<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
(File No. 811-5845; CIK No. 853180)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Item 22(a)(2) of Schedule 14A.
/ / Fee paid previously with preliminary materials.
<PAGE> 2
March 8, 1996
Dear Van Kampen American Capital Prime Rate Income Trust Shareholder:
The Board of Trustees of Van Kampen American Capital Prime Rate Income Trust
(the "Fund") has approved a new investment advisory agreement that provides for
the reduction of investment advisory fees payable by the Fund on average daily
net assets in excess of $4 billion. The affect of the new agreement will be to
reduce the investment advisory fee payable by the Fund, as a percentage of net
assets, whenever the Fund's average daily net assets exceed $4 billion. In
addition, we are seeking approval of nominees for the Board of Trustees and
ratification of the Fund's independent auditors for the 1996 fiscal year. The
attached proxy statement seeks shareholder approval on these items.
Your vote is important and your participation
in the affairs of your Fund does make a difference.
The proposals have been approved by the Trustees of the Fund, who recommend
you vote "FOR APPROVAL" on these proposals. YOUR IMMEDIATE RESPONSE WILL HELP
SAVE ON THE COSTS OF ADDITIONAL SOLICITATIONS. PLEASE SIGN AND RETURN YOUR PROXY
CARD. We look forward to your participation, and we thank you for your continued
confidence in Van Kampen American Capital.
PLEASE SIGN AND RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Sincerely,
Don G. Powell
Chief Executive Officer
<PAGE> 3
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
ONE PARKVIEW PLAZA
OAKBROOK TERRACE, ILLINOIS 60181
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 1996
TO THE SHAREHOLDERS OF VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST:
Notice is hereby given to the holders of common shares of beneficial interest,
par value $.01 per share (the "Shares"), of Van Kampen American Capital Prime
Rate Income Trust (the "Fund") that a Special Meeting of the shareholders of the
Fund will be held at the offices of the Fund, One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, on Thursday, April 18, 1996, at 2:00 p.m., for the
following purposes:
1. To ratify or reject a material change in the terms of the Fund's
investment advisory agreement with Van Kampen American Capital Investment
Advisory Corp. (the "Adviser");
2. To elect eight trustees to serve until the next meeting of shareholders
of the Fund or until their successors shall have been duly elected and
qualified;
3. To ratify or reject the selection of KPMG Peat Marwick LLP as independent
auditors for the Fund's fiscal year ending July 31, 1996; and
4. To transact such other business as may properly come before the meeting.
Holders of record of the Shares at the close of business on March 1, 1996 are
entitled to notice of and to vote at the Special Meeting and any adjournment
thereof.
By order of the Board of Trustees
RONALD A. NYBERG, Vice President and
Secretary
March 8, 1996
<PAGE> 4
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL REPORT
AND ITS MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT (WHEN SUCH
REPORT BECOMES AVAILABLE) TO A SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD
BE DIRECTED TO THE FUND BY CALLING (800) 341-2911 OR BY WRITING TO VAN KAMPEN
AMERICAN CAPITAL PRIME RATE INCOME TRUST, ONE PARKVIEW PLAZA, OAKBROOK TERRACE,
ILLINOIS 60181.
SHAREHOLDERS ARE INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. IF YOU DO
NOT EXPECT TO ATTEND THE MEETING, PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON
THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE
PROVIDED, WHICH IS ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED
IN THE UNITED STATES.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION,
WE ASK THAT YOU MAIL YOUR PROXY PROMPTLY.
MANAGEMENT OF THE FUND RECOMMENDS THAT YOU CAST YOUR VOTE:
- FOR APPROVAL OF A MATERIAL CHANGE IN THE TERMS OF THE INVESTMENT ADVISORY
AGREEMENT;
- IN FAVOR OF THE NOMINEES FOR THE BOARD OF TRUSTEES LISTED IN THE PROXY
STATEMENT; AND
- FOR THE RATIFICATION OF THE SELECTION OF KPMG PEAT MARWICK LLP AS
INDEPENDENT AUDITORS FOR THE FUND'S FISCAL YEAR ENDING JULY 31, 1996.
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD PROMPTLY
NO MATTER HOW MANY SHARES YOU OWN.
<PAGE> 5
PROXY STATEMENT
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
ONE PARKVIEW PLAZA
OAKBROOK TERRACE, ILLINOIS 60181
TELEPHONE (800) 341-2911
SPECIAL MEETING OF SHAREHOLDERS
APRIL 18, 1996
This Proxy Statement is furnished in connection with the solicitation by the
Board of Trustees (the "Trustees") of Van Kampen American Capital Prime Rate
Income Trust (the "Fund") of proxies to be voted at a Special Meeting of
shareholders of the Fund, and at any and all adjournments thereof (the
"Meeting"), to be held at the offices of the Fund, One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, on Thursday, April 18, 1996 at 2:00 p.m. The
approximate mailing date of this Proxy Statement and accompanying form of proxy
is March 8, 1996.
The Trustees have fixed the close of business on March 1, 1996 as the record
date (the "Record Date") for the determination of holders of common shares of
beneficial interest of the Fund ("Shares") entitled to vote at the Meeting.
Holders of Shares on the Record Date will be entitled to one vote for each Share
held, with no Share having cumulative voting rights. As of March 1, 1996, there
were issued and outstanding Shares.
The Trustees recommend that you cast your vote FOR APPROVAL of a material
change in the terms of the Investment Advisory Agreement with Van Kampen
American Capital Investment Advisory Corp. (the "Adviser"), IN FAVOR of the
nominees for the Board of Trustees listed in the Proxy Statement and FOR the
ratification of the selection of KPMG Peat Marwick LLP as independent auditors
for the Fund's fiscal year ending July 31, 1996. Shareholders who execute
proxies may revoke them at any time before they are voted by filing with the
Fund a written notice of revocation, by delivering a duly executed proxy bearing
a later date, or by attending the Meeting and voting in person.
All properly executed proxies received prior to the Meeting will be voted at
the Meeting in accordance with the instructions marked thereon or otherwise as
provided therein. Unless instructions to the contrary are marked, Shares
represented by a proxy will be voted "FOR" each proposal as to which it is
entitled to
<PAGE> 6
vote. Abstentions do not constitute votes "for" or "against" a matter and will
be disregarded in determining the "votes cast" on an issue. Broker non-votes
(i.e., proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owner or other person entitled to vote
shares on a particular matter with respect to which the broker or nominees do
not have discretionary power) will be treated the same as abstentions.
A majority of the outstanding Shares entitled to vote on a proposal must be
present in person or by proxy to have a quorum to conduct such business at the
Meeting. Abstentions and broker non-votes will be deemed present for quorum
purposes. In the event a quorum is present at the Meeting but sufficient votes
to approve any of the proposals are not received, the persons named as proxies
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies provided they determine that such an adjournment and
additional solicitation is reasonable and in the interest of shareholders based
on a consideration of all relevant factors, including the nature of the relevant
proposal, the percentage of votes then cast, the percentage of negative votes
then cast, the nature of the proposed solicitation activities and the nature of
the reasons for such further solicitation.
The cost of preparing, printing and mailing the enclosed proxy, the
accompanying Notice and Proxy Statement, and all other costs in connection with
the solicitation of proxies will be paid by the Fund. Additional solicitation
may be made by letter, telephone or telegraph by officers of the Fund, by
officers or employees of the Adviser or by financial intermediaries and their
representatives.
THE FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT ANNUAL REPORT
AND ITS MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT (WHEN SUCH
REPORT BECOMES AVAILABLE) TO A SHAREHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD
BE DIRECTED TO THE FUND BY CALLING (800) 341-2911 OR BY WRITING TO THE FUND AT
ONE PARKVIEW PLAZA, OAKBROOK TERRACE, ILLINOIS 60181.
- ------------------------------------------------------------------------------
PROPOSAL 1: APPROVAL OF INVESTMENT ADVISORY AGREEMENT
- ------------------------------------------------------------------------------
THE CURRENT INVESTMENT ADVISORY AGREEMENT
The Adviser has acted as investment adviser for the Fund since the
commencement of the Fund's operations on October 4, 1989. The original
investment advisory agreement (the "Original Agreement") between the Fund and
the Adviser was last approved by a majority of the Trustees and by a majority of
those Trustees who are not interested persons of the Fund or the Adviser (the
"Disinterested Trustees") within the meaning of the Investment Company Act of
1940 (the "1940 Act"), voting in person at a meeting on May 12, 1995. The
purpose of the meeting, among
2
<PAGE> 7
other things, was consideration of the annual reapproval of the Original
Agreement. The Original Agreement was last approved by the shareholders of the
Fund at a meeting held on January 14, 1993 relating to the acquisition by CDV
Acquisition Corporation of the Adviser's corporate parent from Xerox Financial
Services, Inc. A copy of the Original Agreement is attached hereto as Appendix
A. The Original Agreement may be terminated by either party, at any time,
without penalty, upon 60 days written notice, and will automatically terminate
in the event of its assignment.
The Adviser is a wholly-owned subsidiary of Van Kampen American Capital, Inc.,
which in turn is a wholly-owned subsidiary of VK/AC Holding, Inc. VK/AC Holding,
Inc. is controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity Fund IV Limited
Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is managed
by Clayton, Dubilier & Rice, Inc., a New York based private investment firm. The
General Partner of C&D L.P. is Clayton & Dubilier Associates IV Limited
Partnership ("C&D Associates L.P."). The general partners of C&D Associates L.P.
are Joseph L. Rice, III, B. Charles Ames, William A. Barbe, Alberto Cribiore,
Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and Andrall E. Pearson,
each of whom is a principal of Clayton, Dubilier & Rice, Inc. In addition,
certain officers, directors and employees of Van Kampen American Capital, Inc.
own, in the aggregate, not more than 7% of the common stock of VK/AC Holding,
Inc. and have the right to acquire, upon the exercise of options, approximately
an additional 11% of the common stock of VK/AC Holding, Inc. Presently, and
after giving effect to the exercise of such options, no officer or trustee of
the Fund owns or would own 5% or more of the common stock of VK/AC Holding, Inc.
The Original Agreement provides that the Adviser will supply investment
research and portfolio management, including the selection of securities for the
Fund to purchase, hold or sell and the selection of brokers through which the
Fund's portfolio transactions are executed. The Adviser also administers the
business affairs of the Fund, furnishes offices, necessary facilities and
equipment, provides administrative services, and permits its officers and
employees to serve without compensation as trustees and officers of the Fund if
duly elected to such positions.
The Original Agreement provides that the Adviser shall not be liable for any
error of judgment or of law, or for any loss suffered by the Fund in connection
with the matters to which the Original Agreement relates, except a loss
resulting from willful misfeasance, bad faith, or gross negligence on the part
of the Adviser in the performance of its obligations and duties, or by reason of
its reckless disregard of its obligations and duties under the Original
Agreement.
3
<PAGE> 8
The Adviser's activities are subject to the review and supervision of the
Board of Trustees to whom the Adviser renders regular periodic reports of the
Fund's investment activities.
For the services provided by the Adviser under the Original Agreement, the
Fund pays the Adviser an annual fee payable monthly of 0.95% of the average net
assets of the Fund. For the fiscal year ended July 31, 1995, advisory fees paid
to the Adviser by the Fund were $16,722,752. For the fiscal year ended July 31,
1995, the Fund paid no brokerage commissions to any broker-dealer affiliated
with the Fund, the Adviser or the Fund's administrator.
Under the Original Agreement, the Fund pays all other expenses incurred in the
operation of the Fund including, but not limited to, direct charges relating to
the purchase and sale of its portfolio securities, interest charges, fees and
expenses of legal counsel and independent auditors, taxes and governmental fees,
cost of share certificates and any other expenses (including clerical expenses)
of issuance, sale or repurchase of the Fund's common shares, expenses in
connection with the Fund's dividend reinvestment plan, membership fees in trade
associations, expenses of registering and qualifying shares of the Fund for sale
under federal and state securities laws, expenses related to printing and
distribution, expenses of filing reports and other documents filed with
governmental agencies, expenses of annual and special meetings of trustees and
shareholders, fees and disbursements of the transfer agents, custodians and
sub-custodians, expenses of disbursing dividends and distributions, fees and
out-of-pocket costs of the trustees, insurance premiums, indemnification and
other expenses not expressly provided for in the Original Agreement, and any
extraordinary expenses of a nonrecurring nature. The Fund also compensates the
Adviser, Van Kampen American Capital Distributors, Inc., the principal
underwriter of the Shares (the "Distributor"), and Van Kampen American Capital,
Inc., the parent of the Adviser ("Van Kampen American Capital"), for certain
non-advisory services provided pursuant to agreements discussed below.
4
<PAGE> 9
THE NEW INVESTMENT ADVISORY AGREEMENT
The Board of Trustees approved a new investment advisory agreement (the "New
Agreement") between the Fund and the Adviser on November 10, 1995, the form of
which agreement is attached hereto as Appendix B. The form of the New Agreement
is substantially identical to the Original Agreement, except that the investment
advisory fee payable by the Fund would be reduced on average net assets of the
Fund in excess of $4 billion as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY FEE AS A PERCENT
NET ASSETS OF AVERAGE DAILY
(MILLIONS) NET ASSETS
- -------------------- ----------------
<S> <C>
First $4.0 billion.................... 0.950%
Next $3.5 billion..................... 0.900%
Next $2.5 billion..................... 0.875%
Over $10.0 billion.................... 0.850%
</TABLE>
If the investment advisory fee proposed under the New Agreement had been in
effect for the fiscal year ended July 31, 1995, advisory fees paid to the
Adviser by the Fund would have been the same as advisory fees actually paid to
the Adviser because the average net assets of the Fund did not exceed $4 billion
during the 1995 fiscal year. In future years, if the Fund's average daily net
assets exceed $4 billion, the effect of the new fee schedule would be to reduce
the investment advisory fee payable by the Fund to the Adviser as a percentage
of net assets. As of March 1, 1996, the net assets of the Fund were
approximately $ .
Background. In connection with the Board of Trustees' annual review of the
Original Agreement on May 12, 1995, the Trustees considered the recent growth in
the net assets of the Fund and whether the addition of one or more "breakpoints"
to the Fund's advisory fee schedule had become appropriate in light of such
growth. As part of their deliberations, the Trustees reviewed a report with
respect to the fees and expenses paid by other senior loan funds prepared by a
nationally recognized analytical services consultant based on publicly available
industry data. The Trustees requested that, at the next quarterly meeting of the
Trustees, management of the Adviser provide the Trustees with additional
information with respect to expenses incurred by the Adviser in performing its
obligations under the Original Agreement. The Trustees then reapproved the
Original Agreement for an interim period while the Adviser prepared the
information requested by the Trustees and the Trustees considered further the
addition of breakpoints to the Fund's advisory fee schedule.
The Board of Trustees considered materials relating to the Fund's advisory
fees prepared by the Adviser at its next regular quarterly meeting on August 11,
1995 and consulted with legal counsel as to the use of breakpoints within the
mutual fund industry. The materials included, among other things, information
with respect to: expenses and profitability of the Fund; investment advisory
operations of the Fund
5
<PAGE> 10
in light of the nature of its portfolio securities and a comparison of such
operations to the operations of other types of investment companies; the ability
of the Fund and the Adviser to realize economies of scale; and expenses and
risks incurred by the Adviser in connection with the distribution of the Fund's
shares. Representatives of the Adviser were present at the meeting to discuss
the materials with the Trustees and answer questions raised by the Trustees.
After considering the materials presented to the Trustees, the Board of Trustees
decided, pending further study and analysis, to defer the proposal. The Trustees
requested that the Adviser revise its materials to address additional issues
raised by the Trustees and directed the Adviser to make a proposal, consistent
with the Trustees' deliberations, with respect to adding breakpoints to the
Fund's advisory fee schedule at the Trustees' next regular quarterly scheduled
meeting.
The Board of Trustees considered the breakpoint schedule proposed by the
Adviser at a meeting held on November 10, 1995. Based on its evaluation of the
materials presented by the Adviser and the report of the independent analytical
services consultant and assisted by the advice of counsel, the Board of
Trustees, including the Disinterested Trustees, approved the advisory fee
structure proposed by the Adviser in the New Agreement, the terms of the New
Agreement and the submission of the New Agreement for the consideration of the
shareholders of the Fund.
In reaching their decision to approve the New Agreement, the Board of Trustees
considered many factors including among others: the findings of the report from
the independent analytical services consultant regarding the Fund's current
management fee structure and total expense ratio; an analysis of the Fund's
advisory fee, total expense ratio and performance data; the complexity of the
securities which comprise substantially all of the Fund's investment portfolio;
the Fund's policy of not investing more than $50 million in any one senior loan
credit and the additional research expenses incurred by the Adviser in
connection with such policy; and the need of the Adviser to devote additional
personnel and resources to managing the Fund and to retain key personnel
currently employed by the Adviser in order to continue providing a comparable
level of investment management services and the short- and long-term record of
investment performance under the Adviser.
Shareholder Approval. The New Agreement must be approved by a majority of the
outstanding voting securities of the Fund. The vote of a majority of the
outstanding voting securities means the lesser of the vote of (i) 67% or more of
the Shares entitled to vote thereon present at the Meeting if the holders of
more than 50% of such outstanding Shares are present in person or represented by
proxy; or (ii) more than 50% of such outstanding Shares. The New Agreement went
into effect as of November 10, 1995 and, if approved by shareholders, it will
remain in effect until November 10, 1997 and thereafter on an annual basis if
specifically approved by the Board of Trustees of the Fund or the shareholders
and by the
6
<PAGE> 11
Disinterested Trustees in compliance with the requirements of the 1940 Act. If
the New Agreement is not approved at the Meeting, the Original Agreement will be
reinstated and remain in effect until May 12, 1996 and thereafter on an annual
basis if specifically approved by the Board of Trustees of the Fund or the
shareholders and by the Disinterested Trustees in compliance with the
requirements of the 1940 Act.
The New Agreement was approved by the Trustees, and the Disinterested
Trustees, after consideration of all factors which they determined to be
relevant to their deliberations, including those discussed above. The Trustees
also determined to submit the New Agreement for consideration by the
shareholders. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR
APPROVAL" OF THE NEW AGREEMENT.
NON-ADVISORY AGREEMENTS
The Fund has entered into certain other agreements with the Adviser, the
Distributor or Van Kampen American Capital, as the case may be, as follows:
Administration Agreement. The Fund has entered into an Administration
Agreement pursuant to which Van Kampen American Capital provides administrative
services, including without limitation monitoring the provisions of the senior
loans in which the Fund invests with respect to assignment, maintaining records
with respect to the senior loans in which the Fund invests, preparation and
dissemination of shareholder reports and proxy materials, and negotiating the
terms and provisions of custodial and dividend disbursing arrangements into
which the Fund may enter. In consideration for such administrative services, the
Fund pays Van Kampen American Capital a fee, accrued daily and paid monthly, at
the annualized rate of 0.25% of the Fund's average weekly managed assets. Under
the Administration Agreement, the Fund paid Van Kampen American Capital
$4,400,721 for the fiscal year ended July 31, 1995. The address of Van Kampen
American Capital is One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
Legal Services Agreement. The Fund and each of the other Van Kampen American
Capital funds advised by the Adviser and distributed by the Distributor have
entered into a Legal Services Agreement pursuant to which Van Kampen American
Capital provides legal services, including without limitation maintenance of the
funds' minute books and records, preparation and oversight of the funds'
regulatory reports, and other information provided to shareholders, as well as
responding to day-to-day legal issues on behalf of the funds. Management
believes that Van Kampen American Capital can render such legal services on a
more cost effective basis than other providers of such services. Payment by the
Fund for such services is made on a cost basis for the employment of personnel
as well as the overhead and equipment necessary to render such services. Other
funds distributed by the Distributor also receive legal services from Van Kampen
American Capital.
7
<PAGE> 12
Of the total costs for legal services provided to funds distributed by the
Distributor, 50% of such costs are allocated equally to each fund. The remaining
50% of such costs are allocated to specific funds based on specific time
allocations, or in the event services are attributable only to types of funds
(i.e. closed-end or open-end), the relative amount of time spent on each type of
fund and then further allocated among funds of that type based upon their
respective net asset values. Under the Legal Services Agreement, the Fund paid
Van Kampen American Capital $552,500 for the fiscal year ended July 31, 1995.
Support Services Agreement. Prior to , the Fund was a party
to a support service agreement with Van Kampen American Capital. Under the
Support Services Agreement, the Fund received support services for shareholders,
including the handling of all written and telephonic communications, except
initial order entry and other distribution related communications. Payment by
the Fund for such services was made on a cost basis for the employment of the
personnel and the equipment necessary to render the support services. Under the
Support Services Agreement, the Fund paid Van Kampen American Capital $2,302,518
for the fiscal year ended July 31, 1995. The Support Services Agreement was
terminated on .
Offering Agreement. The Fund has executed an offering agreement with the
Distributor pursuant to which the Distributor, as principal underwriter,
purchases shares for resale to the public, either directly or through securities
dealers, and is obligated to purchase only those shares for which it has
received purchase orders. Under the Offering Agreement, the Fund paid the
Distributor $ for the fiscal year ended July 31, 1995. The address of the
Distributor is One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
PRINCIPAL EXECUTIVE OFFICERS OF THE ADVISER.
The names, addresses and principal occupations of the principal executive
officers and the directors of the Adviser, in addition to those set forth below
under "Proposal 2" of this Proxy Statement, are set forth below. The address of
each such principal executive officer is One Parkview Plaza, Oakbrook Terrace,
IL 60181.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ---------------------------- ------------------------------------------
<S> <C>
Ronald A. Nyberg............ Executive Vice President, General Counsel
and Director
William R. Rybak............ Executive Vice President, Chief Financial
Officer and Director
Robert J. Froehlich......... Executive Vice President
Peter W. Hegel.............. Executive Vice President
Alan T. Sachtleben.......... Executive Vice President
Scott E. Martin............. Senior Vice President, Deputy General
Counsel and Secretary
Charles G. Millington....... Senior Vice President and Treasurer
</TABLE>
8
<PAGE> 13
SHAREHOLDER APPROVAL
The vote of a majority of the outstanding voting securities of the Fund is
required for approval of this Proposal 1. The affirmative vote of a majority of
the outstanding voting securities is defined in the 1940 Act as the lesser of
(i) 67% or more of the voting securities entitled to vote thereon present in
person or by proxy at a meeting, if holders of more than 50% of the outstanding
voting securities are present in person or represented by proxy at such meeting,
or (ii) more than 50% of the outstanding voting securities of a fund. THE BOARD
OF TRUSTEES OF THE FUND RECOMMENDS A VOTE "FOR APPROVAL" OF THIS PROPOSAL 1.
- ------------------------------------------------------------------------------
PROPOSAL 2: ELECTION OF TRUSTEES
- ------------------------------------------------------------------------------
At the Meeting, eight Trustees are to be elected to serve until the next
meeting of shareholders, if any, or until their successors are duly elected and
qualified. It is the intention of the persons named in the enclosed proxy to
vote the Shares represented by them for the election of the nominees listed
below unless the proxy is marked otherwise.
Dennis J. McDonnell, Theodore A. Myers, Rod Dammeyer, David C. Arch and Wayne
W. Whalen have acted as Trustees since their election to the Board of Trustees
in August of 1989 and were last elected by shareholders at a meeting held on
January 14, 1993. Howard J Kerr was appointed as a Trustee of the Fund on
October 26, 1992 to fill a vacant Trustee position in connection with the
expansion of the Board from seven to eight Trustees and was last elected by
shareholders at a meeting held on January 14, 1993. Hugo F. Sonnenschein was
appointed as a Trustee of the Fund on February 25, 1994 to fill a vacant Trustee
position in connection with the retirement from the Board of Trustees of Clyde
H. Keith on the same date. Don G. Powell was appointed as a Trustee of the Fund
on January 28, 1995, to fill a vacant Trustee position in connection with the
resignation from the Board of Trustees of John C. Merritt on the same date. Mr.
Merritt, who had been a trustee and chairman of the Fund, the other closed-end
investment companies and the open-end investment companies advised by the
Adviser, also resigned as the chairman of the board, chief executive officer and
a director of the Adviser, Van Kampen Merritt Management Inc., Van Kampen
Merritt Inc., and chairman, chief executive officer, president, chief operating
officer and director of The Van Kampen Merritt Companies, Inc. and VKM Holding,
Inc. Mr. Merritt's resignation from these Van Kampen Merritt-related entities
was related to the acquisition of American Capital Management & Research, Inc.
(the "Acquisition"). At or subsequent to the closing of the Acquisition, Mr.
Merritt exercised options and sold approximately 49,740 shares of the common
stock of Van Kampen American Capital at a price of $200 per share. In addition,
Mr. Merritt had a severance agreement with Van Kampen American Capital entitling
him to approximately
9
<PAGE> 14
$550,000 payable during 1995. Mr. Merritt was also a Director of McCarthy,
Crisanti & Maffei, Inc., MCM Asia Pacific Company, Limited, a limited partner of
R.L. Renck & Co., Inc., and Vice Chairman of the Municipal Securities Rulemaking
Board. Messrs. Sonnenschein and Powell have not previously been elected to the
Board of Trustees by shareholders. Each of the nominees has agreed to serve as a
Trustee if elected; however, should any nominees become unable or unwilling to
accept nomination or election, the proxies will be voted for one or more
substitute nominees designated by the present Board of Trustees.
The Declaration of Trust of the Fund provides that the Board of Trustees shall
consist of not less than three nor more than eleven trustees. Following the
Meeting, the Fund does not contemplate holding regular meetings of shareholders
to elect Trustees or otherwise. In the event a vacancy occurs on the Board of
Trustees by reason of death, resignation or a reason other than removal by the
shareholders, the remaining Trustees shall appoint a person to fill the vacancy
for the entire unexpired term.
The following sets forth the names, ages, principal occupations and other
information respecting the Trustee nominees.
Nominees for Trustees are:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ---------------------------- ------------------------------------------
<S> <C>
Don G. Powell*.............. Chairman and Trustee. Mr. Powell is
2800 Post Oak Blvd. President, Chief Executive Officer and a
Houston, TX 77056 Director of VK/AC Holding, Inc. and Van
Age: 56 Kampen American Capital, and is Chairman,
Chief Executive Officer and a Director of
the Distributor, the Adviser and Van
Kampen American Capital Management, Inc.
(the "AC Adviser"), Director, President
and Chief Executive Officer of Van Kampen
American Capital Advisors, Inc. and Van
Kampen American Capital Exchange Corp.,
Director and Executive Vice President of
Advantage Capital Corporation, ACCESS
Investor Services, Inc., Van Kampen
American Capital Services, Inc. and Van
Kampen American Capital Trust Company,
Director of McCarthy, Crisanti & Maffei,
Inc. He is also President and Director,
Trustee or Managing General Partner of
each of the funds advised by the AC
Adviser and Trustee of each of the funds
advised by the AC Adviser and Trustee of
each of the funds advised by the Advisers.
He is also Chairman of the Board of Van
Kampen Merritt Series Trust and open-end
investment companies advised by the
Adviser.
</TABLE>
10
<PAGE> 15
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ---------------------------- ------------------------------------------
<S> <C>
Dennis J. McDonnell*........ President, Chief Executive Officer and
One Parkview Plaza Trustee. Mr. McDonnell is President, Chief
Oakbrook Terrace, IL 60181 Operating Officer and a Director of the
Age: 53 Adviser, the AC Adviser, Van Kampen
American Capital Advisors Inc., VCJ Inc.
and Van Kampen American Capital
Management, Inc. He is also an Executive
Vice President and Director of VK/AC
Holding, Inc., and Van Kampen American
Capital. Chairman and Director of MCM Asia
Pacific Company, Limited and VSM, Inc.,
Chief Executive Officer of McCarthy,
Crisanti & Maffei, Inc. and McCarthy,
Crisanti & Maffei Acquisition Corporation,
President of Van Kampen Merritt Equity
Advisors Corp., Director of Van Kampen
Merritt Equity Holdings Corp. and
McCarthy, Crisanti & Maffei, S.A. Mr.
McDonnell is the President, Chief
Executive Officer and a Trustee of other
investment companies advised by the
Adviser.
Theodore A. Myers........... Trustee. Mr. Myers is an Executive Vice
1940 East 6th Street President and Chief Financial Officer of
Cleveland, OH 44114 Qualitech Steel Corporation, a producer of
Age: 65 high quality engineered steels for
automotive, transportation and capital
goods industries. He is also a Director of
McLouth Steel and a member of the Arthur
Anderson Chief Financial Officer Advisory
Committee. Prior to August, 1993, Mr.
Myers was Senior Vice President, Chief
Financial Officer and a Director of
Doskocil Companies, Inc., a food
processing and distribution company. Mr.
Myers is also a Trustee of other
investment companies advised by the
Adviser.
</TABLE>
11
<PAGE> 16
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ---------------------------- ------------------------------------------
<S> <C>
Rod Dammeyer................ Trustee. Mr. Dammeyer is President, Chief
Two North Riverside Plaza Executive Officer and Director of Anixter
Chicago, IL 60606 International Inc. (formerly known as Itel
Age: 55 Corporation), a value-added provider of
integrated networking and cabling
solutions that support business informa-
tion and network infrastructure
requirements; and Great American
Management & Investment, Inc., a
diversified manufacturing company. He is
also a Director of Lukens, Inc., Falcon
Building Products, Inc., Revco D.S., Inc.,
Jacor Communications, Inc., Kent State
University Foundation, National Advisory
Board of Chemical Bank, Capsure Holdings
Corp., The Vigoro Corporation and Antec
Corporation. Mr. Dammeyer was previously a
Director of Santa Fe Energy Resources,
Inc., Lomas Financial Corporation, Santa
Fe Pacific Corporation, Q-Tel, S.A. de
C.V. and Servicios Financieros Quadrum,
S.A. Mr. Dammeyer is also a Trustee of
other investment companies advised by the
Adviser.
David C. Arch............... Trustee. Mr. Arch is Chairman and Chief
1800 Swift Drive Executive Officer of Blistex Inc., a
Oak Brook, IL 60521 consumer health care products
Age: 50 manufacturer. Mr. Arch is also a Trustee
of other investment companies advised by
the Adviser.
Howard J Kerr............... Trustee. Mr. Kerr is President and Chief
736 North Western Ave. Executive Officer of Pocklington
P.O. Box 317 Corporation, Inc., an investment holding
Lake Forest, IL 60045 company. Mr. Kerr is also a Director of
Age: 60 Canbra Foods, Ltd., a Canadian oilseed
crushing, refining, processing and
packaging operation. Mr. Kerr is a Trustee
of other investment companies advised by
the Adviser.
</TABLE>
12
<PAGE> 17
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ---------------------------- ------------------------------------------
<S> <C>
Hugo F. Sonnenschein........ Trustee. Mr. Sonnenschein is President of
5801 South Ellis Avenue the University of Chicago. Mr.
Suite 502 Sonnenschein is a member of the Board of
Chicago, IL 60637 trustees of the University of Rochester
Age: 55 and a member of its investment committee.
Prior to July, 1993, Mr. Sonnenschein was
Provost of Princeton University and Dean
of the School of Arts and Sciences at the
University of Pennsylvania. Mr.
Sonnenschein is a member of the National
Academy of Sciences and a fellow of the
American Academy of Arts and Sciences. Mr.
Sonnenschein is also a trustee of other
investment companies advised by the
Adviser.
Wayne W. Whalen*............ Trustee. Mr. Whalen is a partner in the
333 West Wacker Drive law firm of Skadden, Arps, Slate, Meagher
Chicago, IL 60606 & Flom. Mr. Whalen is also a Trustee of
Age: 56 other investment companies advised by the
Adviser.
</TABLE>
- ---------------
* Such nominees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Messrs. Powell and McDonnell are interested persons of the
Adviser and the Fund by reason of their positions with the Adviser. Mr. Whalen
is an interested person of the Fund by reason of his firm acting as legal
counsel for the Fund.
Messrs. Powell and McDonnell own, or have the opportunity to purchase, an
equity interest in VK/AC Holding, Inc., the parent company of Van Kampen
American Capital, Inc., which is the parent of the Adviser, and have entered
into employment contracts (for a term of five years) with Van Kampen American
Capital.
During the fiscal year ended July 31, 1995, the Board of Trustees held three
meetings. All of the Trustees attended 100% of the meetings of the Board of
Trustees and all of the committee meetings thereof of which such Trustee was a
member in the fiscal year ended July 31, 1995 (except for Mr. Powell who was not
appointed to the Board of Trustees until January 28, 1995). During the fiscal
year ended July 31, 1995, the Board of Trustees had no standing committees with
the exception of an audit committee.
The Fund's audit committee consists of Messrs. Arch, Dammeyer, Kerr, Myers and
Sonnenschein, who are not "interested persons" of the Fund as defined in the
1940 Act. The committee is primarily responsible for supervision of the Fund's
independent accountants and the annual review of the investment advisory
agreement and any other matters requiring the approval of the Trustees who are
not
13
<PAGE> 18
"interested persons" of the Fund pursuant to the 1940 Act. During the fiscal
year ending July 31, 1995, the audit committee held two meetings.
The Trustees select and nominate trustees to fill any vacancies in
trusteeships and are prepared to review nominations from shareholders.
Nominations from shareholders should be in writing and addressed to the Trustees
at the Fund's office. The Trustees expect to be able to identify from their own
resources an ample number of qualified candidates.
The compensation of trustees who are affiliated persons (as defined in the
1940 Act) of the Adviser, the Distributor or Van Kampen American Capital is paid
by the respective entity. The Fund pays compensation to the non-affiliated
trustees. During the Fund's 1995 fiscal year, the Fund paid trustees who were
not affiliated persons of the Adviser, the Distributor or Van Kampen American
Capital, $2,500 per year, and $250 per meeting of the Board, plus expenses.
Members of the Audit Committee received $250 for each meeting of such committee.
Under the Fund's retirement plan, trustees who are not affiliated with the
Adviser, the Distributor or Van Kampen American Capital, have at least ten years
of service and retire at or after attaining the age of 60 are eligible to
receive a retirement benefit equal to $2,500 per year for each of the ten years
following such trustee's retirement. Under certain conditions, reduced benefits
are available for early retirement. Under the Fund's deferred compensation plan,
a trustee who is not affiliated with the Adviser, the Distributor or Van Kampen
American Capital can elect to defer receipt of all or a portion of the trustee's
fees earned by such trustee until such trustee's retirement. The deferred
compensation earns a rate of return determined by reference to the Fund's return
or the return of other closed-end investment companies advised by the Adviser as
selected by the trustee. To the extent permitted by the 1940 Act, the Fund may
invest in securities of such other 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.
14
<PAGE> 19
The following table provides summary compensation information for each of the
incumbent trustees of the Fund:
1995 COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
AGGREGATE BENEFITS ACCRUED ANNUAL FROM THE FUND
COMPENSATION AS PART BENEFITS COMPLEX PAID
FROM THE OF FUND UPON TO
TRUSTEE FUND(2) EXPENSES(3) RETIREMENT(4) TRUSTEES(5)
- ----------------------- ------------ ---------------- ------------- -------------
<S> <C> <C> <C> <C>
Theodore A. Myers....... $ $ $ 2,500 $
Rod Dammeyer............ 2,500
David C. Arch........... 2,500
Howard J. Kerr.......... 2,500
Hugo F. Sonnenschein.... 2,500
Wayne W. Whalen......... 2,500
</TABLE>
- ---------------
(1) Messrs. Powells Merritt and McDonnell, members of the Board of Trustees
during all or a portion of calendar year 1995, were affiliated persons of
the Adviser and did not receive compensation or retirement benefits directly
from the Fund.
(2) The amounts in this column are the Aggregate Compensation from the Fund
during its last completed fiscal year ended July 31, 1995. Beginning in
September 1994, each trustee, except Messrs. Arch, Myers and Whalen, began
deferring his compensation paid by the Fund. The total amount of deferred
compensation (including interest) accrued with respect to each trustee from
the Fund as of December 31, 1995 is as follows: ; ;
; and . [Beginning on January 1, 1995, Messrs.
and Whalen began deferring all of their compensation.]
Compensation deferred by a trustee is invested in one or more closed-end
investment companies advised by the Adviser, including the Fund, until it is
distributed to the trustee.]
(3) The Retirement Plan commenced as of August 1, 1994 for the Fund. The amounts
shown in this column are the expenses accrued for retirement benefits as of
December 31, 1995 for the Fund.
(4) This is the estimated annual benefits payable per year for the 10-year
period commencing in the year of such Trustee's retirement by the Fund
assuming: the trustee has 10 or more years of service on the board of the
Fund, and retires at or after attaining the age of 60. Trustees retiring
prior to the age of 60 or with fewer than 10 years of service for the Fund
may receive reduced retirement benefits from the Fund.
(5) The "Fund Complex" consists of [39] investment companies advised by the
Adviser that have a Board of Trustees identical to the Board of Trustees of
the
15
<PAGE> 20
Fund. The amounts shown in this column are accumulated from the
Aggregate Compensation of such funds during the calendar year ended December
31, 1995. The Adviser also serves as investment adviser for other investment
companies; however, with the exception of Messrs. Powell, McDonnell and Whalen,
the trustees of the Board are not trustees of such investment companies.
Combining the Fund Complex with the other investment companies advised by the
Adviser, Mr. Whalen received Total Compensation of $ during the calendar
year ended December 31, 1995.
The following table sets forth certain information (other than information
concerning Messrs. Powell and McDonnell, which is set forth above) concerning
the executive officers of the Fund, each of whom holds the same office with each
of the other open-end and closed-end investment companies advised by the
Adviser. The officers serve for one year or until their respective successors
are chosen and qualified. The Fund's officers receive no compensation from the
Fund but are also officers of the Adviser or Van Kampen American Capital, the
Adviser's parent, and receive compensation in such capacities.
<TABLE>
<CAPTION>
POSITIONS AND OTHER PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND IN PAST 5 YEARS
- --------------------- -------------------------- -------------------------------
<S> <C> <C>
Peter W. Hegel....... Vice President Executive Vice President and
Age: 39 Portfolio Manager of the
Adviser. Executive Vice
President of Van Kampen
American Capital Asset
Management, Inc. (the "AC
Adviser"), Van Kampen American
Capital Advisors, Inc. Director
of McCarthy, Crisanti & Maffei,
Inc. and McCarthy, Crisanti &
Maffei Acquisition Corporation.
Vice President of each of the
VK Funds and Closed End Funds.
Jeffrey W. Maillet... Vice President Senior Vice President and
Age: 39 Portfolio Manager of the
Adviser. Senior Vice President
of Van Kampen American Capital
Management, Inc., and the AC
Adviser.
</TABLE>
16
<PAGE> 21
<TABLE>
<CAPTION>
POSITIONS AND OTHER PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND IN PAST 5 YEARS
- --------------------- -------------------------- -------------------------------
<S> <C> <C>
Ronald A. Nyberg..... Vice President and Executive Vice President,
Age: 42 Secretary General Counsel and Secretary
of Van Kampen American Capital
and VK/AC Holding, Inc.
Executive Vice President,
General Counsel and a Director
of the Distributor, Executive
Vice President and General
Counsel of the Adviser and the
AC Adviser, Van Kampen American
Capital Management, Inc., VSU
Inc., VCJ, Inc., Van Kampen
Merritt Equity Advisors Corp.,
and Van Kampen Merritt Equity
Holdings Corp. Executive Vice
President, General Counsel and
Assistant Secretary of
VanKampen American Capital
Advisors, Inc., American
Capital Contactual Services,
Inc., Van Kampen American
Capital Exchange Corporation,
ACCESS Investor Services, Inc.,
American Capital Shareholders
Corporation, and Van Kampen
American Capital Trust Company.
General Counsel of McCarthy,
Crisanti & Maffei, Inc. and
McCarthy, Crisanti & Maffei
Acquisition Corp. Secretary of
each of the Van Kampen American
Capital funds advised by the
Adviser and the AC Adviser.
Secretary of Van Kampen Merritt
Series Trust and the closed-end
funds advised by the VK
Adviser. Director of ICI Mutual
Insurance Co., a provider of
insurance to members of the
Investment Company Institution.
Edward C. Wood III... Vice President, Treasurer Senior Vice President of the
Age: 40 and Chief Financial Adviser and the AC Adviser.
Officer Vice President, Treasurer and
Chief Financial Officer of each
of the open-end and closed-end
investment companies advised by
the Adviser.
</TABLE>
17
<PAGE> 22
<TABLE>
<CAPTION>
POSITIONS AND OTHER PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND IN PAST 5 YEARS
- --------------------- -------------------------- -------------------------------
<S> <C> <C>
Nicholas Dalmaso..... Assistant Secretary Assistant Vice President and
Age: 30 Senior Attorney of Van Kampen
(31 after 3/1/96) American Capital. Assistant
Vice President and Assistant
Secretary of the Distributor,
Inc., the Adviser, the AC
Adviser, and Van Kampen
American Capital Management,
Inc. Assistant Vice President
of Van Kampen American Capital
Advisors, Inc. Assistant
Secretary of each of the
open-end and closed-end
investment companies advised by
the Adviser. Prior to May 1992,
attorney for Cantwell &
Cantwell, a Chicago law firm.
Scott E. Martin...... Assistant Secretary Senior Vice President, Deputy
Age: 39 General Counsel and Assistant
Secretary of, VK/AC Holding,
Van Kampen American Capital.
Senior Vice President, Deputy
General Counsel and Secretary
of the Adviser, the AC Adviser
the Distributor. Van Kampen
American Capital Management,
Inc., Van Kampen American
Capital Advisors, Inc., VSM
Inc., VCJ Inc., American
Capital Contractual Services,
Inc., Van Kampen American
Capital Exchange Corporation,
Access Investor Services, Inc.,
Van Kampen Merritt Equity
Advisors Corp., Van Kampen
Merritt Equity Holdings Corp.,
American Capital Shareholders
Corporation. Secretary and
Deputy General Counsel of
McCarthy, Crisanti & Maffei,
Inc. and McCarthy, Crisanti &
Maffei Acquisition. Chief Legal
Officer of McCarthy, Crisanti &
Maffei, S.A. Assistant
Secretary of each of the
open-end and closed-end
investment companies advised by
the Adviser.
</TABLE>
18
<PAGE> 23
<TABLE>
<CAPTION>
POSITIONS AND OTHER PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND IN PAST 5 YEARS
- --------------------- -------------------------- -------------------------------
<S> <C> <C>
Weston B. Assistant Secretary Vice President, Associate
Wetherell.......... General Counsel and Assistant
Age: 39 Secretary of Van Kampen
American Capital, the Adviser
the AC Adviser, and the
Distributor, Van Kampen
American Capital Management,
Inc., Van Kampen American
Capital Advisors, Inc.,
Assistant Secretary of each of
the open-end and closed-end
investment companies advised by
the Adviser.
John L. Sullivan..... Controller First Vice President of the
Age: 40 Adviser and AC Adviser.
Treasurer of each of the
open-end investment companies
advised by the Adviser and the
AC Adviser, and Controller of
each of the investment
companies advised by the
Adviser.
Steven M. Hill....... Assistant Treasurer Assistant Vice President of the
Age: 31 Adviser and the AC Adviser.
Assistant Treasurer of each of
the open-end and closed-end
investment companies advised by
the Adviser.
</TABLE>
With respect to the Fund, as of March 1, 1996, the trustees and officers as a
group owned less than 1% of the outstanding shares of the Fund. At such date the
"interested persons" of the Fund as a group owned an aggregate of less than 5%
of the outstanding shares of the Fund.
SHAREHOLDER APPROVAL
The affirmative vote of a plurality of the Shares of the Trust present in
person or by proxy is required to elect the nominees to the Board of Trustees of
the Trust. THE BOARD OF TRUSTEES RECOMMENDS A VOTE "IN FAVOR" OF EACH OF THE
NOMINEES.
- ------------------------------------------------------------------------------
Proposal 3: Ratification of Independent Auditors
- ------------------------------------------------------------------------------
The Board, including a majority of the Disinterested Trustees, have selected
the firm of KPMG Peat Marwick LLP, independent auditors, to examine the
financial statements for the current fiscal year of the Fund. The Fund knows of
no direct or
19
<PAGE> 24
indirect financial interest of such firm in the Fund. Such appointment is
subject to ratification or rejection by the shareholders of the Fund. Unless a
contrary specification is made, the accompanying proxy will be voted in favor of
ratifying the selection of such accountants. It is expected that KPMG Peat
Marwick LLP will also act as independent auditors for VK/AC Holding, Inc., Van
Kampen American Capital, the Adviser and the Distributor.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Meeting and will be available to respond to questions from shareholders and will
have the opportunity to make a statement if they so desire.
SHAREHOLDER APPROVAL
The shareholders, voting as a single class, are entitled to vote on this
issue. An affirmative vote of a majority of the Shares of the Fund present in
person or by proxy and voting is required to ratify the selection of the
accountants for the Fund. THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR"
RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE FUND'S
FISCAL YEAR ENDING JULY 31, 1996.
- ------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- ------------------------------------------------------------------------------
As a general matter, the Fund does not hold regular annual meetings of
shareholders. Any shareholder who wishes to submit proposals for consideration
at a meeting of the Fund should send such proposal to the Fund at One Parkview
Plaza, Oakbrook Terrace, Illinois 60181. To be considered for presentation at a
shareholders' meeting, rules promulgated by the Securities and Exchange
Commission require that, among other things, a shareholder's proposal must be
received at the offices of the Fund a reasonable time before a solicitation is
made. Timely submission of a proposal does not necessarily mean that such
proposal will be included.
- ------------------------------------------------------------------------------
GENERAL
- ------------------------------------------------------------------------------
Management of the Fund does not intend to present and does not have reason to
believe that others will present any other items of business at the Meeting.
However, if other matters are properly presented to the Meeting for a vote, the
proxies will be voted upon such matters in accordance with the judgment of the
persons acting under the proxies.
A list of shareholders of the Fund entitled to be present and vote at the
Meeting will be available at the offices of the Fund, One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, for inspection by any shareholder during
regular business hours for ten days prior to the date of the Meeting.
20
<PAGE> 25
Failure of a quorum to be present at the Meeting may necessitate adjournment
and subject the Fund to additional expense.
IF YOU CANNOT BE PRESENT IN PERSON, YOU ARE REQUESTED TO FILL IN, SIGN AND
RETURN THE ENCLOSED PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.
RONALD A. NYBERG,
Vice President and Secretary
March 8, 1996
21
<PAGE> 26
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
SPECIAL MEETING OF SHAREHOLDERS--APRIL 18, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned holder of common shares of VAN KAMPEN AMERICAN
CAPITAL PRIME RATE INCOME TRUST (the "Fund"), a Massachusetts
business trust, hereby appoints Ronald A. Nyberg and Edward C.
Wood III, and each of them, with full power of substitution and
revocation, as proxies to represent the undersigned at the
Special Meeting of shareholders to be held at the offices of the
Fund, One Parkview Plaza, Oakbrook Terrace, Illinois 60181, on
April 18, 1996, at 2:00 p.m., and at any and all adjournments
thereof, and thereat to vote all common shares of the Fund which
the undersigned would be entitled to vote, with all powers the
undersigned would possess if personally present, in accordance
with the following instructions:
1. FOR / / AGAINST / / ABSTAIN / / as to the proposal to
approve a material change
in the terms of the
Investment Advisory
Agreement with Van Kampen
American Capital
Investment Advisory Corp.
2. GRANTING / / WITHHOLDING / / authority to vote for the
election as trustee each
nominee named below:
Messrs. Powell, McDonnell, Arch, Dammeyer,
Kerr, Myers, Sonnenschein and
Whalen
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME.
3. FOR / / AGAINST / / ABSTAIN / / as to the proposal to
ratify the selection of
KPMG Peat Marwick LLP to
act as the independent
auditors of the Fund for
its fiscal year ending
July 31, 1996.
4. Upon any and all other business which may come before the
Special Meeting or any adjournment thereof.
If more than one of the proxies, or their substitutes, are
present at the Special Meeting or any adjournment thereof, they
jointly (or, if only one is present and voting, then that one)
shall have authority and may exercise all powers granted hereby.
This Proxy, when properly executed, will be voted in accordance
with the instructions marked hereon by the undersigned. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS DESCRIBED ABOVE AND IN THE DISCRETION OF THE PROXIES
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued from other side)
Account Number No. of Shares Proxy No.
The undersigned hereby acknowledges receipt of the accompanying
Notice of Special Meeting and Proxy Statement for the Special
Meeting to be held on April 18, 1996.Dated: , 1996
----------------------------
----------------------------
Signature(s)
Please sign exactly as your
name or names appear on this
Proxy. When signing as
attorney, trustee, executor,
administrator, custodian,
guardian or corporate
officer, please give full
title. If shares are held
jointly, each holder should
sign.
