLE>
<PAGE> 2
SCHEDULE 1
VAN KAMPEN U.S. GOVERNMENT TRUST
VAN KAMPEN TAX FREE TRUST
VAN KAMPEN TRUST
VAN KAMPEN EQUITY TRUST
VAN KAMPEN PENNSYLVANIA TAX FREE INCOME FUND
VAN KAMPEN TAX FREE MONEY FUND
VAN KAMPEN COMSTOCK FUND
VAN KAMPEN CORPORATE BOND FUND
VAN KAMPEN EMERGING GROWTH FUND
VAN KAMPEN ENTERPRISE FUND
VAN KAMPEN EQUITY INCOME FUND
VAN KAMPEN LIMITED MATURITY GOVERNMENT FUND
VAN KAMPEN GLOBAL MANAGED ASSETS FUND
VAN KAMPEN GOVERNMENT SECURITIES FUND
VAN KAMPEN GROWTH AND INCOME FUND
VAN KAMPEN HARBOR FUND
VAN KAMPEN HIGH INCOME CORPORATE BOND FUND
VAN KAMPEN LIFE INVESTMENT TRUST
VAN KAMPEN PACE FUND
VAN KAMPEN REAL ESTATE SECURITIES FUND
VAN KAMPEN RESERVE FUND
VAN KAMPEN TAX-EXEMPT TRUST
VAN KAMPEN U.S. GOVERNMENT TRUST FOR INCOME
VAN KAMPEN WORLD PORTFOLIO SERIES TRUST
<PAGE> 1
EXHIBIT (z)(1)
Van Kampen U.S. Government Trust
Van Kampen U.S. Government Fund
Van Kampen Tax Free Trust
Van Kampen Insured Tax Free Income Fund
Van Kampen Tax Free High Income Fund
Van Kampen California Insured Tax Free Fund
Van Kampen Municipal Income Fund
Van Kampen Intermediate Term Municipal Income Fund
Van Kampen Florida Insured Tax Free Income Fund
Van Kampen New York Tax Free IncomeFund
Van Kampen California Tax Free Income Fund*
Van Kampen Michigan Tax Free Income Fund*
Van Kampen Missouri Tax Free Income Fund*
Van Kampen Ohio Tax Free Income Fund*
Van Kampen Trust
Van Kampen High Yield Fund
Van Kampen Short-Term Global Income Fund
Van Kampen Strategic Income Fund
Van Kampen Equity Trust
Van Kampen Aggressive Growth Fund
Van Kampen Great American Companies Fund*
Van Kampen Growth Fund
Van Kampen Mid Cap Value Fund*
Van Kampen Prospector Fund*
Van Kampen Small Cap Value Fund*
Van Kampen Utility Fund
Van Kampen Equity Trust II
Van Kampen Technology Fund*
Van Kampen Pennsylvania Tax Free Income Fund
Van Kampen Tax Free Money Fund
Van Kampen Prime Rate Income Trust
Van Kampen Senior Floating Rate Fund
Van Kampen Comstock Fund
Van Kampen Corporate Bond Fund
Van Kampen Emerging Growth Fund
Van Kampen Enterprise Fund
Van Kampen Equity Income Fund
Van Kampen Exchange Fund
The Explorer Institutional Trust
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
<PAGE> 2
Van Kampen Limited Maturity Government Fund
Van Kampen Global Managed Assets Fund
Van Kampen Government Securities Fund
Van Kampen Growth and Income Fund
Van Kampen Harbor Fund
Van Kampen High Income Corporate Bond Fund
Van Kampen Life Investment Trust on behalf of its series
Asset Allocation Portfolio
Comstock Portfolio
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Global Equity Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Strategic Stock Portfolio
Morgan Stanley Real Estate Securities Portfolio
Van Kampen Pace Fund
Van Kampen Real Estate Securities Fund
Van Kampen Reserve Fund
Van Kampen Tax - Exempt Trust
Van Kampen High Yield Municipal Fund
Van Kampen U.S. Government Trust for Income
Van Kampen World Portfolio Series Trust on behalf of its Series
Van Kampen Global Government Securities Fund
Van Kampen Series Fund, Inc.
Van Kampen Aggressive Equity Fund
Van Kampen American Value Fund
Van Kampen Asian Growth Fund
Van Kampen Emerging Markets Debt Fund*
Van Kampen Emerging Markets Fund
Van Kampen Equity Growth Fund
Van Kampen European Equity Fund
Van Kampen Global Equity Allocation Fund
Van Kampen Global Equity Fund
Van Kampen Global Fixed Income Fund
Van Kampen Global Franchise Fund
Morgan Stanley Government Obligations Money Market Fund
Van Kampen Growth and Income Fund II*
Van Kampen High Yield & Total Return Fund
Van Kampen International Magnum Fund
Van Kampen Japanese Equity Fund*
Van Kampen Latin American Fund
Van Kampen Mid Cap Growth Fund*
Morgan Stanley Money Market Fund
Morgan Stanley Tax-Free Money Market Fund*
Van Kampen Value Fund
Van Kampen Worldwide High Income Fund
<PAGE> 3
<TABLE>
<S> <C>
Insured Municipals Income Trust Series 410
Strategic Municipal Trust, Intermediate Series 2
California Insured Municipals Income Trust Series 180
Florida Insured Municipals Income Trust Series 126
Michigan Insured Municipals Income Trust Series 156
Missouri Insured Municipals Income Trust Series 111
New Jersey Insured Municipals Income Trust Series 127
New York Insured Municipals Income Trust Series 148
Pennsylvania Insured Municipals Income Trust Series 242
Tennessee Investors' Quality Tax-Exempt Trust Series 1
Internet Trust Series 14
The Dow(SM)Strategic 10 Trust May 1999
Series
The Dow(SM)Strategic 10 Trust May 1999
Traditional Series
The Dow(SM)Strategic 5 Trust May 1999
Series
The Dow(SM)Strategic 5 Trust May 1999
Traditional Series
EAFE Strategic 20 Trust May 1999
Series
EURO Strategic 20 Trust May 1999
Series
Strategic Picks Opportunity Trust May 1999
Series
Great International Firms Trust Series 8
Dow 30 Index Trust Series 7
Dow 30 Index and Treasury Trust Series 9
Global Energy Trust Series 8
Brand Name Equity Trust Series 9
Edward Jones Select Growth Trust May 1999
Series
Banking Trust Series 6
Morgan Stanley High-Technology 35 Index Trust Series 6
Pharmaceuticals Trust Series 6
Telecommunications and Bandwidth Trust Series 6
Utility Trust Series 6
Financial Services Trust Series 4
Roaring 2000s Trust Series 2
Roaring 2000s Trust Traditional Series 1
Josepthal - Research Series Power Portfolio Series 1
Josepthal - Research Series The Online Portfolio 1 Series 1
NatCity - Great American Equities Trust Series 2
Baird - Financial Institutions Trust 1999 Series
</TABLE>
* Funds that have not commenced investment operations.
<PAGE> 1
EXHIBIT (z) (2)
<TABLE>
<S> <C> <C>
Richard F. Powers III Chairman & Chief Executive Officer Oakbrook Terrace, IL
John H. Zimmerman III President Oakbrook Terrace, IL
A. Thomas Smith III Executive Vice President, General Oakbrook Terrace, IL
Counsel & Secretary;
Vice President and Secretary of the Funds
William R. Rybak Executive Vice President & Chief
Financial Officer Oakbrook Terrace, IL
Michael H. Santo Executive Vice President & Chief
Administrative Officer Oakbrook Terrace, IL
Paul R. Wolkenberg Executive Vice President: Oakbrook Terrace, IL
Vice President of the Funds
Laurence J. Althoff Sr. Vice President & Controller Oakbrook Terrace, IL
James J. Boyne Sr. Vice President, Associate General Oakbrook Terrace, IL
Counsel & Assistant Secretary
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
John E. Doyle Sr. Vice President Oakbrook Terrace, IL
Richard G. Golod, Sr. Vice President Annapolis, MD
Steven T. Johnson Sr. Vice President Oakbrook Terrace, IL
Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Assistant Secretary;
Assistant Secretary of the Funds
Walter E. Rein Sr. Vice President Oakbrook Terrace, IL
James J. Ryan Sr. Vice President Oakbrook Terrace, IL
Colette M. Saucedo Sr. Vice President Houston, TX
Frederick Shepherd Sr. Vice President Houston, TX
Steven P. Sorenson Sr. Vice President Oakbrook Terrace, IL
Robert S. West Sr. Vice President Oakbrook Terrace, IL
Patrick J. Woelfel Sr. Vice President Oakbrook Terrace, IL
Edward G. Wood, III Sr. Vice President and
Chief Operating Officer; Oakbrook Terrace. IL
Vice President of the Funds
Patricia A. Bettlach First Vice President Chesterfield, MO
Glenn M. Cackovic First Vice President Laguna Niguel, CA
Eric J. Hargens First Vice President Orlando, FL
Gregory Heffington First Vice President Ft. Collins, CO
David S. Hogaboom First Vice President Oakbrook Terrace, IL
Robert S. Hunt First Vice President Phoenix, AZ
Dominic C. Martellaro First Vice President Danville, CA
Carl Mayfield First Vice President Lakewood, CO
Mark R. McClure First Vice President Oakbrook Terrace, IL
Maura A. McGrath First Vice President New York, NY
Robert F. Muller First Vice President Houston, TX
Thomas Rowley First Vice President St. Louis, MO
Andrew J. Scherer First Vice President Oakbrook Terrace, IL
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
James D. Stevens First Vice Presdent North Andover, MA
George J. Vogel First Vice President Oakbrook Terrace, IL
James R. Yount First Vice President Mercer Island, WA
Robert J. Abreu Vice President New York, NY
James K. Ambrosio Vice President Massapequa, NY
Brian P. Arcara Vice President Buffalo, NY
Timothy R. Armstrong Vice President Wellington, FL
Shakeel Anwar Barkat Vice President Wellington, FL
Scott C. Bemstiel Vice President Plainsboro, NJ
Carol S. Biegel Vice President Oakbrook Terrace, IL
Christopher M. Bisaillon Vice President Oakbrook Terrace, IL
Michael P. Boos Vice President Oakbrook Terrace, IL
Robert C. Brooks Vice President Oakbrook Terrace, IL
Elizabeth M. Brown Vice President Houston, TX
William F. Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Juanita E. Buss Vice President Kennesaw, GA
Christine Cleary Byrum Vice President Tampa, FL
Daniel R. Chambers Vice President Austin, TX
Richard J. Charlino Vice President Oakbrook Terrace, IL
Deanne Margaret Chiaro Vice President Oakbrook Terrace, IL
Scott A. Chriske Vice President Plano, TX
German Clavijo Vice President Atlanta, GA
Eleanor M. Cloud Vice President Oakbrook Terrace, IL
Dominick Cogliandro Vice President & Asst. Treasurer New York, NY
Michael Colston Vice President Louisville, KY
Kevin J. Connors Vice President Oakbrook Terrace, IL
Suzanne Cummings Vice President Oakbrook Terrace, IL
Nicholas Dalmaso Vice President, Associate General Oakbrook Terrace, IL
Counsel & Asst. Secretary;
Assistant Secretary of the Funds
Michael E. Eccleston Vice President Oakbrook Terrace, IL
Christopher J. Egan Vice President Oakbrook Terrace, IL
William J. Fow Vice President Redding, CT
Nicholas J. Foxhoven Vice President Englewood, CO
Charles Friday Vice President Gibsonia, PA
Timothy D. Griffith Vice President Kirkland, WA
Kyle D. Haas Vice President Oakbrook Terrace, IL
Daniel Hamilton Vice President Austin, TX
John G. Hansen Vice President Oakbrook Terrace, IL
Joseph Hays Vice President Cherry Hill, NJ
Michael D. Hibsch Vice President Oakbrook Terrace, IL
Susan J. Hill Vice President Oakbrook Terrace, IL
Thomas R. Hindelang Vice President Gilbert, AZ
Bryn M. Hoggard Vice President Houston, TX
Michelle Huber Vice President Oakbrook Terrace, IL
Michael B. Hughes Vice President Oakbrook Terrace, IL
Lowell Jackson Vice President Norcross, GA
Kevin G. Jajuga Vice President Baltimore, MD
Dana R. Klein Vice President Oakbrook Terrace, IL
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Frederick Kohly Vice President Miami, FL
Paul Koleda Vice President Denver, CO
David R. Kowalski Vice President & Director of Compliance Oakbrook Terrace, IL
Patricia D. Lathrop Vice President Tampa, FL
Brian Laux Vice President Staten Island, NY
Tony E. Leal Vice President Daphne, AL
S. William Lehew III Vice President Charlotte, NC
Eric Levinson Vice President San Francisco, CA
Jonathan Linstra Vice President Oakbrook Terrace, IL
Richard M. Lundgren Vice President Oakbrook Terrace, IL
Walter Lynn Vice President Flower Mound, TX
Linda S. MacAyeal Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Brooks D. McCartney Vice President Puyallup, WA
Anne Therese McGrath Vice President Los Gatos, CA
John Mills Vice President Kenner, LA
Stuart R. Moehlman Vice President Houston, TX
Ted Morrow Vice President Dallas, TX
Peter Nicholas Vice President Beverly, MA
Steven R. Norvid Vice President Oakbrook Terrace, IL
Gregory S. Parker Vice President Houston, TX
Christopher Petrungaro Vice President Oakbrook Terrace, IL
Richard J. Poli Vice President Philadelphia, PA
Ronald E. Pratt Vice President Marietta, GA
Daniel D. Reams Vice President Royal Oak, MI
Michael W. Rohr Vice President Oakbrook Terrace. IL
Jeffrey L. Rose Vice President Houston, TX
Suzette N. Rothberg Vice President Plymouth, MN
Jeffrey Rourke Vice President Oakbrook Terrace, IL
Heather R. Sabo Vice President Richmond, VA
Stephanie Scarlata Vice President Bedford Corners, NY
Christina L. Schmieder Vice President Oakbrook Terrace, IL
Timothy M. Scholten Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Gwen L. Shaneyfalt Vice President Oakbrook Terrace, IL
Jeffrey C. Shirk Vice President Swampscott, MA
Traci T. Sorenson Vice President Oakbrook Terrace, IL
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
Richard Stefanec Vice President Los Angles, CA
William C. Strafford Vice President Granger, IN
Mark A. Syswerda Vice President Oakbrook Terrace, IL
Charles S. Thompson Vice President Oakbrook Terrace, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Daniel B. Waldron Vice President Oakbrook Terrace, IL
David G. Walsh Vice President Exton, PA
Jeff Warland Vice President Oakbrook Terrace, IL
Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary;
Assistant Secretary of the Funds
</TABLE>
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<TABLE>
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Frank L. Wheeler Vice President Oakbrook Terrace, IL
Harold Whitworth, III Vice President Oakbrook Terrace, IL
Thomas M. Wilson Vice President Oakbrook Terrace, IL
Barbara A. Withers Vice President Oakbrook Terrace, IL
David M. Wynn Vice President Phoenix, AZ
Patrick M. Zacchea Vice President Oakbrook Terrace, IL
Scott F. Becker Asst. Vice President Oakbrook Terrace, IL
Andree Beckham Asst. Vice President Oakbrook Terrace, IL
Brian E. Binder Asst. Vice President Oakbrook Terrace, IL
Joan E. Blackwood Asst. Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Gregory T. Brunk Asst. Vice President Oakbrook Terrace, IL
Lynn Chadderton Asst. Vice President Valrico, FL
Amy Cooper Asst. Vice President Oakbrook Terrace, IL
Gina Costello Asst. Vice President Oakbrook Terrace, IL
Sarah K. Geiser Asst. Vice President Oakbrook Terrace, IL
Walter C. Gray Asst. Vice President Oakbrook Terrace, IL
Laurie L. Jones Asst. Vice President Houston, TX
Robin R. Jordan Asst. Vice President Oakbrook Terrace, IL
Ivan R. Lowe Asst. Vice President Houston, TX
Barbara Novak Asst. Vice President Oakbrook Terrace, IL
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Andrew Rakowski Asst. Vice President Oakbrook Terrace, IL
Leah Richardson Asst. Vice President Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
Regina Rosen Asst. Vice President Oakbrook Terrace, IL
Pamela S. Salley Asst. Vice President Houston, TX
Vanessa M. Sanchez Asst. Vice President Oakbrook Terrace, IL
Thomas J. Sauerborn Asst. Vice President New York, NY
Bruce Saxon Asst. Vice President Oakbrook Terrace, IL
David T. Saylor Asst. Vice President Oakbrook Terrace, IL
Lisa Schultz Asst. Vice President Oakbrook Terrace, IL
Lauren B. Sinai Asst. Vice President Oakbrook Terrace, IL
Kristen L. Transier Asst. Vice President Houston, TX
Michael Trizil Asst. Vice President Oakbrook Terrace, IL
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Sharon M. C. Wells Asst. Vice President Oakbrook Terrace, IL
Aimee Williams Asst. Vice President Oakbrook Terrace, IL
Cathy Napoli Assistant Secretary Oakbrook Terrace, IL
Diane Saxon Assistant Treasurer Oakbrook Terrace, IL
John Browning Officer Oakbrook Terrace, IL
Leticia George Officer Houston, TX
William D. McLaughlin Officer Houston, TX
Rebecca Newman Officer Houston, TX
Theresa M. Renn Officer Oakbrook Terrace, IL
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX
William R. Rybak Treasurer Oakbrook Terrace, IL
Richard F. Powers III Director Oakbrook Terrace, IL
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A. Thomas Smith III Director Oakbrook Terrace, IL
William R. Rybak Director Oakbrook Terrace, IL
Michael H. Santo Director Oakbrook Terrace, IL
John H. Zimmerman III Director Oakbrook Terrace, IL
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