<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1996
REGISTRATION NOS. 33-37879
811-6220
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. 12 /X/
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 13 /X/
</TABLE>
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
ONE PARKVIEW PLAZA, OAKBROOK TERRACE, ILLINOIS 60181
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (708) 684-6000
RONALD A. NYBERG, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
VAN KAMPEN AMERICAN CAPITAL, INC.
ONE PARKVIEW PLAZA
OAKBROOK TERRACE, ILLINOIS 60181
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
---------------------
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:
/ / immediately upon filing pursuant to paragraph (b)
/X/ on September 28, 1996 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) 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.
DECLARATION PURSUANT TO RULE 24F-2
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE SECURITIES
ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940 AND
INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION A FORM 24F-2 FOR ITS
FISCAL YEAR ENDING MAY 31, 1997 ON OR ABOUT JULY 30, 1997.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933 FOR
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND,
A SERIES OF THE REGISTRANT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AMOUNT PROPOSED MAXIMUM AGGREGATE
TITLE OF SECURITY BEING OFFERING PRICE OFFERING AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT(1) PRICE(2) REGISTRATION FEE
- ------------------------ ---------------- ---------------- ---------------- ----------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares of
Beneficial Interest,
par value $.01 per
share................. 4,940,998 shares $8.37 $289,995 $100.00
</TABLE>
- --------------------------------------------------------------------------------
(1) Based on the offering price $8.37 per share on September 20, 1996.
(2) This calculation is made pursuant to Rule 24e-2 under the Investment Company
Act of 1940. During the fiscal year ended May 31, 1996, 8,328,857 shares
(2,290,621 Class A, 4,655,689 Class B and 1,382,547 Class C) were redeemed
or repurchased. 3,422,506 of such redeemed or repurchased shares have been
utilized for reductions prior to this time and 4,906,351 of such shares are
being used for reduction at this time.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM PART A PROSPECTUS CAPTION
-------------------------------------------
<C> <S> <C>
1. Cover Page................................. Cover Page
2. Synopsis................................... Prospectus Summary; Shareholder Transaction
Expenses; Annual Fund Operating Expenses
and Example
3. Condensed Financial Information............ Financial Highlights
4. General Description of Registrant.......... The Trust; Investment Objective and
Policies; Investment Practices; Description
of Shares of the Trust
5. Management of the Fund..................... The Trust; Investment Practices; Investment
Advisory Services; Inside Back Cover
6. Capital Stock and Other Securities......... Alternative Sales Arrangements; The Trust;
Shareholder Services; Distribution and
Service Plans; Redemption of Shares;
Distributions from the Fund; Tax Status;
Description of Shares of the Fund; Inside
Back Cover
7. Purchase of Securities Being Offered....... Alternative Sales Arrangements; Purchase of
Shares; Shareholder Services;
Distribution and Service Plans
8. Redemption or Repurchase................... Shareholder Services; Redemption of Shares
9. Pending Legal Proceedings.................. Inapplicable
</TABLE>
<TABLE>
<CAPTION>
PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
-------------------------------------------
<C> <S> <C>
10. Cover Page................................. Cover Page
11. Table of Contents.......................... Table of Contents
12. General Information and History............ General Information
13. Investment Objectives and Policies......... Investment Objective and Policies;
Investment Restrictions
14. Management of the Fund..................... General Information; Trustees and Officers;
Investment Advisory Agreement
15. Control Persons and Principal Holders of
Securities............................... General Information; Trustees and Officers;
Investment Advisory Agreement
16. Investment Advisory and Other Services..... Investment Advisory Agreement; Distributor;
Distribution and Service Plans; Transfer
Agent; Portfolio Transactions and
Brokerage; Other Information
17. Brokerage Allocation and Other Practices... Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities......... Purchase and Redemption of Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Determination of Net Asset Value; Purchase
and Redemption of Shares; Alternative Sales
Arrangements; Exchange Privilege
20. Tax Status................................. Dividends, Distributions and Federal Taxes
21. Underwriters............................... Distributor
22. Calculation of Performance Data............ Fund Performance
23. Financial Statements....................... Report of Independent Accountants;
Financial Statements; Notes to Financial
Statements
PART C
</TABLE>
Information required to be included in Part C is set forth under the
appropriate item in Part C of this registration statement.
<PAGE> 3
- --------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
- --------------------------------------------------------------------------------
Van Kampen American Capital Global Equity Fund (the "Fund") is a
professionally managed mutual fund. The Fund is a series of Van Kampen American
Capital World Portfolio Series Trust (the "Trust"). The investment objective of
the Fund is to seek long-term growth of capital. The Fund seeks to achieve its
objective by investing in an internationally diversified portfolio of equity
securities of companies located in any nation, including the United States.
There is no assurance that the Fund will achieve its investment objective.
The Fund's investment adviser is Van Kampen American Capital Asset
Management, Inc. This Prospectus sets forth certain information that a
prospective investor should know before investing in the Fund. Please read it
carefully and retain it for future reference. The address of the Fund is One
Parkview Plaza, Oakbrook Terrace, Illinois 60181, and its telephone number is
(800) 421-5666.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR STATE REGULATORS NOR HAS THE COMMISSION OR STATE
REGULATORS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION; FURTHER, SUCH SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information, dated September 28, 1996, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission and is hereby incorporated by reference in its entirety into
this Prospectus. A copy of the Statement of Additional Information may be
obtained without charge by calling (800) 421-5666 or for Telecommunications
Device for the Deaf at (800) 772-8889.
------------------
VAN KAMPEN AMERICAN CAPITAL SM
------------------
THIS PROSPECTUS IS DATED SEPTEMBER 28, 1996.
<PAGE> 4
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Prospectus Summary............................................... 3
Shareholder Transaction Expenses................................. 5
Annual Fund Operating Expenses and Example....................... 6
Financial Highlights............................................. 8
The Trust........................................................ 9
Investment Objective and Policies................................ 9
Investment Practices............................................. 13
Investment Advisory Services..................................... 18
Alternative Sales Arrangements................................... 20
Purchase of Shares............................................... 23
Shareholder Services............................................. 33
Redemption of Shares............................................. 37
Distribution and Service Plans................................... 41
Distributions from the Fund...................................... 43
Tax Status....................................................... 43
Fund Performance................................................. 45
Description of Shares of the Fund................................ 47
Additional Information........................................... 48
</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 REPRESENTATIONS 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.
2
<PAGE> 5
- ------------------------------------------------------------------------------
PROSPECTUS SUMMARY
- ------------------------------------------------------------------------------
THE FUND. Van Kampen American Capital Global Equity Fund (the "Fund") is a
diversified portfolio of Van Kampen American Capital World Portfolio Series
Trust (the "Trust"). The Trust is an open-end management investment company
organized as a Delaware business trust.
MINIMUM PURCHASE. $500 minimum initial investment for each class of shares and
$25 minimum subsequent investment for each class of shares (or less as described
under "Purchase of Shares").
INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek long-term
growth of capital. There is no assurance that the Fund will achieve its
objective. See "Investment Objective and Policies."
INVESTMENT POLICY. The Fund invests in an internationally diversified portfolio
of equity securities of companies of any nation, including the United States.
See "Investment Objective and Policies." Use of options, futures contracts and
related options may include additional risks. See "Investment Practices -- Using
Options, Futures Contracts and Related Options."
INVESTMENT RESULTS. The investment results of the Fund are shown in the table of
"Financial Highlights."
RISK FACTORS. Investing in common stocks of foreign issuers may subject the Fund
to risks of foreign political, economic and legal conditions and developments.
See "Investment Objective and Policies -- Risk Factors."
ALTERNATIVE SALES ARRANGEMENTS. The Fund offers three classes of shares to the
public, each with its own sales charge structure: Class A shares, Class B shares
and Class C shares. Each class has distinct advantages and disadvantages for
different investors, and investors may choose the class of shares that best
suits their circumstances and objectives. Each class of shares represents an
interest in the same portfolio of investments of the Fund. See "Alternative
Sales Arrangements." For information on redeeming shares see "Redemption of
Shares."
Class A Shares. Class A shares are offered at net asset value per share plus a
maximum initial sales charge of 5.75% of the offering price (6.10% of the net
amount invested), reduced on investments of $50,000 or more. Investments of $1
million or more are not subject to any sales charge at the time of purchase, but
a contingent deferred sales charge of 1.00% may be imposed on redemptions made
within one year of the purchase. Class A shares are subject to an annual service
fee of up to 0.25% of its average daily net assets attributable to such class of
shares. See "Purchase of Shares -- Class A Shares" and "Distribution and Service
Plans."
3
<PAGE> 6
Class B Shares. Class B shares are offered at net asset value per share and
are subject to a maximum contingent deferred sales charge of 5.00% of redemption
proceeds on redemptions made within the first year after purchase and declining
thereafter to 0.00% after the fifth year. See "Redemption of Shares." Class B
shares are subject to a combined annual distribution fee and service fee of up
to 1.00% of the Fund's average daily net assets attributable to such class of
shares. See "Purchase of Shares -- Class B Shares" and "Distribution and Service
Plans." Class B shares convert automatically to Class A shares eight years after
the end of the calendar month in which the shareholder's order to purchase was
accepted. See "Alternative Sales Arrangements -- Conversion Feature."
Class C Shares. Class C shares are offered at net asset value per share and
are subject to a contingent deferred sales charge of 1.00% of redemption
proceeds on redemptions made within one year of purchase. See "Redemption of
Shares." Class C shares are subject to a combined annual distribution fee and
service fee of up to 1.00% of the Fund's average daily net assets attributable
to such class of shares. See "Purchase of Shares -- Class C Shares" and
"Distribution and Service Plans." Class C shares convert automatically to Class
A shares ten years after the end of the calendar month in which the
shareholder's order to purchase was accepted. See "Alternative Sales
Arrangements -- Conversion Feature."
INVESTMENT ADVISERS. Van Kampen American Capital Asset Management, Inc. (the
"Adviser") is the Fund's investment adviser. John Govett & Co. Limited (the
"Subadviser") provides sub-advisory services to the Adviser with respect to the
Fund's investments in foreign securities.
DISTRIBUTOR. Van Kampen American Capital Distributors, Inc. (the "Distributor")
is the distributor of the Fund's shares.
DISTRIBUTIONS FROM THE FUND. Dividends from net investment income and capital
gains, if any, are distributed annually. All dividends and distributions are
automatically reinvested in shares of the Fund at net asset value per share
(without sales charge) unless payment in cash is requested. See "Distributions
from the Fund."
The foregoing is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus.
4
<PAGE> 7
- ------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ----------------- -------------
<S> <C> <C> <C>
Maximum sales charge imposed on
purchases (as a percentage of
offering price)................. 5.75%(1) None None
Maximum sales charge imposed on
reinvested dividends (as a
percentage of offering price)... None None None
Deferred sales charge (as a
percentage of the lesser of
original purchase price or
redemption proceeds)............ None(2) Year 1--5.00% Year 1--1.00%
Year 2--4.00% After--None
Year 3--3.00%
Year 4--2.50%
Year 5--1.50%
After--None
Redemption fees (as a percentage
of amount redeemed)............. None None None
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 contingent deferred sales charge of 1.00% may be
imposed on redemptions made within one year of the purchase. See "Purchase
of Shares -- Class A Shares."
5
<PAGE> 8
- ------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES AND EXAMPLE
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees (as a percentage of average
daily net assets)........................ 1.00% 1.00% 1.00%
12b-1 Fees(1) (as a percentage of average
daily net assets)........................ 0.25% 1.00%(2) 1.00%(2)
Other Expenses (as a percentage of average
daily net assets)........................ 0.97% 0.99% 1.00%
Total Fund Operating Expenses (as a
percentage of average daily net
assets).................................. 2.22% 2.99% 3.00%
</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 "Distribution and Service Plans."
(2) Individual long-term shareholders may pay more than the economic equivalent
of the maximum front-end sales charges permitted as a Fund-level expense by
NASD Rules.
6
<PAGE> 9
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
EXAMPLE: YEAR YEARS YEARS YEARS
------ ------ ------ ------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming (i) an
operating expense ratio of 2.22% for
Class A shares, 2.99% for Class B shares
and 3.00% for Class C shares, (ii) a 5%
annual return and (iii) redemption at the
end of each time period:
Class A............................... $ 79 $123 $170 $298
Class B............................... $ 81 $124 $174 $313*
Class C............................... $ 41 $ 93 $158 $332
You would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of each time
period:
Class A............................... $ 79 $123 $170 $298
Class B............................... $ 30 $ 92 $157 $313*
Class C............................... $ 30 $ 93 $158 $332
</TABLE>
- ------------------------------------------------------------------------------
* Based on conversion to Class A shares after eight years.
The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The "Example" reflects expenses based on the "Annual Fund
Operating Expenses" table as shown above carried out to future years and is
included to provide a means for the investor to compare expense levels of funds
with different fee structures over varying investment periods. To facilitate
such comparison, all funds are required by the Securities and Exchange
Commission ("SEC") to utilize a 5% annual return assumption. Class B shares
acquired through the exchange privilege are subject to the deferred sales charge
schedule relating to the Class B shares of the fund from which the purchase of
Class B shares was originally made. Accordingly, future expenses as projected
could be higher than those determined in the above table if the investor's Class
B shares were exchanged from a fund with a higher contingent deferred sales
charge. THE INFORMATION CONTAINED IN THE ABOVE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. For a more complete description of such costs and
expenses, see "Purchase of Shares," "Investment Advisory Services," "Redemption
of Shares" and "Distribution and Service Plans."
7
<PAGE> 10
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Selected data for a share of beneficial interest
outstanding throughout each of the periods indicated)
- --------------------------------------------------------------------------------
The following financial highlights have been audited by Price Waterhouse LLP,
independent accountants, whose report thereon was unqualified and is included in
the Statement of Additional Information, which may be obtained by shareholders
without charge by calling the telephone number on the cover of this prospectus.
This information should be read in conjunction with the financial statements and
notes thereto included in the Statement of Additional Information.
<TABLE>
<CAPTION>
CLASS B
SHARES
CLASS A SHARES ----------
-----------------------------------------------------------------
YEAR ENDED
YEAR ENDED MAY 31 AUG. 5, 1991(1) MAY 31
------------------------------------------- TO ----------
1996(2) 1995(2) 1994 1993(2) MAY 31, 1992(2) 1996(2)
---------- ---------- ---------- ---------- ------------------ ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $11.79 $11.67 $10.76 $10.44 $9.33 $11.50
---------- ---------- ---------- ---------- --------- ----------
INCOME FROM INVESTMENT OPERATIONS
Investment income............................ .24 .23 .26 .235 .21 .23
Expenses..................................... (.28) (.27) (.32) (.325) (.185) (.37)
Expense reimbursement........................ -- -- -- .035 -- --
---------- ---------- ---------- ---------- --------- ----------
Net investment income (loss).................. (.04) (.04) (.06) (.055) .025 (.14)
Net realized and unrealized gain on
securities................................... 2.561 .42 1.0125 .7775 1.145 2.501
---------- ---------- ---------- ---------- --------- ----------
Total from investment operations.............. 2.521 .38 .9525 .7225 1.17 2.361
---------- ---------- ---------- ---------- --------- ----------
LESS DISTRIBUTIONS FROM
Net realized gain on securities.............. (.331) -- (.0425) (.4025) (.06) (.331)
Excess of book-basis net realized gain on
securities................................. -- (.26) -- -- -- --
---------- ---------- ---------- ---------- --------- ----------
Total distributions........................... (.331) (.26) (.0425) (.4025) (.06) (.331)
---------- ---------- ---------- ---------- --------- ----------
Net asset value, end of period................ $13.98 $11.79 $11.67 $10.76 $10.44 $13.53
========== ========== ========== ========== ========= ==========
TOTAL RETURN(3)............................... 21.85% 3.36% 9.17% 7.13% 12.56% 20.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions).......... $106.7 $60.1 $41.8 $12.7 $8.4 $92.8
Average net assets (millions).................
Ratios to average net assets (annualized)..... $77.6 $54.5 $25.8 $9.2 $6.2 $75.6
Expenses..................................... 2.22% 2.29% 2.46% 2.93% 2.07% 2.99%
Expenses, without expense reimbursement...... 2.23% -- -- 3.28% -- 2.99%
Net investment income (loss)................. (.30%) (.35%) (.46%) (.57%) .29% (1.11%)
Net investment (loss), without expense
reimbursement.............................. (.31%) -- -- (.92%) -- (1.11%)
Average commission rate per equity stock
traded....................................... $.02 -- -- -- -- $.02
Portfolio turnover rate....................... 94% 120% 116% 120% 135% 94%
<CAPTION>
CLASS B SHARES CLASS C SHARES(2)
------------------------------------------------------ ----------------------
YEAR ENDED
MAY 31 NOV. 15, 1991(1) YEAR ENDED MAY 31,
-------------------------------- TO ----------------------
1995(2) 1994 1993(2) MAY 31, 1992(2) 1996 1995
---------- ---------- ---------- ------------------- ---------- -----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $11.48 $10.67 $10.46 $9.78 $11.61 $11.59
---------- ---------- ---------- ------- ---------- -----------
INCOME FROM INVESTMENT OPERATIONS
Investment income............................ .22 .22 .235 .16 .24 .22
Expenses..................................... (.35) (.35) (.435) (.165) (.38) (.35)
Expense reimbursement........................ -- -- .065 -- -- --
---------- ---------- ---------- ------- ---------- -----------
Net investment income (loss).................. (.13) (.13) (.135) (.005) (.14) (.13)
Net realized and unrealized gain on
securities................................... .41 .9825 .7475 .745 2.521 .41
---------- ---------- ---------- ------- ---------- -----------
Total from investment operations.............. .28 .8525 .6125 .74 2.381 .28
---------- ---------- ---------- ------- ---------- -----------
LESS DISTRIBUTIONS FROM
Net realized gain on securities.............. -- (.0425) (.4025) (.06) (.331) --
Excess of book-basis net realized gain on
securities................................. (.26) -- -- -- -- (.26)
---------- ---------- ---------- ------- ---------- -----------
Total distributions........................... (.26) (.0425) (.4025) (.06) (.331) (.26)
---------- ---------- ---------- ------- ---------- -----------
Net asset value, end of period................ $11.50 $11.48 $10.67 $10.46 $13.66 $11.61
========== ========== ========== ======== ========== ===========
TOTAL RETURN(3)............................... 2.62% 8.21% 6.15% 7.58% 20.87% 2.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions).......... $64.7 $48.8 $6.9 $1.2 $9.2 $6.6
Average net assets (millions).................
Ratios to average net assets (annualized)..... $59.4 $26.4 $2.8 $.5 $7.4 $6.2
Expenses..................................... 3.05% 3.21% 3.88% 3.11% 3.00% 3.05%
Expenses, without expense reimbursement...... -- -- 4.50% -- 3.00% --
Net investment income (loss)................. (1.11%) (1.19%) (1.41%) (.12%) (1.10%) (1.13%)
Net investment (loss), without expense
reimbursement.............................. -- -- (2.02%) -- (1.10%) --
Average commission rate per equity stock
traded....................................... -- -- -- -- $.02 --
Portfolio turnover rate....................... 120% 116% 120% 135% 94% 120%
<CAPTION>
CLASS C SHARES(2)
-------------------
JUNE 21, 1993(1)
TO
MAY 31, 1994
-------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $10.29
-------
INCOME FROM INVESTMENT OPERATIONS
Investment income............................ .24
Expenses..................................... (.37)
Expense reimbursement........................ --
-------
Net investment income (loss).................. (.13)
Net realized and unrealized gain on
securities................................... 1.4725
-------
Total from investment operations.............. 1.3425
-------
LESS DISTRIBUTIONS FROM
Net realized gain on securities.............. (.0425)
Excess of book-basis net realized gain on
securities................................. --
-------
Total distributions........................... (.0425)
-------
Net asset value, end of period................ $11.59
========
TOTAL RETURN(3)............................... 13.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions).......... $5.1
Average net assets (millions).................
Ratios to average net assets (annualized)..... $2.4
Expenses..................................... 3.21%
Expenses, without expense reimbursement...... --
Net investment income (loss)................. (1.15%)
Net investment (loss), without expense
reimbursement.............................. --
Average commission rate per equity stock
traded....................................... --
Portfolio turnover rate....................... 116%
</TABLE>
- --------------------------------
(1) Commencement of offering of shares.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
8
<PAGE> 11
- ------------------------------------------------------------------------------
THE TRUST
- ------------------------------------------------------------------------------
The Trust is an open-end, management investment company, commonly known as a
mutual fund. A mutual fund provides, for those who have similar investment
goals, a practical and convenient way to invest in a diversified portfolio of
securities by combining their resources in an effort to achieve such goals. The
Fund is a diversified portfolio of the Trust and is one of two series of shares
of beneficial interest which the Trust is currently authorized to issue. The
other series is Van Kampen American Capital Global Government Securities Fund
("Global Government").
Van Kampen American Capital Asset Management, Inc. (the "Adviser") provides
investment advisory and administrative services to the Fund. The Adviser and its
affiliates also manage other mutual funds distributed by Van Kampen American
Capital Distributors, Inc. (the "Distributor"). To obtain prospectuses and other
information on any of these other funds, please call the telephone number on the
cover page of the Prospectus.
- ------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- ------------------------------------------------------------------------------
The investment objective of the Fund is to seek long-term growth of capital.
The Fund seeks to achieve its objective by investing in an internationally
diversified portfolio of equity securities of companies located in any nation,
including the United States. The Fund intends to be invested in equity
securities of companies located in at least three countries, including the
United States. Under normal market conditions, at least 65% of the Fund's total
assets are so invested. Equity securities include common stocks, preferred
stocks and warrants or options to acquire such securities. In selecting
portfolio securities, the Fund attempts to take advantage of the differences
between economic trends and the anticipated performance of securities markets in
various countries.
Under normal market conditions, the Fund invests in securities of issuers
traded on markets of at least three of the world's six largest countries by
market capitalization (United States, Japan, United Kingdom, Germany, France and
Canada), but securities of issuers traded on quoted markets of other countries
are also considered for investment. The next six largest countries, in terms of
market capitalization, are Switzerland, Italy, Netherlands, Australia, Sweden
and Spain.
The Adviser, subject to the direction of the Trustees, provides the Fund with
an overall investment program consistent with the Fund's investment objective
and policies. The Adviser is solely responsible for advising the Fund with
respect to investments in the United States. The Subadviser, subject to overall
review by the
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<PAGE> 12
Adviser and the Fund's Trustees, is responsible for recommending an optimal
geographic equity allocation and is responsible for providing advice with
respect to the Fund's investments in countries other than the United States.
Investments may be shifted among the world's various capital markets and among
different types of securities in accordance with ongoing analysis provided by
the Adviser and the Subadviser of trends and developments affecting such markets
and securities. The Adviser and the Subadviser are sometimes referred to herein
collectively as the Advisers.
While the investment policy of the Fund is to be broadly diversified as to
both countries and individual issuers, the Advisers select individual countries
and securities on the basis of several factors. Investments are allocated among
issuers in countries selected based on a comparison of values between the equity
markets in those countries. This comparison is based upon criteria such as
return on equity, book value, earnings, dividends, and interest rates in each
market. After evaluating these and other factors for each country and comparing
opportunities among countries, the Advisers select those countries which, in
their opinion, have the most attractive equity markets. This evaluation is
influential in determining the amount of investment by the Fund in each country.
The Advisers seek the most attractive individual equity securities within
individual countries based on factors such as book value, earnings per share and
other financial data. The Advisers' approach to both country and individual
security selection is characterized as a quantitative method utilizing specific
financial criteria to identify both value and opportunity in the equity markets.
The Advisers also endeavor to identify industry, political, and geographical
trends which may affect equity values within individual countries or among a
group of countries. The Advisers use these financial criteria and analysis of
industry, political, and geographical trends to evaluate and compare equity
investment opportunities among various countries and among securities within
each country with the objective of identifying and investing in those securities
which can best meet the Fund's investment objective. Of course, there is no
assurance that the Advisers will be successful in this endeavor or that the
investment objective will be realized.
The Fund may purchase foreign securities in the form of American Depositary
Receipts ("ADRs") and European Depositary Receipts ("EDRs") or other securities
representing underlying shares of foreign companies. ADRs are publicly traded on
exchanges or over-the-counter in the United States and are issued through
"sponsored" or "unsponsored" arrangements. In a sponsored ADR arrangement, the
foreign issuer assumes the obligation to pay some or all of the depositary's
transaction fees, whereas under an unsponsored arrangement, the foreign issuer
assumes no obligations and the depositary's transaction fees are paid by the ADR
holders. In addition, less information is available in the United States about
an unsponsored ADR than about a sponsored ADR. The Fund may invest in ADRs
through both sponsored and unsponsored arrangements.
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The Fund may invest cash temporarily in short-term debt instruments. Such
temporary investments will only be made with cash held to maintain liquidity or
pending investment. See "Temporary Short-Term Investments" herein.
The investment policies, the percentage limitations and the types of
securities in which the Fund may invest may be changed by the Trustees, unless
expressly governed by those limitations as described under "Investment
Practices -- Investment Restrictions" which can be changed only by action of the
shareholders.
RISK FACTORS. An investment in the Fund involves risks similar to those of
investing in foreign common stocks generally. Investment in common stocks of
foreign issuers may subject the Fund to risks of foreign political, economic and
legal conditions and developments. Such conditions or developments might include
favorable or unfavorable changes in currency exchange rates, exchange control
regulations (including currency blockage), expropriation of assets of companies,
imposition of withholding taxes on dividend or interest payments, and possible
difficulty in obtaining and enforcing judgments against a foreign issuer. Also,
foreign common stocks may not be as liquid and may be more volatile than
comparable domestic common stocks.
Issuers of foreign common stocks are subject to different, often less
comprehensive, accounting, reporting and disclosure requirements than domestic
issuers. Brokerage costs incurred in purchasing and selling securities in
foreign securities markets generally are higher than such costs in comparable
transactions in domestic securities markets, and foreign custodial costs
relating to the Fund's portfolio securities are higher than domestic custodial
costs. See also "Investment Practices" for a discussion of certain additional
risks related to investment practices that may be utilized by the Fund,
including use of options, futures contracts and related options.
FOREIGN CURRENCY TRANSACTIONS. The value of the Fund's portfolio securities
that are traded in foreign markets may be affected by changes in currency
exchange rates and exchange control regulations. In addition, the Fund will
incur costs in connection with conversions between various currencies. The
Fund's foreign currency exchange transactions generally will be conducted on a
spot basis (that is, cash basis) at the spot rate for purchasing or selling
currency prevailing in the foreign currency exchange market. The Fund purchases
and sells foreign currency on a spot basis in connection with the settlement of
transactions in securities traded in such foreign currency. The Fund does not
purchase and sell foreign currencies as an investment.
The Fund also may enter into contracts with banks or other foreign currency
brokers or dealers to purchase or sell foreign currencies at a future date
("forward contracts") and purchase and sell foreign currency futures contracts
to hedge against changes in foreign currency exchange rates. A foreign currency
forward
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<PAGE> 14
contract is a negotiated agreement between the contracting parties to exchange a
specified amount of currency at a specified future time at a specified rate. The
rate can be higher or lower than the spot rate between the currencies that are
the subject of the contract.
The Fund may attempt to hedge against changes in the value of the United
States dollar in relation to a foreign currency by entering into a forward
contract for the purchase or sale of the amount of foreign currency invested or
to be invested, or by buying or selling a foreign currency futures contract for
such amount. Such hedging strategies may be employed before the Fund purchases a
foreign security traded in the hedged currency which the Fund anticipates
acquiring or between the date the foreign security is purchased or sold and the
date on which payment therefor is made or received. Hedging against a change in
the value of a foreign currency in the foregoing manner does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Furthermore, such hedging transactions reduce
or preclude the opportunity for gain if the value of the hedged currency should
move in the direction opposite to the hedged position. The Fund will not
speculate in foreign currency forward or futures contracts or through the
purchase and sale of foreign currencies.
TEMPORARY SHORT-TERM INVESTMENTS. The Fund's policy is to be fully invested in
common stocks and securities convertible into common stocks. The Fund may,
however, hold a portion of its assets in cash to meet redemptions and other
day-to-day operating expenses. The Fund may invest cash held for such purposes
in obligations of the United States and of foreign governments, including their
political subdivisions, commercial paper, bankers' acceptances, certificates of
deposit, repurchase agreements collateralized by these securities, and other
short-term evidences of indebtedness. The Fund will purchase commercial paper
only if it is rated Prime-1 or Prime-2 by Moody's Investors Services, Inc. or
A-1 or A-2 by Standard & Poor's Corporation. The Fund also may invest cash held
for such purposes in short-term, high grade foreign debt securities. High grade
foreign debt securities are those debt securities of foreign issuers which the
Advisers determine to have creditworthiness substantially equivalent to that of
domestic issuers of debt securities rated investment grade.
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INVESTMENT PRACTICES
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
domestic or foreign banks or broker-dealers in order to earn a return on
temporarily available cash. 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 a default by the other party. The Fund
will not invest in repurchase agreements maturing in more than seven days if any
such investment, together with any other illiquid securities held by the Fund,
exceeds 10% of the value of the Fund's net assets. In the event of the
bankruptcy or other default of the seller of a repurchase agreement, the Fund
could experience delays in liquidating the underlying securities including: (a)
a possible decline in the value of the underlying security during the period
while the Fund seeks to enforce its rights thereto; (b) a 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 funds advised or subadvised by the Adviser 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 SEC exemptive order
authorizing this practice, which conditions are designed to ensure the fair
administration of the joint account and to protect the amounts in that account.
PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES. The Advisers are responsible
for the placement of orders for the purchase and sale of portfolio securities
for the Fund and the negotiation of brokerage commissions on such transactions.
Brokerage firms are selected on the basis of their professional capability for
the type of transaction and the value and quality of execution of services on a
continuing basis. The Advisers are authorized to place portfolio transactions
with brokerage firms participating in the distribution of shares of the Fund and
other Van Kampen American Capital mutual funds if it reasonably believes that
the quality of the execution and the commission are comparable to that available
from other qualified firms. The Advisers are authorized to pay higher
commissions to brokerage firms that provide investment and research information
than to firms which do not provide such services if the Advisers determine that
such commissions are reasonable in relation to the overall services provided.
The information received may be
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<PAGE> 16
used by the Advisers in managing the assets of other advisory accounts as well
as in the management of the assets of the Fund.
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" and may involve the payment by the Fund of brokerage
commissions or dealer mark-up and other transaction costs on the sale of
securities as well as on the investment of the proceeds in other securities. The
portfolio turnover rate for a fiscal year is the ratio of the lesser of
purchases or sales of portfolio securities to the average value of portfolio
securities, excluding debt securities whose maturities at acquisition were one
year or less. The rate may exceed 100% in any given year, which is higher than
that of many other investment companies. The turnover rate will not be a
limiting factor, however, if the Advisers deem portfolio changes appropriate.
The Fund's annual portfolio turnover rate is shown in the table of "Financial
Highlights."
LOANS OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
unaffiliated brokers, dealers and financial institutions provided that (a)
immediately after any such loan, the value of the securities loaned does not
exceed 15% of the total value of the Fund's assets, and (b) any securities loan
is collateralized in accordance with applicable regulatory requirements. Lending
portfolio securities involves risks of delay in recovery of the loaned
securities or, in some cases, loss of rights in the collateral should the
borrower fail financially.
RESTRICTED SECURITIES. The Fund may invest up to 10% of its net assets in
restricted securities and other illiquid assets. As used herein, restricted
securities are those that have been sold in the United States without
registration under the Securities Act of 1933 ("1933 Act") and are thus subject
to restrictions on resale. Excluded from the limitation, however, are any
restricted securities which are eligible for resale pursuant to Rule 144A under
the 1933 Act and which have been determined to be liquid by the Trustees or by
the Advisers pursuant to Board-approved guidelines. The determination of
liquidity is based on the volume of reported trading in the institutional
secondary market for each security. Since it is not possible to predict with
assurance how the markets for restricted securities sold and offered under Rule
144A will develop, the Trustees will carefully monitor the Fund's investment in
these securities focusing on such factors, among others, as valuation, liquidity
and availability of information. This investment practice could have the effect
of increasing the level of illiquidity in the Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing these
restricted securities. These difficulties and delays could result in the Fund's
inability to realize a favorable price upon disposition of restricted
securities, and in some cases might make disposition of such securities at the
time desired by the Fund impossible. Since market quotations are not readily
available for restricted securities, such securities will be valued by a method
that the Fund's Trustees believe accurately reflects fair value.
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<PAGE> 17
SHORT SALES AGAINST THE BOX. The Fund may from time to time make short sales
of securities it owns or has the right to acquire through conversion or exchange
of other securities it owns. A short sale is "against the box" to the extent
that the Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short. In a short sale, the Fund does not
immediately deliver the securities sold and does not receive the proceeds from
the sale. The Fund is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. The Fund may not make short sales or maintain a short position if doing so
would cause more than 25% of its total assets, taken at market value, to be held
as collateral for such sales.
To secure its obligation to deliver the securities sold short, the Fund will
deposit in escrow in a separate account with its Custodian an equal amount of
the securities sold short or securities convertible into or exchangeable for
such securities. The Fund may close out a short position by purchasing and
delivering an equal amount of the securities sold short, rather than by
delivering securities already held by the Fund, because the Fund may want to
continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short. The Fund will not
purchase and deliver new securities to satisfy its short order if such purchase
and sale would cause the Fund to derive more than 30% of its gross income from
the sale of securities held for less than three months.
USING OPTIONS, FUTURES CONTRACTS AND RELATED OPTIONS. The Fund expects to
utilize options, futures contracts and options thereon in several different
ways, depending upon the status of the Fund's portfolio and the Advisers'
expectations concerning the securities markets.
In times of stable or rising security prices, the Fund generally seeks to be
fully invested in the stock market. 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 also may have cash on hand that has not yet been invested. The portion
of the Fund's assets that is invested in cash equivalents does not fluctuate
with security market prices, so that, in times of rising market prices, the Fund
may underperform the market in proportion to the amount of cash equivalents in
its portfolio. By purchasing futures contracts, however, the Fund can seek to
"equitize" the cash portion of its assets and may obtain performance equivalent
to investing 100% of its assets in equity securities.
If the Advisers anticipate a market decline, the Fund may take a defensive
position, reducing its exposure to the securities markets by increasing its cash
position. By selling futures contracts instead of portfolio securities, a
similar result may be achieved to the extent that the performance of the stock
index 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,
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<PAGE> 18
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 selling stock index futures contracts, the Fund can
purchase stock index puts (or stock index futures puts) to hedge the portfolio's
risk in a declining market. Since the value of a put increases as the index
declines below a specified level, the portfolio's value is protected against a
market decline to the degree the performance of the index 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.
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
purchasing or selling portfolio securities.
Potential Risks of Options, Futures Contracts and Related Options. The
purchase and sale of options and futures contracts involve risks different from
those involved with direct investments in underlying securities. While
utilization of options, futures contracts and similar instruments may be
advantageous to the Fund, if the Advisers are not successful in employing such
instruments in managing the Fund's investments, the Fund's performance will be
worse than if the Fund did not make such investments. In addition, the Fund
would pay commissions and other costs in connection with such investments, which
may increase the Fund's expenses and reduce its return.
The Fund is authorized to purchase and sell over-the-counter options ("OTC
Options"). OTC options are purchased from or sold to securities dealers,
financial institutions of other parties ("Counterparties") through direct
bilateral agreement with the Counterparty. The Fund will sell only OTC Options
(other than OTC currency options) that are subject to a buy-back provision
permitting the Fund to require to the Counterparty to sell the option back to
the Fund at a formula price within seven days. The staff of the SEC currently
takes the position that, in general, OTC options on securities other than U.S.
Government securities purchased by the Fund, and portfolio securities covering
OTC options sold by the Fund, are illiquid securities subject to the Fund's
limitation on investing no more than 10% of its assets in illiquid securities.
In order to prevent leverage in connection with the purchase of futures
contracts by the Fund, an amount of cash, cash equivalents or liquid high grade
debt 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. The Fund may not invest more than 10% of its net
assets in illiquid
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<PAGE> 19
securities, including OTC Options and repurchase agreements, which have a
maturity of longer than seven days.
INVESTMENT RESTRICTIONS. The Fund has adopted a number of investment
restrictions that may not be changed without approval by a majority vote (as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of
the outstanding shares of the Fund. See the Statement of Additional Information.
The percentage limitations need only be met at the time the investment is made
or other relevant action taken. These restrictions provide, among other things,
that the Fund may not:
1. Purchase any security (other than obligations of the United States
Government, its agencies, or instrumentalities) if more than 25% of its
total assets (taken at current value) would then be invested in a single
industry.
2. Invest more than 5% of its total assets (taken at current value) in
securities of a single issuer other than the United States Government,
its agencies or instrumentalities, or hold more than 10% of the
outstanding voting securities of an issuer.
3. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of its
net assets, or pledge more than 10% of its net assets in connection with
permissible borrowings or purchase additional securities when money
borrowed exceeds 5% of its net assets. Margin deposits or payments in
connection with the writing of options or in connection with the purchase
or sale of forward contracts, futures, foreign currency futures and
related options, are not deemed to be a pledge or other encumbrance.
4. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend securities
in an amount exceeding 15% of the total assets of the Fund. The purchase
of a portion of an issue of securities described under (i) above
distributed publicly, whether or not the purchase is made on the original
issuance, is not considered the making of a loan.
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INVESTMENT ADVISORY SERVICES
- ------------------------------------------------------------------------------
THE ADVISER. The Adviser is a wholly-owned subsidiary of Van Kampen American
Capital, Inc. ("Van Kampen American Capital"). Van Kampen American Capital is a
diversified asset management company with more than two million retail investor
accounts, extensive capabilities for managing institutional portfolios, and more
than $57 billion under management or supervision. Van Kampen American Capital's
more than 40 open-end and 38 closed-end funds and more than 2,800 unit
investment trusts are professionally distributed by leading financial advisers
nationwide. Van Kampen American Capital Distributors, Inc., the distributor of
the Fund and the sponsor of the Funds mentioned above, is also a wholly-owned
subsidiary of Van Kampen American Capital.
Van Kampen American Capital is a wholly-owned subsidiary of VK/AC Holding,
Inc. VK/AC Holding, Inc. is controlled, through the ownership of a substantial
majority of its common stock, by The Clayton & Dubilier Private Equity Fund IV
Limited Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is
managed by Clayton Dubilier & Rice, Inc., a New York based private investment
firm. The General Partner of C&D L.P. is Clayton & Dubilier Associates IV
Limited Partnership ("C&D Associates L.P."). The general partners of C&D
Associates L.P. are Joseph L. Rice, III, B. Charles Ames, William A. Barbe,
Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and
Andrall E. Pearson, each of whom is a principal of Clayton, Dubilier & Rice,
Inc. In addition, certain officers, directors and employees of Van Kampen
American Capital own, in the aggregate, not more than 6% of the common stock of
VK/AC Holding, Inc. and have the right to acquire, upon the exercise of options,
approximately an additional 12% 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 SUBADVISER. The Subadviser provides investment advisory services to the
Adviser of the Fund with respect to the Fund's investments in foreign
securities, including recommending optimal geographic asset allocation and
currency exposure. The Subadviser is a United Kingdom-based investment
management company whose investment management activities originated in the
1920s. The Subadviser was incorporated in London, England, in 1955, and from
1986 to December 29, 1995 was a wholly-owned subsidiary of London Pacific Group
Limited, a Jersey, Channel Islands corporation whose ordinary shares are listed
on the London Stock Exchange and NASDAQ. The Subadviser currently is a wholly-
owned subsidiary of John Govett Holdings Limited, which is a majority owned
entity of AIB Group Holdings (U.K.) Limited located at Bankcentre-Britain,
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<PAGE> 21
Uxbridge, Middlesex UB8 1SA. AIB Group Holding (U.K.) Limited is wholly-owned by
AIB, a publicly held bank headquartered in Bankcentre, Ballsbridge. Dublin 4,
Ireland.
ADVISORY AGREEMENTS. The Trust retains the Adviser to manage the investment of
the Fund's assets and to place orders for the purchase and sale of the Fund's
portfolio securities. Under an investment advisory agreement between the Adviser
and the Trust (the "Advisory Agreement"), the Trust pays the Adviser a monthly
fee computed on average daily net assets of the Fund at the annual rate of 1.00%
of the Fund's average daily net assets. This fee is higher than that charged by
most other mutual funds but the Fund's Trustees believe it is justified by the
special international nature of the Fund and it is not necessarily higher than
the fees charged by certain mutual funds with investment objectives and policies
similar to those of the Fund. Under the Advisory Agreement, the Trust also
reimburses the Adviser for the cost of the Fund's accounting services, which
include maintaining its financial books and records and calculating its daily
net asset value. Operating expenses paid by the Fund include shareholder service
agency fees, distribution charges, custodial fees, legal and accounting fees,
the costs of reports and proxies to shareholders, trustees' fees, and all other
business expenses not specifically assumed by the Adviser. Advisory (management)
fee, and total operating expense, ratios are shown under the caption "Annual
Fund Operating Expenses and Example" herein.
The Adviser has entered into a sub-advisory agreement (the "Sub-advisory
Agreement") with the Subadviser to assist it in performing its investment
advisory functions. The Subadviser will be primarily responsible for
recommending the allocation of investments among various international markets
and currencies; recommendation and selection of particular securities in the
international markets; and placement of portfolio transactions in the foreign
equity markets. Pursuant to the Sub-advisory Agreement, the Subadviser receives
on an annual basis 50% of the compensation received by the Adviser.
From time to time as the Adviser, the Subadviser or the Distributor may deem
appropriate, they may voluntarily undertake to reduce the Fund's expenses by
reducing the fees payable to them to the extent of, or bearing expenses in
excess of, such limitations as they may establish. The Adviser may utilize, at
its own expense, credit analysis, research and trading support services provided
by its affiliate, Van Kampen American Capital Investment Advisory Corp.
PERSONAL INVESTING 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 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.
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<PAGE> 22
PORTFOLIO MANAGEMENT. Mr. Jeff New has been primarily responsible for the
day-to-day management of the Fund's investment portfolio with respect to
investments in the United States since May 1994. Mr. New has been Vice President
of the Adviser since April 1994 and Vice President of Van Kampen American
Capital Investment Advisory Corp. since June 1995. He has been an associate
portfolio manager with the Adviser since April 1990.
The Subadviser has employed Peter Kysel since September 1994 as Director and
Fund Manager. He is primarily responsible for allocating the Fund's investments
between United States and non-United States equity securities and the day-to-day
management of the Fund's investments in countries other than the United States.
Mr. Kysel began managing the Fund's investment portfolio effective December 21,
1994. Mr. Kysel was previously a managing director of the investment banking
division of Komercni Bank.
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ALTERNATIVE SALES ARRANGEMENTS
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The Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase and
the length of time the investor expects to hold the shares.
CLASS A SHARES. Class A shares are sold at net asset value plus an initial
maximum sales charge of up to 5.75% of the offering price (6.10% of the net
amount invested), reduced on investments of $50,000 or more. Investments of $1
million or more are not subject to any sales charge at the time of purchase, but
a contingent deferred sales charge of 1.00% may be imposed on certain
redemptions made within one year of the purchase. Class A shares are subject to
an ongoing service fee at an annual rate of up to 0.25% of the Fund's aggregate
average daily net assets attributable to the Class A shares. Certain purchases
of Class A shares qualify for reduced initial sales charges. See "Purchase of
Shares -- Class A Shares."
CLASS B SHARES. Class B shares are sold at net asset value and are subject to
a deferred sales charge if redeemed within five years of purchase. Class B
shares are subject to an ongoing service fee at an annual rate of up to 0.25% of
the Fund's aggregate average daily net assets attributable to the Class B shares
and an ongoing distribution fee at an annual rate of up to 0.75% of the Fund's
aggregate average daily net assets attributable to the Class B shares. Class B
shares enjoy the benefit of permitting all of the investor's dollars to work
from the time the investment is made. The ongoing distribution fee paid by Class
B shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares. See "Purchase of Shares -- Class
B Shares." Class B shares automatically convert to Class A shares eight years
after the end of the calendar month in which
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<PAGE> 23
the shareholder's order to purchase was accepted. See "Conversion Feature"
herein for discussion on applicability of the conversion feature to Class B
shares.
CLASS C SHARES. Class C shares are sold at net asset value and are subject to
a deferred sales charge if redeemed within one year of purchase. Class C shares
are subject to an ongoing service fee at an annual rate of up to 0.25% of the
Fund's aggregate average daily net assets attributable to the Class C shares and
an ongoing distribution fee at an annual rate of up to 0.75% of the Fund's
aggregate average daily net assets attributable to the Class C shares. Class C
shares enjoy the benefit of permitting all of the investor's dollars to work
from the time the investment is made. The ongoing distribution fee paid by Class
C shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares. See "Purchase of Shares -- Class
C Shares." Class C shares automatically convert to Class A shares ten years
after the end of the calendar month in which the shareholder's order to purchase
was accepted. See "Conversion Feature" herein for discussion on applicability of
the conversion feature to Class C shares.
CONVERSION FEATURE. Class B shares and Class C shares automatically convert to
Class A shares eight years or ten years, respectively, after the end of the
calendar month in which the shares were purchased and will no longer be subject
to the distribution fee. 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 purpose of the conversion feature is to relieve the holders of
the Class B shares and Class C shares that have been outstanding for a period of
time sufficient for the Distributor to have been substantially compensated for
distribution expenses related to the Class B shares or Class C shares, as the
case may be, from the burden of the ongoing distribution fee.
For purposes of conversion to Class A shares, shares purchased through the
reinvestment of dividends and distributions paid on Class B shares and Class C
shares in a shareholder's Fund account will be considered to be held in a
separate sub-account. Each time any Class B shares or Class C shares in the
shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, an equal pro rata portion of the Class B shares or Class C
shares in the sub-account also will convert to Class A shares.
The conversion of Class B shares and Class C 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 distribution fee and higher transfer agency costs
with respect to Class B shares and Class C shares does not result in the Fund's
dividends or distributions constituting "preferential dividends" under the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the conversion
of shares does not constitute a taxable event under federal income tax law. The
conversion of Class B shares and Class C shares may be suspended if such an
opinion is no longer available. In that event, no further conversions of Class B
shares or Class C shares
21
<PAGE> 24
would occur, and shares might continue to be subject to the distribution fee for
an indefinite period which may extend beyond the period ending eight years or
ten years, respectively, after the end of the calendar month in which the
shareholder's order to purchase was accepted.
FACTORS FOR CONSIDERATION. In deciding which class of shares to purchase,
investors should take into consideration their investment goals, present and
anticipated purchase amounts, time horizons and temperaments. Investors should
consider whether, during the anticipated life of their investment in the Fund,
the accumulated distribution fees and contingent deferred sales charges on Class
B shares or Class C shares prior to conversion would be less than the initial
sales charge on Class A shares purchased at the same time, and to what extent
such differential would be offset by the higher dividends per share on Class A
shares. To assist investors in making this determination, the table under the
caption "Annual Fund Operating Expenses and Example" sets forth examples of the
charges applicable to each class of shares. In this regard, Class A shares may
be more beneficial to the investor who qualifies for reduced initial sales
charges or purchases at net asset value, as described herein under "Purchase of
Shares -- Class A Shares." It is presently the policy of the Distributor not to
accept any order of $500,000 or more for Class B shares or any order of $1
million or more for Class C shares.
Class A shares are not subject to an ongoing distribution fee and,
accordingly, receive correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase for accounts
under $1 million, investors in Class A shares do not have all their funds
invested initially and, therefore, initially own fewer shares. Other investors
might determine that it is more advantageous to purchase either Class B shares
or Class C shares and have all their funds invested initially, although
remaining subject to a contingent deferred sales charge. Ongoing distribution
fees on Class B shares and Class C shares are offset to the extent of the
additional funds originally invested and any return realized on those funds.
However, there can be no assurance as to the return, if any, which will be
realized on such additional funds. For investments held for ten years or more,
the relative value upon liquidation of the three classes tends to favor Class A
shares or Class B shares, rather than Class C shares.
Class A shares may be appropriate for investors who prefer to pay the sales
charge up front, want to take advantage of the reduced sales charges available
on larger investments, wish to maximize their current income from the start,
prefer not to pay redemption charges or have a longer-term investment horizon.
Class B shares may be appropriate for investors who wish to avoid a front-end
sales charge, put 100% of their investment dollars to work immediately, or have
a longer-term investment horizon. Class C shares may be appropriate for
investors who wish to avoid a front-end sales charge, put 100% of their
investment dollars to work
22
<PAGE> 25
immediately, have a shorter-term investment horizon or desire a short contingent
deferred sales charge schedule.
The distribution expenses incurred by the Distributor in connection with the
sale of the shares will be reimbursed, in the case of Class A shares, from the
proceeds of the initial sales charge and, in the case of Class B shares and
Class C shares, from the proceeds of the ongoing distribution fee and any
contingent deferred sales charge incurred upon redemption within five years or
one year, respectively, of purchase. Sales personnel of broker-dealers
distributing the Fund's shares and other persons entitled to receive
compensation for selling such shares may receive differing compensation for
selling such shares. INVESTORS SHOULD UNDERSTAND THAT THE PURPOSE AND FUNCTION
OF THE CONTINGENT DEFERRED SALES CHARGE AND ONGOING DISTRIBUTION FEE WITH
RESPECT TO THE CLASS B SHARES AND CLASS C SHARES ARE THE SAME AS THOSE OF THE
INITIAL SALES CHARGE WITH RESPECT TO CLASS A SHARES. See "Distribution and
Service Plans."
GENERAL. Dividends paid by the Fund with respect to Class A shares, Class B
shares and Class C shares will be calculated in the same manner at the same time
on the same day, except that the distribution fees and any incremental transfer
agency costs relating to Class B shares or Class C shares will be borne by the
respective class. See "Distributions from the Fund." Shares of the Fund may be
exchanged, subject to certain limitations, for shares of the same class of
certain other mutual funds distributed by the Distributor. See "Shareholder
Services -- Exchange Privilege."
- ------------------------------------------------------------------------------
PURCHASE OF SHARES
- ------------------------------------------------------------------------------
GENERAL
The Fund offers three classes of shares to the public on a continuous basis
through the Distributor as principal underwriter, which is located at One
Parkview Plaza, Oakbrook Terrace, Illinois 60181. Shares are also offered
through members of the National Association of Securities Dealers, Inc. ("NASD")
who are acting as securities dealers ("dealers") and NASD members or eligible
non-NASD members who are acting as brokers or agents for investors ("brokers").
The term "dealers" and "brokers" are sometimes referred to herein as "authorized
dealers."
Initial investments must be at least $500 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. Shares of the Fund may be sold in foreign countries where
permissible. The Fund and the Distributor reserve the right to refuse any order
for the purchase of shares. The
23
<PAGE> 26
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 purchased on any business day through authorized
dealers. Shares may also be purchased by completing the application accompanying
this Prospectus and forwarding the application, through the authorized dealer,
to the shareholder service agent, ACCESS Investor Services, Inc. ("ACCESS"), a
wholly-owned subsidiary of Van Kampen American Capital. When purchasing shares
of the Fund, investors must specify whether the purchase is for Class A shares,
Class B shares or Class C shares.
Shares are offered at the next determined net asset value per share, plus a
front-end or contingent deferred sales charge depending on the class of shares
chosen by the investor, as shown in the tables herein. Net asset value per share
for each class is determined once daily as of the close of trading on the New
York Stock Exchange ("Exchange") (currently 4:00 p.m. New York time) each day
the Exchange is open. Net asset value per share for each class is determined by
dividing the value of the Fund's 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. With respect to foreign securities, income is accrued by
the Fund on the ex date or when data becomes available, whichever is later.
Securities listed or traded on a national securities exchange are valued at the
last sale price. Unlisted securities and listed securities for which the last
sale price is not available are valued at the most recent bid price. Options and
futures contracts are valued at the last sale price or if no sales are reported,
at the mean between the bid and asked prices. Short-term investments and other
securities are valued in the manner described in the Statement of Additional
Information.
Generally, the net asset values per share of the Class A shares, Class B
shares and Class C shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of the Class A
shares, Class B shares and Class C shares may differ from one another,
reflecting the daily expense accruals of the distribution and the higher
transfer agency fees applicable with respect to the Class B shares and Class C
shares and the differential in the dividends paid on the classes of shares. The
price paid for shares purchased is based on the next calculation of net asset
value (plus sales charges, where applicable) after an order 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. Orders received by
authorized dealers after the close of the Exchange are priced based on the next
close, provided they are received by the Distributor prior to the Distributor's
close of business on such day. It is the responsibility of authorized dealers to
transmit orders received by them to the Distributor so they will be received
prior to
24
<PAGE> 27
such time. Orders of less than $500 are mailed by the authorized dealer and
processed at the offering price next calculated after acceptance by ACCESS.
Each class of shares represents an interest in the same portfolio of
investments of the Fund, has the same rights and is identical in all respects,
except that (i) Class B shares and Class C shares bear the expenses of the
deferred sales arrangement and any expenses (including the higher distribution
fee and incremental transfer agency costs) resulting from such sales
arrangement, (ii) generally, each class has exclusive voting rights with respect
to approvals of the Rule 12b-1 distribution plan pursuant to which its
distribution fee or service fee is paid and (iii) Class B shares and Class C
shares are subject to a conversion feature. Each class has different exchange
privileges and certain different shareholder service options available. The net
income attributable to Class B shares and Class C shares and the dividends
payable on Class B shares and Class C shares will be reduced by the amount of
the distribution fee and incremental transfer agency expenses associated with
such class of shares. Sales personnel of authorized dealers distributing the
Fund's shares and other persons entitled to receive compensation for selling
such shares may receive differing compensation for selling Class A shares, Class
B shares or Class C shares.
Agreements are in place which provide, among other things and subject to
certain conditions, for certain favorable distribution arrangements for shares
of the Fund with subsidiaries of The Travelers Inc.
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. Fees may include payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. 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. 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
25
<PAGE> 28
are made by the Distributor out of its own assets. These programs will not
change the price an investor will pay for shares or the amount that a Fund will
receive from such sale.
CLASS A SHARES
The public offering price of Class A shares is the next determined net asset
value plus a sales charge, as set forth below.
SALES CHARGE TABLE
<TABLE>
<CAPTION>
REALLOWED
TO DEALERS
AS % OF (AS A % OF
SIZE OF AS % OF NET AMOUNT OFFERING
INVESTMENT OFFERING PRICE INVESTED 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 redemptions made within one
year of the purchase. A commission will be paid to authorized dealers
who initiate and are responsible for purchases of $1 million or more as
follows: 1.00% on sales to $2 million, plus 0.80% on the next million
and 0.50% on the excess over $3 million. See "Purchase of
Shares -- Deferred Sales Charge Alternatives" for additional information
with respect to contingent deferred sales charges.
In addition to the reallowances from the applicable public offering price
described above, the Distributor may, from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash or other
compensation, to authorized dealers that sell shares of the Fund. Authorized
dealers which are reallowed all or substantially all of the sales commissions
may be deemed to be underwriters for purposes of the 1933 Act.
The Distributor may also pay financial institutions (which may include banks)
and other industry professionals that provide services to facilitate
transactions in shares of the Fund for their clients a transaction fee up to the
level of the reallowance allowable to authorized dealers described herein. Such
financial institutions, other industry professionals and authorized dealers are
hereinafter referred to as "Service Organizations." 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
26
<PAGE> 29
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 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.
QUANTITY DISCOUNTS
Investors purchasing Class A shares may, under certain circumstances, be
entitled to pay reduced sales charges. The circumstances under which such
investors may pay reduced sales charges are described below.
Investors, or their authorized dealers, must notify the Fund 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, their
spouse and minor children 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 fiduciary
account, or a "company" as defined in Section 2(a)(8) of the 1940 Act.
Volume Discounts. The size of investment shown in the preceding 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 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.
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 preceding table. The
size of investment shown in the preceding table also 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. If the goal is not
achieved within the
27
<PAGE> 30
period, the investor must pay the difference between the charges applicable to
the purchases made and the charges previously paid. The initial purchase must be
for an amount equal to at least 5% of the minimum total purchased 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 back-dating
provisions, an adjustment will be made at the expiration of the Letter of Intent
to give effect to the lower charge. Such adjustments in sales charge will be
used to purchase additional shares for the shareholder at the applicable
discount category. Additional information is contained in the application form
accompanying this Prospectus.
OTHER PURCHASE PROGRAMS
Purchasers of Class A shares may be entitled to reduced initial sales charges
in connection with unit trust reinvestment programs 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 Programs. 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 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 applicable
terms and conditions thereof, 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 ACCESS with appropriate backup data
for each participating investor in a computerized format fully compatible with
ACCESS's 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 monthly basis only, even
if
28
<PAGE> 31
their investments are made more frequently. The Fund reserves the right to
modify or terminate this program at any time.
NAV 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 the shares will not be resold except through redemption by the Fund,
by:
(1) Current or retired Trustees/Directors of funds advised by the Adviser, Van
Kampen American Capital Investment Advisory Corp. or John Govett & Co.
Limited and such persons' families and their beneficial accounts.
(2) Current or retired directors, officers and employees of VK/AC Holding,
Inc. and any of its subsidiaries, Clayton, Dubilier & Rice, Inc.,
employees of an investment subadviser to any fund described in (1) above
or an affiliate of such subadviser; and such persons' families and their
beneficial accounts.
(3) Directors, officers, employees and registered representatives of financial
institutions that have a selling group agreement with the Distributor and
their spouses and minor children 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.
(4) Registered investment advisers, trust companies and bank trust departments
investing on their own behalf or on behalf of their clients provided that
the aggregate amount invested in the Fund alone, or any combination of
shares of the Fund and shares of other Participating Funds as described
herein under "Purchase of Shares -- Class A Shares -- Volume Discounts,"
during the 13-month period commencing with the first investment pursuant
hereto equals at least $1 million. 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 following such transaction.
(5) Trustees and other fiduciaries purchasing shares for retirement plans of
organizations with retirement plan assets of $10 million or more. The
Distributor may pay commissions of up to 1.00% for such purchases.
(6) 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.
(7) Investors purchasing shares of the Fund with redemption proceeds from
other mutual fund complexes on which the investor has paid a front-end
sales charge or was subject to a deferred sales charge, whether or not
paid, if such redemption has occurred no more than 30 days prior to such
purchase.
(8) Full service participant directed profit sharing and money purchase plans,
full service 401(k) plans, or similar full service recordkeeping programs
made available through Van Kampen American Capital Trust Company
29
<PAGE> 32
with at least 50 eligible employees or investing at least $250,000 in
Participating Funds, Tax Free Money Fund or Reserve Fund. For such
investments the Fund imposes a contingent deferred sales charge of 1.00%
in the event of redemptions within one year of the purchase other than
redemptions required to make payments to participants under the terms of
the plan. The contingent deferred sales charge incurred upon certain
redemptions is paid to the Distributor in reimbursement for distribution-
related expenses. A commission will be paid to dealers who initiate and
are responsible for such purchases 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.
(9) Participants in any 403(b)(7) program of a college or university system
which permits only net asset value mutual fund investments and for which
Van Kampen American Capital Trust Company serves as custodian. In
connection with such purchases, the Distributor may pay, out of its own
assets, a commission to brokers, dealers, or financial intermediaries as
follows: one percent on sales up to $5 million, plus 0.50% on the next $5
million, plus 0.25% on the excess over $10 million.
(10) Individuals who are members of a "qualified group" may purchase Class A
Shares of the Fund without the imposition of a front end sales charge. 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 other funds in the Van Kampen American Capital
Family of 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 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 million and 0.50% on the excess over $3 million.
The term "families" includes a person's spouse, minor children 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 ACCESS by the investment
adviser, trust company or bank trust department, provided that ACCESS receives
30
<PAGE> 33
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 herein under "Distribution and Service Plans"
on purchases made as described in (3) through (10) 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.
CLASS B SHARES
Class B shares are offered at net asset value. Class B shares which are
redeemed within five years of purchase are subject to a contingent deferred
sales charge at the rates set forth below charged as a percentage of the dollar
amount subject thereto. The 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 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 purchases
of shares, all payments during a month are aggregated and deemed to have been
made on the last day of the month.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF
YEAR SINCE PURCHASE DOLLAR AMOUNT SUBJECT TO CHARGE
<S> <C>
- ------------------------------------------------------------------------------
First........................................ 5.00%
Second....................................... 4.00%
Third........................................ 3.00%
Fourth....................................... 2.50%
Fifth........................................ 1.50%
Sixth and After.............................. None
</TABLE>
------------------------------------------------------------------------------
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, second of shares held for over five years or shares acquired pursuant to
31
<PAGE> 34
reinvestment of dividends or distributions and third of shares held longest
during the five-year period.
To provide an example, assume an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares upon dividend reinvestment. If at such time the investor makes
his or her first redemption of 50 shares (proceeds of $600), 10 shares will not
be subject to charge because of dividend reinvestment. With respect to the
remaining 40 shares, the charge is applied only to the original cost of $10 per
share and not to the increase in net asset value of $2 per share. Therefore,
$400 of the $600 redemption proceeds is subject to a deferred sales charge at a
rate of 4.00% (the applicable rate in the second year after purchase).
A commission or transaction fee of 4.00% of the purchase amount will be paid
to authorized dealers and at the time of purchase. Additionally, the Distributor
may, from time to time, pay additional promotional incentives, in the form of
cash or other compensation, to authorized dealers that sell Class B shares of
the Fund.
CLASS C SHARES
Class C shares are offered at net asset value. Class C shares which are
redeemed within the first year of purchase are subject to a contingent deferred
sales charge of 1.00%. The 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 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 in an amount of $1 million
or more for Class C shares 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 second, of shares held for more than one year or shares acquired
pursuant to reinvestment of dividends or distributions.
A commission or transaction fee of 1.00% of the purchase amount will be paid
to authorized dealers at the time of purchase. Authorized dealers also will also
be paid ongoing commissions and transaction fees of up to 0.75% of the average
daily net assets of the Fund's Class C shares for the second through tenth year
after purchase. Additionally, the Distributor may, from time to time, pay
additional promotional incentives in the form of cash or other compensation, to
authorized dealers that sell Class C shares of the Fund.
32
<PAGE> 35
WAIVER OF CONTINGENT DEFERRED SALES CHARGE
The contingent deferred sales charge is waived on redemptions of Class B
shares and Class C shares (i) following the death or disability (as defined in
the Code) of a shareholder, (ii) in connection with certain distributions from
an IRA or other retirement plan, (iii) pursuant to the Fund's systematic
withdrawal plan but limited to 12% annually of the initial value of the account,
and (iv) effected pursuant to the right of the Fund to liquidate a shareholder's
account as described herein under "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 120 days after redemption. See the Statement of Additional
Information for further discussion of waiver provisions.
- ------------------------------------------------------------------------------
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. The
following is a description of those services. As used herein, "Participating
Funds" refers to all open-end investment companies distributed by the
Distributor other than Van Kampen American Capital Tax Free Money Fund ("Tax
Free Money Fund"), Van Kampen American Capital Reserve Fund ("Reserve Fund") and
The Govett Funds, Inc.
INVESTMENT ACCOUNT. Each shareholder has an investment account under which the
investor's shares are held by ACCESS, the Fund's transfer agent. ACCESS performs
bookkeeping, data processing and administrative services related to the
maintenance of shareholder accounts. Except as described in this Prospectus,
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, the Tax Free Money Fund or Reserve Fund, will
receive statements quarterly from ACCESS 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 ACCESS.
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
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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 American Capital Funds, c/o ACCESS, P.O. Box 418256, Kansas City,
MO 64141-9256, requesting an "affidavit of loss" and obtain a Surety Bond in a
form acceptable to ACCESS. On the date the letter is received ACCESS will
calculate no more than 2.00% of the net asset value of the issued shares, and
bill the party to whom the certificate was mailed.
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 (without sales charge) on
the record date. Unless the shareholder instructs otherwise, the reinvestment
plan is automatic. This instruction may be made by telephone by calling (800)
421-5666 ((800) 772-8889 for the hearing impaired) or in writing to ACCESS. 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 ACCESS to charge a bank account on a regular
basis to invest pre-determined amounts in the Fund. Additional information is
available from the Distributor or authorized dealers.
RETIREMENT PLANS. Eligible investors may establish individual retirement
accounts ("IRAs"); SEP and pension and profit sharing plans; 401(k) plans; or
Section 403(b)(7) plans in the case of employees of public school systems and
certain non-profit organizations. Documents and forms containing detailed
information regarding these plans are available from the Distributor. Van Kampen
American Capital 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 Automated Clearing House. 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
ACCESS 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 ACCESS.
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DIVIDEND DIVERSIFICATION. A shareholder may, upon written request or by
completing the appropriate section of the application form accompanying this
Prospectus or by calling (800) 421-5666 ((800) 772-8889 for the hearing
impaired), elect to have all dividends and other distributions paid on a Class
A, Class B or Class C account in the Fund invested into a pre-existing Class A,
Class B or Class C account in any of the Participating Funds, Tax Free Money
Fund or Reserve Fund.
Both accounts must be of the same type, either non-retirement or retirement.
Any two non-retirement accounts can be used. 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 as of
the payable date of the distribution.
EXCHANGE PRIVILEGE. Shares of the Fund or of any Participating Fund other than
Van Kampen American Capital Government Target Fund ("Government Target"), may be
exchanged for shares of the same class of any other fund without sales charge,
provided that shares of certain Van Kampen American Capital fixed-income funds
are subject to a 30-day holding period requirement before exchange. Shares of
Government Target may be exchanged for Class A shares of the Fund without sales
charge. Class A shares of Tax Free Money Fund or Reserve Fund that were not
acquired in exchange for Class B shares or Class C shares of a Participating
Fund may be exchanged for Class A shares of the Fund upon payment of the excess,
if any, of the sales charge rate applicable to the shares being acquired over
the sales charge rate previously paid. Shares of Tax Free Money Fund or Reserve
Fund acquired through an exchange of Class B shares or Class C shares may be
exchanged only for the same class of shares of a Participating Fund without
incurring a contingent deferred sales charge. Shares of any Participating Fund,
Tax Free Money Fund or Reserve Fund may be exchanged for shares of any other
Participating Fund 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.
Class B shareholders and Class C shareholders of the Fund have the ability to
exchange their shares ("original shares") for the same class of shares of any
other Van Kampen American Capital fund that offers such shares ("new shares") in
an amount equal to the aggregate net asset value of the original shares, without
the payment of any contingent deferred sales charge otherwise due upon
redemption of the original shares. For purposes of computing the contingent
deferred sales charge payable upon a disposition of the new shares, the holding
period for the original shares is added to the holding period of the new shares.
Class B shareholders and Class C shareholders would remain subject to the
contingent deferred sales charge
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imposed by the original fund upon their redemption from the Van Kampen American
Capital complex of funds. The contingent deferred sales charge is based upon the
holding period requirements of the original fund.
Shares of the Fund to be acquired must be registered for sale in the
investor's state. Exchanges of shares are sales and may result in a gain or loss
for federal income tax purposes, although if the shares exchanged have been held
for less than 91 days, the sales charge paid on such shares is not included in
the tax basis of the exchanged shares, but is carried over and included in the
tax basis of the shares acquired. See the Statement of Additional Information.
A shareholder wishing to make an exchange may do so by sending a written
request to ACCESS, 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 this Prospectus. Van
Kampen American Capital and its subsidiaries, including ACCESS (collectively,
"VKAC"), 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 VKAC nor the Fund will be liable for
following telephone instructions which it reasonably believes to be genuine.
VKAC and the Fund may be liable for any losses due to unauthorized or fraudulent
instructions if reasonable procedures are not followed. Exchanges are effected
at the net asset value per share next calculated after the request is received
in good order with adjustment for any additional sales charge. 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 file a specific
written request. The Fund reserves the right to reject any order to acquire its
shares through exchange. 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.
A prospectus of any of these mutual 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.
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
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instructions may establish a monthly, quarterly, semi-annual 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. See "Purchase of Shares -- Waiver of Contingent
Deferred Sales Charge" and the Statement of Additional Information.
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 this plan are reinvested in additional shares
at the next determined net asset value. 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 taxable gain or loss will be recognized by the shareholder upon
redemption of shares.
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REDEMPTION OF SHARES
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REGULAR REDEMPTIONS. Shareholders may redeem for cash some or all of their
shares of the Fund at any time. To do so, a written request in proper form must
be sent directly to ACCESS, P.O. Box 418256, Kansas City, Missouri 64141-9256.
Shareholders may also place redemption requests through an authorized dealer.
Orders received from authorized dealers must be at least $500 unless transmitted
via the FUNDSERV network. The redemption price for such shares is the net asset
value next calculated after an order 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.
As described herein under "Purchase of Shares," redemptions of Class B shares
and Class C shares are subject to a contingent deferred sales charge. In
addition, a contingent deferred sales charge of 1.00% may be imposed on certain
redemptions
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of Class A shares made within one year of purchase for investments of $1 million
or more and for certain qualified 401(k) retirement plans. The contingent
deferred sales charge incurred upon redemption is paid to the Distributor in
reimbursement for distribution-related expenses. See "Purchase of Shares." A
custodian of a retirement plan account may charge fees based on the custodian's
fee schedule.
The request for redemption 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. For example, although the Fund normally does
not issue certificates for shares, it will do so if a special request has been
made to ACCESS. In the case of shareholders holding certificates, the
certificates for the shares being redeemed 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 60 days must
accompany the redemption request. IRA redemption requests should be sent to the
IRA custodian to be forwarded to ACCESS. Where Van Kampen American Capital Trust
Company serves as custodian, special IRA, 403(b)(7), or Keogh distribution forms
must be obtained from and be forwarded to Van Kampen American Capital Trust
Company, P.O. Box 944, Houston, Texas 77001-0944. Contact the custodian for
information.
In the case of redemption requests sent directly to ACCESS, the redemption
price is the net asset value per share next determined after the request is
received. Payment for shares redeemed will be made by check mailed within seven
days after acceptance by ACCESS 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. If the shares to be redeemed have
been recently purchased by check, ACCESS may delay mailing a redemption check
until the purchase check has cleared, usually a period of 15 days. Any taxable
gain or loss will be recognized by the shareholder upon redemption of shares.
The Fund may redeem any shareholder account with a net asset value on the date
of the notice of redemption less than the minimum initial investment as
specified in
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this prospectus. At least 60 days advance written notice of any such involuntary
redemption is required and the shareholder is given an opportunity to purchase
the required value of additional shares at the next determined net asset value
without sales charge. Any applicable contingent deferred sales charge will be
deducted from the proceeds of this redemption. Any involuntary redemption may
only occur if the shareholder account is less than the minimum initial
investment due to shareholder redemptions.
TELEPHONE REDEMPTIONS. In addition to the regular redemption procedures set
forth above, 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
accompanying this Prospectus or call the Fund at (800) 421-5666 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. VKAC 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 VKAC nor the Fund
will be liable for following telephone instructions which it reasonably believes
to be genuine. VKAC and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed. Telephone redemptions may not be available if the shareholder cannot
reach ACCESS 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
regular redemption procedure previously described. Requests received by ACCESS
prior to 4:00 p.m., New York time, on a regular business day will be processed
at the net asset value per share determined that day. These privileges are
available for all accounts other than retirement accounts. The telephone
redemption privilege is not available for shares represented by certificates. If
an account has multiple owners, ACCESS 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 are expected to be wired on the next business day following the date
of redemption. This service is also not available with respect to shares held in
an individual retirement account (IRA) for which Van Kampen American Capital
Trust Company
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acts as custodian. The Fund reserves the right at any time to terminate, limit
or otherwise modify this redemption privilege.
REDEMPTION UPON DISABILITY. The Fund will waive the contingent deferred sales
charge on redemptions following the disability of a Class B shareholder or Class
C shareholder. An individual will be considered disabled for this purpose if he
or she meets the definition thereof in Section 72(m)(7) of 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 disability before it determines to waive the
contingent deferred sales charge on Class B shares and Class C shares.
In cases of disability, the contingent deferred sales charge on Class B shares
and Class C shares will be waived where the 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 initial determination of
disability. This waiver of the contingent deferred sales charge on Class B
shares and Class C shares applies to a total or partial redemption, but only to
redemptions of shares held at the time of the initial determination of
disability.
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 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 (without sales charge except as described under
"Shareholder Services -- Exchange Privilege") next determined after the order is
received, which must be within 120 days after the date of the redemption. See
"Purchase of Shares -- Waiver of Contingent Deferred Sales Charge" and the
Statement of Additional Information. Reinstatement at net asset value is also
offered to participants in those eligible retirement plans held or administered
by Van Kampen American Capital Trust Company for repayment of principal (and
interest) on their borrowings on such plans.
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DISTRIBUTION AND SERVICE PLANS
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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 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 each class. The Distribution Plan and the Service
Plan are being implemented through an agreement with the Distributor and
sub-agreements between the Distributor and brokers, dealers or financial
intermediaries (collectively, "Selling Agreements") that may provide for their
customers or clients certain services or assistance.
CLASS A SHARES. The Fund may spend an aggregate amount up to 0.25% per year of
the average daily net assets attributable to the Class A shares of the Fund
pursuant to the Distribution Plan and Service Plan. From such amount, the Fund
may spend up to 0.25% per year of the Fund's average daily net assets
attributable to the Class A shares pursuant to the Service Plan in connection
with the ongoing provision of services to holders of such shares by the
Distributor and by brokers, dealers or financial intermediaries and in
connection with the maintenance of such shareholders' accounts. The Fund pays
the Distributor the lesser of the balance of the 0.25% not paid to such brokers,
dealers or financial intermediaries or the amount of the Distributor's actual
distribution related expense.
CLASS B SHARES. The Fund may spend up to 0.75% per year of the average daily
net assets attributable to the Class B shares of the Fund pursuant to the
Distribution Plan. In addition, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets attributable to the Class B shares pursuant to
the Service Plan in connection with the ongoing provision of services to holders
of such shares by the Distributor and by brokers, dealers or financial
intermediaries and in connection with the maintenance of such shareholders'
accounts.
CLASS C SHARES. The Fund may spend up to 0.75% per year of the average daily
net assets attributable to the Class C shares of the Fund pursuant to the
Distribution Plan. From such amount, the Fund, or the Distributor as agent for
the Fund, pays brokers, dealers or financial intermediaries in connection with
the distribution of the Class C shares up to 0.75% of the Fund's average daily
net assets attributable to Class C shares maintained in the Fund more than one
year by such broker's, dealer's or financial intermediary's customers. The Fund
pays the Distributor the lesser of the balance of 0.75% not paid to such
brokers, dealers or financial intermediaries or the amount of the Distributor's
actual distribution related expense attributable to the Class C shares. In
addition, the Fund may spend up to 0.25% per year of the Fund's average daily
net assets attributable to the Class C shares
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pursuant to the Service Plan in connection with the ongoing provision of
services to holders of such shares by the Distributor and by brokers, dealers or
financial intermediaries and in connection with the maintenance of such
shareholders' accounts.
OTHER INFORMATION. Amounts payable to the Distributor with respect to the
Class A shares under the Distribution Plan in a given year may not fully
reimburse the Distributor for its actual distribution-related expenses during
such year. In such event, with respect to the Class A shares, there is no
carryover of such reimbursement obligations to succeeding years.
The Distributor's actual expenses with respect to Class B shares or Class C
shares for any given year may exceed the amounts payable to the Distributor with
respect to such class of shares under the Distribution Plan, the Service Plan
and payments received pursuant to the contingent deferred sales charge. In such
event, with respect to any such class of shares, any unreimbursed expenses will
be carried forward and paid by the Fund (up to the amount of the actual expenses
incurred) in future years so long as such Distribution Plan is 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 on
a Fund level basis, in 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. As of May 31, 1996, there were $2,100,000 and
$86,000 of unreimbursed distribution expenses with respect to Class B shares and
Class C shares, respectively, representing 2.76% and 1.16% of the Fund's average
net assets attributable to Class B shares and Class C shares, respectively. If
the Distribution Plan was 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.
The Distributor will not use the proceeds from the contingent deferred sales
charge applicable to a particular class of shares to defray distribution related
expenses attributable to any other class of shares. Various federal and state
laws prohibit national banks and some state-chartered commercial banks from
underwriting or dealing in the Fund's shares. In addition, state securities laws
on this issue may differ from the interpretations of federal law, and banks and
financial institutions may be required to register as dealers pursuant to state
law. In the unlikely event that a court were to find that these laws prevent
such banks from providing such services described above, the Fund would seek
alternate providers and expects that shareholders would not experience any
disadvantage.
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DISTRIBUTIONS FROM THE FUND
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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.
DIVIDENDS. Dividends from stocks and interest earned from other investments
are the Fund's main source of income. Substantially all of this income, less
expenses, is distributed annually as dividends to shareholders. Unless the
shareholder instructs otherwise, dividends are automatically applied to purchase
additional shares of the Fund at the next determined net asset value. See
"Shareholder Services -- Reinvestment Plan."
The per share dividends on Class B shares and Class C shares will be lower
than the per share dividends on Class A shares as a result of the higher
distribution charges and incremental transfer agency fees 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 their purchase prices. The Fund distributes to shareholders at
least once a year the excess, if any, of its total profits on the sale of
securities during the year over its total losses on the sale of securities,
including capital losses carried forward from prior years under tax laws. As in
the case of income dividends, capital gains distributions are automatically
reinvested in additional shares of the Fund at net asset value unless the
shareholder elects otherwise. See "Shareholder Services -- Reinvestment Plan."
Transactions in stock index futures traded on domestic exchanges or boards of
trade will generally give rise to a combination of short-term and long-term
capital gains and losses.
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TAX STATUS
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The Fund intends to qualify, and to be taxed as a regulated investment company
under the Code. By qualifying as a regulated investment company, the Fund is not
subject to federal income taxes to the extent it distributes its net investment
company taxable income (which includes for this purpose net short-term capital
gains, but not net capital gains, which is the excess of net long-term capital
gains over net short-term capital losses) and net capital gains. The Fund
intends to distribute substantially all of its investment company taxable income
and net capital gains, if any, at least annually. Distributions in excess of the
Fund's earnings and profits will first reduce the adjusted tax basis of the
shares held by the shareholders
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and, after such adjusted tax basis is reduced to zero, will constitute capital
gains to such shareholder (assuming such shares are held as a capital asset).
Dividends from investment company taxable income taxable to shareholders as
ordinary income. Distributions from net capital gains constitute long-term
capital gains for federal income tax purposes. All such dividends and
distributions are taxable to the shareholder whether or not reinvested in
shares. However, shareholders not subject to tax on their income will not be
required to pay tax on amounts distributed to them.
Shareholders are notified annually of the federal tax status of dividends and
capital gains distributions.
To avoid being subject to a 31% federal backup withholding on dividends,
distributions and redemption payments, shareholders must, among other things,
furnish the Fund with a certification of their correct taxpayer identification
number.
Dividends and distributions paid by the Fund have the effect of reducing net
asset value per share on the record date by the amount of the payment.
Therefore, a dividend or distribution paid shortly after the purchase of shares
by an investor would represent, in substance, a return of capital to the
shareholder (to the extent it is paid on the shares so purchased) even though
subject to income taxes as discussed herein.
Dividends, interest and gains received by the Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Investors may be entitled to claim United States foreign tax credits or
deductions with respect to such taxes, subject to certain provisions and
limitations contained in the Code. If more than 50% in value of the Fund's total
assets at the close of its taxable year consists of securities of foreign
corporations, the Fund may be eligible, and may file an election with the
Internal Revenue Service pursuant to which shareholders of the Fund will be
required to include their respective pro rata portions of such taxes in their
United States income tax returns as gross income, treat such respective pro rata
portions as taxes paid by them, and deduct such respective pro rata portions in
computing their taxable incomes or, alternatively, use them as foreign tax
credits against their United States income taxes. The Fund will report annually
to its shareholders the amount per share of any such taxes.
Under Code Section 988, foreign currency gains or losses attributable to
exchange rate fluctuations generally are treated as ordinary income or loss.
Such Code Section 988 gains or losses will increase or decrease the amount of
the Fund's investment company taxable income available to be distributed to
shareholders as ordinary income, rather than increasing or decreasing the amount
of the Fund's net capital gain. Additionally, if Code Section 988 losses exceed
such investment company taxable income during a taxable year, the Fund would not
be able to make
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any ordinary dividend distributions and any distributions made by the Fund could
be recharacterized as a return of capital to shareholders thereby reducing each
shareholder's basis in his or her Fund shares. To the extent that such
distributions exceed such shareholder's basis, they will be treated as gain from
the sale of shares.
The foregoing is a brief summary of some of the federal income tax
considerations affecting the Fund and its investors who are U.S. residents or
U.S. corporations. Investors should consult their tax advisors for more detailed
tax advice including state and local tax considerations. Foreign investors
should consult their own counsel for further information as to the U.S. and
their country of residence or citizenship tax consequences of receipt of
dividends and distributions from the Fund. See "Dividends, Distributions and
Federal Taxes" in the Statement of Additional Information.
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FUND PERFORMANCE
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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 and for the life of the Fund. 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 a maximum sales charge of 5.75% 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.
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.
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
45
<PAGE> 48
charge of 5.75%; 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
of the classes 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.
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 ratings or rankings prepared by Lipper Analytical Services, Inc., CDA,
Morningstar Mutual Funds or similar independent services which monitor the
performance of mutual funds or with the Dow Jones Industrial Average Index or
Standard & Poor's, or with other global indexes, such as the Morgan Stanley
Capital International World 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 Fund 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 refer to results of top performing world equity markets as compiled by
Morgan Stanley Capital International or other independent statistical services
or to products or services produced or provided by domestic or foreign
companies.
46
<PAGE> 49
The Fund may also utilize performance information in hypothetical
illustrations provided in narrative form. These hypotheticals will be
accompanied by the standard performance information required by the SEC as
described above.
The Fund's Annual Report contains additional performance information. A copy
of the Annual Report may be obtained without charge by calling or writing the
Fund at the telephone number and address printed on the cover page of this
Prospectus.
- ------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- ------------------------------------------------------------------------------
The Trust was originally incorporated in the State of Maryland on May 25,
1990. The Fund was reorganized as a business trust under the laws of the state
of Delaware on August 31, 1995. The Trust currently offers two separate
portfolios: the Van Kampen American Capital Global Government Securities Fund
and the Fund. Shares issued by the Fund are fully paid, non-assessable and have
no preemptive or conversion rights.
The Fund is authorized to issue an unlimited number of Class A shares, Class B
shares and Class C shares of beneficial interest. Each class of shares
represents an interest in the same assets of the Fund and 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.
The par value for each class of shares is $.01 per share.
The Fund is permitted to issue an unlimited number of classes. Other classes
of shares may be established from time to time in accordance with the provisions
of the Trust's Declaration of Trust. Each class of shares is equal as to
earnings, assets and voting privileges, except as noted above, and each class
bears the expenses related to the distribution of its shares. There are no
conversion, preemptive or other subscription rights, except with respect to the
conversion of Class B shares and Class C shares into Class A shares as described
above. 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 debt and expenses of
the Fund have been paid. Since Class B shares and Class C shares pay higher
distribution expenses, the liquidation proceeds to Class B shareholders and
Class C shareholders are likely to be lower than to other shareholders.
The Fund does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. More detailed information concerning the Fund is
set forth in the Statement of Additional Information.
The Trust's Declaration of Trust provides that no Trustee, officer or
shareholder of the Fund shall be held to any personal liability, nor shall
resort be had to their
47
<PAGE> 50
private property for the satisfaction of any obligation or liability of the Fund
but the assets of the Fund only shall be liable.
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
This Prospectus and the Statement of Additional Information do not contain all
the information set forth in the Registration Statement filed by the Trust with
the SEC under the Securities Act of 1933. Copies of the Registration Statement
may be obtained at a reasonable charge from the SEC or may be examined, without
charge, at the office of the SEC in Washington, D.C.
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 with respect to the Fund.
An investment in the Fund is intended to be a long-term investment, and should
not be used as a trading vehicle.
48
<PAGE> 51
EXISTING SHAREHOLDERS--
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE CALL
THE FUND'S TOLL-FREE
NUMBER--(800) 421-5666
PROSPECTIVE INVESTORS--CALL
YOUR BROKER OR (800) 421-5666
DEALERS--FOR DEALER
INFORMATION, SELLING
AGREEMENTS, WIRE ORDERS, OR
REDEMPTIONS CALL THE
DISTRIBUTOR'S TOLL-FREE
NUMBER--(800) 421-5666
FOR SHAREHOLDER AND DEALER
INQUIRIES THROUGH
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
DIAL (800) 772-8889
FOR TELEPHONE TRANSACTIONS
DIAL (800) 421-5684
VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
One Parkview Plaza
Oakbrook Terrace, IL 60181
Investment Adviser
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Investment Subadviser
JOHN GOVETT & CO. LIMITED
4 Battle Bridge Lane
London SE1 2HR
England
Distributor
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Transfer Agent
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, MO 64141-9256
Attn: Van Kampen American Capital
Global Equity Fund
Custodian
STATE STREET BANK AND
TRUST COMPANY
225 West Franklin Street
P.O. Box 1713
Boston, MA 02105-1713
Attn: Van Kampen American Capital
Global Equity Fund
Legal Counsel
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, IL 60606
Independent Accountants
PRICE WATERHOUSE LLP
1201 Louisiana
Suite 2900
Houston, TX 77002
<PAGE> 52
------------------------------------------------------------------------------
GLOBAL EQUITY FUND
------------------------------------------------------------------------------
P R O S P E C T U S
SEPTEMBER 28, 1996
------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 53
STATEMENT OF ADDITIONAL INFORMATION
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
Van Kampen American Capital Global Equity Fund (the "Fund") is a
diversified series of Van Kampen American Capital World Portfolio Series Trust
(the "Trust") an open-end investment company. This Statement of Additional
Information is not a Prospectus and should be read in conjunction with the
Prospectus for the Fund (the "Prospectus"). This Statement of Additional
Information does not include all the information 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 calling or writing Van Kampen American Capital
Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois 60181 at
(800) 421-5666.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information.................................................................. B-2
Investment Objective and Policies.................................................... B-3
Options, Futures and Related Options................................................. B-3
Repurchase Agreements................................................................ B-9
Loans of Portfolio Securities........................................................ B-9
Investment Restrictions.............................................................. B-10
Trustees and Officers................................................................ B-12
Legal Counsel........................................................................ B-19
Investment Advisory Agreement........................................................ B-19
Distributor.......................................................................... B-21
Distribution and Service Plans....................................................... B-21
Transfer Agent....................................................................... B-22
Portfolio Transactions and Brokerage................................................. B-22
Determination of Net Asset Value..................................................... B-23
Purchase and Redemption of Shares.................................................... B-24
Exchange Privilege................................................................... B-28
Dividends, Distributions and Federal Taxes........................................... B-28
Fund Performance..................................................................... B-31
Other Information.................................................................... B-31
Report of Independent Accountants.................................................... B-32
Financial Statements................................................................. B-33
Notes to Financial Statements........................................................ B-51
</TABLE>
This Statement of Additional Information is dated September 28, 1996.
B-1
<PAGE> 54
GENERAL INFORMATION
Van Kampen American Capital World Portfolio Series Trust, formerly known as
American Capital World Portfolio Series, Inc. (the "Trust"), was originally
incorporated in Maryland on May 25, 1990 and reorganized under the laws of the
State of Delaware as a business trust and adopted its present name as of August
31, 1995. The Trust currently is comprised of two series: Van Kampen American
Capital Global Equity Fund (the "Fund") and Van Kampen American Capital Global
Government Securities Fund.
Van Kampen American Capital Asset Management, Inc. (the "Adviser"), Van
Kampen American Capital Distributors, Inc. (the "Distributor"), and ACCESS
Investor Services, Inc. ("ACCESS") are wholly-owned subsidiaries of Van Kampen
American Capital, Inc. ("VKAC"), which is a wholly-owned subsidiary of VK/AC
Holding, Inc. VK/AC Holding, Inc. is controlled, through the ownership of a
substantial majority of its common stock, by The Clayton & Dubilier Private
Equity Fund IV Limited Partnership ("C&D L.P."), a Connecticut limited
partnership. C&D L.P. is managed by Clayton, Dubilier & Rice, Inc. a New York
based private investment firm. The General Partner of C&D L.P. is Clayton &
Dubilier Associates IV Limited Partnership ("C&D Associates L.P."). The general
partners of C&D Associates L.P. are Joseph L. Rice, III, B. Charles Ames,
William A. Barbe, Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr.,
Hubbard C. Howe and Andrall E. Pearson, each of whom is a principal of Clayton,
Dubilier & Rice, Inc. In addition, certain officers, directors and employees of
VKAC own, in the aggregate, approximately 6% of the common stock of VK/AC
Holding, Inc. and have the right to acquire, upon the exercise of options,
approximately an additional 12% 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.
John Govett & Co. Limited (the "Subadviser") is a wholly-owned subsidiary
of John Govett Holdings Limited.
VKAC offers one of the industry's broadest lines of
investments -- encompassing mutual funds, closed-end funds and unit investment
trusts -- and is currently the nation's 5th largest broker-sold mutual fund
group according to Strategic Insight, July 1995. VKAC manages or supervises more
than $50 billion in mutual funds, closed-end funds and unit investment
trusts -- assets which have been entrusted to VKAC in more than 2 million
investor accounts. VKAC has one of the largest research teams (outside of the
rating agencies) in the country, with more than 80 analysts devoted to various
specializations.
VKAC uses a four-step investment process designed to attempt to produce
consistently good short-term results, which should help lead to superior
long-term performance.
Fully Invested: Money invested in a VKAC stock fund will normally be fully
invested in the market to attempt to maximize the potential for long-term
returns. The importance of being fully invested can be illustrated by the
following comparison. By missing fewer than 4% of the months during the past 69
years, the value of $1 invested in 1926 was $15.81 at the end of 1995, compared
to $1,113.92 for $1 that was invested for the entire period (Source: Micropal,
Inc.). During the most recent five-year period (1991-1995), the average annual
total return for stocks, as measured by the Standard and Poor's 500 Stock Index,
a broad-based, unmanaged index, was 11.75%. However, the average annual return
for the S&P 500 for the same period excluding the 20 best days for stock market
performance, was just 1.93%. Of course, past performance is no guarantee of
future results.
Widely Varied: A widely varied portfolio usually reduces risk and increases
relative stability. Since VKAC's goal is consistency, a widely varied portfolio
across industries is emphasized. VKAC stock funds are varied both in terms of
the number of industries and the number of stocks within each industry in which
they invest. Generally, the stock funds invest in 12 broad economic sectors, and
in many individual stocks within each sector.
Clearly Defined: The basic characteristics of VKAC funds are determined by
a pre-defined profile which remains constant over time.
B-2
<PAGE> 55
Blended Investment Style: Market conditions are constantly changing, which
means the stocks that perform well should be expected to change. A rigid
investment style might cause an investor to suffer when certain types of stocks
lose favor with the market. The two most common investment styles are growth,
which emphasizes companies that are projected to experience rapid growth in
earnings, and value, which focuses on companies whose stock is selling for less
than the company's trust worth. At VKAC, our style is blended between growth and
value on a fund-specific basis. The results of our approach are constantly
evaluated and compared to other similar funds. Although past performance is no
guarantee of future results, VKAC remains committed to our belief that this
approach should help maximize potential for long-term returns.
As of September 17, 1996, 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, except as follows:
<TABLE>
<CAPTION>
AMOUNT OF
OWNERSHIP AT CLASS PERCENTAGE
NAME AND ADDRESS OF HOLDER SEPTEMBER 17, 1996 OF SHARES OWNERSHIP
- ---------------------------------------------------- ------------------ --------- ----------
<S> <C> <C> <C>
Van Kampen American Capital Trust Company 1,946,308 A 24.65%
2800 Post Oak Blvd. 1,857,170 B 25.53%
Houston, TX 77056 87,802 C 12.31%
</TABLE>
Van Kampen American Capital Trust Company act as custodian for certain
employee benefit plans and independent retirement accounts.
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
explanation of the matters disclosed. Readers must also refer to this caption in
the Prospectus for a complete presentation of the matters disclosed below.
The investment objective of the Fund is to provide long-term growth of
capital.
The Fund may invest in the securities of foreign issuers in the form of
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) or
other securities convertible into securities of foreign issuers. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted but rather in the currency of the
market in which they are traded. ADRs are receipts typically issued by an
American bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts issued in Europe by banks or
depositories which evidence a similar ownership arrangement. Generally, ADRs in
registered form, are designed for use in United States securities markets and
EDRs, in bearer form, are designed for use in European securities markets.
The Fund may write and invest in options, futures contracts and related
options thereon. For further discussion of options, futures and related options
see "Investment Practices" in the Prospectus and "Options, Futures and Related
Options" herein.
OPTIONS, FUTURES AND RELATED OPTIONS
WRITING CALL AND PUT OPTIONS
Purpose. The principal reason for writing options is to obtain, through
receipt of premiums, a greater current return or total return than would be
realized on the underlying securities alone. Such returns could be expected to
fluctuate because premiums earned from an option writing program and dividend or
interest income yields on portfolio securities vary as economic and market
conditions change. Actively writing options on portfolio securities is likely to
result in a substantially higher portfolio turnover rate than that of most other
investment companies.
Writing Options. The purchaser of a call option pays a premium to the
writer (i.e., the seller) for the right to buy the underlying security from the
writer at a specified price during a certain period. The Fund would write call
options only on a covered basis, which means that, at all times during the
option period, the
B-3
<PAGE> 56
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.
The purchaser of a put option pays a premium to the writer (i.e., the
seller) for the right to sell the underlying security to the writer at a
specified price during a certain period. The Fund would write 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 Custodian cash, cash
equivalents or U.S. Government securities in any 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.
The Fund intends to limit its ability to write options such that the
aggregate value of the securities underlying the calls or the obligations
underlying the puts determined as of the date the options are sold shall not
exceed 25% of its net assets.
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 written 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 write 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 writer 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 writer, but would provide an asset of
equal value to its obligation under the option written. 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 written, it will be required to maintain the
securities subject to the call or the collateral underlying the put 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 writing a call option, the Fund loses the
potential for gain on the underlying security above the exercise price while the
option is outstanding and limits it ability to achieve long-term growth of
capital for such period; by writing a put option the Fund might become obligated
to purchase the underlying security at an exercise price that exceeds the then
current market price.
Each of the United States exchanges has established limitations governing
the maximum number of call or put options on the same underlying security
(whether or not covered) that may be written by a single investor, whether
acting alone or in concert with others, regardless of whether such options are
written on one or more accounts or through one or more brokers. An exchange may
order the liquidation of positions found to be in violation of those limits and
it may impose other sanctions or restrictions. These position limits may
restrict the number of options the Fund may be able to write.
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.
B-4
<PAGE> 57
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 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 INDEXES
Options on stock indexes 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. Indexes 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 The Chicago Board Options Exchange, the American Stock Exchange and other
exchanges. The Fund may write or purchase options which are listed on an
exchange as well as options which are traded over-the-counter.
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.
FOREIGN CURRENCY OPTIONS
The Fund may purchase put and call options on foreign currencies to reduce
the risk of currency exchange fluctuation. Premiums paid for such put and call
options will be limited to no more than five percent of the Fund's net assets at
any given time. Options on foreign currencies operate similarly to options on
securities, and are traded primarily in the over-the-counter market, although
options on foreign currencies are traded on United States and foreign exchanges.
Exchange-traded options are expected to be purchased by the Fund from time to
time and over-the-counter options may also be purchased, but only when the
Advisers believe that a liquid secondary market exists for such options,
although there can be no assurance that a liquid secondary market will exist for
a particular option at any specific time. Option on foreign currencies are
affected by all of those factors which influence foreign exchange rates and
investment generally. See "Investment Practices and Restrictions -- Using
Options, Futures Contracts and Related Options" in the Prospectus.
The value of a foreign currency option is dependent upon the value of the
underlying foreign currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or both
currencies and has no relationship to the investment merits of a foreign
security. Because foreign currency transactions occurring in the interbank
market (conducted directly between currency traders, usually large commercial
banks, and their customers) involve substantially larger amounts than those that
may be involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
B-5
<PAGE> 58
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Quotation information available is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (i.e., less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options markets.
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 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
the Standard & Poor's 500 Stock Index on the Chicago Mercantile Exchange
("CME"), the New York Stock Exchange Composite Index on the New York Futures
Exchange and the Value Line Stock Index on the Kansas City Board of Trade.
Differences in the stocks included in the indexes may result in differences in
correlation of the futures contracts with movements in the value of the
securities being hedged.
The Fund also may invest in foreign stock index futures traded outside the
United States. Foreign stock index futures traded outside the United States
include the Nikkei Index of 225 Japanese stocks traded on the Singapore
International Monetary Exchange ("Nikkei Index"), Osaka Index of 50 Japanese
stocks traded on the Osaka Exchange, Financial Times Stock Exchange Index of the
100 largest stocks on the London Stock Exchange, the All Ordinaries Share Price
Index of 307 stocks on the Sydney, Melbourne Exchanges, Hang Seng Index of 33
stocks on the Hong Kong Stock Exchange, Barclays Share Price Index of 40 stocks
on the New Zealand Stock Exchange and Toronto Index of 35 stocks on the Toronto
Stock Exchange. Futures and futures options on the Nikkei Index are traded on
the CME and United States commodity exchanges may develop futures and futures
options on other indices of foreign securities. Futures and options on United
States devised index of foreign stocks are also being developed. Investments in
securities of foreign entities and securities denominated in foreign currencies
involve risks not typically involved in domestic investment, including
fluctuations in foreign exchange rates, future foreign political and economic
developments, and the possible imposition of exchange controls or other foreign
or United States governmental laws or restrictions applicable to such
investments.
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 or a futures
contract. Initially, the Fund will be required to deposit with its Custodian in
an account in the broker's name an amount of cash, cash equivalents or liquid
high grade debt 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, will be 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 has purchased a futures contract and the price
of the underlying security or index has risen, that position will have increased
in value, and the Fund will receive from the broker a variation margin payment
equal to that increase in value. Conversely, where the Fund has purchased a
futures contract
B-6
<PAGE> 59
and the value of the underlying security or index has declined, the position
would be less valuable, and the Fund would be 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 not 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, provide an alternative to the liquidation of securities positions in the
Fund with attendant transaction costs.
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 and/or losses in liquidating open positions purchased and/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.
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 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, currency or index 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 (lesser) dollar amount than the dollar amount of
securities being hedged if the historical volatility of the securities being
hedged is greater (lesser) than the historical volatility of the securities,
currency or index underlying the futures contract. 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, currencies 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, currencies 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 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 the
movements in the futures contracts and movements in the securities or currencies
underlying them, a correct forecast of general market trends by the Advisers 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
B-7
<PAGE> 60
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 on 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 Advisers' 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 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
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 in the Prospectus, 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.
CFTC regulations require, among other things, (i) that futures and related
options be used solely for bona fide hedging purposes (or meet certain
conditions as specified in CFTC regulations) and (ii) that the Fund not enter
into futures and related options for which the aggregate initial margin and
premiums exceed 5% of the fair market value of such Fund's assets. In order to
minimize leverage in connection with the purchase of futures contracts by the
Fund, an amount of cash, cash equivalents or liquid high grade debt 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.
Options on futures contracts to be written or purchased by the Fund will be
traded on United States or foreign exchanges or over-the-counter. An option on a
futures contract gives the purchasers 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 purpose as it could sell, 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 such Fund. The purchase of call options on
futures contracts would be intended to serve the same purpose as the actual
purchase of the futures contract.
B-8
<PAGE> 61
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 relating to options on futures.
The Advisers will not purchase options on futures on any exchange unless in the
Advisers' 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 level of the index or in
the price of the underlying security, 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 AND FUTURES TRANSACTIONS
Each of the United States exchanges and boards of trade 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 Advisers
are combined for purposes of these limits. An exchange or board of trade 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.
REPURCHASE AGREEMENTS
In order to earn interest on funds available for very short-term
investment, the Fund may enter into repurchase agreements with domestic or
foreign banks or broker-dealers deemed to be creditworthy by the Adviser under
guidelines approved by the Trustees. 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, usually not more than seven days from the date of purchase, thereby
determining the yield during the purchaser's holding period. Repurchase
agreements are fully collateralized by the underlying debt securities and are
considered to be loans under the Investment Company Act of 1940, as amended
("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 securities unless the seller defaults under its repurchase
obligation. See "Investment Practices -- Repurchase Agreements" in the
Prospectus for further information.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend portfolio securities to unaffiliated brokers, dealers and
financial institutions provided that cash or U.S. Government securities equal in
value to 100% of the market value of the securities loaned is deposited by the
borrower with the Fund and is marked to market daily. While such securities are
on loan, the borrower is required to pay the Fund any income accruing thereon.
Furthermore, the Fund may invest the cash collateral in portfolio securities
thereby increasing the return to the Fund as well as increasing the market risk
to the Fund. The Fund will not lend its portfolio securities if such loans are
not permitted by the laws or regulations of any state in which its shares are
qualified for sale. However, should the Fund believe that lending securities is
in the best interests of its shareholders, it would consider withdrawing it
shares from sale in any such state.
Loans would be made for short-term purposes and subject to termination by
the Fund in the normal settlement time, currently five business days after
notice, or by the borrower on one day's notice. Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the market price of
the borrowed
B-9
<PAGE> 62
securities which occurs during the term of the loan inures to the Fund and its
shareholders, but any gain can be realized only if the borrower does not
default. The Fund may pay reasonable finders', administrative and custodial fees
in connection with a loan.
INVESTMENT RESTRICTIONS
The Fund has adopted the following restrictions which cannot be changed
without approval by a majority vote of its outstanding shares. Such majority
vote is defined as the lesser of (i) 67% or more of the voting securities
present at the 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. Engage in the underwriting of securities of other issuers, except that
the Fund may sell an investment position even though it may be deemed to
be an underwriter under the federal securities laws.
2. Purchase any security (other than obligations of the United States
Government, its agencies, or instrumentalities) if more than 25% of its
total assets (taken at current value) would then be invested in a single
industry.
3. Invest more than 5% of its total assets (taken at current value) in
securities of a single issuer other than the United States Government,
its agencies or instrumentalities, or hold more than 10% of the
outstanding voting securities of an issuer.
4. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of
its net assets, or pledge more than 10% of its net assets in connection
with permissible borrowings or purchase additional securities when money
borrowed exceeds 5% of its net assets. Margin deposits or payments in
connection with the writing of options or in connection with the
purchase or sale of forward contracts, futures, foreign currency futures
and related options are not deemed to be a pledge or other encumbrance.
5. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend securities
in an amount exceeding 15% of the total assets of the Fund. The purchase
of a portion of an issue of securities described under (i) above
distributed publicly, whether or not the purchase is made on the
original issuance, is not considered the making of a loan.
6. Make short sales of securities, unless at the time of the sale it owns
or has the right to acquire an equal amount of such securities; provided
that this prohibition does not apply to the writing of options or the
sale of forward contracts, futures, foreign currency futures or related
options.
7. Purchase securities on margin but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities. The deposit or payment by the Fund of initial or maintenance
margin in connection with forward contracts, futures, foreign currency
futures or related options is not considered the purchase of a security
on margin.
8. Buy or sell real estate or interests in real estate including real
estate limited partnerships, provided that the foregoing prohibition
does not apply to a purchase and sale of publicly traded (i) securities
which are secured by real estate, (ii) securities representing interests
in real estate, and (iii) securities of companies principally engaged in
investing or dealing in real estate.
9. Make investments for the purpose of exercising control or management
although the Fund retains the right to vote securities held by it.
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<PAGE> 63
10. Invest in commodities or commodity contracts, except that the Fund may
enter into transactions in options, futures contracts or related options
including foreign currency futures contracts and related options and
forward contracts.
11. Issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from (i) making and
collateralizing any permitted borrowings, (ii) making any permitted
loans of its portfolio securities or (iii) entering into repurchase
agreements, utilizing options, futures contracts, options on futures
contracts, forward contracts, forward commitments and other investment
strategies and instruments that would be considered "senior securities"
but for the maintenance by the Fund of a segregated account with its
custodian or some other form of "cover".
In addition to the foregoing fundamental policies which may not be changed
without shareholder approval, the Fund is subject to the following policies
which may be amended by the Trustees and which apply at the time of purchase of
portfolio securities.
1. The Fund may not invest in the securities of other open-end investment
companies, or invest in the securities of closed-end investment
companies except through purchase in the open market in a transaction
involving no commission or profit to a sponsor or dealer (other than the
customary broker's commission) or as part of a merger, consolidation or
other acquisition.
2. The Fund may not invest more than 5% of its net assets in warrants or
rights valued at the lower of cost or market, nor more than 2% of its
net assets in warrants or rights (valued on such basis) which are not
listed on the New York or American Stock Exchanges. Warrants or rights
acquired in units or attached to other securities are not subject to the
foregoing limitation.
3. The Fund may not invest in securities of any company if any officer or
trustee of the Trust or of the Adviser owns more than 0.50% of the
outstanding securities of such company, and such officers and trustees
who own more than 0.50% own in the aggregate more than 5% of the
outstanding securities of such issuer.
4. The Fund may not invest in interests in oil, gas, or other mineral
exploration or development programs or invest in oil, gas, or mineral
leases, except that the Fund may acquire securities of public companies
which themselves are engaged in such activities.
5. The Fund may not invest more than 5% of its total assets in securities
of unseasoned issuers which have been in operation directly or through
predecessors for less than three years.
6. The Fund may not purchase or otherwise acquire any security if, as a
result, more than 10% of its net assets (taken at current value) would
be invested in securities that are illiquid by virtue of the absence of
a readily available market. This policy includes repurchase agreements
maturing in more than seven days and over-the-counter options held by
the Fund and that portion of assets used to cover such options. This
policy does not apply to restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act")
which the Trustees or the Adviser under Board approved guidelines, may
determine are liquid nor does it apply to other securities, for which,
notwithstanding legal or contractual restrictions on resale, a liquid
market exists.
The Fund has made an undertaking with one state that it will continue to
comply with the disclosure relating to writing options and engaging in future
and related options transactions as described herein. The Fund has made an
undertaking with one state to provide written notification to shareholders of
any change in its investment objective at least 30 days prior to implementing
such change and will waive any fee or charge which may result if the shareholder
decides to redeem his or her account as a result of such change in the
investment objectives.
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<PAGE> 64
TRUSTEES AND OFFICERS
The tables below list the trustees and officers of the Fund and their
principal occupations for the last five years and their affiliations, if any,
with Van Kampen American Capital Asset Management, Inc. (the "AC Adviser" or
"Adviser"), Van Kampen American Capital Investment Advisory Corp. (the "VK
Adviser"), Van Kampen American Capital Management, Inc., McCarthy, Crisanti &
Maffei, Inc., MCM Asia Pacific Company, Limited, Van Kampen American Capital
Distributors, Inc. (the "Distributor"), Van Kampen American Capital, Inc. ("Van
Kampen American Capital" or "VKAC") or VK/AC Holding, Inc. For purposes hereof,
the term "Van Kampen American Capital Funds" includes each of the open-end
investment companies advised by the VK Adviser (excluding The Explorer
Institutional Trust) and each of the open-end investment companies advised by
the AC Adviser (excluding the Van Kampen American Capital Exchange Fund and the
Common Sense Trust).
TRUSTEES
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
J. Miles Branagan.................. Co-founder, Chairman, Chief Executive Officer and
Strafford Hall President of MDT Corporation, a company which develops,
Suite 200 manufactures, markets and services medical and scientific
1009 Slater Road equipment. A Trustee of each of the Van Kampen American
Harrisville, NC 27560 Capital Funds.
Date of Birth: 07/14/32
Linda Hutton Heagy................. Managing Partner, Paul Ray Berndston, an executive
10 South Riverside Plaza recruiting and management consulting firm. Formerly,
Suite 720 Executive Vice President of ABN AMRO, N.A., a Dutch bank
Chicago, IL 60606 holding company. Prior to 1992, Executive Vice President
Date of Birth: 06/03/49 of La Salle National Bank. A Trustee of each of the Van
Kampen American Capital Funds.
Roger Hilsman...................... Professor of Government and International Affairs
251-1 Hamburg Cove Emeritus, Columbia University. A Trustee of each of the
Lyme, CT 06371 Van Kampen American Capital Funds.
Date of Birth: 11/23/19
R. Craig Kennedy................... President and Director, German Marshall Fund of the
11 Du Pont Circle, N.W. United States. Formerly, advisor to the Dennis Trading
Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive
Date of Birth: 02/29/52 Officer, Director and member of the Investment Committee
of the Joyce Foundation, a private foundation. A Trustee
of each of the Van Kampen American Capital Funds.
Dennis J. McDonnell*............... President, Chief Operating Officer and a Director of the
One Parkview Plaza VK Adviser, the AC Adviser and Van Kampen American
Oakbrook Terrace, IL 60181 Capital Management, Inc. Executive Vice President and a
Date of Birth: 05/20/42 Director of VK/AC Holding, Inc. and Van Kampen American
Capital. Chief Executive Officer of McCarthy, Crisanti &
Maffei, Inc. Chairman and a Director of MCM Asia Pacific
Company, Ltd. Executive Vice President and a Trustee of
each of the Van Kampen American Capital Funds. President
of the closed-end investment companies advised by the VK
Adviser. Prior to December, 1991, Senior Vice President
of Van Kampen Merritt Inc.
Donald C. Miller................... Prior to 1992, Director of Royal Group, Inc., a company
415 North Adams in insurance related businesses. Formerly Vice Chairman
Hinsdale, IL 60521 and Director of Continental Illinois National Bank and
Date of Birth: 03/31/20 Trust Company of Chicago and Continental Illinois
Corporation. A Trustee of each of the Van Kampen American
Capital Funds and Chairman of each Van Kampen American
Capital Fund advised by the VK Adviser.
</TABLE>
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<PAGE> 65
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Jack E. Nelson..................... President of Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President of Nelson Investment Brokerage
Date of Birth: 02/13/36 Services Inc., a member of the National Association of
Securities Dealers, Inc. ("NASD") and Securities
Investors Protection Corp. A Trustee of each of the Van
Kampen American Capital Funds.
Jerome L. Robinson................. President of Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director of Pacesetter Software, a
Date of Birth: 10/10/22 software programming company specializing in white collar
productivity. Director of Panasia Bank. A Trustee of each
of the Van Kampen American Capital Funds.
Fernando Sisto..................... George M. Bond Chaired Professor and, prior to 1995, Dean
Stevens Institute of Graduate School and Chairman, Department of Mechanical
of Technology Engineering, Stevens Institute of Technology. Director of
Castle Point Station Dynalysis of Princeton, a firm engaged in engineering
Hoboken, NJ 07030 research. A Trustee of each of the Van Kampen American
Date of Birth: 08/02/24 Capital Funds and Chairman of the Van Kampen American
Capital Funds advised by the Adviser.
Wayne W. Whalen*................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom, legal counsel to the Van Kampen American Capital
Chicago, IL 60606 Funds. A Trustee of each of the Van Kampen American
Date of Birth: 08/22/39 Capital Funds. He also is a Trustee of The Explorer
Institutional Trust and closed-end investment companies
advised by the AC Adviser.
William S. Woodside................ Vice Chairman of the Board of LSG Sky Chefs, Inc., a
712 Fifth Avenue caterer of airline food. Formerly, Director of Primerica
40th Floor Corporation (currently known as The Traveler's Inc.).
New York, NY 10019 Formerly, Director of James River Corporation, a producer
Date of Birth: 01/31/22 of paper products. Trustee, and former President of
Whitney Museum of American Art. Formerly, Chairman of
Institute for Educational Leadership, Inc., Board of
Visitors, Graduate School of The City University of New
York, Academy of Political Science. Trustee of Committee
for Economic Development. Director of Public Education
Fund Network, Fund for New York City Public Education.
Trustee of Barnard College. Member of Dean's Council,
Harvard School of Public Health. Member of Mental Health
Task Force, Carter Center. A Trustee of each of the Van
Kampen American Capital Funds.
</TABLE>
- ---------------
* Such Trustees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. McDonnell is an interested person of the Adviser and the
Fund by reason of his positions with the Adviser. Mr. Whalen is an interested
person of the Fund by reason of his firm having acted as legal counsel to the
Fund.
The Fund's Officers other than Messrs. Hegel, Nyberg, Wood, Sullivan,
Dalmaso, Martin, Wetherell and Hill are located at 2800 Post Oak Blvd., Houston,
TX 77056. Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell and
Hill are located at One Parkview Plaza, Oakbrook Terrace, IL 60181.
B-13
<PAGE> 66
OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
William N. Brown......... Vice President Executive Vice President of the VK Adviser,
Date of Birth: 05/26/53 AC Adviser, VK/AC Holding, Inc., VKAC, Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services,
Inc., Van Kampen American Capital Exchange
Corporation, ACCESS Investor Services,
Inc., and Van Kampen American Capital Trust
Company. Director of American Capital
Shareholders Corporation. Vice President of
each of the Van Kampen American Capital
Funds.
Peter W. Hegel........... Vice President Executive Vice President of the VK Adviser,
Date of Birth: 06/25/56 AC Adviser, Van Kampen American Capital
Advisors, Inc. Director of McCarthy,
Crisanti & Maffei, Inc. Vice President of
each of the Van Kampen American Capital
Funds. Vice President of the closed-end
funds advised by the VK Adviser.
Curtis W. Morell......... Vice President and Chief Vice President and Chief Accounting Officer
Date of Birth: 08/04/46 Accounting Officer of most of the investment companies advised
by the AC Adviser.
Ronald A. Nyberg......... Vice President and Executive Vice President, General Counsel
Date of Birth: 07/29/53 Secretary and Secretary of Van Kampen American
Capital and VK/AC Holding, Inc. Executive
Vice President, General Counsel and a
Director of the Distributor. Executive Vice
President and General Counsel of the VK
Adviser and the AC Adviser, Van Kampen
American Capital Management, Inc., Van
Kampen Merritt Equity Advisors Corp., and
Van Kampen Merritt Equity Holdings Corp.
Executive Vice President, General Counsel
and Assistant Secretary of Van Kampen
American Capital Advisors, Inc., American
Capital Contractual Services, Inc., Van
Kampen American Capital Exchange
Corporation, ACCESS Investor Services,
Inc., American Capital Shareholders
Corporation, and Van Kampen American
Capital Trust Company. General Counsel of
McCarthy, Crisanti & Maffei, Inc. Vice
President and Secretary of each of the Van
Kampen American Capital Funds. Secretary of
the closed-end funds advised by the VK
Adviser. Director of ICI Mutual Insurance
Co., a provider of insurance to members of
the Investment Company Institute.
Robert C. Peck, Jr....... Vice President Executive Vice President of the VK Adviser.
Date of Birth: 10/01/46 Executive Vice President and Director of
the AC Adviser. Vice President of each of
the Van Kampen American Capital Funds.
</TABLE>
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<PAGE> 67
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
Alan T. Sachtleben....... Vice President Executive Vice President of the VK Adviser.
Date of Birth: 04/29/42 Executive Vice President and a Director of
the AC Adviser. Vice President of each of
the Van Kampen American Capital Funds.
Paul R. Wolkenberg....... Vice President Executive Vice President of the VK Adviser
Date of Birth: 11/10/44 and the AC Adviser. President, Chief
Executive Officer and a Director of Van
Kampen American Capital Trust Company and
ACCESS. Vice President of each of the Van
Kampen American Capital Funds.
Edward C. Wood III....... Vice President and Chief Senior Vice President of VK Adviser and the
Date of Birth: 01/11/56 Financial Officer AC Adviser. Vice President and Chief
Financial Officer of each of the Van Kampen
American Capital Funds. Vice President,
Treasurer and Chief Financial Officer of
the closed-end funds advised by VK Adviser.
John L. Sullivan......... Treasurer First Vice President of the VK Adviser and
Date of Birth: 08/20/55 AC Adviser. Treasurer of each of the Van
Kampen American Capital Funds. Controller
of the closed-end funds advised by the VK
Adviser. Formerly Controller of open-end
funds advised by VK Adviser.
Tanya M. Loden........... Controller Controller of most of the investment
Date of Birth: 11/19/59 companies advised by the Adviser, formerly
Tax Manager/Assistant Controller.
Nicholas Dalmaso......... Assistant Secretary Assistant Vice President and Senior
Date of Birth: 03/01/65 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Distributor,
the VK Adviser, the AC Adviser, and Van
Kampen American Capital Management, Inc.
Assistant Vice President of Van Kampen
American Capital Advisors, Inc. Assistant
Secretary of each of the Van Kampen
American Capital Funds, Assistant Secretary
of the closed-end funds advised by the VK
Adviser. Prior to May 1992, attorney for
Cantwell & Cantwell, a Chicago law firm.
Huey P. Falgout, Jr...... Assistant Secretary Assistant Vice President and Senior
Date of Birth: 11/15/63 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Distributor,
the VK Adviser, the AC Adviser, Van Kampen
American Capital Management, Inc., Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services,
Inc., Van Kampen American Capital Exchange
Corporation, ACCESS, and American Capital
Shareholders Corporation. Assistant
Secretary of each of the Van Kampen
American Capital Funds.
</TABLE>
B-15
<PAGE> 68
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
Scott E. Martin.......... Assistant Secretary Senior Vice President, Deputy General
Date of Birth: 08/20/56 Counsel and Assistant Secretary of VKAC.
Senior Vice President, Deputy General
Counsel and Secretary of the VK Adviser,
the AC Adviser and the Distributor, Van
Kampen American Capital Management, Inc.,
Van Kampen American Capital Advisers, Inc.,
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. Chief Legal Officer of McCarthy,
Crisanti & Maffei, S.A. Assistant Secretary
of each of the Van Kampen American Capital
Funds. Assistant Secretary of the
closed-end funds advised by the VK Adviser.
Weston B. Wetherell...... Assistant Secretary Vice President, Associate General Counsel
Date of Birth: 06/15/56 and Assistant Secretary of VKAC, the VK
Adviser, the AC Adviser and the
Distributor, Van Kampen American Capital
Management, Inc. Van Kampen American
Capital Advisors, Inc. Assistant Secretary
of each of the Van Kampen American Capital
Funds. Assistant Secretary of closed-end
funds advised by VK Adviser.
Steven M. Hill........... Assistant Treasurer Assistant Vice President of the VK Adviser
Date of Birth: 10/16/64 and AC Adviser. Assistant Treasurer of each
of the Van Kampen American Capital Funds.
Assistant Treasurer of the closed-end funds
advised by the VK Adviser.
Robert Sullivan.......... Assistant Controller Assistant Controller of each of the Van
Date of Birth: 03/30/33 Kampen American Capital Funds.
</TABLE>
Each of the foregoing trustees and officers holds the same position with
each of the Van Kampen American Capital mutual funds (the "Fund Complex"). Each
trustee who is not an affiliated person of the Adviser, the Distributor or VKAC
(each a "Non-Affiliated Trustee") is compensated by an annual retainer and
meeting fees for services to the funds in the Fund Complex. Each fund in the
Fund Complex provides a deferred compensation plan to its Non-Affiliated
Trustees that allows trustees to defer receipt of his or her compensation and
earn a return on such deferred amounts based upon the return of the common
shares of the funds in the Fund Complex as more fully described below. Each Fund
in the Fund Complex also 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.
The compensation of each Non-Affiliated Trustee includes a retainer by the
funds in the Fund Complex advised by the AC Adviser (the "AC Funds") in an
amount equal to $35,000 per calendar year, due in four quarterly installments on
the first business day of each calendar quarter. The AC Funds pay each Non-
Affiliated Trustee a per meeting fee in the amount of $2,000 per regular
quarterly meeting attended by the Non-Affiliated Trustee, due on the date of
such meeting, plus reasonable expenses incurred by the Non-Affiliated Trustee in
connection with his or her services as a trustee. Payment of the annual retainer
and the
B-16
<PAGE> 69
regular meeting fee is allocated among the AC Funds (i) 50% on the basis of the
relative net assets of each AC Fund to the aggregate net assets of all the AC
Funds and (ii) 50% equally to each AC Fund, in each case as of the last business
day of the preceding calendar quarter. Each AC Fund participating in any special
meeting of the trustees generally pays each Non-Affiliated Trustee a per meeting
fee in the amount of $125 per special meeting attended by the Non-Affiliated
Trustee, due on the date of such meeting, plus reasonable expenses incurred by
the Non-Affiliated Trustee in connection with his or her services as a trustee,
provided that no compensation will be paid in connection with certain telephonic
special meetings.
The trustees have approved an aggregate compensation cap with respect to
the Fund Complex of $84,000 per Non-Affiliated Trustee per year (excluding any
retirement benefits) for the period July 22, 1995 through December 31, 1996,
subject to the net assets and the number of mutual funds in the Fund Complex as
of July 21, 1995 and certain other exceptions. In addition, the Adviser has
agreed to reimburse each fund in the Fund Complex through December 31, 1996 for
any increase in the aggregate trustee's compensation over the aggregate
compensation paid by such fund in its 1994 fiscal year, provided that if a fund
did not exist for the entire 1994 fiscal year appropriate adjustments will be
made.
Each Non-Affiliated Trustee can elect to defer receipt of all or a portion
of the compensation earned by such Non-Affiliated Trustee until retirement.
Amounts deferred are retained by the Fund and earn a rate of return determined
by reference to the return on the common shares of the Fund or other mutual
funds in the Fund Complex as selected by the respective Non-Affiliated Trustee.
To the extent permitted by the 1940 Act, the Fund will invest in securities of
those mutual funds selected by the Non-Affiliated Trustees in order to match the
deferred compensation obligation. The deferred compensation plan is not funded
and obligations thereunder represent general unsecured claims against the
general assets of the Fund.
The Fund adopted a retirement plan on January 25, 1996. Under the Fund's
retirement plan, a Non-Affiliated Trustee who is receiving trustee's fees from
the Fund prior to such Non-Affiliated Trustee's retirement, has at least ten
years of service and retires at or after attaining the age of 60, is eligible to
receive a retirement benefit equal to $2,500 per year for each of the ten years
following such trustee's retirement. Under certain conditions, reduced benefits
are available for early retirement provided the trustee has served at least five
years. As of the date hereof the retirement plan contains a Fund Complex
retirement benefit cap of $60,000 per year. The Adviser will reimburse the Fund
for expenses related to the retirement plan through December 31, 1996.
B-17
<PAGE> 70
Additional information regarding compensation before deferral paid by the
Fund and other funds in the Fund Complex is set forth below.
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
AGGREGATE PENSION OR ESTIMATED BEFORE DEFERRAL
COMPENSATION RETIREMENT ANNUAL FROM FUND
BEFORE DEFERRAL BENEFITS ACCRUED BENEFITS AND FUND
FROM AS PART OF FUND UPON COMPLEX PAID TO
NAME(2) FUND(3) EXPENSES(4) RETIREMENT(5) TRUSTEE(6)
- --------------------------------------- ---------------- ---------------- ----------- ---------------
<S> <C> <C> <C> <C>
J. Miles Branagan...................... $1,115 $-0- $ 2,500 $84,250
Dr. Richard E. Caruso.................. 550 -0- -0- 57,250
Philip P. Gaughan...................... 600 -0- -0- 76,500
Linda Hutton Heagy..................... 640 -0- 2,500 38,417
Dr. Roger Hilsman...................... 1,145 -0- 1,250 91,250
R. Craig Kennedy....................... 740 -0- 2,500 92,625
Donald C. Miller....................... 690 -0- -0- 94,625
Jack E. Nelson......................... 740 -0- 2,500 93,625
David Rees............................. 1,120 -0- 1,250 83,250
Jerome L. Robinson..................... 740 -0- -0- 89,375
Lawrence J. Sheehan.................... 1,145 -0- -0- 91,250
Dr. Fernando Sisto..................... 1,230 -0- 2,500 98,750
Wayne W. Whalen........................ 740 -0- 2,500 93,375
William S. Woodside.................... 1,070 -0- 1,250 79,125
</TABLE>
- ---------------
(1) As indicated in the other explanatory notes, the amounts in the table relate
to the applicable trustees during the Fund's last fiscal year ended May 31,
1996 or the Fund Complex's last calendar year ended December 31, 1995.
(2) Mr. McDonnell, a trustee of the Fund, is an affiliated person of the Adviser
and is not eligible for compensation or retirement benefits from the
Registrant. Messrs. Gaughan, Kennedy, Miller, Nelson, Robinson and Whalen
were elected by shareholders to the Board of Trustees on July 21, 1995. Ms.
Heagy was appointed to the Board of Trustees on September 7, 1995. Mr.
McDonnell was appointed to the Board of Trustees on January 29, 1996. Mr.
Don G. Powell resigned from the Board of Trustees on August 15, 1996, and
did not receive any compensation or benefits from the Fund while a trustee
because he was an affiliated person of the Adviser. Messrs. Gaughan and Rees
retired from the Board of Trustees on January 26, 1996 and January 29, 1996,
respectively. Messrs. Caruso and Sheehan were removed from the Board of
Trustees effective September 7, 1995 and January 29, 1996, respectively.
(3) The amounts shown in this column are accumulated from the aggregate
compensation paid by the Fund during its fiscal year ended May 31, 1996
before deferral by the trustees under the Fund's deferred compensation plan.
The following trustees deferred all or a portion of their compensation from
the Fund during the fiscal year ended May 31, 1996: Dr. Caruso, $550; Mr.
Gaughan, $200; Ms. Heagy, $450; Mr. Kennedy, $500; Mr. Miller, $450; Mr.
Nelson, $500; Mr. Rees, $250; Mr. Robinson, $500; Dr. Sisto, $515; and Mr.
Whalen, $500. For trustees who have served more than one year and have
deferred account balances, the cumulative deferred compensation (including
interest) accrued with respect to each trustee from the Fund as of May 31,
1996 is as follows: Dr. Caruso, $4,152; Mr. Gaughan, $209; Ms. Heagy, $461;
Mr. Kennedy, $511; Mr. Miller, $459; Mr. Nelson, $511; Mr. Rees, $250; Mr.
Robinson, $511; Dr. Sisto, $3,865; and Mr. Whalen, $511. The deferred
compensation plan is described above the Compensation Table. Amounts
deferred are retained by the Fund and earn a rate of return determined by
reference to either the return on the common shares of the Fund or other
mutual funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee. To the extent permitted by the 1940 Act, it is
anticipated that the Fund will invest in securities of those mutual funds
selected by the Non-Affiliated Trustees in order to match the deferred
compensation obligation.
(footnotes continued on following page)
B-18
<PAGE> 71
(4) The amounts in this column will remain zero in the Fund's 1996 fiscal year
the because the Adviser has agreed to reimburse the Fund for expenses
related to the retirement plan through December 31, 1996. Absent such
reimbursement, the aggregate expenses of the Fund for all trustees would
have been approximately $5,200 in its 1996 fiscal year. The retirement plan
is described above the Compensation Table.
(5) The amounts shown in this column are the annual benefits payable per year
from the Fund for the 10-year period commencing in the year of such
trustee's retirement. The amounts were computed based on each trustee's
anticipated retirement date. The retirement plan is described above the
Compensation Table.
(6) The amounts shown in this column are accumulated from the aggregate
compensation paid by all of the mutual funds in the Fund Complex as of
December 31, 1995 before deferral by the trustees under each Fund's deferred
compensation plan. The following trustees deferred compensation paid by the
Fund and the Fund Complex during the calendar year ended December 31, 1995;
Dr. Caruso, $41,750; Mr. Gaughan, $57,750; Ms. Heagy, $8,750; Mr. Kennedy,
$65,875; Mr. Miller, $65,875; Mr. Nelson, $65,875; Mr. Rees, $8,375; Mr.
Robinson, $62,375; Dr. Sisto, $30,260; and Mr. Whalen, $65,625. The deferred
compensation earns a rate of return determined by reference to the return on
the common shares of the Fund or other mutual funds in the Fund Complex as
selected by the respective Non-Affiliated Trustee. To the extent permitted
by the 1940 Act, it is anticipated that the Fund will invest in securities
of those mutual funds selected by the Non-Affiliated Trustees in order to
match the deferred compensation obligation. The trustees' Fund Complex
compensation cap commenced on July 22, 1995 and covered the period between
July 22, 1995 and December 31, 1995. Compensation received prior to July 22,
1995 was not subject to the cap. For the calendar year ended December 31,
1995, while certain trustees received compensation over $84,000 in the
aggregate, no trustee received compensation in excess of the pro rata amount
of the Fund Complex cap for the period July 22, 1995 through December 31,
1995. In addition to the amounts set forth above, certain trustees received
lump sum retirement benefit distributions not subject to the cap in 1995
related to three mutual funds that ceased investment operations during 1995
as follows: Mr. Gaughan, $22,136; Mr. Miller, $33,205; Mr. Nelson, $30,851;
Mr. Robinson, $11,068; and Mr. Whalen, $27,332. The Adviser and its
affiliates also serve as investment adviser for other investment companies;
however, with the exception of Messrs. McDonnell and Whalen, the trustees
were not trustees of such investment companies. Combining the Fund Complex
with other investment companies advised by the Adviser and its affiliates,
Mr. Whalen received Total Compensation of $268,857 during the calendar year
ended December 31, 1995.
As of September 17, 1996, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund. Mr. McDonnell owns, or has the
opportunity to purchase, an equity interest in VK/AC Holding, Inc., the parent
company of VKAC and has entered into an employment contract (for a term of five
years) with VKAC. As of September 17, 1996, no trustee or officer of the Fund
owns or would be able to acquire 5% or more of the common stock of VK/AC
Holding, Inc.
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom, Chicago, Illinois.
INVESTMENT ADVISORY AGREEMENT
The Trust and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Trust 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 programs.
The Adviser has entered into a subadvisory agreement with the Subadviser to
assist it in performing its investment advisory functions (the "Sub-advisory
Agreement"). The Subadviser will be primarily responsible for recommending the
allocation of investments among various international markets and currencies;
recommendation and selection of particular securities in the international
markets; and placement of portfolio
B-19
<PAGE> 72
transactions in the foreign equity markets. For its services, the Subadviser
receives from the Adviser a fee at the annual rate of 50% of the compensation
received by the Adviser. The Adviser and Subadviser are hereinafter sometimes
referred to as the "Advisers."
The Adviser also furnishes the services of the Trust's President and such
other executive and clerical personnel as are necessary to prepare the various
reports and statements and conduct the Trust's day-to-day operations. The Trust,
however, bears the cost of its accounting services, which include maintaining
its financial books and records. The costs of such accounting services include
the salaries and overhead expenses of the Trust's Treasurer and the personnel
operating under his direction. Charges are allocated among the investment
companies advised or subadvised by the Adviser. A portion of these amounts were
paid to the Adviser or its parent in reimbursement of personnel, facilities and
equipment costs attributable to the provision of accounting services to the
Trust. The services provided by the Adviser are at cost. The Trust also pays
shareholder service agency fees, distribution fees, custodian fees, legal and
auditing fees, the costs of reports to shareholders, and all other ordinary
business expenses not specifically assumed by the Adviser. The Advisory
Agreement also provides that the Adviser shall not be liable to the Trust for
any actions or omissions if it acted without willful misfeasance, bad faith,
negligence or reckless disregard of its obligations.
Under the Advisory Agreement, the Trust pays to the Adviser, as
compensation for the services rendered, facilities furnished, and expenses paid
by it, a fee payable monthly, computed at the annual rate of 1.00% of average
daily net assets of the Fund.
The Fund's average net assets are determined by taking the average of all
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 fee payable to the Adviser will be reduced by any commissions, tender
solicitation and other fees, brokerage or similar payments received by the
Adviser or any other direct or indirect majority owned subsidiary of VK/AC
Holding, Inc. in connection with the purchase and sale of portfolio investments
less any direct expenses incurred by such subsidiary of VK/AC Holding, Inc., in
connection with obtaining such commissions, fees, brokerage or similar payments.
The Adviser agrees to use its best efforts to recapture tender solicitation fees
and exchange offer fees for the Trust's benefit and to advise the Trustees of
the Trust of any other commissions, fees, brokerage or similar payments which
may be possible for the Adviser or any other direct or indirect majority-owned
subsidiary of VK/AC Holding, Inc. to receive in connection with the Fund's
portfolio transactions or other arrangements which may benefit the Fund.
The Advisory Agreement also provides that, in the event the ordinary
business expenses of the Trust, calculated separately for each series, for any
fiscal year should exceed the most restrictive expense limitation applicable in
the states where the Trust's shares are qualified for sale, the compensation due
the Adviser will be reduced by the amount of such excess and that, if the amount
of such excess exceeds the Adviser's monthly compensation, the Adviser will pay
the Trust an amount sufficient to make up the deficiency, subject to
readjustment during the Trust's fiscal year. Ordinary business expenses do not
include (1) interest and taxes, (2) brokerage commissions, (3) certain
litigation and indemnification expenses as described in the Advisory Agreement,
and (4) payments made by the Fund pursuant to the distribution plans (described
below). The Advisory Agreement also provides that the Adviser shall not be
liable to the Fund for any actions or omissions if it acted in good faith
without willful misfeasance, negligence or misconduct.
The most restrictive applicable limitation is 2 1/2% of the first $30
million, 2% of the next $70 million, and 1 1/2% of the remaining average net
assets.The Advisory Agreement also limits the extent to which the Adviser shall
be liable to the Trust for acts or omissions.
The Advisory Agreement has an initial term of two years and thereafter may
be continued from year to year if specifically approved at least annually (a)(i)
by the Trustees, or (ii) by vote of a majority of the Fund's outstanding voting
securities; and (b) by the 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.
B-20
<PAGE> 73
For the fiscal years ended May 31, 1994, 1995 and 1996, the Adviser
received $544,485, $1,200,835 and $1,605,816, respectively, in advisory fees
from the Fund. For such periods the Fund paid $27,600, $28,800 and $31,987,
respectively, for accounting services.
Pursuant to the Advisory Agreement and the Sub-advisory Agreement, the
Trust has agreed to indemnify the Adviser and the Adviser has agreed to
indemnify the Subadviser, respectively, against any taxes imposed by the United
Kingdom on the Trust for its investment related activities as contemplated in
each Agreement. Neither the Adviser nor the Subadviser may be indemnified,
however, with respect to any liabilities incurred by such party's 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
Agreements or to the Trust.
DISTRIBUTOR
The Distributor acts as the principal underwriter of the Trust's shares
pursuant to a written agreement (the "Underwriting Agreement"). The Distributor
has the exclusive right to distribute shares of the Fund through dealers. 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 Funds 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 sales literature and advertising. The
Underwriting Agreement is renewable from year to year if approved (a) by the
Trustees or 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 Underwriting Agreement or interested persons of any party, by
votes cast in person at a meeting called for such purpose. The Underwriting
Agreement provides that it will terminate if assigned, and that it may be
terminated without penalty by either party on 60 days' written notice. Total
underwriting commissions on the sale of shares of the Fund for the last three
fiscal periods is shown in the chart below. Advantage Capital Corporation is a
former affiliated dealer of the Fund.
<TABLE>
<CAPTION>
DEALER REALLOWANCES
AMOUNTS RECEIVED BY
TOTAL UNDERWRITING RETAINED ADVANTAGE CAPITAL
COMMISSIONS BY DISTRIBUTOR CORPORATION
------------------ -------------- -------------------
<S> <C> <C> <C>
Fiscal Year Ended May 31, 1996................. $491,380 $ 34,742 $13,980
Fiscal Year Ended May 31, 1995................. $399,444 $ 1,104 $43,099
Fiscal Year Ended May 31, 1994................. $567,966 $ 37,912 $87,300
</TABLE>
DISTRIBUTION AND SERVICE PLANS
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 an agreement (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."
B-21
<PAGE> 74
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 either 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
either 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.
For the year ended May 31, 1996, the Fund has paid expenses under the
Distribution Plan of $0, $567,146 and $55,525 for the Class A shares, Class B
shares and Class C shares, respectively; and the Fund paid $193,897, $189,049
and $18,508 under the Service Plan for Class A shares, Class B shares and Class
C shares, respectively.
TRANSFER AGENT
During the fiscal year ended May 31, 1996, 1995 and 1994, ACCESS,
shareholder service agent and dividend distributing agent for the Fund, received
fees aggregating $852,280, $586,655 and $183,170 for these services. These
services are provided at cost plus a profit.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Advisers are responsible for decisions to buy and sell securities for
the Fund and for the placement of its portfolio business and the negotiation of
the commissions paid on such transactions. It is the policy of the Advisers to
seek the best security price available with respect to each transaction. In
over-the-counter transactions, orders are placed directly with a principal
market maker unless it is believed that a better price and execution can be
obtained by using a broker. Except to the extent that the Fund may pay higher
brokerage commissions for brokerage and research services (as described below)
on a portion of its transactions executed on securities exchanges, the Advisers
seek the best security price at the most favorable commission rate. In selecting
broker/dealers and in negotiating commissions, the Advisers consider the firm's
reliability, the quality of its execution services on a continuing basis and its
financial condition. When more than one firm is believed to meet these criteria,
preference may be given to firms which also provide research services to the
Fund or the Advisers. Consistent with the Rules of Fair Practice of the NASD and
subject to seeking best execution and such other policies as the Trustees may
determine, the Advisers may consider sales of shares of the Funds and of the
other Van Kampen American Capital mutual funds as a factor in the selection of
firms to execute portfolio transactions for the Funds.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, under certain circumstances, to cause an account
to pay a broker who supplies brokerage and research services, a commission for
effecting a securities transaction in excess of the amount of commission another
broker would have charged for effecting the transaction. Brokerage and research
services 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).
Pursuant to provisions of the Advisory Agreement and the Sub-advisory
Agreement, the Trustees have authorized the Advisers to cause the Fund to incur
brokerage commissions in an amount higher than the lowest available rate in
return for research services provided to the Advisers. The Advisers are of the
opinion that the continued receipt of supplemental investment research services
from brokers is essential to its
B-22
<PAGE> 75
provision of high quality portfolio management services to the Fund. The
Advisers undertake that such higher commissions will not be paid by the Fund
unless (a) the Advisers determine in good faith that the amount is reasonable in
relation to the services in terms of the particular transaction or in terms of
the Advisers' overall responsibilities with respect to the accounts as to which
it exercises investment discretion, (b) such payment is made in compliance with
the provisions of Section 28(e) and other applicable state and federal laws, and
(c) in the opinion of the Advisers, the total commissions paid by the Fund are
reasonable in relation to the expected benefits to the Fund over the long term.
The investment advisory fee paid by the Fund under the Advisory Agreement is not
reduced as a result of the Advisers' receipt of research services.
The Advisers place portfolio transactions for other advisory accounts,
including other investment companies. Research services furnished by firms
through which the Fund effects its securities transactions may be used by the
Advisers in servicing all of their accounts; not all of such services may be
used by the Advisers in connection with the Fund. In the opinion of the
Advisers, the benefits from research services to each of the accounts (including
the Fund) managed by the Advisers cannot be measured separately. Because the
volume and nature of the trading activities of the accounts are not uniform, the
amount of commissions in excess of the lowest available rate paid by each
account for brokerage and research services will vary. However, in the opinion
of the Advisers, such costs to the Fund will not be disproportionate to the
benefits received by the Fund on a continuing basis.
The Advisers seek to allocate portfolio transactions equitably whenever
concurrent decisions are made to purchase or sell securities by 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 Advisers are 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 Advisers' brokerage practices are monitored by the Brokerage Review
Committee comprised of Trustees who are not interested persons (as defined in
the 1940 Act) of the Advisers. Brokerage commissions paid by the Fund on
portfolio transactions for the fiscal years ended May 31, 1994, 1995 and 1996,
totalled $587,199, $937,870 and $666,564, respectively.
Prior to December 20, 1994, the Fund placed brokerage transactions with
brokers who were considered affiliated persons of the Adviser's former parent,
The Travelers Inc. Such affiliated persons included Smith Barney Inc. ("Smith
Barney") and Robinson Humphrey, Inc. ("Robinson Humphrey"). Effective December
20, 1994, Smith Barney and Robinson Humphrey ceased to be affiliates of the
Adviser. The negotiated commission paid to an affiliated broker on any
transaction would be comparable to that payable to a non-affiliated broker in a
similar transaction. The Fund paid the following commissions to these brokers
during the periods shown:
Commissions Paid:
<TABLE>
<CAPTION>
SMITH ROBINSON
BARNEY HUMPHREY
------ ------
<S> <C> <C>
Fiscal Year Ended May 31, 1994.................................... $8,315 $1,330
Fiscal Year Ended May 31, 1995.................................... $3,391 $ 154
</TABLE>
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined as of the close of the New York
Stock Exchange (the "Exchange") (currently 4:00 p.m., New York Time) on each
business day on which the Exchange is open.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the Exchange is open). In
addition, European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place on
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<PAGE> 76
all business days in Japanese markets on certain Saturdays and in various
foreign markets on days which are not business days in New York and on which the
Fund's net asset value is not calculated and on which the Fund does not effect
sales, redemptions and repurchases of its shares. There may be significant
variations in the net asset value of Fund shares on days when net asset value is
not calculated and on which shareholders cannot redeem on account of changes in
prices of stocks traded in foreign stock markets.
The Fund calculates net asset value per share, and therefore effects sales,
redemptions and repurchases of its shares, as of the close of the Exchange once
on each day on which the Exchange is open. Such calculation does not take place
contemporaneously with the determination of the prices of the majority of the
portfolio securities used in such calculation. If events materially affecting
the value of such securities occur between the time when their price is
determined and the time when the Fund's net asset value is calculated, such
securities will be valued at fair value as determined in good faith by the
Trustees.
The net asset value of the Fund is computed by (i) valuing securities
listed or traded on a national securities exchange at the last reported sale
price, or if there has been no sale that day at the last reported bid price,
using prices as of the close of trading on the Exchange, (ii) valuing unlisted
securities for which over-the-counter market quotations are readily available at
the most recent bid price as supplied by the National Association of Securities
Dealers Automated Quotations ("NASDAQ") or by broker/dealers, and (iii) valuing
any securities for which market quotations are not readily available and any
other assets at fair value as determined in good faith by the Trustees. Options
on stocks, options on stock indexes, and stock index futures contracts and
options thereon, which are traded on exchanges, are valued at their last sale or
settlement price as of the close of such exchanges, or, if no sales are
reported, at the mean between the last reported bid and asked prices. Debt
securities with a remaining maturity of 60 days or less are valued on an
amortized cost basis which approximates market value.
The assets belonging to the Class A shares, the Class B shares and the
Class C shares will be invested together in a single portfolio. The net asset
value of each class will be determined separately by subtracting the expenses
and liabilities allocated to that class from the assets belonging to that class.
PURCHASE AND REDEMPTION OF SHARES
The following information supplements the section in the Fund's Prospectus
captioned "Purchase of Shares."
PURCHASE OF SHARES
Shares of the Fund are sold in a continuous offering and may be purchased
on any business day through authorized dealers.
ALTERNATIVE SALES ARRANGEMENTS
The Fund offers three classes of shares: Class A shares, Class B shares and
Class C shares. The three classes of shares each represent interests in the same
portfolio of investments of the Fund, have the same rights and are identical in
all respects, except that Class B shares and Class C shares bear the expenses of
the deferred sales arrangements, distribution fees, and any expenses (including
higher transfer agency costs) resulting from such sales arrangements, and have
exclusive voting rights with respect to the Rule 12b-1 distribution plan
pursuant to which the distribution fee is paid.
During special promotions, the entire sales charge on Class A shares may be
reallowed to dealers, and at such times dealers may be deemed to be underwriters
for purposes of the 1933 Act.
INVESTMENTS BY MAIL
A Shareholder Investment Account may be opened by completing the
application accompanying the Prospectus and forwarding the application, through
the authorized dealer, to ACCESS, at P.O. Box 419319, Kansas City, Missouri
64141-6319. The account is opened only upon acceptance of the application by
ACCESS. The minimum initial investment of at least $500 per class of shares, in
the form of a check payable
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<PAGE> 77
to the Fund, must accompany the application. This minimum may be waived by the
Distributor for plans involving continuing investments. Minimum subsequent
investments of at least $25 per class of shares, may be mailed directly to
ACCESS. All such investments are made at the public offering price of Fund
shares next computed following receipt of payment by ACCESS. Confirmations of
the opening of an account and of all subsequent transactions in the account are
forwarded by ACCESS to the investor's authorized dealer.
In processing applications and investments, ACCESS acts as agent for the
investor and for the dealer named thereon, and also as agent for the
Distributor, in accordance with the terms of the Prospectus. If ACCESS ceases to
act as such, a successor company named by the Fund will act in the same
capacities so long as the account remains open.
CUMULATIVE PURCHASE DISCOUNT
The reduced sales charges reflected in the sales charge table as shown in
the Prospectus apply to purchases of Class A shares of the Fund where the
aggregate investment is $50,000 or more. For purposes of determining eligibility
for volume discounts, spouses and their minor children are treated as a single
purchaser, as is a director or other fiduciary purchasing for a single fiduciary
account. An aggregate investment includes all shares of the Fund and all shares
of certain other participating Van Kampen American Capital mutual funds
described in the Prospectus (the "Participating Funds"), which have been
previously purchased and are still owned, plus the shares being purchased. The
current offering price is used to determine the value of all such shares. The
same reduction is applicable to purchases under a Letter of Intent as described
in the next paragraph. THE DEALER MUST NOTIFY THE DISTRIBUTOR AT THE TIME AN
ORDER IS PLACED FOR A PURCHASE WHICH WOULD QUALIFY FOR THE REDUCED CHARGE ON THE
BASIS OF PREVIOUS PURCHASES. SIMILAR NOTIFICATION MUST BE MADE IN WRITING WHEN
SUCH AN ORDER IS PLACED BY MAIL. The reduced sales charge will not be applied if
such notification is not furnished at the time of the order. The reduced sales
charge will also not be applied should a review of the records of the
Distributor or ACCESS fail to confirm the representations concerning the
investor's holdings.
LETTER OF INTENT
Purchases of Class A shares of the Participating Funds described above
under "Cumulative Purchase Discount," made pursuant to the Letter of Intent and
the value of all shares of such Funds previously purchased and still owned are
also included in determining the applicable quantity discount. A Letter of
Intent permits an investor to establish a total investment goal to be achieved
by any number of investments over a 13-month period. Each investment made during
the period receives the reduced sales charge applicable to the amount
represented by the goal as if it were a single investment. Escrowed shares
totalling 5% of the dollar amount of the Letter of Intent are held by ACCESS in
the name of the shareholder. The effective date of a Letter of Intent may be
back-dated up to 90 days in order that any investments made during this 90-day
period, valued at the investor's cost, can become subject to the Letter of
Intent. The Letter of Intent does not obligate the investor to purchase the
indicated amount. In the event the Letter of Intent goal is not achieved within
the 13-month period, the investor is required to pay the difference between
sales charges otherwise applicable to the purchases made during this period and
sales charges actually paid. Such payment may be made directly to the
Distributor or, if not paid, the Distributor will liquidate sufficient escrow
shares to obtain such difference. If the goal is exceeded in an amount which
qualifies for a lower sales charge, a price adjustment is made by refunding to
the investor in shares of the Fund, the amount of excess sales charges, if any,
paid during the 13-month period.
REDEMPTION OF SHARES
Redemptions are not made on days during which the New York Stock 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 New York
Stock Exchange is closed for other than customary weekends or holidays; (b)
trading on the New York Stock 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.
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<PAGE> 78
CONTINGENT DEFERRED SALES CHARGE -- CLASS A
For certain full service participant directed profit sharing and money
purchase plans and qualified 401(k) retirement plans and for investments in the
amount of $1,000,000 or more of Class A shares of the Fund ("Qualified
Purchaser"), the front-end sales charge will be waived and a contingent deferred
sales charge ("CDSC -- Class A") of 1.00% is imposed in the event of certain
redemptions within one year of the purchase. If a CDSC -- Class A is imposed
upon redemption, the amount of the CDSC -- Class A will be equal to the lesser
of one percent of the net asset value of the shares at the time of purchase, or
one percent of the net asset value of the shares at the time of redemption.
The CDSC -- Class A will only be imposed if a Qualified Purchaser redeems
an amount which causes the value of the account to fall below the total dollar
amount of purchase payments made by the Qualified Purchaser without an initial
sales charge during the one year period prior to the redemption. The CDSC --
Class A will be waived in connection with redemptions by Qualified Purchasers
(e.g., in retirement plans qualified under Section 401(a) of the Code and
deferred compensation plans under Section 457 of the Code) required to obtain
funds to pay distributions to beneficiaries pursuant to the terms of the plans.
Such payments include, but are not limited to, death, disability, retirement, or
separation from service. No CDSC -- Class A will be imposed on exchanges between
funds. 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.
Cumulative Purchase Discounts and Letters of Intent will apply to the net
asset value privilege. Also, in order to establish an amount of $1,000,000 or
more, a Qualified Purchaser may aggregate shares of Van Kampen American Capital
Reserve Fund and Van Kampen American Capital Tax Free Money Fund with shares of
other participating funds described as "Participating Funds" in the Prospectus.
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 and Class
C shares in the circumstances described below:
(a) Redemption Upon Disability or Death
The Fund will waive the CDSC -- Class B and C on redemptions following the
death or disability of a Class B and Class C shareholder. An individual will be
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 disability or death, 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.
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<PAGE> 79
(b) 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 of American Capital
Funds; in such event, as described below, the Fund will "tack" the period for
which the original shares were held onto 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), 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.
(c) Redemption Pursuant to a Fund's Systematic Withdrawal Plan
A shareholder may elect to participate in a systematic withdrawal plan
("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 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.
(d) Involuntary Redemptions of Shares in Accounts that Do Not Have the
Required Minimum Balance
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.
(e) Reinvestment of Redemption Proceeds in Shares of the Same Fund Within
120 Days After Redemption
A shareholder who has redeemed Class C shares of a Fund may reinvest, 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
shares of the Fund, provided that the reinvestment is effected within 120 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.
(f) 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.
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<PAGE> 80
EXCHANGE PRIVILEGE
The following supplements the discussion of "Shareholder
Services -- Exchange Privilege" in the Prospectus:
By use of the exchange privilege, the investor authorizes ACCESS to act on
telephonic, telegraphic or written exchange instructions from any person
representing himself to be the investor or the agent of the investor and
believed by ACCESS to be genuine. Van Kampen American Capital and its
subsidiaries, including ACCESS, 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 American Capital, ACCESS nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. Van Kampen
American Capital, ACCESS and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed.
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 exchange 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 his 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 mutual 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.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The Fund's policy is to distribute substantially all of its investment
company taxable income (which includes net short-term capital gains, but not net
capital gains, which are the excess of net long-term capital gains over net
short-term losses including capital losses carried forward from prior years in
accordance with the tax laws) annually to shareholders of Class A shares, Class
B shares and Class C shares. The per share dividends on Class B shares and Class
C shares will be lower than the per share dividends on Class A shares as a
result of the distribution fees and higher transfer agency fees applicable to
the Class B shares and Class C shares. The Fund intends to distribute to
shareholders any net capital gains, if any, at least once a year. All dividends
and capital gains distributions are reinvested in shares of the Fund at net
asset value without sales charge on the record date, except that any shareholder
may otherwise instruct ACCESS in writing and receive cash.
The Fund has qualified and intends to continue to qualify as a regulated
investment company ("RIC") under Sections 851-855 of the Code. This means the
Fund must pay all or substantially all its investment company taxable income and
net capital gains to shareholders and comply with certain requirements of the
Code relating to, among other things, the source of its income and
diversification of its assets. By qualifying as a RIC, the Fund is not subject
to federal income taxes to the extent it distributes its net investment income
and net capital gains. If for any taxable year the Fund does not qualify for the
special tax treatment afforded RIC's, all of its taxable income, including any
net capital gains, would be subject to tax at regular corporate
B-28
<PAGE> 81
rates (without any deduction for distributions to shareholders) and all
distributions out of the Fund's earnings and profits would be taxed to
shareholders as ordinary income.
To the extent the Fund does not distribute to its shareholders during any
calendar year at least 98% of its ordinary taxable income for the 12 months
ended December 31 plus 98% of its capital gains net income for the 12 months
ended October 31 of such calendar year, the Fund would be required to pay a 4%
excise tax. The Fund intends to distribute sufficient amounts to avoid liability
for the excise tax.
Dividends from investment company taxable income are taxable to
shareholders as ordinary income. A 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. Dividends and distributions declared
payable to shareholders of record after September 30 of any year and paid before
February 1 of the following year are considered taxable income to shareholders
received by the shareholder on December 31 of the year in which the dividend was
declared even though paid in the next year.
Distributions from net capital gains are taxable to shareholders as
long-term capital gains, regardless of how long the shareholder has held Fund
shares. Any loss on the sale of Fund shares held for six months or less is
treated as a long-term capital loss to the extent of any capital gain
distributions paid on such shares. All dividends and distributions are taxable
to the shareholder whether or not reinvested in shares. Shareholders are
notified annually by each Fund as to the federal tax status of dividends and
distributions paid by the Fund unless such amount is less than $10.00, in which
case no notice is provided.
If shares of the Fund are sold or exchanged within 90 days of acquisition
and shares of the same or a related mutual fund are acquired, to the extent the
sales charge is reduced or waived on the subsequent acquisition the sales charge
may not be used to determine the basis in the disposed shares for purposes of
determining gain or loss. To the extent the sales charge is not allowed in
determining gain or loss on the initial shares, it is capitalized and included
in the basis of the subsequently acquired shares.
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 and
proposed changes to the tax laws may also require the Fund to mark-to-market
some of the positions in its portfolio (i.e., treat them as if they were closed
out), which may cause the Fund to recognize income without receiving cash with
which to make distributions in amounts necessary to satisfy the distribution
requirements to maintain its qualification as a RIC and to avoid 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 RIC and to avoid income and excise taxes. In order to generate sufficient
cash to make distributions necessary to satisfy the distribution requirements
and to avoid income and excise taxes, the Fund may have to dispose of securities
that it would otherwise have continued to hold.
The Fund's ability to dispose of portfolio securities may be limited by the
requirement for qualification as a RIC that less than 30% of the Fund's gross
income be derived from the disposition of securities held for less than three
months.
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produced, or are held for the production
of, passive income. Under certain circumstances, a RIC that holds stock of a
PFIC will be subject to federal income tax on a portion of any "excess
distribution" received on the stock or of any gain on disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the RIC distributes
the PFIC income as a taxable
B-29
<PAGE> 82
dividend to its stockholders. 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 by the Fund to
satisfy the distribution requirement for avoiding income and excise taxes. In
many instances it may be very difficult to make this election due to certain
requirements imposed with respect to the election.
Pursuant to proposed regulations, the Fund would be entitled to elect to
"mark-to-market" its stock in certain PFICs. "Marking-to-market," in this
context, means recognizing as ordinary income for each taxable year the excess
as of the end of that year of the fair market value of the PFIC's stock over the
owner's adjusted basis in that stock (including mark-to-market gain for each
prior year for which an election was in effect). Unrealized losses, however,
would not be recognized. By making the mark-to-market election, the Fund could
ameliorate the adverse tax consequences with respect to its ownership of stock
of a PFIC 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. These regulations, if adopted in their current form,
would be effective for taxable years ending after their promulgation as final
regulations.
The Fund may qualify for and may make the election permitted under Section
853 of the Code so that shareholders will be able to claim a credit or deduction
on their income tax returns for, and will be required to treat as part of the
amounts distributed to them, their pro rata portion of qualified taxes paid by
the Fund to foreign countries (which taxes relate primarily to investment
income). In such event, the shareholders of the Fund may claim a foreign tax
credit by reason of the Fund's election under Section 853 of the Code subject to
certain limitations imposed by Section 904 of the Code. Also under Section 63 of
the Code, no deduction for foreign taxes may be claimed by shareholders who do
not itemize deductions on their federal income tax returns. It should also be
noted that a tax-exempt shareholder, like other shareholders, will be required
to treat as part of the amounts distributed to it a pro rata portion of the
income taxes paid by the Fund to foreign countries. However, that income will
generally be exempt from United States taxation by virtue of such shareholder's
tax-exempt status, and such a shareholder will not be entitled to either a tax
credit or a deduction with respect to such income.
Dividends to shareholders who are non-United States persons (including but
not limited to non-resident aliens) may be subject to a 30% United States
withholding tax under existing provisions of the Code unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty law.
Non-United States shareholders are urged to consult their own tax adviser
concerning the applicability of the United States withholding tax.
The foregoing is a general and abbreviated summary of the applicable
federal income tax laws based on provisions of the Code and Treasury Regulations
presently in effect. The Code and Treasury Regulations are subject to change by
legislative or administrative action either prospectively or retroactively.
Prospective investors should consult their own tax advisors regarding the
specific tax consequences of holding and disposing of shares and any proposed
tax law changes. Dividends and distributions may also be subject to treatment
under state, local, and foreign tax laws which differ from federal income tax
consequences.
BACK-UP WITHHOLDING
The Fund is required to withhold and remit to the United States Treasury
31% of (i) reportable taxable dividends and distributions and (ii) the proceeds
of any redemptions of Fund shares with respect to any shareholder who is not
exempt from withholding and who fails to furnish the Fund with a correct
taxpayer identification number, who fails to report fully dividend or interest
income to the Internal Revenue Service, or who fails to certify to the Fund that
he has provided a correct taxpayer identification number and that he is not
subject to withholding. (An individual's taxpayer identification number is his
social security number.) The 31% back-up withholding tax is not an additional
tax and may be credited against a taxpayer's regular federal income tax
liability.
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<PAGE> 83
FUND PERFORMANCE
The Fund's average annual total return (computed in the manner described in
the Prospectus) for Class A shares of the Fund for (i) the one year period
ending May 31, 1996 was 14.84% and (ii) the 4 year, 9 1/2 month period ending
May 31, 1996 was 9.77%. The Fund's average annual total return (computed in the
manner described in this Prospectus) for Class B shares of the Fund for (i) the
one year period ending May 31, 1996 was 15.90% and (ii) the 4 year, 6 1/2 month
period ending May 31, 1996 was 9.21%. The Fund's average annual total return for
Class C shares of the Fund for (i) the one year period ending May 31, 1996 was
19.87% and (ii) the 2 year, 11 1/2 month period ending May 31, 1996 was 12.14%.
These results are based on historical earnings and asset value fluctuations and
are not intended to indicate future performance. Such information should be
considered in light of the Fund's investment objectives and policies as well as
the risks incurred in the Fund's investment practices. Future results will be
affected by changes in the general level of prices of securities available for
purchase and sale by the Fund.
Total return is computed separately for Class A shares, Class B shares and
Class C shares.
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;
and (3) in reports or other communications to shareholders or in advertising
material, illustrate the benefits of compounding at various assumed rates of
return. Such illustrations may be in the form of charts or graphs and will not
be based on historical returns experienced by the Fund.
The Fund seeks long-term growth of capital through investments in an
internationally diversified portfolio of equity securities of companies of any
nation including the United States. In addition, the Fund attempts to remain
fully invested and diversified across many industries to attempt to achieve
consistent performance.
From time to time marketing materials may provide a portfolio manager
update, an adviser update and/or discuss general economic conditions and
outlooks. The Fund's marketing materials may also show the Fund's asset class
diversification, top five sector holdings and ten largest holdings. Materials
may also mention how Van Kampen American Capital believes the Fund compares
relative to other Van Kampen American Capital funds. Materials may also discuss
the Dalbar Financial Services study from 1984 to 1994 which examined investor
cash flow into and out of all types of mutual funds. The ten year study found
that 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 channels. The study showed that investors working with a
professional representative have tended over time to earn higher returns than
those who invested directly. The Fund will also be marketed on the Internet.
OTHER INFORMATION
CUSTODY OF ASSETS -- State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110 serves as Custodian for the Trust. The custodian has
entered into agreements with foreign sub-custodians approved by the Trustees
pursuant to Rule 17f-5 under the 1940 Act. The Custodian and sub-custodians
generally domestically, and frequently abroad, do not actually hold certificates
for the securities in their custody, but instead have book records with domestic
and foreign securities depositories, which in turn have book records with the
transfer agents of the issuers of the securities.
SHAREHOLDER REPORTS -- Semiannual statements are furnished to shareholders, and
annually such statements are audited by the independent accountants.
INDEPENDENT ACCOUNTANTS -- Price Waterhouse LLP, 1201 Louisiana, Houston, Texas
77002, the independent accountants for the Fund, performs an annual audit of the
Fund's financial statements.
B-31
<PAGE> 84
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
respects, the financial position of Van Kampen American Capital Global Equity
Fund (the "Fund") at May 31, 1996, and the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
securities at May 31, 1996 by correspondence with the custodian and brokers and
the application of alternative procedures where confirmations from brokers were
not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
July 22, 1996
B-32
<PAGE> 85
PORTFOLIO OF INVESTMENTS
May 31, 1996
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK AND EQUIVALENTS 92.5%
AUSTRALIA 0.7%
90,000 Pioneer International Ltd.......................... $ 275,840
179,000 Tab Corp Holdings Ltd.............................. 785,777
60,000 WMC Ltd............................................ 454,466
------------
1,516,083
------------
AUSTRIA 0.4%
1,800 AMS Austria Mikros................................. 194,237
7,400 Flughafen Wien..................................... 507,779
------------
702,016
------------
BELGIUM 0.2%
9,100 G.I.B. Holdings.................................... 409,152
------------
BRAZIL 0.6%
70,000 Centrais, Class B.................................. 884,100
40,000 Usiminas Usi....................................... 430,000
------------
1,314,100
------------
CANADA 0.5%
7,700 BCE Inc............................................ 306,640
15,000 Canadian Pacific Ltd............................... 307,162
* 95,000 Grandetel Technologies, Inc........................ 83,125
* 11,000 Inco Ltd........................................... 358,555
------------
1,055,482
------------
CZECH REPUBLIC 1.6%
* 6,800 Ceske Radiokomunickace............................. 960,723
* 5,700 IPS Praha.......................................... 658,048
57,200 Komercni Banka..................................... 1,558,700
* 1,300 Leciva............................................. 118,374
* 1,200 Prazske Pivovary................................... 78,049
------------
3,373,894
------------
DENMARK 0.8%
15,000 Bang & Olufsen Holding, Series B................... 509,122
* 8,000 Carli Gry International............................ 228,087
39,000 ISS International, Series B........................ 761,137
1,000 Sophus Berendsen................................... 133,220
------------
1,631,566
------------
FINLAND 0.2%
12,900 Finnlines.......................................... 266,965
17,000 Valmet Corp........................................ 263,409
------------
530,374
------------
FRANCE 4.5%
11,000 Bouygues........................................... 1,195,860
2,450 Chargeurs, SA...................................... 699,052
8,400 Christian Dior..................................... 1,186,188
488 Club Mediterranee.................................. 45,312
</TABLE>
B-33 See Notes to Financial Statements
<PAGE> 86
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market
Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C>
7,500 Credit Local De France............................... $ 614,421
1,500 Ecco................................................. 359,803
* 11,880 Primagaz (Cie Gaz)................................... 1,266,250
* 1,080 Primagaz (Cie Gaz), Warrants, expiring 7/1/98........ 21,811
2,150 Roussel Uclaf........................................ 498,250
8,800 Sanofi............................................... 677,172
6,000 Sidel................................................ 1,477,512
6,675 Societe Generale..................................... 710,175
4,900 Union Assurance Federales............................ 638,863
-----------
9,390,669
-----------
GERMANY 3.2%
30,000 Adidas............................................... 2,251,966
2,060 Bayer................................................ 688,467
20,000 Berliner Elektro Holdings............................ 525,557
* 1,000 Ebara Corp., Warrants, expiring 3/13/98.............. 58,322
1,170 Hoechst.............................................. 389,336
* 27,900 Praktiker............................................ 667,333
22,000 RWE.................................................. 868,610
3,400 SAP.................................................. 475,688
14,950 Siemens.............................................. 838,415
-----------
6,763,694
-----------
HONG KONG 4.5%
730,000 First Pacific Co..................................... 1,004,808
250,000 Henderson Land Development........................... 1,890,194
455,000 Hong Kong Land Holding............................... 1,001,000
74,800 HSBC Holdings........................................ 1,131,092
135,000 Hutchison Whampoa.................................... 867,163
2,420,000 Jilin Chemical Industry, Class H..................... 491,050
120,000 Sun Hung Kai Properties.............................. 1,225,234
140,000 Swire Pacific........................................ 1,243,973
* 600,000 Tingyi Holding Co.................................... 162,848
76,000 Wharf Holdings....................................... 293,203
-----------
9,310,565
-----------
HUNGARY 1.0%
* 66,000 Borsodchem........................................... 1,270,500
30,000 OTP Bank............................................. 374,400
8,823 Pick Szeged.......................................... 374,978
-----------
2,019,878
-----------
INDONESIA 1.2%
1,646,000 BK Bira............................................ 1,623,065
* 28,500 Perusahaan Persero Telekom......................... 869,250
-----------
2,492,315
-----------
</TABLE>
B-34 See Notes to Financial Statements
<PAGE> 87
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
IRELAND 1.3%
170,000 Bank of Ireland...................................... $ 1,193,398
77,000 CRH.................................................. 736,231
650,000 Waterford Wedgewood.................................. 826,052
-----------
2,755,681
------------
ISRAEL 0.7%
* 76,375 Tadiran Telecommunications Ltd....................... 1,374,750
------------
ITALY 1.3%
74,000 Eni, SPA............................................. 351,365
* 19,375 Gucci Group.......................................... 1,298,125
* 79,000 Mediolanum........................................... 767,612
55,900 Rinascente........................................... 375,141
------------
2,792,243
------------
JAPAN 16.2%
50,000 Ajinomoto Co......................................... 601,852
* 50,600 Bank of Tokyo........................................ 1,199,407
40,000 Daiichi Corp......................................... 1,040,741
40,000 Dainippon Screen Manufacturing Co.................... 374,074
90,000 Daiwa Securities..................................... 1,208,333
113,000 Denki Kagaku Kogyo................................... 415,380
15,000 Fuji Photo Film Co................................... 466,667
80,000 Fujitsu.............................................. 725,926
45,000 Honda Motor Co....................................... 1,083,333
9,000 ICOM Incorporated.................................... 96,667
60,000 Isuzu Motors......................................... 326,667
* 30,000 Japan Air Lines Co................................... 241,944
59,000 Japan Radio Co....................................... 830,370
14,000 JGC Corp............................................. 178,889
40,000 Kitano Construction Corp............................. 274,444
* 100,000 Kobe Steel........................................... 275,926
25,000 Komatsu.............................................. 238,426
70,000 Kumagai Gumi Co...................................... 294,907
50,000 Kurita Water Industries.............................. 1,157,407
9,000 Kyocera Corp.......................................... 616,667
* 5,200 Lear Corp............................................. 200,850
130,000 Marubeni Corp......................................... 708,981
100,000 Matsushita Industries................................. 1,722,222
90,000 Mitsubishi Chemical................................... 445,000
55,000 Mitsubishi Estate..................................... 768,981
130,000 Mitsubishi Heavy Industries........................... 1,118,241
30,000 Mitsubishi Trust & Banking Corp. ..................... 500,000
110,000 Mitsukoshi............................................ 1,212,040
</TABLE>
B-35 See Notes to Financial Statements
<PAGE> 88
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
46,000 Nichiei Construction................................. $ 532,407
16,000 Nippon Hodo Co. ..................................... 262,222
71 Nippon Telephone & Telegraph Corp.................... 516,722
25,000 Nippon Yusen KK...................................... 146,759
* 350,000 NKK Corp. ........................................... 1,024,074
60,000 Nomura Securities.................................... 1,133,333
42 NTT Data Communications Systems.......................... 1,295,000
35,000 Omron Corp. ......................................... 709,722
65,000 Onward Kashiyama..................................... 1,059,259
90,000 Ricoh Co............................................. 908,333
10,000 Rohm Co.............................................. 625,926
21,000 Sankyo Co............................................ 497,778
12,000 Sanwa Bank........................................... 231,111
16,000 Secom Co............................................. 1,037,037
21,000 Shin Etsu Chemical Co. .............................. 420,000
50,000 Takashimaya Co....................................... 814,815
54,000,000 TB Finance........................................... 518,750
25,000 Tokio Marine & Fire Insurance Co. ................... 324,074
18,000 Tokyu Corp. ......................................... 134,833
65,000 Toshiba Corp. ....................................... 451,991
89,000 Toyota Motor Corp. .................................. 2,035,463
35,000 Yamanouchi Pharmarcy................................. 755,093
-----------
33,759,044
-----------
MALAYSIA 2.0%
145,000 Commerce Asset Holding............................... 975,766
123,000 DCB Holdings......................................... 408,933
* 30,750 DCB Holdings, Warrants, expiring 12/27/99............ 39,169
130,000 Jaya Tiasa Holdings.................................. 812,337
300,000 Metacorp Berhad...................................... 817,144
205,000 Resorts World........................................ 1,182,455
-----------
4,235,804
-----------
MEXICO 1.1%
100,000 Cemex................................................ 806,250
56,000 Empresas............................................. 805,000
10,010 Grupo Industria Maseca, Series B..................... 10,546
21,000 Telefonos de Mexico, SA.............................. 693,000
-----------
2,314,796
-----------
NETHERLANDS 3.5%
10,127 Aegon................................................ 485,147
13,400 ASM Lithography Holding.............................. 634,097
20,000 Koninklijke Ahold.................................... 1,072,914
42,500 Cap Volmac Group..................................... 838,799
13,300 Frans Maas Group..................................... 525,769
</TABLE>
B-36 See Notes to Financial Statements
<PAGE> 89
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<C> <S> <C>
12,609 ING Groep............................................ $ 1,038,258
7,000 KLM.................................................. 250,073
17,500 Philips Electronics, NV.............................. 614,687
8,200 Polygram............................................. 480,234
1,300 Royal Dutch Petroleum Co............................. 195,000
70,000 Ver Ned Uitgevers.................................... 1,147,877
-----------
7,282,855
-----------
NORWAY 1.6%
* 7,600 Multisoft............................................ 320,375
* 10,000 Netcom............................................... 122,632
6,500 Orkla, Class B....................................... 297,918
34,550 Protector Forsikring................................. 879,162
29,400 Schibsted............................................ 392,084
29,800 Spectec.............................................. 890,766
100,000 Uni Storebrand....................................... 482,862
-----------
3,385,799
-----------
PHILIPPINES 0.1%
2,500 Philippine Long Distance Telephone................... 143,750
-----------
POLAND 0.2%
* 145,000 Fabryki Mebll Forte, Series C........................ 502,553
-----------
PORTUGAL 0.3%
50,000 BCO Comm Portugues................................... 615,654
-----------
SINGAPORE 1.8%
66,000 Cycle & Carriage..................................... 693,504
90,000 Fraser & Neave....................................... 977,636
50,000 Keppel Corp.......................................... 418,885
113,000 Overseas Union Bank.................................. 802,272
140,000 Singapore Land....................................... 944,267
-----------
3,836,564
-----------
SLOVAKIA 0.3%
* 6,000 Plastika Nitra....................................... 281,843
13,000 Ses.................................................. 217,488
1,700 Slovakofarma......................................... 155,411
-----------
654,742
-----------
SOUTH KOREA 0.4%
16,000 L.G. Chemical, Ltd................................... 334,080
13,500 Samsung Electronics Co............................... 428,625
1,042 Samsung Electronics Ltd.............................. 29,832
-----------
792,537
-----------
SPAIN 0.5%
16,320 Argentaria Corp...................................... 683,673
9,700 Cortefiel, SA........................................ 219,384
1,850 Gas Y Electricidad................................... 100,649
-----------
1,003,706
-----------
SWEDEN 2.3%
22,500 Astra, Series B...................................... 1,016,440
13,600 Autoliv.............................................. 394,743
</TABLE>
B-37 See Notes to Financial Statements
<PAGE> 90
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
* 13,000 Celsius, Series B.................................... $ 400,547
* 20,500 Dahl International................................... 280,726
90,000 Nobel Biocare........................................ 1,627,644
240,000 Rottneros............................................ 275,070
50,000 Skandinavska Enskilda Banken, Series A............... 394,445
25,500 Stora Kopparbergs, Series B.......................... 335,911
----------
4,725,526
----------
SWITZERLAND 3.6%
* 4,600 Adia................................................. 1,065,920
240 Baloise Holdings..................................... 519,696
1,300 Ciba Geigy........................................... 1,430,364
5,000 CS Holdings.......................................... 431,482
530 Kuoni Reisen Holding................................. 1,120,136
750 Nestle............................................... 844,986
400 Publicitas Holdings.................................. 383,540
500 Schindler Holdings................................... 533,360
* 500 Schindler Holdings, Warrants, Expiring 12/16/96...... 839
* 1,300 Schweizerischer Bankverein........................... 231,123
450 SGS Holding.......................................... 1,013,983
----------
7,575,429
----------
TAIWAN 0.1%
25,000 Walsin Lihwa Corp.................................... 212,500
----------
THAILAND 0.8%
19,000 Siam Cement Co....................................... 1,024,797
* 135,000 Telecomasia Corp..................................... 301,173
71,600 Thai Military Bank PLC............................... 364,700
----------
1,690,670
----------
TURKEY 0.3%
8,700,000 Konfrut Gilda........................................ 586,753
----------
UNITED KINGDOM 7.8%
150,000 Astec................................................ 346,351
114,000 BAA.................................................. 860,344
75,000 Barclays............................................. 872,850
5,000 Barclays De Zoete, Warrants, Expiring 6/14/96........ 100,500
50,000 BOC Group............................................ 720,595
77,000 Boots Co............................................. 727,879
147,000 British Petroleum ................................... 1,264,296
40,000 British Telecom...................................... 220,363
190,000 Cable & Wireless..................................... 1,310,243
20,000 De La Rue............................................ 222,377
129,000 Dixons Group......................................... 1,000,535
48,000 Eurotherm............................................ 477,917
</TABLE>
B-38 See Notes to Financial Statements
<PAGE> 91
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
250,000 FKI................................................. $ 668,294
38,600 General Accident.................................... 398,083
Harvey Nichols, PLC, private placement, purchased
* 81,000 4/23/96 for $331,665................................ 424,895
40,000 Marks & Spencer..................................... 286,688
50,000 National Westminster................................ 483,496
125,000 Next................................................ 1,089,609
* 12,831 Pliva............................................... 396,157
40,000 Premier Farnell..................................... 451,263
37,500 Reed International.................................. 648,536
88,000 Reuters Holdings.................................... 1,022,780
49,000 Sainsbury........................................... 301,077
260,000 Senior Engineering.................................. 439,176
11,500 Shell Transportation & Trading...................... 163,777
100,000 Standard Chartered.................................. 994,111
75,000 Tesco............................................... 350,418
-----------
16,242,610
-----------
UNITED STATES 26.9%
6,750 AAMES Financial Corp................................ 221,062
* 6,000 Adaptec, Inc........................................ 359,250
* 5,000 ADC Telecommunications Inc.......................... 230,000
7,300 AK Steel Holding Corp............................... 315,725
* 3,900 American Radio System Corp.......................... 149,175
* 3,900 Amgen, Inc.......................................... 232,050
* 12,300 Analog Devices, Inc................................. 339,787
* 5,400 Ascend Communications Inc........................... 361,125
* 5,900 Aspect Telecommunications Corp...................... 334,825
* 6,000 Atmel Corp.......................................... 213,000
5,000 Baker Hughes Inc.................................... 156,875
8,200 Bank of Boston Corp................................. 408,975
5,700 BankAmerica Corp.................................... 428,925
* 54,000 BE Semiconductor Industries......................... 884,250
4,700 Belden Inc.......................................... 150,400
4,700 Bemis Inc........................................... 155,687
5,500 Black & Decker Corp................................. 226,187
5,800 BMC Industries Inc.................................. 172,550
* 5,200 BMC Software Inc.................................... 327,600
5,700 Boeing Co. ......................................... 485,925
7,400 Boise Cascade Corp.................................. 310,800
2,700 Bristol Myers Squibb Co............................. 230,512
4,400 Brown (Alex) Inc.................................... 254,100
1,300 Burlington Northington Santa Fe..................... 110,175
* 7,200 Cadence Design Systems Inc.......................... 408,600
</TABLE>
B-39 See Notes to Financial Statements
<PAGE> 92
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market
Value
- --------------------------------------------------------------------------------
<C> <S> <C>
* 6,600 Career Horizons Inc................................... $ 261,525
* 2,400 Cascade Communications Corp........................... 135,300
6,100 Case Corp............................................. 305,762
3,100 Champion International Corp........................... 136,787
9,000 Chase Manhattan Corp.................................. 630,000
8,900 Chrysler Corp......................................... 592,962
* 8,200 Cisco Systems Inc..................................... 448,950
4,400 Citicorp.............................................. 369,600
4,300 CMAC Investment Corp.................................. 234,350
* 2,200 Coherent Inc.......................................... 107,525
10,100 Computer Associates International Inc................. 734,775
8,100 Conseco Inc........................................... 293,625
* 2,500 Continental Airlines Inc.............................. 142,187
4,700 CSX Corp.............................................. 232,650
* 2,300 Cytec Industries, Inc................................. 205,850
4,500 Dayton Hudson Corp.................................... 459,000
6,000 Deere & Co............................................ 249,750
4,600 Dillard Department Stores Inc, Class A................ 184,000
7,100 Dover Corp............................................ 337,250
* 8,300 DST Systems Inc....................................... 289,462
* 29,400 Eckerd Corp........................................... 668,850
* 6,100 Emmis Broadcasting Corp............................... 268,400
* 9,500 Evergreen Media Co.................................... 380,000
4,500 Exxon Corp............................................ 381,375
26,900 Federal National Mortgage Association................. 830,537
2,900 First Data Corp....................................... 231,275
7,500 Ford Motor Corp....................................... 273,750
* 5,700 Fort Howard Corp...................................... 118,275
6,900 Frontier Corp......................................... 220,800
9,300 Gap Inc............................................... 312,712
* 7,000 Gateway 2000 Inc...................................... 265,125
* 5,000 General Instrument Corp............................... 154,375
* 10,500 General Nutrition Companies Inc....................... 162,750
* 4,900 Genzyme Corp.......................................... 285,425
1,800 Geon Co............................................... 48,825
* 10,100 Grand Casinos Inc..................................... 353,500
17,300 Green Tree Financial Group............................ 566,575
6,300 Greenfield Industries Inc............................. 237,825
5,900 Guidant Corp.......................................... 342,200
* 9,400 Gymboree Corp......................................... 319,600
4,400 Halliburton Co........................................ 244,750
</TABLE>
B-40 See Notes to Financial Statements
<PAGE> 93
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
5,500 Harley Davidson Inc................................... $ 263,312
* 7,850 Health Management Association Inc, Class A............ 270,825
* 3,000 HealthCare Compare Corp............................... 145,125
* 8,000 Healthsouth Corp...................................... 280,000
5,700 Hewlett Packard, Co................................... 608,475
3,500 Illinois Tool Works, Inc.............................. 234,500
* 3,500 In Focus Systems...................................... 201,250
* 6,450 Infinity Broadcasting, Corp........................... 175,763
* 4,400 Input/Output, Inc..................................... 177,650
6,500 Intel Corp............................................ 490,750
* 9,300 International Rectifier Corp.......................... 241,800
* 14,000 Jefferson Smurfit Corp................................ 175,000
2,000 Johnson Controls, Inc................................. 139,500
3,700 Johnson & Johnson..................................... 360,288
* 6,200 Komag, Inc............................................ 214,675
* 10,200 Kroger Co............................................. 400,350
5,000 La Quinta Inns Inc.................................... 157,500
* 5,600 LCI International Inc................................. 178,500
* 8,800 Lincare Holdings, Inc................................. 332,200
7,300 Linear Technology Corp................................ 251,850
7,200 Liz Claiborne......................................... 267,300
* 4,600 Lucent Technologies, Inc.............................. 174,800
8,800 Marriott International, Inc........................... 418,000
* 2,600 Maxim Integrated Products, Inc........................ 88,400
22,000 MCI Communications Corp............................... 640,750
* 3,900 Medic Computer System, Inc............................ 362,700
3,900 Medtronic, Inc........................................ 219,375
5,200 Mentor Corp........................................... 115,700
5,600 Merck & Co., Inc...................................... 361,900
5,200 Merrill Lynch & Co., Inc.............................. 336,700
* 10,000 Metalclad Corp........................................ 31,875
4,500 MGIC Investment Corp.................................. 264,375
* 6,000 Microcom, Inc......................................... 116,250
* 5,700 Microsoft Corp........................................ 676,875
* 5,700 Mirage Resorts, Inc................................... 324,188
9,400 Money Store, Inc...................................... 246,750
5,200 Morgan Stanley Group, Inc............................. 257,400
* 4,100 MSC Industrial Direct, Inc., Class A.................. 142,988
* 10,000 NABI Inc.............................................. 135,625
4,200 NationsBank Corp...................................... 340,725
* 16,000 Nautica Enterprises, Inc.............................. 400,000
</TABLE>
B-41 See Notes to Financial Statements
<PAGE> 94
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
* 6,400 Northwest Airlines Corp.............................. $ 254,400
* 3,700 Oakley, Inc.......................................... 188,238
* 9,800 Octel Communication Corp............................. 240,100
* 9,900 Office Max, Inc...................................... 258,638
11,800 Omnicom Group........................................ 514,775
* 8,650 Oracle System Corp................................... 286,531
* 5,800 Orthodontic Centers of America....................... 215,325
* 7,400 Outback Steakhouse Inc............................... 280,275
* 4,700 Pairgain Technologies, Inc........................... 478,225
7,800 PanEnergy Corp....................................... 250,575
8,300 Penncorp Financial Group, Inc........................ 253,150
* 3,000 PeopleSoft Inc....................................... 212,250
4,400 Pep Boys Manny, Moe & Jack........................... 145,200
19,400 PepsiCo, Inc......................................... 645,050
5,100 Pfizer Inc........................................... 360,825
1,600 Phelps Dodge Corp.................................... 109,600
23,400 Philip Morris Companies, Inc......................... 2,325,375
5,200 Philips Petroleum Co................................. 215,800
* 2,900 Physician Reliance Network Inc....................... 152,250
* 6,500 Picturetel Corp...................................... 255,125
16,200 Praxair, Inc......................................... 658,125
* 6,500 Promous Hotel Corp................................... 178,750
* 5,300 Proxim Inc........................................... 221,275
3,300 Raychem Corp......................................... 246,675
* 10,000 Renal Treatment Centers Inc.......................... 340,000
3,000 Rohm & Haas Co....................................... 203,250
* 22,800 Safeway Inc.......................................... 769,500
* 4,000 Sanmina Corp......................................... 147,500
7,500 Schering-Plough Corp................................. 439,688
* 8,800 SCI Systems, Inc..................................... 396,000
* 4,800 Seagate Technology, Inc.............................. 282,000
11,900 Sears, Roebuck & Co.................................. 605,413
9,400 Service Corp. International.......................... 525,225
3,500 Sigma Aldrich........................................ 196,000
* 12,200 Smith International, Inc............................. 384,300
4,900 Snap On, Inc......................................... 235,813
* 2,500 Sofamor/Danek Group Inc.............................. 89,375
* 2,700 Solectron Corp....................................... 117,113
2,400 Sonat Offshore Drilling Inc.......................... 127,200
* 6,000 Sonic Corp........................................... 144,000
11,600 Sprint Corp.......................................... 491,550
</TABLE>
B-42 See Notes to Financial Statements
<PAGE> 95
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
* 12,600 Staples Inc......................................... $ 252,000
5,700 Student Loan Marketing Association.................. 423,938
* 11,900 Sun Microsystems Inc................................ 745,238
11,750 SunAmerica, Inc..................................... 658,000
* 4,000 Synopsys Inc........................................ 179,000
* 4,700 Tellabs Inc......................................... 303,150
4,800 Texaco Inc.......................................... 402,000
4,700 Textron, Inc........................................ 398,325
* 4,800 3Com Corp........................................... 236,400
4,200 Tiffany & Co........................................ 318,675
7,500 TJX Companies Inc................................... 264,375
* 4,400 Tommy Hilfiger Corp................................. 242,000
7,350 Travelers Group Inc................................. 305,025
* 9,500 Trump Hotels & Casino Resorts....................... 299,250
9,400 Union Carbide Corp. ................................ 405,375
3,100 United Technologies Corp............................ 339,063
* 9,600 United Waste Systems, Inc........................... 529,200
* 2,800 Universal Health Services Inc....................... 72,800
* 7,100 U.S. Office Products Co............................. 269,800
* 5,800 US Robotics Corp.................................... 532,150
* 10,000 USA Waste Services Inc.............................. 295,000
* 6,400 Vons Companies Inc.................................. 233,600
* 6,100 Watson's Pharmaceuticals Inc........................ 274,500
8,800 Wellman Inc......................................... 199,100
1,100 Wells Fargo & Co.................................... 265,100
4,200 Willamette Industries Inc........................... 252,000
9,400 Williams Companies Inc.............................. 472,350
* 4,350 Wind River System Inc............................... 138,656
* 13,700 WorldCom, Inc....................................... 669,588
------------
56,123,900
------------
TOTAL COMMON STOCKS AND EQUIVALENTS (Cost
$166,702,201)..................................... 193,117,654
------------
</TABLE>
B-43 See Notes to Financial Statements
<PAGE> 96
PORTFOLIO OF INVESTMENTS (CONTINUED)
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par
Amount Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE CORPORATE OBLIGATIONS 0.6%
$ 290,000 Acer, Inc., 4.00%, 06/10/01........................ $ 701,800
400,000 United Micro, 1.25%, 06/08/04...................... 487,500
------------
TOTAL CONVERTIBLE CORPORATE OBLIGATIONS (Cost
$1,461,425)....................................... 1,189,300
------------
REPURCHASE AGREEMENT 5.7%
11,840,000 State Street Bank & Trust Co, dated 5/31/96, 5.27%,
due 06/03/96 (collateralized by U.S. Government
Obligations in a pooled cash account) repurchase
proceeds $11,845,200 (Cost $11,840,000)........... 11,840,000
------------
TOTAL INVESTMENTS (Cost $180,003,626) 98.8%..................... 206,146,954
OTHER ASSETS AND LIABILITIES, NET 1.2%.......................... 2,534,912
------------
NET ASSETS 100%................................................. $208,681,866
============
</TABLE>
*Non-income producing security
B-44 See Notes to Financial Statements
<PAGE> 97
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $180,003,626)................. $206,146,954
Foreign currency, at market value (Cost $936,072)................ 943,481
Cash............................................................. 536
Receivable for investments sold.................................. 2,803,870
Unrealized appreciation of forward currency exchange contracts... 1,806,101
Dividends and interest receivable................................ 802,826
Receivable for Fund shares sold.................................. 530,418
Other assets and receivables..................................... 2,129
------------
TOTAL ASSETS................................................ 213,036,315
------------
LIABILITIES
Payable for investments purchased................................ 3,282,645
Payable for Fund shares redeemed................................. 306,402
Unrealized depreciation of forward currency exchange contracts... 196,382
Due to Adviser................................................... 168,430
Due to Distributor............................................... 124,414
Due to shareholder service agent................................. 101,910
Deferred Trustees' compensation.................................. 12,889
Accrued expenses and other payables.............................. 161,377
------------
TOTAL LIABILITIES........................................... 4,354,449
------------
NET ASSETS, equivalent to $13.98 per share for Class A, $13.53
per share for Class B, and $13.66 per share for Class C
shares...................................................... $208,681,866
============
NET ASSETS WERE COMPRISED OF
Shares of beneficial interest, at par; 7,632,191 Class A,
6,857,163 Class B and 671,872 Class C shares outstanding.... $ 151,612
Capital surplus.................................................. 175,275,338
Undistributed net realized gain on securities.................... 5,810,832
Net unrealized appreciation (depreciation) of securities
Investments................................................. 26,143,328
Forward currency exchange contracts......................... 1,609,719
Foreign currency............................................ 7,409
Other foreign denominated assets and liabilities............ (18,486)
Accumulated net investment loss.................................. (297,886)
------------
NET ASSETS....................................................... $208,681,866
============
</TABLE>
B-45 See Notes to Financial Statements
<PAGE> 98
STATEMENT OF OPERATIONS
Year Ended May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends (net of $304,621 of foreign taxes withheld at source)... $ 2,642,255
Interest.......................................................... 411,302
-----------
Total investment income...................................... 3,053,557
-----------
EXPENSES
Management fees................................................... 1,605,816
Shareholder service agent's fees and expenses..................... 987,711
Accounting services............................................... 31,987
Service fees--Class A............................................. 193,897
Distribution and service fees--Class B............................ 756,195
Distribution and service fees--Class C............................ 74,033
Trustees' fees and expenses....................................... 36,883
Audit fees........................................................ 51,803
Custodian fees.................................................... 263,752
Legal fees........................................................ 4,510
Reports to shareholders........................................... 79,200
Registration and filing fees...................................... 83,146
Organization expenses............................................. 14,622
Miscellaneous..................................................... 27,260
Retirement plan expense reimbursement (see Note 4)................ (5,200)
-----------
Total expenses............................................... 4,205,615
-----------
NET INVESTMENT LOSS............................................... (1,152,058)
===========
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain on securities
Investments.................................................. 13,436,447
Foreign currency and forward currency exchange contracts..... 917,724
Net unrealized appreciation (depreciation) of securities during
the period
Investments.................................................. 16,851,899
Foreign currency............................................. 551
Forward currency exchange contracts.......................... 1,547,114
Other foreign denominated assets and liabilities............. (10,699)
-----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES.................... 32,743,036
===========
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $31,590,978
===========
</TABLE>
B-46 See Notes to Financial Statements
<PAGE> 99
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended May 31
--------------------------
1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period ................... $131,365,013 $ 95,717,344
------------ ------------
OPERATIONS
Net investment loss............................... (1,152,058) (918,859)
Net realized gain (loss) on securities............ 14,354,171 (1,653,364)
Net unrealized appreciation of securities during
the period....................................... 18,388,865 6,127,108
------------ ------------
Increase in net assets resulting from operations.. 31,590,978 3,554,885
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (see Note 1H)
Net realized gain on securities
Class A........................................... (1,775,643) --
Class B........................................... (1,920,148) --
Class C........................................... (187,369) --
------------ ------------
(3,883,160) --
------------ ------------
Excess of book-basis net realized gain on
securities
Class A........................................... -- (1,311,980)
Class B........................................... -- (1,438,472)
Class C........................................... -- (155,182)
------------ ------------
-- (2,905,634)
------------ ------------
Total distributions.............................. (3,883,160) (2,905,634)
------------ ------------
CAPITAL TRANSACTIONS
Proceeds from shares sold
Class A........................................... 63,861,473 42,797,541
Class B........................................... 29,925,908 29,086,706
Class C........................................... 3,401,773 4,030,850
------------ ------------
97,189,154 75,915,097
------------ ------------
Proceeds from shares issued for distributions
reinvested
Class A........................................... 1,683,743 1,240,023
Class B........................................... 1,807,274 1,341,370
Class C........................................... 159,854 131,350
------------ ------------
3,650,871 2,712,743
------------ ------------
Cost of shares redeemed
Class A........................................... (32,888,196) (26,555,840)
Class B........................................... (16,089,389) (14,514,920)
Class C........................................... (2,253,405) (2,558,662)
------------ ------------
(51,230,990) (43,629,422)
------------ ------------
Increase in net assets resulting from capital
transactions...................................... 49,609,035 34,998,418
------------ ------------
INCREASE IN NET ASSETS............................. 77,316,853 35,647,669
------------ ------------
NET ASSETS, end of period (including accumulated
net investment loss of $297,886 and $69,365,
respectively)..................................... $208,681,866 $131,365,013
============ ============
</TABLE>
B-47 See Notes to Financial Statements
<PAGE> 100
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
----------------------------------------------------
Aug. 5
Year Ended May 31 1991/(1)/ to
--------------------------------------- May 31,
1996/(2)/ 1995/(2)/ 1994 1993/(2)/ 1992/(2)/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period................... $11.79 $11.67 $10.76 $10.44 $ 9.33
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Investment income.......... .24 .23 .26 .235 .21
Expenses................... (.28) (.27) (.32) (.29) (.185)
------ ----- ------- ------ ------
Net investment income
(loss)..................... (.04) (.04) (.06) (.055) .025
Net realized and
unrealized gain on
securities................. 2.561 .42 1.0125 .7775 1.145
----- ------ ------ ------ ------
Total from investment
operations.................. 2.521 .38 .9525 .7225 1.17
------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM
(see Note 1H)
Net realized gain on
securities................. (.331) -- (.0425) (.4025) (.06)
Excess of book-basis net
realized gain on
securities................. -- (.26) -- -- --
------ ------ ------ ------ ------
Total distributions......... (.331) (.26) (.0425) (.4025) (.06)
------ ------ ------ ------ ------
Net asset value, end of
period...................... $13.98 $11.79 $11.67 $10.76 $10.44
====== ====== ====== ====== ======
TOTAL RETURN /(4)/.......... 21.85% 3.36% 9.17% 7.13% 12.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(millions)................. $106.7 $60.1 $41.8 $12.7 $8.4
Average net assets
(millions)................. $77.6 $54.5 $25.8 $9.2 $6.2
Ratios to average net
assets (annualized)/(3)/
Expenses................... 2.22% 2.29% 2.46% 2.93% 2.07%
Expenses, without expense
reimbursement.............. 2.23% -- -- 3.28% --
Net investment income
(loss)..................... (.30%) (.35%) (.46%) (.57%) .29%
Net investment loss,
without expense
reimbursement............ (.31%) -- -- (.92%) --
Average commission rate
per equity stock traded.. $.02 -- -- -- --
Portfolio turnover rate..... 94% 120% 116% 120% 135%
</TABLE>
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) See Notes 2 and 4.
(4) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
B-48 See Notes to Financial Statements
<PAGE> 101
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------
Nov. 15,
Year Ended May 31 1991/(1)/ to
--------------------------------------- May 31,
1996/(2)/ 1995/(2)/ 1994 1993/(2)/ 1992/(2)/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value,
beginning of period...... $11.50 $11.48 $10.67 $10.46 $ 9.78
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Investment income....... .23 .22 .22 .235 .16
Expenses................ (.37) (.35) (.35) (.37) (.165)
------ ------ ------ ------ ------
Net investment loss..... (.14) (.13) (.13) (.135) (.005)
Net realized
and unrealized gain on
securities.............. 2.501 .41 .9825 .7475 .745
------ ------ ------ ------ ------
Total from investment
operations.............. 2.361 .28 .8525 .6125 .74
------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM
(see Note 1H)
Net realized gain on
securities ............ (.331) -- (.0425) (.4025) (.06)
Excess of book-basis
net realized gain on
securities............. -- (.26) -- -- --
------ ------ ------ ------ ------
Total distributions...... (.331) (.26) (.0425) (.4025) (.06)
------ ------ ------ ------ ------
Net asset value, end of
period................... $13.53 $11.50 $11.48 $10.67 $10.46
====== ====== ====== ====== ======
TOTAL RETURN /(4)/....... 20.90% 2.62% 8.21% 6.15% 7.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (millions)........ $92.8 $64.7 $48.8 $6.9 $1.2
Average net assets
(millions).............. $75.6 $59.4 $26.4 $2.8 $0.5
Ratios to average net
assets (annualized)/(3)/
Expenses................ 2.99% 3.05% 3.21% 3.88% 3.11%
Expenses, without
expense reimbursement. 2.99% -- -- 4.50% --
Net investment loss..... (1.11%) (1.11%) (1.19%) (1.41%) (.12%)
Net investment loss,
without expense
reimbursement........... (1.11%) -- -- (2.02%) --
Average commission rate
per equity stock traded.. $.02 -- -- -- --
Portfolio turnover rate.. 94% 120% 116% 120% 135%
</TABLE>
(1) Commencement of offering of shares.
(2) Based on average month-end shares outstanding.
(3) See Notes 2 and 4.
(4) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
B-49 See Notes to Financial Statements
<PAGE> 102
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C/(2)/
----------------------------
Year Ended
May 31 June 21,
------------- 1993/(1)/ to
1996 1995 May 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.............. $11.61 $11.59 $10.29
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Investment income............................ .24 .22 .24
Expenses..................................... (.38) (.35) (.37)
------ ------ ------
Net investment loss............................... (.14) (.13) (.13)
Net realized and unrealized gain on securities.... 2.521 .41 1.4725
------ ------ ------
Total from investment operations.................. 2.381 .28 1.3425
------ ------ ------
LESS DISTRIBUTIONS FROM (see Note 1H)
Net realized gain on securities ............. (.331) -- (.0425)
Excess of book-basis net realized gain on
securities................................... -- (.26) --
------ ------ ------
Total distributions............................... (.331) (.26) (.0425)
------ ------ ------
Net asset value, end of period.................... $13.66 $11.61 $11.59
====== ====== ======
TOTAL RETURN /(4)/................................ 20.87% 2.60% 13.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions).............. $9.2 $6.6 $5.1
Average net assets (millions)..................... $7.4 $6.2 $2.4
Ratios to average net assets (annualized)/(3)/
Expenses..................................... 3.00% 3.05% 3.21%
Expenses, without expense reimbursement...... 3.00% -- --
Net investment loss.......................... (1.10%) (1.13%) (1.15%)
Net investment loss, without expense
reimbursement................................ (1.10%) -- --
Average commission rate per equity stock traded... $.02 -- --
Portfolio turnover rate........................... 94% 120% 116%
</TABLE>
(1) Commencement of offering of shares.
(2) Based on average month-end shares outstanding.
(3) See Note 4.
(4) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
B-50 See Notes to Financial Statements
<PAGE> 103
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital World Portfolio Series Trust (formerly American
Capital World Portfolio Series) is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end management investment company
which offers shares in two separate portfolios, one of which is described in
this report: Van Kampen American Capital Global Equity Fund (the "Fund"). The
investment objective of the Fund is to provide long-term growth through in-
vestments in an internationally diversified portfolio of equity securities.
Investments in foreign securities involve certain risks not ordinarily associ-
ated with investments in securities of domestic issuers, including fluctua-
tions in foreign exchange rates, future political and economic developments,
and the possible imposition of exchange controls or other foreign governmental
laws or restrictions.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prep-
aration of financial statements in conformity with generally accepted account-
ing principles requires management to make estimates and assumptions that
affect the amounts reported. Actual amounts may differ from the estimates.
A. INVESTMENT VALUATIONS-Securities listed or traded on a national securities
exchange are valued at the last sale price. Unlisted securities and listed se-
curities for which the last sale price is not available are valued at the most
recent bid price. Securities for which market quotations are not readily
available are valued at fair value under a method approved by the Board of
Trustees.
Short-term investments with a maturity of 60 days or less when purchased
are valued at amortized cost, which approximates market value. Short-term
invest- ments with a maturity of more than 60 days when purchased are valued
based on market quotations until the remaining days to maturity become less than
61 days. From such time, until maturity, the investments are valued at amortized
cost.
B. REPURCHASE AGREEMENTS-A repurchase agreement is a short-term investment in
which the Fund acquires ownership of a debt security and the seller agrees to
repurchase the security at a future time and specified price. The Fund may in-
vest independently in repurchase agreements, or transfer uninvested cash bal-
ances into a pooled cash account along with other investment companies advised
by Van Kampen American Capital Asset Management, Inc. (the "Adviser"), the
daily aggregate of which is invested in repurchase agreements. Repurchase
agreements are collateralized by the underlying debt security. The Fund will
make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller is re-
quired to maintain the value of the underlying security at not less than the
repurchase proceeds due the Fund.
B-51
<PAGE> 104
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
C. FOREIGN CURRENCY TRANSLATION-The market values of foreign securities, for-
ward currency exchange contracts and other assets and liabilities stated in
foreign currency are translated into U.S. dollars based on quoted exchange
rates as of noon Eastern Time. The cost of securities is determined using his-
torical exchange rates. Income and expenses are translated at prevailing ex-
change rates when accrued or incurred. Gains and losses on the sale of
securities are not segregated for financial reporting purposes between amounts
arising from changes in exchange rates and amounts arising from changes in the
market prices of securities. Realized gain and loss on foreign currency in-
cludes the net realized amount from the sale of currency and the amount real-
ized between trade date and settlement date on security transactions.
D. FORWARD CURRENCY EXCHANGE CONTRACTS-The Fund enters into forward currency
exchange contracts in order to hedge its exposure to changes in foreign cur-
rency exchange rates on its foreign portfolio holdings or to settle transac-
tions. A forward currency exchange contract is a commitment to buy or sell a
foreign security at a set price on a future date. Changes in the value of the
contract are recognized by marking the contract to market on a daily basis to
reflect current currency translation rates. The Fund realizes gains or losses
at the time the forward currency exchange contract is closed. Risks may arise
as a result of the potential inability of the counterparties to meet the terms
of their contracts, and from unanticipated movements in the value of a foreign
currency relative to the U.S. dollar.
E. FUTURES CONTRACTS-Transactions in futures contracts are utilized in strate-
gies to manage the market risk of the Fund's investments by increasing or de-
creasing the percentage of assets effectively invested. The purchase of a
futures contract increases the impact on net asset value of changes in the
market price of investments. There is also a risk that the market movement of
such instruments may not be in the direction forecasted.
Upon entering into futures contracts, the Fund maintains, in a segregated
account with its custodian, securities with a value equal to its obligation
under the futures contracts. A portion of these funds is held as collateral in
an account in the name of the broker, the Fund's agent in acquiring the
futures position. During the period the futures contract is open, changes in
the value of the contract ("variation margin") are recognized by marking the
contract to market on a daily basis. As unrealized gains or losses are in-
curred, variation margin payments are received from or made to the broker.
Upon the closing or cash settlement of a contract, gains or losses are real-
ized. The cost of securities acquired through delivery under a contract is ad-
justed by the unrealized gain or loss on the contract.
F. FEDERAL INCOME TAXES-No provision for federal income taxes is required be-
cause the Fund has elected to be taxed as a "regulated investment company" un-
der the Internal Revenue Code and intends to maintain this qualification by
annually distributing all of its taxable net investment income and taxable net
realized gains on investments to its shareholders.
B-52
<PAGE> 105
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
G. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME-Investment transac-
tions are accounted for on the trade date. Realized gains and losses on in-
vestments are determined on the basis of identified cost. Dividend income is
recorded on the ex-dividend date or when information becomes available, which-
ever is later. Interest income is accrued daily.
Under the applicable foreign tax laws, a withholding tax may be imposed on
interest, dividends and realized gains generated from foreign investments.
Such withholding taxes are reflected on the Statement of Operations as a re-
duction of the related income or gain.
H. DIVIDENDS AND DISTRIBUTIONS-Dividends and distributions to shareholders are
recorded on the record date. The Fund distributes tax basis earnings in accor-
dance with the minimum distribution requirements of the Internal Revenue Code,
which may differ from generally accepted accounting principles. Such dividends
or distributions may result in dividends or distributions in excess of finan-
cial statement earnings.
I. DEBT DISCOUNT OR PREMIUM-The Fund accounts for discounts and premiums on
the same basis as is used for federal income tax reporting. Accordingly, orig-
inal issue discounts on debt securities purchased are amortized over the life
of the security. Premiums on debt securities are not amortized. Market dis-
counts are recognized at the time of sale as realized gains for book purposes
and ordinary income for tax purposes.
J. ORGANIZATION COSTS-Organization expenses of approximately $75,000 were de-
ferred and are being amortized over a five-year period ending September, 1996.
NOTE 2--MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager to the Fund. The Adviser has entered
into a subadvisory agreement with John Govett & Co., Ltd. (the "Subadviser"),
who provides advisoryservices to the Fund and the Adviser with respect to the
Fund's investments in foreign securities. Management fees are calculated
monthly, based on the average daily net assets of the Fund at the annual rate
of 1.00%. The Adviser pays 50% of its management fee to the Subadviser.
At the annual meeting in July 1995, Fund shareholders approved the
reorganization of the Fund as a Delaware business trust and an expansion of the
Board from eight to fourteen trustees (the "Consolidation"). Van Kampen
American Capital ("VKAC") agreed to initially bear the expenses, aggregating
$69,224, relating to the Consolidation. However, if during the five-year period
ending July 2000, the Fund realizes a benefit from the Consolidation, the Fund
will reimburse VKAC the amount of the savings, not to exceed the amount of the
Consolidation expenses. During the period, savings of $18,028 were realized
by the Fund, and reimbursed to VKAC. Under the terms of the advisory agreement,
if the total ordinary business expenses of the Fund, exclusive of taxes,
interest and distribution plans, exceed the most restrictive expense
B-53
<PAGE> 106
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
limitation applicable in the states where the Fund's shares are qualified for
sale, the Adviser will reimburse the Fund for the excess. Such reimbursement
shall be made monthly. The most restrictive expense limitation in effect was
California's which aggregated 2 1/2% of the first $30 million of average daily
net assets, 2% of the next $70 million of average daily net assets and 1 1/2%
of the average daily net assets in excess of $100 million. No reimbursement
was made during the current period.
ACCESS Investor Services, an affiliate of the Adviser, serves as the
Fund's shareholder service agent. These services are provided at cost plus a
profit. For the period, such fees aggregated $852,280.
The Fund was advised that Van Kampen American Capital Distributors, Inc.
(the "Distributor") and Advantage Capital Corp. (the "Retail Dealer"), both
affiliates of the Adviser, received $34,742 and $13,980, respectively, as their
portion of the commissions charged on sales of Fund shares during the period.
As of January 2, 1996, the Retail Dealer was no longer an affiliate of the
Adviser.
Under the Distribution Plans, each class of shares pays up to .25% per
annum of its average net assets to reimburse the Distributor for expenses and
service fees incurred. Class B and C shares pay an additional fee of up to .75%
per annum of their average daily net assets to reimburse the Distributor for
its distribution expenses. Actual distribution expenses incurred by the
Distributor for Class B and C shares may exceed the amounts reimbursed to the
Distributor by the Fund. At the end of the period, the unreimbursed expenses
incurred by the Distributor under the Class B and C plans aggregated
approximately $2.1 million and $86,000, respectively, and may be carried
forward and reimbursed through either the collection of the contingent deferred
sales charges from share redemptions or, subject to the annual renewal of the
plans, future Fund reimbursements of distribution fees.
Legal fees during the period were for services rendered by
former counsel of the Fund, O'Melveny & Myers. A former trustee was of counsel
to that firm.
Certain officers and trustees of the Fund are officers and
trustees of the Adviser, the Distributor, and the shareholder service agent.
NOTE 3--INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments, were $179,348,197 and $144,729,981,
respectively.
For federal income tax purposes, the identified cost of portfolio
securities and foreign currency was $181,149,726. Net unrealized appreciation
aggregated $25,940,709, gross unrealized appreciation aggregated $31,100,514
and gross unrealized depreciation aggregated $5,159,805.
B-54
<PAGE> 107
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
At the end of the period, the Fund held the following open forward
currency exchange contracts:
<TABLE>
<CAPTION>
SETTLEMENT U.S. DOLLAR UNREALIZED UNREALIZED
CURRENCY (000) DATE VALUE APPRECIATION (DEPRECIATION)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRENCH FRANC
15,030 (receivable)....... 04/11/97 $ 2,952,200 $ 47,800 $ --
JAPANESE YEN
296,760 (receivable)...... 09/24/96 2,792,361 207,639 --
316,740 (payable)......... 09/24/96 2,980,363 -- (19,638)
19,980 (receivable)....... 09/24/96 188,002 1,742 --
481,450 (receivable)...... 11/13/96 4,562,338 437,662 --
478,700 (receivable)...... 11/13/96 4,536,278 463,722 --
474,300 (receivable)...... 11/13/96 4,494,583 505,417 --
209,790 (payable)......... 11/13/96 1,988,021 -- (11,979)
529,700 (payable)......... 11/13/96 5,019,567 19,567 --
66,560 (receivable)....... 11/13/96 630,739 5,590 --
405,600 (receivable)...... 01/24/97 3,883,038 116,962 --
SWEDISH KRONA
10,302 (receivable)....... 11/13/96 1,530,391 -- (30,391)
UNITED KINGDOM
2,668 (receivable)........ 07/16/97 4,134,374 -- (134,374)
----------- ---------- ----------
TOTAL FORWARD CURRENCY EXCHANGE
CONTRACTS............................ $39,692,255 $1,806,101 $ (196,382)
----------- ---------- ----------
</TABLE>
NOTE 4--TRUSTEE COMPENSATION
Trustees who are not affiliated with the Adviser are compensated by the Fund
at the annual rate of $779 plus a fee of $22 per day for Board and Committee
meetings attended. During the period, such fees aggregated $24,043.
The Fund has a deferred compensation plan and a defined benefits
retirement plan for its trustees not affiliated with the Adviser. These plans
are not funded, and obligations under the plans will be paid solely out of the
Fund's general account. The Fund will not reserve or set aside funds for the
payment of its obligations under the plans by any form of trust or escrow.
Under the deferred compensation plan, trustees may elect to defer all or a
portion of their compensation to a later date. Each trustee covered under the
plan elects to earn on the deferred balances an amount equal to the total re-
turn of the Fund or equal to the income earned by the Fund on its short-term
investments.
Under the retirement plan, which became effective in January 1996,
benefits which are based on years of service will be received by the trustee
for a ten-year period. The maximum annual benefit for each trustee is $2,500.
Retirement plan expenses for the period aggregated $5,200. During the calendar
year 1996, the Adviser agreed to reimburse the Fund for these plan expenses.
B-55
<PAGE> 108
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
NOTE 5--CAPITAL
The Fund offers three classes of shares at their respective net asset values
per share, plus a sales charge which is imposed either at the time of purchase
(Class A) or at the time of redemption on a contingent deferred basis (Class B
and C). All classes of shares have the same rights, except that Class B and C
shares bear the cost of distribution fees and certain other class specific ex-
penses. Class B and C shares automatically convert to Class A shares six years
and ten years after purchase, respectively, subject to certain conditions. Re-
alized and unrealized gains or losses, investment income and expenses (other
than class specific expenses) are allocated daily to each class of shares
based upon the relative proportion of net assets of each class.
The Fund has an unlimited number of shares of $.01 par value beneficial
interest authorized. Transactions in shares of beneficial interest were as fol-
lows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Shares sold
Class A....................................... 4,966,925 3,727,775
Class B....................................... 2,370,872 2,555,706
Class C....................................... 268,622 350,959
---------- ----------
7,606,419 6,634,440
---------- ----------
Shares issued for distributions reinvested
Class A....................................... 136,185 114,288
Class B....................................... 150,464 126,187
Class C....................................... 13,189 12,253
--------- ----------
299,838 252,728
--------- ----------
Shares redeemed
Class A....................................... (2,565,199) (2,333,611)
Class B....................................... (1,288,844) (1,306,968)
Class C....................................... (181,673) (229,693)
---------- -----------
(4,035,716) (3,870,272)
---------- -----------
Increase in shares outstanding..................... 3,870,541 3,016,896
---------- -----------
</TABLE>
NOTE 6--FUND REORGANIZATION
On July 21, 1995, the shareholders approved the reorganization of the Fund to
a Delaware Business Trust and the election of fourteen trustees. On August 31,
1995, the reorganization became effective.
B-56
<PAGE> 109
- --------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
Van Kampen American Capital Global Government Securities Fund (the "Fund")
is a professionally managed mutual fund. The Fund is a series of Van Kampen
American Capital World Portfolio Series Trust (the "Trust"). The Fund's primary
investment objective is to seek a high level of current income. The Fund's
secondary investment objectives are capital appreciation and protection of
principal. The Fund seeks to achieve its investment objectives by investing
primarily in an internationally diversified portfolio of high quality foreign
and U.S. government bonds and by actively managing the maturity structure and
currency exposure of its portfolio. There is no assurance that the Fund will
achieve its investment objectives.
The Fund's investment adviser is Van Kampen American Capital Asset
Management, Inc. This Prospectus sets forth certain information that a
prospective investor should know before investing in the Fund. Please read it
carefully and retain it for future reference. The address of the Fund is One
Parkview Plaza, Oakbrook Terrace, Illinois 60181, and its telephone number is
(800) 421-5666.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR STATE REGULATORS NOR HAS THE COMMISSION OR STATE
REGULATORS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION; FURTHER, SUCH SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information, dated September 28, 1996, containing
additional information about the Fund, has been filed with the Securities and
Exchange Commission ("SEC") and is hereby incorporated by reference in its
entirety into this Prospectus. A copy of the Statement of Additional Information
may be obtained without charge by calling (800) 421-5666 or for
Telecommunications Device For the Deaf at (800) 772-8889.
------------------
VAN KAMPEN AMERICAN CAPITAL SM
------------------
THIS PROSPECTUS IS DATED SEPTEMBER 28, 1996.
<PAGE> 110
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Prospectus Summary............................................... 3
Shareholder Transaction Expenses................................. 5
Annual Fund Operating Expenses and Example....................... 6
Financial Highlights............................................. 8
The Trust........................................................ 10
Investment Objectives and Policies............................... 10
Risk Factors..................................................... 13
Investment Practices............................................. 15
Investment Advisory Services..................................... 22
Alternative Sales Arrangements................................... 24
Purchase of Shares............................................... 27
Shareholder Services............................................. 38
Redemption of Shares............................................. 43
Distribution and Service Plans................................... 46
Distributions from the Fund...................................... 48
Tax Status....................................................... 49
Fund Performance................................................. 50
Description of Shares of the Fund................................ 53
Additional Information........................................... 54
</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 REPRESENTATIONS 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.
2
<PAGE> 111
- ------------------------------------------------------------------------------
PROSPECTUS SUMMARY
- ------------------------------------------------------------------------------
THE FUND. Van Kampen American Capital Global Government Securities Fund (the
"Fund") is a non-diversified series of Van Kampen American Capital World
Portfolio Series Trust (the "Trust"). The Trust is an open-end management
investment company organized as a Delaware business trust.
MINIMUM PURCHASE. $500 minimum initial investment for each class of shares and
$25 minimum subsequent investment for each class of shares (or less as described
under "Purchase of Shares").
INVESTMENT OBJECTIVES. The primary investment objective of the Fund is to seek
to provide a high level of current income. The Fund's secondary investment
objectives are capital appreciation and protection of capital. There is no
assurance that the Fund will achieve its objectives. See "Investment Objectives
and Policies."
INVESTMENT POLICY. The Fund invests primarily in an internationally diversified
portfolio of high quality foreign and U.S. government bonds. The Fund may invest
in securities of supranational issuers. The Fund may enter into contracts for
the purchase or sale for future delivery of fixed-income securities or foreign
currencies, or contracts based on financial indices, including any index of U.
S. Government securities or foreign government securities, and may purchase and
write put and call options to buy or sell futures contracts.
RISK FACTORS. Investing in securities issued by foreign governments and
corporations involves considerations and possible risks not typically associated
with investing in obligations issued by the United States government. The values
of foreign investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws, including withholding
taxes, changes in governmental administration or economic or monetary policy or
changed circumstances in dealings between nations. See "Investment Objectives
and Policies" and "Risk Factors."
INVESTMENT RESULTS. The investment results of the Fund are shown in the table
of "Financial Highlights."
ALTERNATIVE SALES ARRANGEMENTS. The Fund offers three classes of shares to the
public, each with its own sales charge structure: Class A shares, Class B shares
and Class C shares. Each class has distinct advantages and disadvantages for
different investors, and investors may choose the class of shares that best
suits their circumstances and objectives. Each class of shares represents an
interest in the same portfolio of investments of the Fund. The per share
dividends on Class B shares and Class C shares will be lower than the per share
dividends on Class A shares. See "Alternative Sales Arrangements." For
information on redeeming shares see "Redemption of Shares."
3
<PAGE> 112
Class A Shares. Class A shares are offered at net asset value per share plus
a maximum initial sales charge of 4.75% of the offering price (4.99% of the net
amount invested). Investments of $1 million or more are not subject to any sales
charge at the time of purchase, but a contingent deferred sales charge of 1.00%
may be imposed on certain redemptions made within one year of purchase. The Fund
pays an annual service fee of up to 0.25% of its average daily net assets
attributable to such class of shares. See "Purchase of Shares -- Class A Shares"
and "Distribution and Service Plans."
Class B Shares. Class B shares are offered at net asset value per share and
are subject to a maximum contingent deferred sales charge of 4.00% of redemption
proceeds on redemptions made within the first and second year after purchase,
declining thereafter to 0.00% after the fifth year. See "Redemption of Shares."
Class B shares are subject to a combined annual distribution fee and service fee
of up to 1.00% of its average daily net assets attributable to such class of
shares. See "Purchase of Shares -- Class B Shares" and "Distribution and Service
Plans." Class B shares will convert automatically to Class A shares eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted. See "Alternative Sales Arrangements -- Conversion Feature."
Class C Shares. Class C shares are offered at net asset value per share and
are subject to a contingent deferred sales charge of 1.00% on redemption
proceeds on redemptions made within one year of purchase. See "Redemption of
Shares." Class C shares are subject to a combined annual distribution fee and
service fee of up to 1.00% of its average daily net assets attributable to such
class of shares. See "Purchase of Shares -- Class C Shares" and "Distribution
and Service Plans." Class C shares convert automatically to Class A shares ten
years after the end of the calendar month in which the shareholder's order to
purchase was accepted. See "Alternative Sales Arrangements -- Conversion
Feature."
INVESTMENT ADVISERS. Van Kampen American Capital Asset Management, Inc. (the
"Adviser") is the Fund's investment adviser. John Govett & Co. Limited (the
"Subadviser") provides sub-advisory services to the Adviser with respect to the
Fund's investments in foreign securities. See "Investment Advisory Services."
DISTRIBUTOR. Van Kampen American Capital Distributors, Inc. (the "Distributor")
is the distributor of the Fund's shares.
DISTRIBUTIONS FROM THE FUND. Income dividends are paid monthly; any net short-
term or long-term capital gains are distributed at least annually. All dividends
and distributions are automatically reinvested in shares of the Fund at net
asset value per share (without sales charge) unless payment in cash is
requested. See "Shareholder Services -- Reinvestment Plan" and "Distributions
from the Fund."
The foregoing is qualified in its entirety by reference to the more detailed
information appearing elsewhere in this Prospectus.
4
<PAGE> 113
- ------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ----------------- -------------
<S> <C> <C> <C>
Maximum sales charge imposed on
purchases (as a percentage of
offering price)................. 4.75%(1) None None
Maximum sales charge imposed on
reinvested dividends (as a
percentage of offering price)... None None None
Deferred sales charge (as a
percentage of the lesser of
original purchase price or
redemption proceeds)............ None(2) Year 1--4.00% Year 1--1.00%
Year 2--4.00% After--None
Year 3--3.00%
Year 4--2.50%
Year 5--1.50%
After--None
Redemption fees (as a percentage
of amount redeemed)............. None None None
Exchange fee...................... None None None
</TABLE>
- ------------------------------------------------------------------------------
(1) Reduced for purchases of $100,000 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 contingent deferred sales charge of 1.00% may be
imposed on redemptions made within one year of the purchase. See "Purchase
of Shares -- Class A Shares."
5
<PAGE> 114
- ------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES AND EXAMPLE
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Management Fees (as a percentage of average
daily net assets)........................ 0.75% 0.75% 0.75%
12b-1 Fees(1) (as a percentage of average
daily net assets)........................ 0.25% 1.00%(2) 1.00%(2)
Other Expenses (as a percentage of average
daily net assets)........................ 0.51% 0.52% 0.52%
Total Fund Operating Expenses (as a
percentage of average daily net
assets).................................. 1.51% 2.27% 2.27%
</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 "Distribution and Service Plans."
(2) Individual long-term shareholders may pay more than the economic equivalent
of the maximum front-end sales charges permitted as a fund-level expense by
NASD Rules.
6
<PAGE> 115
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
EXAMPLE: YEAR YEARS YEARS YEARS
------ ------ ------ ------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming (i) an
operating expense ratio of 1.51% for
Class A shares, 2.27% for Class B shares
and 2.27% for Class C shares, (ii) a 5%
annual return and (iii) redemption at the
end of each time period:
Class A............................... $ 62 $ 93 $126 $219
Class B............................... $ 64 $103 $139 $241*
Class C............................... $ 33 $ 71 $122 $261
You would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of each time
period:
Class A............................... $ 62 $ 93 $126 $219
Class B............................... $ 23 $ 71 $122 $241*
Class C............................... $ 23 $ 71 $122 $261
</TABLE>
- ------------------------------------------------------------------------------
* Based on conversion to Class A shares after eight years.
The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The "Example" reflects expenses based on the "Annual Fund
Operating Expenses" table as shown above carried out to future years and is
included to provide a means for the investor to compare expense levels of funds
with different fee structures over varying investment periods. To facilitate
such comparison, all funds are required by the Securities and Exchange
Commission (the "SEC") to utilize a 5% annual return assumption. Class B shares
acquired through the exchange privilege are subject to the deferred sales charge
schedule relating to the Class B shares of the fund from which the purchase of
Class B shares was originally made. Accordingly, future expenses as projected
could be higher than those determined in the above table if the investor's Class
B shares were exchanged from a fund with a higher contingent deferred sales
charge. THE INFORMATION CONTAINED IN THE ABOVE TABLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. For a more complete description of such costs and
expenses, see "Purchase of Shares," "Investment Advisory Services," "Redemption
of Shares" and the "Distribution and Service Plans."
7
<PAGE> 116
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST
OUTSTANDING THROUGHOUT EACH OF THE PERIODS INDICATED)
- --------------------------------------------------------------------------------
The following financial highlights have been audited by Price Waterhouse LLP,
independent accountants, whose report thereon was unqualified and is included in
the Statement of Additional Information, which may be obtained by shareholders
without charge by calling the telephone number on the cover of this prospectus.
This information should be read in conjunction with the financial statements and
notes thereto included in the Statement of Additional Information.
<TABLE>
<CAPTION>
CLASS A SHARES
----------------------------------------
YEAR ENDED MAY 31
----------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period..................................................... $ 8.24 $ 8.26 $ 9.01
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Investment income....................................................................... .69 .72 .92
Expenses................................................................................ (.13) (.12) (.14)
---------- ---------- ----------
Net investment income.................................................................... .56 .60 .78
Net realized and unrealized gain (loss) on securities.................................... (.328) (.016) (.5715)
---------- ---------- ----------
Total from investment operations......................................................... .232 .584 .2085
---------- ---------- ----------
LESS DISTRIBUTIONS FROM
Net investment income................................................................... (.552) (.604) (.726)
Excess of book-basis net realized gain on securities.................................... -- -- (.2325)
---------- ---------- ----------
Total distributions...................................................................... (.552) (.604) (.9585)
---------- ---------- ----------
Net asset value, end of period........................................................... $ 7.92 $ 8.24 $ 8.26
========== ========== ==========
TOTAL RETURN(3).......................................................................... 2.81% 7.52% 1.89%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)..................................................... $36.4 $ 47.9 $ 62.8
Average net assets (millions)............................................................ 43.1 54.5 55.6
Ratio to average net assets (annualized)
Expenses................................................................................ 1.51% 1.42% 1.45%
Expenses, without expense reimbursement................................................. 1.52% -- --
Net investment income................................................................... 6.66% 7.18% 8.12%
Net investment income, without expense reimbursement.................................... 6.65% -- --
Portfolio turnover rate.................................................................. 239% 209% 236%
<CAPTION>
CLASS A SHARES
-------------------------------------
YEAR ENDED NOV. 15, 1991(1)
MAY 31 TO MAY 31,
1993(2) 1992(2)
---------- ---------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period..................................................... $ 9.07 $ 9.43
---------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Investment income....................................................................... .98 .62
Expenses................................................................................ (.135) (.03)
---------- ---------------
Net investment income.................................................................... .845 .59
Net realized and unrealized gain (loss) on securities.................................... (.123) (.5245)
---------- ---------------
Total from investment operations......................................................... .722 .0655
---------- ---------------
LESS DISTRIBUTIONS FROM
Net investment income................................................................... (.782) (.4255)
Excess of book-basis net realized gain on securities.................................... -- --
---------- ---------------
Total distributions...................................................................... (.782) (.4255)
---------- ---------------
Net asset value, end of period........................................................... $ 9.01 $ 9.07
========== ===============
TOTAL RETURN(3).......................................................................... 8.47% .71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)..................................................... $ 36.1 $ 25.0
Average net assets (millions)............................................................ 32.4 14.0
Ratio to average net assets (annualized)
Expenses................................................................................ 1.52% .50%
Expenses, without expense reimbursement................................................. -- 1.29%
Net investment income................................................................... 9.33% 10.41%
Net investment income, without expense reimbursement.................................... -- 9.62%
Portfolio turnover rate.................................................................. 301% 289%
</TABLE>
- ---------------
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total returns for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(Table continued on following page)
8
<PAGE> 117
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B SHARES
--------------------------------------------------------------
YEAR ENDED MAY 31 NOV. 15, 1991(1)
---------------------------------------------- TO MAY 31,
1996 1995 1994 1993(2) 1992(2)
---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $8.28 $8.30 $9.04 $9.09 $9.43
----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Investment income............................ .68 .71 .90 .98 .605
Expenses..................................... (.19) (.18) (.21) (.20) (.055)
----- ----- ----- ----- -----
Net investment income......................... .49 .53 .69 .78 .55
Net realized and unrealized gain (loss) on
securities................................... (.318) (.006) (.5435) (.12) (.5005)
----- ----- ----- ----- -----
Total from investment operations.............. .172 .524 .1465 .66 .0495
----- ----- ----- ----- -----
LESS DISTRIBUTIONS FROM
Net investment income........................ (.492) (.544) (.654) (.71) (.3895)
Excess of book-basis net realized gain on
securities................................. -- -- (.2325) -- --
Total distributions........................... (.492) (.544) (.8865) (.71) (.3895)
----- ----- ------ ----- -------
Net asset value, end of period................ $7.96 $8.28 $8.30 $9.04 $9.09
===== ===== ===== ===== =======
TOTAL RETURN(3)............................... 2.06% 6.69% 1.07% 7.95% .53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions).......... $97.7 $123.4 $147.5 $56.7 $22.5
Average Net Assets (millions)................. 110.1 133.3 107.1 39.6 11.0
Ratio to average net assets (annualized)
Expenses..................................... 2.27% 2.18% 2.22% 2.19% 1.02%
Expense, without expense reimbursement....... 2.27% -- -- -- 1.82%
Net investment income........................ 5.91% 6.41% 7.30% 8.66% 9.86%
Net investment income, without expense reim-
bursement.................................. 5.91% -- -- -- 9.07%
Portfolio turnover rate....................... 239% 209% 236% 301% 289%
<CAPTION>
Class C Shares
---------------------------------------------------
YEAR ENDED MAY 31 APRIL 12, 1993
----------------------------------- TO MAY 31,
1996 1995 1994(2) 1993(2)
--------- ---------- --------- --------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period......... $8.22 $8.25 $8.99 $9.00
----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Investment income........................... .64 .69 .83 .12
Expenses.................................... (.18) (.18) (.20) (.025)
----- ----- ----- -----
Net investment income........................ .46 .51 .63 .095
Net realized and unrealized gain (loss) on
securities.................................. (.278) .004 (.4835) .011
----- ----- ----- -----
Total from investment operations............. .182 .514 .1465 .106
----- ----- ----- -----
LESS DISTRIBUTIONS FROM
Net investment income....................... (.492) (.544) (.654) (.116)
Excess of book-basis net realized gain on
securities................................ -- -- (.2325) --
----- ----- ----- -----
Total distributions.......................... (.492) (.544) (.8865) (.116)
----- ----- ----- -----
Net asset value, end of period............... $7.91 $8.22 $8.25 $8.99
===== ===== ===== =====
TOTAL RETURN(3).............................. 2.20% 6.60% 1.19% 8.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)......... $9.5 $18.5 $23.5 $1.4
Average Net Assets (millions)................ 14.1 21.2 14.1 .4
Ratio to average net assets (annualized)
Expenses.................................... 2.27% 2.18% 2.22% 2.63%
Expense, without expense reimbursement...... 2.27% -- -- --
Net investment income....................... 5.91% 6.42% 7.13% 10.06%
Net investment income, without expense reim-
bursement................................. 5.91% -- -- --
Portfolio turnover rate...................... 239% 209% 236% 301%
</TABLE>
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(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total returns for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
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THE TRUST
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The Trust is an open-end, management investment company, commonly known as a
mutual fund. A mutual fund provides, for those who have similar investment
goals, a practical and convenient way to invest in a diversified portfolio of
securities by combining their resources in an effort to achieve such goals. The
Fund is a non-diversified portfolio of the Trust and is one of two series of
shares of beneficial interest which the Trust is currently authorized to issue.
The other series is Van Kampen American Capital Global Equity Fund ("Global
Equity").
Van Kampen American Capital Asset Management, Inc. (the "Adviser") provides
investment advisory and administrative services to the Fund. The Adviser and its
affiliates also manage other mutual funds distributed by Van Kampen American
Capital Distributors, Inc. (the "Distributor"). To obtain Prospectuses and other
information on any of these other funds, please call the telephone number on the
cover page of the Prospectus.
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INVESTMENT OBJECTIVES AND POLICIES
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The primary investment objective of the Fund is to provide a high level of
current income. The Fund's secondary objectives are capital appreciation and
protection of principal. The Fund seeks to achieve its objectives by investing
primarily in an internationally diversified portfolio of high quality foreign
and U.S. government debt securities and by actively managing the maturity
structure and currency exposure of its portfolio. Under normal circumstances,
the Fund invests at least 65% of its assets in government securities. Government
securities include debt securities issued or guaranteed by the United States or
foreign governments or their agencies, authorities or instrumentalities. The
Fund may invest all or a portion of its remaining assets in high quality debt
securities of U.S. and foreign corporations.
Under normal market conditions, the Fund invests in obligations of at least
three countries. These countries may include the United States, the countries of
Western Europe, Japan, Australia, New Zealand and Canada. Obligations of any
other country may also be considered for investment. Securities of any one
issuer (other than the United States government) will represent no more than 25%
of the Fund's total assets. The Fund may purchase securities that are issued by
the government of one nation but denominated in the currency of another nation
(or in a multinational currency unit).
The Fund may also invest in debt obligations of supranational lending entities
organized or supported by several national governments. The supranational
entities
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in which the Fund may invest include the following: International Bank for
Reconstruction and Development (World Bank), established to promote
reconstruction and economic development in its member nations; European Coal and
Steel Community, a partnership of 12 European countries created to establish a
common market for coal and steel and to further the economic development of its
member countries; European Investment Bank, established to finance investment
projects that contribute to the balanced development of the European Economic
Community; European Bank for Reconstruction & Development, whose objectives are
to foster the transition toward open market economies and to promote private and
entrepreneurial initiative in countries of central and eastern Europe; Inter-
American Development Bank, established to further the development of its Latin
American member countries; African Development Bank, established to contribute
to the economic development and social progress of its African member countries;
and Asian Development Bank, established to promote economic growth and
cooperation in Asia and the Far East. The Fund may from time to time invest up
to 25% of its total assets in these and other supranational entities.
The Adviser, subject to the direction of the Trustees, provides the Fund with
an overall investment program consistent with the Fund's objectives and
policies. The Adviser is solely responsible for advising the Fund with respect
to investments in the United States. The Subadviser, subject to overall review
by the Adviser and the Trustees and other authorized officers, is responsible
for recommending an optimal asset allocation and currency exposure of the Fund's
assets and is responsible for providing advice with respect to the Fund's
investments in countries other than the United States. The Adviser and the
Subadviser are sometimes referred to as the Advisers.
The Fund limits its purchases of debt securities to high quality obligations.
For debt obligations other than commercial paper, this includes securities that
are rated Aa3 or better by Moody's Investors Service ("Moody's") or AA- or
better by Standard & Poor's Corporation ("S&P"), or that are not rated but
considered by the Advisers to be of equivalent quality. A description of the
Moody's and S&P ratings is included in the Statement of Additional Information.
The Fund's portfolio is managed in accordance with a global investment
strategy, which means that the Fund's investments are allocated among securities
denominated in the United States dollar and the currencies of a number of
foreign countries and, within each such country, among different types of debt
securities. The Fund's exposure with respect to each currency is adjusted based
on Fund management's perception of the most favorable markets and issuers. In
this regard, the percentage of assets invested in securities of a particular
country or denominated in a particular currency will vary in accordance with
Fund management's assessment of the relative yield and appreciation potential of
such securities and the
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relationship of a country's currency to the United States dollar. Fundamental
economic strength, credit quality and interest rate trends are the principal
factors considered by Fund management in determining whether to increase or
decrease the emphasis placed upon a particular type of security within the
Fund's investment portfolio.
The returns available from foreign currency denominated debt obligations can
be adversely affected by changes in exchange rates. The Advisers believe that
the use of foreign currency hedging techniques, including "cross-hedges" (see
"Investment Practices -- Forward Foreign Currency Exchange Contracts," herein),
can help protect against changes in the United States dollar value of income
available for distribution to shareholders and declines in the net asset value
of the Fund's shares resulting from adverse changes in currency exchange rates.
For example, the return available from securities denominated in a particular
foreign currency would diminish in the event the value of the United States
dollar increased against such currency. Such a decline could be partially or
completely offset by an increase in value of a hedge involving a foreign
currency contract, or by a cross-hedge involving a forward currency contract,
where such contract is available on terms more advantageous to the Fund than a
contract to sell the currency in which the position being hedged is denominated.
It is the Advisers' belief that hedges and cross-hedges can therefore provide
significant protection of net asset value in the event of a general rise in the
United States dollar against foreign currencies. However, a hedge or cross-hedge
cannot protect completely against exchange rate risks, and if Fund management is
incorrect in its judgment of future exchange rate relationships, the Fund could
be in a less advantageous position than if such a hedge had not been
established.
The investment objectives and policies, the percentage limitations and the
kinds of securities in which the Fund may invest may be changed by the Trustees
without shareholder action unless expressly governed by those limitations as
described under "Investment Practices and Restrictions" which can be changed
only by action of the shareholders. A change in the Fund's investment objectives
may result in the Fund having investment objectives different from that which a
shareholder deemed appropriate at the time of investment. See also the Statement
of Additional Information.
TEMPORARY SHORT-TERM INVESTMENTS. It is the Fund's policy generally to invest
in a globally diversified portfolio of longer term debt securities. In the
interest of preserving shareholders' capital and consistent with the Fund's
investment objectives, the Adviser may employ a temporary defensive investment
strategy if it determines such a strategy to be warranted. Under a defensive
strategy, the Fund may hold cash (United States dollars or foreign currencies)
or invest a portion or all of its assets in high quality money market
instruments. It is impossible to predict
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when or for how long the Fund will employ defensive strategies. Money market
instruments in which the Fund may invest include, but are not limited to, the
following instruments of United States or foreign issuers: government
securities; commercial paper; bank certificates of deposit and bankers'
acceptances; and repurchase agreements related to any of the foregoing. The Fund
will only purchase commercial paper if it is rated Prime-1 or Prime-2 by Moody's
or A-1 or A-2 by S&P or, if not rated, is considered by the Adviser to be of
equivalent quality. In addition, for temporary defensive reasons, such as during
times of international political or economic uncertainty, most or all of the
Fund's investments may be made in the United States and denominated in United
States dollars.
Under such a temporary defensive strategy, the Fund would invest at least 25%
of its assets in securities issued by banks. See "Investment
Practices -- Investment Restrictions." Such investments may include certificates
of deposit, time deposits, bankers' acceptances, and obligations issued by bank
holding companies, as well as repurchase agreements entered into with banks. In
such event, the Fund would have greater exposure to the risk factors which are
characteristic of such investments. In particular, the value of and investment
return on the Fund's shares would be affected by economic or regulatory
developments in or related to the banking industry. Sustained increases in
interest rates can adversely affect the availability and cost of funds for a
bank's lending activities, and a deterioration in general economic conditions
could increase the exposure to credit losses. The banking industry is also
subject to the effects of the concentration of loan portfolios in particular
businesses such as real estate, energy, agriculture or high technology-related
companies; concentration of loan portfolios in lesser developed country loans
and highly leveraged transaction loans; national and local regulation; and
competition within those industries as well as with other types of financial
institutions. In addition, the Fund's investments in commercial banks located in
several foreign countries are subject to additional risks due to the combination
in such banks of commercial banking and diversified securities activities.
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RISK FACTORS
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FOREIGN SECURITIES AND CURRENCIES. Investing in securities issued by foreign
governments and corporations involves considerations and possible risks not
typically associated with investing in obligations issued by the United States
government. The values of foreign investments are affected by changes in
currency rates or exchange control regulations, application of foreign tax laws,
including withholding taxes, changes in governmental administration or economic
or monetary policy (in this country or abroad) or changed circumstances in
dealings between nations. Foreign currency exchange rates are determined by
forces of supply and demand on the foreign exchange markets. These forces are
themselves affected by the
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international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors. Moreover, foreign
currency exchange rates may be affected by the regulatory control of the
exchanges on which the currencies trade. Costs are incurred in connection with
conversions between various currencies. In addition, foreign brokerage
commissions and dealer mark-ups are generally higher than in the United States,
and foreign securities markets may be less liquid, more volatile and less
subject to governmental supervision than in the United States. Investments in
foreign countries could be affected by other factors not present in the United
States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations, and could be subject to extended settlement periods.
NON-DIVERSIFICATION. The Fund is a "non-diversified" investment company
portfolio, which means the Fund is not limited in the proportion of its assets
that may be invested in the securities of a single issuer. However, the Fund
intends to conduct its operations so as to qualify as a "regulated investment
company" for purposes of the Internal Revenue Code of 1986, as amended (the
"Code"), which will relieve the Fund of any liability for federal income tax to
the extent its earnings are distributed to shareholders. See "Distributions from
the Fund" and "Tax Status." To so qualify, among other requirements, the Fund
will limit its investments so that, at the close of each quarter of the taxable
year, (i) not more than 25% of the market value of the Fund's total assets are
invested in securities of a single issuer (other than the U.S. Government, its
agencies and instrumentalities), and (ii) at least 50% of the market value of
its total assets is invested in cash, securities of the U.S. Government, its
agencies and instrumentalities and other securities limited in respect of any
one issuer to an amount not greater than five percent of the market value of the
Fund's total assets and not more than ten percent of the outstanding voting
securities of such issuer. For purposes of the Fund's requirements to maintain
diversification for tax purposes, the issuer of a loan participation will be the
underlying borrower. In cases where the Fund does not have recourse directly
against the borrower, both the borrower and each agent bank and co-lender
interposed between the Fund and the borrower will be deemed issuers of the loan
participation for tax diversification purposes. Since the Fund, as a
non-diversified investment company, may invest in a smaller number of individual
issuers than a diversified investment company, an investment in the Fund may,
under certain circumstances, present greater risks to an investor than an
investment in a diversified company.
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INVESTMENT PRACTICES
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REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
domestic or foreign banks or broker-dealers in order to earn a return on
temporarily available cash. 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 a default by the other party. The Fund
will not invest in repurchase agreements maturing in more than seven days if any
such investment, together with any other illiquid securities held by the Fund,
exceeds ten percent of the value of the Fund's net assets. In the event of the
bankruptcy or other default of the seller of a repurchase agreement, the Fund
could experience delays in liquidating the underlying security 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 funds advised or subadvised by the Adviser would
otherwise invest separately into a joint account. The cash in the joint account
is then invested and the funds that contributed to the joint account share pro
rata in the net revenue generated. The Adviser believes that the joint account
produces greater 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 the SEC exemptive order obtained by the Fund
authorizing this practice, which conditions are designed to ensure the fair
administration of the joint account and to protect the amounts in that account.
PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES. The Advisers are responsible
for the placement of orders for the purchase and sale of portfolio securities
for the Fund. The Fund's portfolio securities generally are traded in the
over-the-counter market through dealers. A dealer is a securities firm or bank
which makes a market for securities by opening a position at one price and
closing the position at a slightly more favorable price. The difference between
the prices is known as a spread. Foreign currency and forward currency exchange
contracts are traded in a similar fashion in a dealer market maintained
primarily by large commercial banks. The Fund will pay brokerage commissions in
connection with transactions in exchange-traded options, futures contracts and
related options. Spreads or commissions for transactions executed in foreign
markets often are higher than in the United States. Brokerage firms are selected
on the basis of their professional capability for the type
15
<PAGE> 124
of transaction and the value and quality of execution of services on a
continuing basis. The Advisers are authorized to place portfolio transactions
with brokerage firms participating in the distribution of shares of the Fund and
other Van Kampen American Capital mutual funds if they reasonably believe that
the quality of the execution and the commission are comparable to that available
from other qualified firms. The Advisers are authorized to pay higher
commissions to brokerage firms that provide investment and research information
than to firms which do not provide such services if the Advisers determine that
such commissions are reasonable in relation to the overall services provided.
The information received may be used by the Advisers in managing the assets of
other advisory accounts as well as in the management of the assets of the Fund.
PORTFOLIO TURNOVER. A change in securities held by the Fund is known as
"portfolio turnover" and may involve the payment by the Fund of brokerage
commissions or dealer spreads and other transaction costs on the sale of
securities as well as on the investment of the proceeds in other securities. The
portfolio turnover rate for a fiscal year is the ratio of the lesser of
purchases or sales of portfolio securities to the average value of portfolio
securities, excluding debt securities whose maturities at acquisition were one
year or less. The Fund expects its portfolio turnover rate to be as much as 400%
in any given year. An annual turnover rate of 400% occurs, for example, when the
dollar equivalent of all securities in the Fund's portfolio are replaced four
times over the period of one year. A high rate of portfolio turnover involves
correspondingly greater expenses than a lower rate, which expenses must be borne
by the Fund and its shareholders. A high portfolio turnover rate may also result
in the realization of substantial net short-term capital gains. See
"Distributions from the Fund" and "Tax Status."
LOANS OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to
unaffiliated brokers, dealers and financial institutions provided that (a)
immediately after any such loan, the value of the securities loaned does not
exceed 15% of the total value of the Fund's assets, and (b) any securities loan
is collateralized in accordance with applicable regulatory requirements. Lending
portfolio securities involves risks of delay in recovery of the loaned
securities or, in some cases, loss of rights in the collateral should the
borrower fail financially.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
illiquid securities. As used herein, securities are considered illiquid if, in
the ordinary course of business, the Fund would not be able to dispose of the
security and receive the proceeds of the sale within seven days. Since market
quotations are not readily available for illiquid securities, such securities
will be valued by a method that the Fund's Trustees believe accurately reflects
fair value.
SHORT SALES AGAINST THE BOX. The Fund may from time to time make short sales
of securities it owns or has the right to acquire. A short sale is "against the
box" to the extent that the Fund contemporaneously owns or has the right to
obtain at no
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<PAGE> 125
added cost securities identical to those sold short. In a short sale, the Fund
does not immediately deliver the securities sold and does not receive the
proceeds from the sale. The Fund is said to have a short position in the
securities sold until it delivers the securities sold, at which time it receives
the proceeds of the sale. The Fund may not make short sales or maintain a short
position if doing so would cause more than 25% of its total assets, taken at
market value, to be involved in such sales.
The Fund may close out a short position by purchasing and delivering an equal
amount of the securities sold short, rather than by delivering securities
already held by the Fund, because the Fund may want to continue to receive
interest and dividend payments on securities in its portfolio. However, the Fund
will not purchase and deliver new securities to satisfy its short order if such
purchase and sale would cause such Fund to derive more than 30% of its gross
income from the sale of securities held for less than three months.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund may enter into
contracts for the purchase or sale for future delivery of fixed-income
securities or foreign currencies, or contracts based on financial indices
including any index of United States government securities or foreign government
securities ("futures contracts") and may purchase and write put and call options
to buy or sell futures contracts ("options on futures contracts"). A "sale" of a
futures contract means the acquisition of a contractual obligation to deliver
the securities or foreign currencies called for by the contract at a specified
price on a specified date. A "purchase" of a futures contract means the
incurring of a contractual obligation to acquire the securities or foreign
currencies called for by the contract at a specified price on a specified date.
The purchaser of a futures contract on an index agrees to take or make delivery
of an amount of cash equal to the difference between a specified multiple of the
value of the index on the expiration date of the contract ("current contract
value") and the price at which the contract was originally struck. No physical
delivery of the fixed-income securities underlying the index is made. Options on
futures contracts to be written or purchased by the Fund will be traded on
United States or foreign exchanges. These investment techniques are used to
hedge against anticipated future changes in interest or exchange rates which
otherwise might either adversely affect the value of the Fund's portfolio
securities or adversely affect the price of securities which the Fund intends to
purchase at a later date.
OPTIONS ON FOREIGN CURRENCIES. The Fund may purchase and write put and call
options on foreign currencies to increase the Fund's gross income and for the
purpose of protecting against declines in the United States dollar value of
foreign currency denominated portfolio securities and against increases in the
United States dollar cost of such securities to be acquired. As in the case of
other kinds of options, however, the writing of an option on a foreign currency
constitutes only a partial hedge, up to the amount of the premium received, and
the Fund could be required
17
<PAGE> 126
to purchase or sell foreign currencies at disadvantageous exchange rates,
thereby incurring losses. The purchase of an option on a foreign currency may
constitute an effective hedge against fluctuations in exchange rates although,
in the event of rate movements adverse to the Fund's position, the Fund may
forfeit the entire amount of the premium plus related transaction costs. Options
on foreign currencies written or purchased by the Fund are traded on United
States and foreign exchanges or over-the-counter. There is no specific
percentage limitation on the Fund's investments in options on foreign
currencies. See the Statement of Additional Information for further discussion
of the use, risks and costs of options on foreign currencies.
OPTIONS ON PORTFOLIO SECURITIES. The Fund may write call options on certain
of its portfolio securities at such time and from time to time as Fund
management shall determine to be appropriate and consistent with the investment
objective of the Fund. Generally, the Fund expects that options written by it
will be conducted on recognized securities exchanges.
The Fund is authorized to purchase and sell over-the-counter options ("OTC
Options"). OTC options are purchased from or sold to securities dealers,
financial institutions of other parties ("Counterparties") through direct
bilateral agreement with the Counterparty. The Fund will sell only OTC Options
(other than OTC currency options) that are subject to a buy-back provision
permitting the Fund to require to the Counterparty to sell the option back to
the Fund at a formula price within seven days. The staff of the SEC currently
takes the position that, in general, OTC options on securities other than U.S.
Government securities purchased by the Fund, and portfolio securities covering
OTC options sold by the Fund, are illiquid securities subject to the Fund's
limitation on investing no more than 10% of its assets in illiquid securities.
The Fund will receive a premium (less any commissions) from the writing of
such contracts, consistent with the Fund's investment objective. The writing of
option contracts is a highly specialized activity which involves investment
techniques and risks different from those ordinarily associated with investment
companies, although the Fund believes that the writing of call options listed on
an exchange or traded in the over-the-counter market, where the Fund owns the
underlying security, tends to reduce such risks. The writer foregoes the
opportunity to profit from an increase in market price of the underlying
security above the exercise price so long as the option remains open. See the
Statement of Additional Information for more information.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund may purchase or sell
forward foreign currency exchange contracts ("forward contracts") to attempt to
minimize the risk to the Fund from adverse changes in the relationship between
the United States dollar and foreign currencies. A forward contract is an
obligation to purchase or sell a specific currency for an agreed price at a
future date which is individually negotiated and privately traded by currency
traders and their customers.
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<PAGE> 127
The Fund may enter into a forward contract, for example, when it enters into a
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the United States dollar price of the security
("transaction hedge"). Additionally, for example, when the Fund believes that a
foreign currency may suffer a substantial decline against the United States
dollar, it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency, or when the Fund believes that
the United States dollar may suffer a substantial decline against foreign
currency, it may enter into a forward purchase contract to buy that foreign
currency for a fixed dollar amount ("position hedge"). In this situation, the
Fund may, in the alternative, enter into a forward contract to sell a different
foreign currency for a fixed United States dollar amount where the Fund believes
that the United States dollar value of the currency to be sold pursuant to the
forward contract will fall whenever there is a decline in the United States
dollar value of the currency in which portfolio securities of the Fund are
denominated ("cross-hedge").
The Fund's custodian will place cash or United States government securities or
other high-quality debt securities in a segregated account having a value equal
to the aggregate amount of the Fund's commitments under forward contracts
entered into with respect to position hedges and cross-hedges. If the value of
the securities placed in the segregated account declines, additional cash or
securities are placed in the account on a daily basis so that the value of the
account equals the amount of the Fund's commitments with respect to such
contracts. As an alternative to maintaining all or part of the segregated
account, the Fund may purchase a call option permitting the Fund to purchase the
amount of foreign currency being hedged by a forward sale contract at a price no
higher than the forward contract price or the Fund may purchase a put option
permitting the Fund to sell the amount of foreign currency subject to a forward
purchase contract at a price as high or higher than the forward contract price.
Unanticipated changes in currency prices may result in poorer overall
performance for the Fund than if it had not entered into such contracts.
POTENTIAL RISKS OF OPTIONS, FUTURES AND FORWARD CONTRACTS. The successful use
of the foregoing investment techniques depends on the ability of the Fund's
Advisers to forecast interest rate and currency exchange rate movements
correctly. Should interest or exchange rates move in an unexpected manner, the
Fund may not achieve the anticipated benefits of futures contracts, options or
forward contracts or may realize losses and thus be in a worse position than if
such strategies had not been used. Unlike many exchange-traded futures contracts
and options on futures contracts, there are no daily price fluctuation limits
with respect to options on currencies and forward contracts, and adverse market
movements could therefore continue to an unlimited extent over a period of time.
In addition, the correlation between movements in the prices of such instruments
and movements in
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the price of the securities and currencies hedged or used for cover will not be
perfect and could produce unanticipated losses. The Fund's ability to dispose of
its positions in futures contracts, options and forward contracts will depend on
the availability of liquid markets in such instruments. Markets in options and
futures with respect to a number of fixed-income securities and currencies are
relatively new and still developing. It is impossible to predict the amount of
trading interest that may exist in various types of futures contracts, options
and forward contracts. If a secondary market does not exist with respect to an
option purchased or written by the Fund over-the-counter, it might not be
possible to effect a closing transaction in the option (i.e., dispose of the
option) with the result that (i) an option purchased by the Fund would have to
be exercised in order for the Fund to realize any profit and (ii) the Fund may
not be able to sell currencies or portfolio securities covering an option
written by the Fund until the option expires or it delivers the underlying
futures contract or currency upon exercise. Therefore, no assurance can be given
that the Fund will be able to utilize these instruments effectively for the
purposes set forth above. The Fund may not purchase or sell futures contracts or
related options for which the aggregate initial margin and premiums exceed five
percent of the fair market value of the Fund's assets. In order to prevent
leverage in connection with the purchase of futures contracts or call options
thereon by the Fund, an amount of cash, cash equivalents or liquid high grade
debt 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. Furthermore, the Fund's ability to engage in options
and futures transactions may be limited by tax considerations. See the Statement
of Additional Information.
SECURITY FORWARD COMMITMENTS. The Fund may purchase or sell securities on a
"when issued" or "delayed delivery" basis ("Forward Commitments"). These
transactions occur when securities are purchased or sold by the Fund with
payment and delivery taking place in the future, frequently a month or more
after such transaction. The price is fixed on the date of the commitment, and
the seller continues to accrue interest on the securities covered by the Forward
Commitment until delivery and payment takes place. At the time of settlement,
the market value of the securities may be more or less than the purchase or sale
price.
The Fund may either settle a Forward Commitment according to its original
terms, or it may resell or repurchase a Forward Commitment on or before the
settlement date if deemed advisable by the Advisers. When engaging in Forward
Commitments, the Fund relies on the other party to complete the transaction;
should the other party fail to do so, the Fund might lose a purchase or sale
opportunity that could be more advantageous than alternative opportunities at
the time of the failure.
INVESTMENT RESTRICTIONS. The Fund has adopted a number of investment
restrictions that may not be changed without the approval by a majority vote (as
defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of
the
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outstanding shares of the Fund. See the Statement of Additional Information. The
percentage limitations need only be met at the time the investment is made or
other relevant action taken. These restrictions provide, among other things,
that the Fund may not:
1. Purchase any security (other than obligations of the United States
Government, its agencies, or instrumentalities) if more than 25% of its
total assets (taken at current value) would then be invested in a single
industry except that, if the value of securities owned by the Fund with
remaining maturities of less than 13 months exceeds 35% of the value of
the Fund's total assets, the Fund will invest at least 25% of its assets
in securities issued by banks. Although this policy is not applicable to
securities issued by government or political subdivisions because such
issues are not members of any industry, the Fund does not intend to invest
more than 25% of its total assets in the securities issued or guaranteed
by any government (except U.S. Government, its agencies or
instrumentalities). For purposes of this restriction, issuers are not
considered to be of a single industry if their primary economic
characteristics are materially different.
2. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of its
net assets, or pledge more than ten percent of its net assets in
connection with permissible borrowings or purchase additional securities
when money borrowed exceeds five percent of its net assets. Margin
deposits or payments in connection with the writing of options, or in
connection with the purchase or sale of forward contracts, futures,
foreign currency futures and related options, are not deemed to be a
pledge or other encumbrance.
3. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend securities
in an amount exceeding 15% of the total assets of the Fund. The purchase
of a portion of an issue of securities described under (i) above
distributed publicly, whether or not the purchase is made on the original
issuance, is not considered the making of a loan.
4. Write, purchase or sell puts, calls or combinations thereof, except that
the Fund may (i) write covered or fully collateralized call options, write
secured put options, and enter into closing or offsetting purchase
transactions with respect to such options, (ii) purchase and sell options
to the extent that the premiums paid for all such options owned at any
time do not exceed ten percent of its total assets and (iii) engage in
transactions in interest rate futures contracts and related options
provided that such transactions are entered into for bona fide hedging
purposes (or that the underlying commodity
21
<PAGE> 130
value of the Fund's long positions does not exceed the sum of certain
identified liquid investments as specified in CFTC regulations), provided
further that the aggregate initial margin and premiums do not exceed five
percent of the fair market value of the Fund's total assets, and provided
further that the Fund may not enter into net aggregate long and short
futures contracts or related options if more than 50% of the Fund's total
assets would be so invested.
- ------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
- ------------------------------------------------------------------------------
THE ADVISER. The Adviser is a wholly-owned subsidiary of Van Kampen American
Capital, Inc. ("Van Kampen American Capital"). Van Kampen American Capital is a
diversified asset management company with more than two million retail investor
accounts, extensive capabilities for managing institutional portfolios, and more
than $57 billion under management or supervision. Van Kampen American Capital's
more than 40 open-end and 38 closed-end funds and more than 2,800 unit
investment trusts are professionally distributed by leading financial advisers
nationwide. Van Kampen American Capital Distributors, Inc., the distributor of
the Fund and the sponsor of the Funds mentioned above, is also a wholly-owned
subsidiary of Van Kampen American Capital.
Van Kampen American Capital is a wholly owned subsidiary of VK/AC Holding,
Inc. VK/AC Holding, Inc. is controlled, through the ownership of a substantial
majority of its common stock, by The Clayton & Dubilier Private Equity Fund IV
Limited Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is
managed by Clayton Dubilier & Rice, Inc., a New York based private investment
firm. The General Partner of C&D L.P. is Clayton & Dubilier Associates IV
Limited Partnership ("C&D Associates L.P."). The general partners of C&D
Associates L.P. are Joseph L. Rice, III, B. Charles Ames, William A. Barbe,
Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and
Andrall E. Pearson, each of whom is a principal of Clayton, Dubilier & Rice,
Inc. In addition, certain officers, directors and employees of Van Kampen
American Capital own, in the aggregate, not more than 6% of the common stock of
VK/AC Holding, Inc. and have the right to acquire, upon the exercise of options,
approximately an additional 12% 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 SUBADVISER. The Subadviser provides investment advisory services to the
Adviser of the Fund with respect to the Fund's investments in foreign
securities, including recommending optimal geographic asset allocation and
currency exposure. The Subadviser is a United Kingdom-based investment
management company whose
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<PAGE> 131
investment management activities originated in the 1920s. The Subadviser was
incorporated in London, England, in 1955, and from 1986 to December 29, 1995 was
a wholly-owned subsidiary of London Pacific Group Limited, a Jersey, Channel
Islands corporation whose ordinary shares are listed on the London Stock
Exchange and NASDAQ. The Subadviser currently is a wholly-owned subsidiary of
John Govett Holdings Limited, which is a majority owned entity of AIB Group
Holdings (U.K.) Limited located at Bankcentre-Britain, Uxbridge, Middlesex UB8
1SA. AIB Group Holding (U.K.) Limited is wholly-owned by AIB, a publicly held
bank headquartered in Bankcentre, Ballsbridge. Dublin 4, Ireland. Located at 4
Battle Bridge Lane, London SE1 2HR, England, the Subadviser is a wholly owned
subsidiary of Govett & Company Limited, a corporation listed on the London Stock
Exchange. The Govett Group, which manages or administers investment funds valued
at approximately $8.6 billion, maintains offices in London, Singapore, Jersey
(Channel Islands), Sacramento, Raleigh, and San Francisco.
ADVISORY AGREEMENTS. The Trust retains the Adviser to manage the investment of
the Fund's assets and to place orders for the purchase and sale of the Fund's
portfolio securities. Under an investment advisory agreement between the Adviser
and the Trust (the "Advisory Agreement"), the Trust pays the Adviser a monthly
fee computed at the annual rate of 0.75% of the Fund's average daily net assets.
This fee is higher than that charged by most other mutual funds but the Fund's
Trustees believe it is justified by the special international nature of the Fund
and it is not necessarily higher than the fees charged by certain mutual funds
with investment objectives and policies similar to those of the Fund. Under the
Advisory Agreement, the Trust also reimburses the Adviser for the cost of the
Fund's accounting services, which include maintaining its financial books and
records and calculating its daily net asset value. Operating expenses paid by
the Fund include shareholder service agency fees, distribution charges,
custodial fees, legal and accounting fees, the costs of reports and proxies to
shareholders, trustees' fees, and all other business expenses not specifically
assumed by the Adviser. Advisory (management) fee, and total operating expense,
ratios are shown under the caption "Annual Fund Operating Expenses and Example"
herein.
The Adviser has entered into a sub-advisory agreement (the "Sub-advisory
Agreement") with the Subadviser to assist it in performing its investment
advisory functions. The Subadviser will be primarily responsible for
recommending the allocation of investments among various international markets
and currencies; recommendation and selection of particular securities in the
international markets; and trading in the foreign fixed-income markets. Pursuant
to the Sub-advisory Agreement, the Subadviser receives on an annual basis 50% of
the compensation received by the Adviser.
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<PAGE> 132
From time to time as the Adviser, the Subadviser or the Distributor may deem
appropriate, they may voluntarily undertake to reduce the Fund's expenses by
reducing the fees payable to them to the extent of, or bearing expenses in
excess of, such limitations as they may establish. The Adviser may utilize, at
its own expense, credit analysis, research and trading support services provided
by its affiliate, Van Kampen American Capital Investment Advisory Corp.
PERSONAL INVESTING 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 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. John R. Reynoldson is primarily responsible for the day-
to-day management of the Fund's investment portfolio with respect to investments
in the United States. Mr. Reynoldson is Vice President of the Fund and has been
Senior Investment Vice President of the Adviser since July 1991. He was
previously an investment vice president with the Adviser. Mr. Reynoldson has
been primarily responsible for managing the Fund's investment portfolio with
respect to investments in the United States since its inception.
The Subadviser utilizes a team of fixed-income managers specializing in
emerging markets for the day-to-day management of the Fund's investments in
countries other than the United States. The team also is responsible for
allocating the Fund's investments between United States and non-United States
debt obligations.
- ------------------------------------------------------------------------------
ALTERNATIVE SALES ARRANGEMENTS
- ------------------------------------------------------------------------------
The Alternative Sales Arrangements permit an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase and
the length of time the investor expects to hold the shares.
CLASS A SHARES. Class A shares are sold at net asset value plus an initial
maximum sales charge of up to 4.75% of the offering price (4.99% of the net
amount invested), reduced on investments of $100,000 or more. Investments of $1
million or more are not subject to any sales charge at the time of purchase, but
a contingent deferred sales charge of 1.00% may be imposed on certain
redemptions made within one year of the purchase. Class A shares are subject to
an ongoing service fee at an annual rate of up to 0.25% of the Fund's aggregate
average daily net assets attributable to the Class A shares. Certain purchases
of Class A shares qualify for reduced initial sales charges. See "Purchase of
Shares -- Class A Shares."
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<PAGE> 133
CLASS B SHARES. Class B shares are sold at net asset value and are subject to
a deferred sales charge if redeemed within five years of purchase. Class B
shares are subject to an ongoing service fee at an annual rate of up to 0.25% of
the Fund's aggregate average daily net assets attributable to the Class B shares
and an ongoing distribution fee at an annual rate of up to 0.75% of the Fund's
aggregate average daily net assets attributable to the Class B shares. Class B
shares enjoy the benefit of permitting all of the investor's dollars to work
from the time the investment is made. The ongoing distribution fee paid by Class
B shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares. See "Purchase of Shares -- Class
B Shares." Class B shares automatically convert to Class A shares eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted. See "Conversion Feature" herein for discussion on applicability of
the conversion feature to Class B shares.
CLASS C SHARES. Class C shares are sold at net asset value and are subject to
a deferred sales charge if redeemed within one year of purchase. Class C shares
are subject to an ongoing service fee at an annual rate of up to 0.25% of the
Fund's aggregate average daily net assets attributable to the Class C shares and
an ongoing distribution fee at an annual rate of up to 0.75% of the Fund's
aggregate average daily net assets attributable to the Class C shares. Class C
shares enjoy the benefit of permitting all of the investor's dollars to work
from the time the investment is made. The ongoing distribution fee paid by Class
C shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares. See "Purchase of Shares -- Class
C Shares." Class C shares automatically convert to Class A shares ten years
after the end of the calendar month in which the shareholder's order to purchase
was accepted. See "Conversion Feature" herein for discussion on applicability of
the conversion feature to Class C shares.
CONVERSION FEATURE. Class B shares and Class C shares automatically convert
to Class A shares eight years or ten years, respectively, after the end of the
calendar month in which the shares were purchased and will no longer be subject
to the distribution fee. 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 purpose of the conversion feature is to relieve the holders of
the Class B shares and Class C shares that have been outstanding for a period of
time sufficient for the Distributor to have been substantially compensated for
distribution expenses related to the Class B shares or Class C shares, as the
case may be, from the burden of the ongoing distribution fee.
For purposes of conversion to Class A shares, shares purchased through the
reinvestment of dividends and distributions paid on Class B shares and Class C
shares in a shareholder's Fund account will be considered to be held in a
separate sub-account. Each time any Class B shares or Class C shares in the
shareholder's Fund account (other than those in the sub-account) convert to
Class A shares, an
25
<PAGE> 134
equal pro rata portion of the Class B shares or Class C shares in the
sub-account will also convert to Class A shares.
The conversion of Class B shares and Class C 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 distribution fee and higher transfer agency costs
with respect to Class B shares and Class C shares does not result in the Fund's
dividends or distributions constituting "preferential dividends" under the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the conversion
of shares does not constitute a taxable event under federal income tax law. The
conversion of Class B shares and Class C shares may be suspended if such an
opinion is no longer available. In that event, no further conversions of Class B
shares or Class C shares would occur, and shares might continue to be subject to
the distribution fee for an indefinite period which may extend beyond the period
ending eight or ten years, respectively, after the end of the calendar month in
which the shareholder's order to purchase was accepted.
FACTORS FOR CONSIDERATION. In deciding which class of shares to purchase,
investors should take into consideration their investment goals, present and
anticipated purchase amounts, time horizons and temperaments. Investors should
consider whether, during the anticipated life of their investment in the Fund,
the accumulated distribution fees and contingent deferred sales charges on Class
B shares or Class C shares prior to conversion would be less than the initial
sales charge on Class A shares purchased at the same time, and to what extent
such differential would be offset by the higher dividends per share on Class A
shares. To assist investors in making this determination, the table under the
caption "Annual Fund Operating Expenses and Example" sets forth examples of the
charges applicable to each class of shares. In this regard, Class A shares may
be more beneficial to the investor who qualifies for reduced initial sales
charges or purchases at net asset value, as described herein under "Purchase of
Shares -- Class A Shares." It is presently the policy of the Distributor not to
accept any order of $500,000 or more for Class B shares or any order of $1
million or more for Class C shares.
Class A shares are not subject to an ongoing distribution fee and,
accordingly, receive correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase for accounts
under $1 million, investors in Class A shares do not have all their funds
invested initially and, therefore, initially own fewer shares. Other investors
might determine that it is more advantageous to purchase either Class B shares
or Class C shares and have all their funds invested initially, although
remaining subject to a contingent deferred sales charge. Ongoing distribution
fees on Class B shares and Class C shares are offset to the extent of the
additional funds originally invested and any return realized on those funds.
However, there can be no assurance as to the return, if any, which will
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<PAGE> 135
be realized on such additional funds. For investments held for ten years or
more, the relative value upon liquidation of the three classes tends to favor
Class A shares or Class B shares, rather than Class C shares.
Class A shares may be appropriate for investors who prefer to pay the sales
charge up front, want to take advantage of the reduced sales charges available
on larger investments, wish to maximize their current income from the start,
prefer not to pay redemption charges or have a longer-term investment horizon.
In addition, the check writing privilege is only available for Class A shares
(see "Shareholder Services -- Check Writing Privilege"). Class B shares may be
appropriate for investors who wish to avoid a front-end sales charge, put 100%
of their investment dollars to work immediately, or have a longer-term
investment horizon. Class C shares may be appropriate for investors who wish to
avoid a front-end sales charge, put 100% of their investment dollars to work
immediately, have a shorter-term investment horizon or desire a short contingent
deferred sales charge schedule.
The distribution expenses incurred by the Distributor in connection with the
sale of the shares will be reimbursed, in the case of Class A shares, from the
proceeds of the initial sales charge and, in the case of Class B shares and
Class C shares, from the proceeds of the ongoing distribution fee and any
contingent deferred sales charge incurred upon redemption within five years or
one year, respectively, of purchase. Sales personnel of broker-dealers
distributing the Fund's shares and other persons entitled to receive
compensation for selling such shares may receive differing compensation for
selling such shares. INVESTORS SHOULD UNDERSTAND THAT THE PURPOSE AND FUNCTION
OF THE CONTINGENT DEFERRED SALES CHARGE AND ONGOING DISTRIBUTION FEE WITH
RESPECT TO THE CLASS B SHARES AND CLASS C SHARES ARE THE SAME AS THOSE OF THE
INITIAL SALES CHARGE WITH RESPECT TO CLASS A SHARES. See "Distribution and
Service Plans."
GENERAL. Dividends paid by the Fund with respect to Class A shares, Class B
shares and Class C shares will be calculated in the same manner at the same time
on the same day, except that the distribution fees and any incremental transfer
agency costs relating to Class B shares or Class C shares will be borne by the
respective class. Shares of the Fund may be exchanged, subject to certain
limitations, for shares of the same class of other mutual funds distributed by
the Distributor.
- ------------------------------------------------------------------------------
PURCHASE OF SHARES
- ------------------------------------------------------------------------------
GENERAL
The Fund offers three classes of shares to the public on a continuous basis
through the Distributor as principal underwriter, which is located at One
Parkview Plaza, Oakbrook Terrace, Illinois 60181. Shares are also offered
through members
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<PAGE> 136
of the National Association of Securities Dealers, Inc. ("NASD") who are acting
as securities dealers ("dealers") and NASD members or eligible non-NASD members
who are acting as brokers or agents for investors ("brokers"). The term
"dealers" and "brokers" are sometimes referred to herein as "authorized
dealers."
Initial investments must be at least $500 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. The Fund and the Distributor reserve the right to refuse any order
for the purchase of shares. Shares of the Fund may be sold in foreign countries
where permissible. 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 purchased on any business day through authorized
dealers. Shares also may be purchased by completing the application accompanying
this prospectus and forwarding the application through the authorized dealer, to
the shareholder service agent, ACCESS Investor Services, Inc. ("ACCESS"), a
wholly-owned subsidiary of Van Kampen American Capital. When purchasing shares
of the Fund, investors must specify whether the purchase is for Class A shares,
Class B shares or Class C shares.
Shares are offered at the next determined net asset value per share, plus a
front-end or contingent deferred sales charge depending on the class of shares
chosen by the investor, as shown in the tables herein. Net asset value per share
for each class 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. Net asset value per share for each class is determined
by dividing the value of the Fund's 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. Securities listed or traded on a national securities
exchange are valued at the mean of representative quoted bid or asked prices.
Unlisted securities and listed securities for which such prices are not
available are valued at prices of comparable securities. Options and futures
contracts are valued at the last sale price or if no sales are reported, at the
mean between the bid and asked prices. Short-term investments are valued at cost
plus interest earned (amortized cost), which approximates market value.
The net asset value of the Fund is computed by (i) valuing long-term debt
obligations at the mean of representative quoted bid or asked prices for such
securities or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when the Advisers deem it
appropriate, prices obtained for the day of valuation from a bond pricing
service will be used, (ii) valuing short-term debt obligations with remaining
maturities in excess of 60 days at the mean of representative quoted bid and
asked prices for such securities or, if
28
<PAGE> 137
such prices are not available, using the prices for securities of comparable
maturity, quality and type, (iii) valuing short-term debt securities with 60
days or less remaining to maturity by amortizing such securities to maturity
based on their cost to the Fund. Options and futures contracts and options
thereon which are traded on exchanges are valued at their last sale or
settlement price as of the close of such exchanges, or, if no sales are
reported, at the mean between the last reported bid and asked prices.
Over-the-counter options are valued at the average of the last bid prices
obtained from dealers. Any other assets will be valued at fair value as
determined in good faith by the Trustees.
Generally, the net asset values per share of the Class A shares, Class B
shares, and Class C shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of the Class A
shares, Class B shares and Class C shares may differ from one another,
reflecting the daily expense accruals of the distribution and higher transfer
agency fees applicable with respect to the Class B shares and Class C shares and
the differential in the dividends paid on the classes of shares. The price paid
for shares purchased is based on the next calculation of net asset value (plus
sales charges, where applicable) after an order 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. Orders received by authorized
dealers after the close of the Exchange are priced based on the next close,
provided they are received by the Distributor prior to the Distributor's close
of business on such day. It is the responsibility of authorized dealers to
transmit orders received by them to the Distributor so they will be received
prior to such time. Orders of less than $500 are mailed by the authorized dealer
and processed at the offering price next calculated after acceptance by ACCESS.
Each class of shares represents an interest in the same portfolio of
investments of the Fund, has the same rights and is identical in all respects,
except that (i) Class B shares and Class C shares bear the expenses of the
deferred sales arrangement and any expenses (including the higher distribution
fee and incremental transfer agency costs) resulting from such sales
arrangement, (ii) generally, each class has exclusive voting rights with respect
to approvals of the Rule 12b-1 distribution plan pursuant to which its
distribution fee or service fee is paid, and (iii) Class B shares and Class C
shares are subject to a conversion feature. Each class has different exchange
privileges and certain different shareholder service options available. The net
income attributable to Class B shares and Class C shares and the dividends
payable on Class B shares and Class C shares will be reduced by the amount of
the distribution fee and incremental transfer agency expenses associated with
such class of shares. Sales personnel of authorized dealers distributing the
Fund's shares and other persons entitled to receive compensation for selling
such shares may receive differing compensation for selling Class A shares, Class
B shares or Class C shares.
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<PAGE> 138
Agreements are in place which provide, among other things and subject to
certain conditions, for certain favorable distribution arrangements for shares
of the Fund with subsidiaries of The Travelers Inc.
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. Fees may include payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. 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. 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. These programs will
not change the price an investor will pay for shares or the amount that a Fund
will receive from such sale.
CLASS A SHARES
The public offering price of Class A shares is the next determined net asset
value plus a sales charge, as set forth below.
SALES CHARGE TABLE
<TABLE>
<CAPTION>
REALLOWED TO
AS % OF AS % OF DEALERS (AS
SIZE OF OFFERING NET AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Less than $100,000................. 4.75% 4.99% 4.25%
$100,000 but less than $250,000.... 3.75% 3.90% 3.25%
$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 redemptions made within one
year of the purchase. A commission will be paid to authorized dealers
who initiate and are responsible for purchases of $1 million or more as
follows: 1.00% on sales to $2 million, plus 0.80% on the next million,
and 0.50% on the excess over $3 million. See "Purchase of
Shares--Deferred Shares Charge Alternatives" for additional information
with respect to contingent deferred sales charges.
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<PAGE> 139
In addition to the reallowances from the applicable public offering price
described above, the Distributor may, from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash or other
compensation, to authorized dealers that sell shares of the Fund. Authorized
dealers which are reallowed all or substantially all of the sales charges may be
deemed to be underwriters for purposes of the Securities Act of 1933.
The Distributor may also pay financial institutions (which may include banks)
and other industry professionals that provide services to facilitate
transactions in shares of the Fund for their clients a transaction fee up to the
level of the reallowance allowable to authorized dealers described herein. Such
financial institutions, other industry professionals and authorized dealers are
hereinafter referred to as "Service Organizations." 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 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.
QUANTITY DISCOUNTS
Investors purchasing Class A shares may, under certain circumstances, be
entitled to pay reduced sales charges. The circumstances under which such
investors may pay reduced sales charges are described below.
Investors, or their authorized dealers, must notify the Fund 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, their
spouse and minor children 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 fiduciary
account, or a "company" as defined in Section 2(a)(8) of the 1940 Act.
Volume Discounts. The size of investment shown in the preceding table applies
to the total dollar amount being invested by any person in shares of the Fund
alone, or in any combination of shares of the Fund and shares of other
Participating Funds, although other Participating Funds may have different sales
charges.
31
<PAGE> 140
Cumulative Purchase Discount. The size of investment shown in the 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.
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 preceding table. The
size of investment shown in the preceding table also 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. If the goal is not
achieved within the period, the investor must pay the difference between the
charges applicable to the purchases made and the charges previously paid. The
initial purchase must be for an amount equal to at least 5% of the minimum total
purchased 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 back-dating provisions, an adjustment will be made at the expiration of
the Letter of Intent to give effect to the lower charge. Such adjustments in
sales charge will be used to purchase additional shares for the shareholder at
the applicable discount category. Additional information is contained in the
application form accompanying this Prospectus.
OTHER PURCHASE PROGRAMS
Purchasers of Class A shares may be entitled to reduced initial sales charges
in connection with unit trust reinvestment programs 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 Programs. 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 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
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with respect to this program, including the applicable terms and conditions
thereof, 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 ACCESS with appropriate backup data
for each participating investor in a computerized format fully compatible with
ACCESS's 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 monthly basis only, even
if their investments are made more frequently. The Fund reserves the right to
modify or terminate this program at any time.
NAV 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 the shares will not be resold except through redemption by the Fund,
by:
(1) Current or retired Trustees/Directors of funds advised by the Adviser, Van
Kampen American Capital Investment Advisory Corp. or John Govett & Co.
Limited and such persons' families and their beneficial accounts.
(2) Current or retired directors, officers and employees of VK/AC Holding,
Inc. and any of its subsidiaries, Clayton, Dubilier & Rice, Inc.,
employees of an investment subadviser to any fund described in (1) above
or an affiliate of such subadviser; and such persons' families and their
beneficial accounts.
(3) Directors, officers, employees and registered representatives of financial
institutions that have a selling group agreement with the Distributor and
their spouses and minor children 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.
(4) Registered investment advisers, trust companies and bank trust departments
investing on their own behalf or on behalf of their clients provided that
the aggregate amount invested in the Fund alone, or any combination of
shares of the Fund and shares of other Participating Funds as described
herein under "Purchase of Shares -- Class A Shares -- Volume Discounts,"
during the 13-month period commencing with the first investment pursuant
hereto equals at least $1 million. The Distributor may pay authorized
dealers
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through which purchases are made an amount up to 0.50% of the amount
invested, over a 12 month period following such transaction.
(5) Trustees and other fiduciaries purchasing shares for retirement plans of
organizations with retirement plan assets of $10 million or more. The
Distributor may pay commissions of up to 1.00% for such purchases.
(6) 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.
(7) Investors purchasing shares of the Fund with redemption proceeds from
other mutual fund complexes on which the investor has paid a front-end
sales charge or was subject to a deferred sales charge, whether or not
paid, if such redemption has occurred no more than 30 days prior to such
purchase.
(8) Full service participant directed profit sharing and money purchase plans,
full service 401(k) plans, or similar full service recordkeeping programs
made available through Van Kampen American Capital Trust Company with at
least 50 eligible employees or investing at least $250,000 in
Participating Funds, Tax Free Money Fund or Reserve Fund. For such
investments the Fund imposes a contingent deferred sales charge of 1.00%
in the event of redemptions within one year of the purchase other than
redemptions required to make payments to participants under the terms of
the plan. The contingent deferred sales charge incurred upon certain
redemptions is paid to the Distributor in reimbursement for distribution-
related expenses. A commission will be paid to dealers who initiate and
are responsible for such purchases 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.
(9) Participants with accounts established after October 12, 1995, in any
403(b)(7) program of a college or university system which permits only net
asset value mutual fund investments and for which Van Kampen American
Capital Trust Company serves as custodian. In connection with such
purchases, the Distributor may pay, out of its own assets, a commission to
brokers, dealers, or financial intermediaries as follows: one percent on
sales up to $5 million, plus 0.50% on the next $5 million, plus 0.25% on
the excess over $10 million.
(10) Individuals who are members of a "qualified group" may purchase Class A
Shares of the Fund without the imposition of a front end sales charge. 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 other funds in the Van Kampen American Capital
Family
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<PAGE> 143
of 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 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 million and 0.50% on the excess over $3 million.
The term "families" includes a person's spouse, minor children 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 ACCESS by the investment
adviser, trust company or bank trust department, provided that ACCESS 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 herein under "Distribution and Service Plans"
on purchases made as described in (3) through (10) 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.
CLASS B SHARES
Class B shares are offered at the next determined net asset value. Class B
shares which are redeemed within five years of purchase are subject to a
contingent deferred sales charge at the rates set forth below charged as a
percentage of the dollar amount subject thereto. The 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 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.
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<PAGE> 144
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 purchases
of shares, all payments during a month are aggregated and deemed to have been
made on the last day of the month.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
AS A PERCENTAGE OF
YEAR SINCE PURCHASE DOLLAR AMOUNT SUBJECT TO CHARGE
<S> <C>
- -----------------------------------------------------------------------
First................................. 4.00%
Second................................ 4.00%
Third................................. 3.00%
Fourth................................ 2.50%
Fifth................................. 1.50%
Sixth and After....................... None
</TABLE>
- ------------------------------------------------------------------------------
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, second of shares held for over five years or shares acquired pursuant to
reinvestment of dividends or distributions and third of shares held longest
during the five-year period.
To provide an example, assume an investor purchased 100 shares at $10 per
share (at a cost of $1,000) and in the second year after purchase, the net asset
value per share is $12 and, during such time, the investor has acquired 10
additional shares upon dividend reinvestment. If at such time the investor makes
his or her first redemption of 50 shares (proceeds of $600), 10 shares will not
be subject to charge because of dividend reinvestment. With respect to the
remaining 40 shares, the charge is applied only to the original cost of $10 per
share and not to the increase in net asset value of $2 per share. Therefore,
$400 of the $600 redemption proceeds is subject to a deferred sales charge at a
rate of 4.00% (the applicable rate in the second year after purchase).
A commission or transaction fee of 4.00% of the purchase amount will be paid
to authorized dealers and at the time of purchase. Additionally, the Distributor
may, from time to time, pay additional promotional incentives in the form of
cash or other compensation, to authorized dealers that sell Class B shares of
the Fund.
CLASS C SHARES
Class C shares are offered at net asset value. Class C shares which are
redeemed within the first year of purchase are subject to a contingent deferred
sales charge of
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<PAGE> 145
1.00%. The 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 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 in an amount of $1 million or
more for Class C shares 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 second, of shares held for more than one year or shares acquired
pursuant to reinvestment of dividends or distributions.
A commission or transaction fee of 1.00% of the purchase amount will be paid
to authorized dealers at the time of purchase. Authorized dealers also will be
paid ongoing commissions and transaction fees of up to 0.75% of the average
daily net assets of the Fund's Class C shares for the second through tenth year
after purchase. Additionally, the Distributor may, from time to time, pay
additional promotional incentives in the form of cash or other compensation, to
authorized dealers that sell Class C shares of the Fund.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE
The contingent deferred sales charge is waived on redemptions of Class B
shares and Class C shares (i) following the death or disability (as defined in
the Code) of a shareholder, (ii) in connection with certain distributions from
an IRA or other retirement plan, (iii) pursuant to the Fund's systematic
withdrawal plan but limited to 12% annually of the initial value of the account,
and (iv) effected pursuant to the right of the Fund to liquidate a shareholder's
account as described herein under "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 120 days after redemption. See the Statement of Additional
Information for further discussion of waiver provisions.
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<PAGE> 146
- ------------------------------------------------------------------------------
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. The
following is a description of those services. As used herein, "Participating
Funds" refers to all open-end investment companies distributed by the
Distributor other than Van Kampen American Capital Tax Free Money Fund ("Tax
Free Money Fund"), Van Kampen American Capital Reserve Fund ("Reserve Fund") and
The Govett Funds, Inc.
INVESTMENT ACCOUNT. Each shareholder has an investment account under which
the investor's shares are held by ACCESS, the Fund's transfer agent. ACCESS
performs bookkeeping, data processing and administrative services related to the
maintenance of shareholder accounts. Except as described in this Prospectus,
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, Tax Free Money Fund or Reserve Fund, will receive
statements quarterly from ACCESS showing any reinvestments of dividends and
capital gains distributions and any other activity in the account since the
preceding statement. Such shareholder 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 ACCESS.
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 American Capital Funds, c/o ACCESS, P.O. Box 418256,
Kansas City, MO 64141-9256, requesting an "affidavit of loss" and obtain a
Surety Bond in a form acceptable to ACCESS. On the date the letter is received
ACCESS will calculate no more than 2.00% of the net asset value of the issued
shares, and bill the party to whom the certificate was mailed.
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 (without sales charge) on
the record date. Unless the shareholder instructs otherwise, the reinvestment
plan is automatic. This instruction may be made by telephone by calling (800)
421-5666 ((800) 772-8889 for the hearing impaired) or in writing to ACCESS. The
investor may, on the initial application or prior to any declaration, instruct
that dividends be
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<PAGE> 147
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 ACCESS to charge a bank account on a regular
basis to invest pre-determined amounts in the Fund. Additional information is
available from the Distributor or authorized dealers.
RETIREMENT PLANS. Eligible investors may establish individual retirement
accounts ("IRAs"); SEP and pension and profit sharing plans; 401(k) plans; or
Section 403(b)(7) plans in the case of employees of public school systems and
certain non-profit organizations. Documents and forms containing detailed
information regarding these plans are available from the Distributor. Van Kampen
American Capital 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 Automated Clearing House. 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
ACCESS 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 ACCESS.
DIVIDEND DIVERSIFICATION. A shareholder may, upon written request or by
completing the appropriate section of the application form accompanying this
Prospectus or by calling (800) 421-5666 ((800) 772-8889 for the hearing
impaired), elect to have all dividends and other distributions paid on a Class
A, Class B or Class C account in the Fund invested into a pre-existing Class A,
Class B or Class C account in any of the Participating Funds, Tax Free Money
Fund or Reserve Fund.
Both accounts must be of the same type, either non-retirement or retirement.
Any two non-retirement accounts can be used. 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
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<PAGE> 148
the fund into which distributions would be invested. Distributions are invested
into the selected fund at its net asset value as of the payable date of the
distribution.
EXCHANGE PRIVILEGE. Shares of the Fund or of any Participating Fund other than
Van Kampen American Capital Government Target Fund ("Government Target"), may be
exchanged for shares of the same class of any other Van Kampen American Capital
Fund, provided that shares of certain Van Kampen American Capital fixed-income
funds are subject to a 30-day holding period requirement before exchange. Shares
of the Government Target may be exchanged for Class A shares of the Fund without
sales charge. The Class A shares of Tax Free Money Fund or Reserve Fund that
were not acquired in exchange for Class B shares or Class C shares of a
Participating Fund may be exchanged for Class A shares of the Fund upon payment
of the excess, if any, of the sales charge rate applicable to the shares being
acquired over the sales charge rate previously paid. Shares of Tax Free Money
Fund or Reserve Fund acquired through an exchange of Class B shares or Class C
shares may be exchanged only for the same class of shares of a Participating
Fund without incurring a contingent deferred sales charge. Shares of any
Participating Fund, Tax Free Money Fund or Reserve Fund may be exchanged for
shares of any other Participating Fund 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.
Class B shareholders and Class C shareholders of the Fund have the ability to
exchange their shares ("original shares") for the same class of shares of any
other Van Kampen American Capital fund that offers such shares ("new shares") in
an amount equal to the aggregate net asset value of the original shares, without
the payment of any contingent deferred sales charge otherwise due upon
redemption of the original shares. For purposes of computing the contingent
deferred sales charge payable upon a disposition of the new shares, the holding
period for the original shares is added to the holding period of the new shares.
Class B shareholders and Class C shareholders would remain subject to the
contingent deferred sales charge imposed by the original fund upon their
redemption from the Van Kampen American Capital complex of funds. The contingent
deferred sales charge is based on the holding period requirements of the
original fund.
Shares of the fund to be acquired must be registered for sale in the
investor's state. Exchanges of shares are sales and may result in a gain or loss
for federal income tax purposes, although if the shares exchanged have been held
for less than 91 days, the sales charge paid on such shares is not included in
the tax basis of the exchanged shares, but is carried over and included in the
tax basis of the shares acquired. See the Statement of Additional Information.
A shareholder wishing to make an exchange may do so by sending a written
request to ACCESS, or by contacting the telephone transaction line at
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<PAGE> 149
(800) 421-5684. A shareholder automatically has telephone exchange privileges
unless otherwise designated in the application form accompanying this
Prospectus. Van Kampen American Capital and its subsidiaries, including ACCESS
(collectively, "VKAC"), 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 VKAC nor the Fund
will be liable for following telephone instructions which it reasonably believes
to be genuine. VKAC and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed. Exchanges are effected at the net asset value per share next
calculated after the request is received in good order with adjustment for any
additional sales charge. 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
file a specific written request. The Fund reserves the right to reject any order
to acquire its shares through exchange. 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.
A prospectus of any of these mutual 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.
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. 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
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<PAGE> 150
amount of the shareholder's investment at the time the election to participate
in the plan is made. See "Purchase of Shares -- Waiver of Contingent Deferred
Sales Charge" and the Statement of Additional Information.
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 this plan are reinvested in additional shares
at the next determined net asset value. 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 taxable gain or loss will be recognized by the shareholder upon
redemption of shares.
CHECK WRITING PRIVILEGE. A Class A shareholder holding shares of the Fund for
which certificates have not been issued and which are in a non-escrow status may
appoint ACCESS as agent by completing the AUTHORIZATION FOR REDEMPTION BY CHECK
form and the appropriate section of the application and returning the form and
the application to ACCESS. Once the form is properly completed, signed and
returned to the agent, a supply of checks drawn on State Street Bank and Trust
Company ("State Street Bank") will be sent to the Class A shareholder. These
checks may be made payable by the shareholder to the order of any person in any
amount of $100 or more.
When a check is presented to State Street Bank for payment, full and
fractional Class A shares required to cover the amount of the check are redeemed
from the shareholder's Class A account by ACCESS at the next determined net
asset value. Check writing redemptions represent the sale of shares. Any gain or
loss realized on the sale of Class A shares is a taxable event. See "Redemption
of Shares."
Checks will not be honored for redemption of shares held less than 15 days,
unless such Class A shares have been paid for by bank wire. Any Class A shares
for which there are outstanding certificates may not be redeemed by check. If
the amount of the check is greater than the proceeds of all uncertificated
shares held in the shareholder's Class A account, the check will be returned and
the shareholder may be subject to additional charges. A Class A shareholder may
not liquidate the entire account by means of a check. The check writing
privilege may be terminated or suspended at any time by the Fund or State Street
Bank. Retirement Plans and accounts that are subject to backup withholding are
not eligible for the privilege. A "stop payment" system is not available on
these checks. See the Statement of Additional Information for further
information regarding the establishment of the privilege.
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- ------------------------------------------------------------------------------
REDEMPTION OF SHARES
- ------------------------------------------------------------------------------
REGULAR REDEMPTIONS. Shareholders may redeem for cash some or all of their
shares of the Fund at any time. To do so, a written request in proper form must
be sent directly to ACCESS, P.O. Box 418256, Kansas City, Missouri 64141-9256.
Shareholders may also place redemption requests through an authorized dealer.
Orders received from authorized dealers must be at least $500 unless transmitted
via the FUNDSERV network. The redemption price for such shares is the net asset
value next calculated after an order 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.
As described herein under "Purchase of Shares," redemptions of Class B shares
and Class C shares are subject to a contingent deferred sales charge. In
addition, a contingent deferred sales charge of 1.00% may be imposed on certain
redemptions of Class A shares made within one year of purchase for investments
of $1 million or more and for certain qualified 401(k) retirement plans. The
contingent deferred sales charge incurred upon redemption is paid to the
Distributor in reimbursement for distribution-related expenses. See "Purchase of
Shares." A custodian of a retirement plan account may charge fees based on the
custodian's fee schedule.
The request for redemption 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. For example, although the Fund normally does
not issue certificates for shares, it will do so if a special request has been
made to ACCESS. In the case of shareholders holding certificates, the
certificates for the shares being redeemed 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 60 days must
accompany the redemption request. IRA redemption requests should be sent to the
IRA custodian to be forwarded to ACCESS. Where Van Kampen
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American Capital Trust Company serves as custodian, special IRA, 403(b)(7), or
Keogh distribution forms must be obtained from and be forwarded to Van Kampen
American Capital Trust Company, P.O. Box 944, Houston, Texas 77001-0944. Contact
the custodian for information.
In the case of redemption requests sent directly to ACCESS, the redemption
price is the net asset value per share next determined after the request is
received. Payment for shares redeemed will be made by check mailed within seven
days after acceptance by ACCESS 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. If the shares to be redeemed have
been recently purchased by check, ACCESS may delay mailing a redemption check
until the purchase check has cleared, usually a period of 15 days. Any taxable
gain or loss will be recognized by the shareholder upon redemption of shares.
The Fund may redeem any shareholder account with a net asset 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 is required and the shareholder is given an
opportunity to purchase the required value of additional shares at the next
determined net asset value without sales charge. Any applicable contingent
deferred sales charge will be deducted from the proceeds of this redemption. Any
involuntary redemption may only occur if the shareholder account is less than
the minimum initial investment due to shareholder redemptions.
TELEPHONE REDEMPTIONS. In addition to the regular redemption procedures set
forth above, 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
accompanying this Prospectus or call the Fund at (800) 421-5666 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. VKAC 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 VKAC nor the Fund
will be liable for following telephone instructions which it reasonably believes
to be genuine. VKAC and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed. Telephone redemptions may not be available if the shareholder cannot
reach ACCESS by telephone, whether because all telephone lines are busy or for
any other reason; in such case, a shareholder would have to use
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the Fund's regular redemption procedure previously described. Requests received
by ACCESS prior to 4:00 p.m., New York time, on a regular business day will be
processed at the net asset value per share determined that day. These privileges
are available for all accounts other than retirement accounts. The telephone
redemption privilege is not available for shares represented by certificates. If
an account has multiple owners, ACCESS 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 are expected to be wired on the next business day following the date
of redemption. This service is also not available with respect to shares held in
an individual retirement account (IRA) for which Van Kampen American Capital
Trust Company acts as custodian. The Fund reserves the right at any time to
terminate, limit or otherwise modify this redemption privilege.
REDEMPTION UPON DISABILITY. The Fund will waive the contingent deferred sales
charge on redemptions following the disability of a Class B shareholder or Class
C shareholder. An individual will be considered disabled for this purpose if he
or she meets the definition thereof in Section 72(m)(7) of 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 disability before it determines to waive the
contingent deferred sales charge on Class B shares and Class C shares.
In cases of disability, the contingent deferred sales charge on Class B shares
and Class C shares will be waived where the 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 initial determination of
disability. This waiver of the contingent deferred sales charge on Class B
shares and Class C shares applies to a total or partial redemption, but only to
redemptions of shares held at the time of the initial determination of
disability.
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
45
<PAGE> 154
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 (without sales charge except as described under
"Shareholder Services -- Exchange Privilege") next determined after the order is
received, which must be within 120 days after the date of the redemption. See
"Purchase of Shares -- Waiver of Contingent Deferred Sales Charge" and the
Statement of Additional Information. Reinstatement at net asset value is also
offered to participants in those eligible retirement plans held or administered
by Van Kampen American Capital Trust Company for repayment of principal (and
interest) on their borrowings on such plans.
- ------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS
- ------------------------------------------------------------------------------
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 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 each class. The Distribution Plan and the Service
Plan are being implemented through an agreement with the Distributor and
sub-agreements between the Distributor and brokers, dealers or financial
intermediaries (collectively, "Selling Agreements") that may provide for their
customers or clients certain services or assistance.
CLASS A SHARES. The Fund may spend an aggregate amount up to 0.25% per year of
the average daily net assets attributable to the Class A shares of the Fund
pursuant to the Distribution Plan and Service Plan. From such amount, the Fund
may spend up to 0.25% per year of the Fund's average daily net assets
attributable to the Class A shares pursuant to the Service Plan in connection
with the ongoing provision of services to holders of such shares by the
Distributor and by brokers, dealers or financial intermediaries and in
connection with the maintenance of such shareholders' accounts. The Fund pays
the Distributor the lesser of the balance of the 0.25% not paid to such brokers,
dealers or financial intermediaries or the amount of the Distributor's actual
distribution related expense.
CLASS B SHARES. The Fund may spend up to 0.75% per year of the average daily
net assets attributable to the Class B shares of the Fund pursuant to the
Distribution Plan. In addition, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets attributable to the Class B shares pursuant to
the Service Plan in connection with the ongoing provision of services to holders
of such shares
46
<PAGE> 155
by the Distributor and by brokers, dealers or financial intermediaries and in
connection with the maintenance of such shareholders' accounts.
CLASS C SHARES. The Fund may spend up to 0.75% per year of the average daily
net assets attributable to the Class C shares of the Fund pursuant to the
Distribution Plan. From such amount, the Fund, or the Distributor as agent for
the Fund, pays brokers, dealers or financial intermediaries in connection with
the distribution of the Class C shares up to 0.75% of the Fund's average daily
net assets attributable to Class C shares maintained in the Fund more than one
year by such broker's, dealer's or financial intermediary's customers. The Fund
pays the Distributor the lesser of the balance of 0.75% not paid to such
brokers, dealers or financial intermediaries or the amount of the Distributor's
actual distribution related expense attributable to the Class C shares. In
addition, the Fund may spend up to 0.25% per year of the Fund's average daily
net assets attributable to the Class C shares pursuant to the Service Plan in
connection with the ongoing provision of services to holders of such shares by
the Distributor and by brokers, dealers or financial intermediaries and in
connection with the maintenance of such shareholders' accounts.
OTHER INFORMATION. Amounts payable to the Distributor with respect to the
Class A Shares under the Distribution Plan in a given year may not fully
reimburse the Distributor for its actual distribution-related expenses during
such year. In such event, with respect to the Class A shares, there is no
carryover of such reimbursement obligations to succeeding years.
The Distributor's actual expenses with respect to Class B shares or Class C
shares for any given year may exceed the amounts payable to the Distributor with
respect to such class of shares under the Distribution Plan, the Service Plan
and payments received pursuant to the contingent deferred sales charge. In such
event, with respect to any such class of shares, any unreimbursed expenses will
be carried forward and paid by the Fund (up to the amount of the actual expenses
incurred) in future years so long as such Distribution Plan is 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 on
a Fund level basis, in 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. As of May 31, 1996, there were $4,500,000 and
$185,000 of unreimbursed distribution expenses with respect to Class B shares
and Class C shares, respectively, representing 4.09% and 1.31% of the Fund's
average net assets attributable to Class B shares and Class C shares,
respectively. If the Distribution Plan was terminated or not continued, the
47
<PAGE> 156
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.
The Distributor will not use the proceeds from the contingent deferred sales
charge applicable to a particular class of shares to defray distribution related
expenses attributable to any other class of shares. Various federal and state
laws prohibit national banks and some state-chartered commercial banks from
underwriting or dealing in the Fund's shares. In addition, state securities laws
on this issue may differ from the interpretations of federal law, and banks and
financial institutions may be required to register as dealers pursuant to state
law. In the unlikely event that a court were to find that these laws prevent
such banks from providing such services described above, the Fund would seek
alternate providers and expects that shareholders would not experience any
disadvantage.
- ------------------------------------------------------------------------------
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.
DIVIDENDS. Interest earned from debt securities are the Fund's main source of
income. This income, less expenses, is distributed monthly as dividends to
shareholders. Unless the shareholder instructs otherwise, dividends and capital
gains distributions are automatically applied to purchase additional shares of
the Fund at the next determined net asset value. See "Shareholder Services --
Reinvestment Plan."
The per share dividends on Class B shares and Class C shares will be lower
than the per share dividends on Class A shares as a result of the higher
distribution charges and incremental transfer agency fees 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 their purchase prices. The Fund distributes to shareholders at
least once a year the excess, if any, of its total profits on the sale of
securities during the year over its total losses on the sale of securities,
including capital losses carried forward from prior years under tax laws. As in
the case of income dividends, capital gains distributions are automatically
reinvested in additional shares of the Fund at net asset value. See "Shareholder
Services -- Reinvestment Plan."
48
<PAGE> 157
- ------------------------------------------------------------------------------
TAX STATUS
- ------------------------------------------------------------------------------
The Fund has qualified, and intends to continue to be qualified, to be taxed
as a regulated investment company under the Code. By qualifying as a regulated
investment company, the Fund is not subject to federal income taxes to the
extent it distributes its net investment income (which includes for this purpose
net short-term capital gains, but not net capital gains, which is the excess of
net long-term capital gains over net short-term capital losses) and net capital
gains. The Fund intends to distribute substantially all of its net investment
income and net capital gains, if any, at least annually. Distributions in excess
of the Fund's earnings and profits will first reduce the adjusted tax basis of
the shares held by a shareholder and, after such adjusted tax basis is reduced
to zero, will constitute capital gains to such shareholder (assuming such shares
are held as a capital asset). Dividends from net investment income are taxable
to shareholders as ordinary income. Distributions from net capital gains
constitute long-term capital gains for federal income tax purposes. All such
dividends and distributions are taxable to the shareholder whether or not
reinvested in shares. However, shareholders not subject to tax on their income
will not be required to pay tax on amounts distributed to them.
Shareholders are notified annually of the federal tax status of dividends and
capital gains distributions.
To avoid being subject to a 31% federal backup withholding on dividends,
distributions and redemption payments, shareholders must, among other things,
furnish the Fund with a certification of their correct taxpayer identification
number.
Dividends and distributions paid by the Fund have the effect of reducing net
asset value per share on the record date by the amount of the payment.
Therefore, a dividend or distribution paid shortly after the purchase of shares
by an investor would represent, in substance, a return of capital to the
shareholder (to the extent it is paid on the shares so purchased) even though
such dividend or distribution may be subject to income taxes as discussed
herein.
Dividends and interest received by the Fund may give rise to withholding and
other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. Investors
may be entitled to claim United States foreign tax credits or deductions with
respect to such taxes, subject to certain provisions and limitations contained
in the Code. If more than 50% in value of the Fund's total assets at the close
of its taxable year consists of securities of foreign corporations, the Fund may
be eligible and may file an election with the Internal Revenue Service pursuant
to which shareholders of the Fund will be required to include their respective
pro rata portions of such taxes in their United States income tax returns as
gross income, treat such respective pro
49
<PAGE> 158
rata portions as taxes paid by them, and deduct such respective pro rata
portions in computing their taxable incomes or, alternatively, use them as
foreign tax credits against their United States income taxes. The Fund will
report annually to its shareholders the amount per share of any such taxes.
Under Code Section 988, certain realized gains or losses on the sale or
retirement of bonds held by the Fund, to the extent attributable to fluctuations
in currency exchange rates, as well as certain other gains or losses
attributable to 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 distributions 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, your tax basis in your Fund shares will be reduced to the extent that
an amount distributed to you is treated as a return of capital.
The foregoing is a brief summary of some of the federal income tax
considerations affecting the Fund and its investors who are U.S. residents or
U.S. corporations. Investors should consult their tax advisors for more detailed
tax advice including state and local tax considerations. Foreign investors
should consult their own counsel for further information as to the U.S. and
their country of residence or citizenship tax consequences of receipt of
dividends and distributions from the Fund. See "Dividends, Distributions and
Federal Taxes" in the Statement of Additional Information.
- ------------------------------------------------------------------------------
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 and for the life of the Fund. 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 a maximum sales charge of 4.75% 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
50
<PAGE> 159
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 by the Fund.
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.
In addition to total return information, the Fund may also advertise its
current "yield." Yield figures are based on historical earnings and are not
intended to indicate future performance. Yield is determined by analyzing the
Fund's net income per share for a 30-day (or one-month) period (which period
will be stated in the advertisement), and dividing by the maximum offering price
per share on the last day of the period. A "bond equivalent" annualization
method is used to reflect a semiannual compounding.
For purposes of calculating yield quotations, net income is determined by a
standard formula prescribed by the SEC to facilitate comparison with yields
quoted by other investment companies. Net income computed for this formula
differs from net income reported by the Fund in accordance with generally
accepted accounting principles and from net income computed for federal income
tax reporting purposes. Thus the yield computed for a period may be greater or
less than the Fund's then current dividend rate.
The Fund's yield is not fixed and will fluctuate in response to prevailing
interest rates and the market value of portfolio securities, and as a function
of the type of securities owned by the Fund, portfolio maturity and the Fund's
expenses.
Yield quotations should be considered relative to changes in the net asset
value of the Fund's shares, the Fund's investment policies, and the risks of
investing in shares of the Fund. The investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
To increase the yield of the Fund, the Adviser, may from time to time, limit
its management fee. A yield quotation which reflects an expense reimbursement or
subsidization by the Adviser will be higher than a yield quotation without such
expense reimbursement or subsidization. The Adviser may stop limiting its
management fees at any time without prior notice.
Yield and total return are calculated separately for Class A shares, Class B
shares and Class C shares. Class A shares total return figures include the
maximum sales charge of 4.75%. 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
of the classes will differ.
51
<PAGE> 160
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.
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 ratings or rankings prepared by Lipper Analytical Services, Inc., CDA,
Morningstar Mutual Funds or similar independent services which monitor the
performance of mutual funds or with the Consumer Price Index, the Dow Jones
Industrial Average 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 Fund 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 refer to
results of top performing world bond markets as compiled by Morgan Stanley
Capital International or other independent statistical services.
The Fund may also utilize performance information in hypothetical
illustrations provided in narrative form. These hypotheticals will be
accompanied by the standard performance information required by the SEC as
described above.
The Fund's Annual Report contains additional performance information. A copy
of the Annual Report may be obtained without charge by calling or writing the
Fund at the telephone number and address printed on the cover page of this
Prospectus.
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- ------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- ------------------------------------------------------------------------------
The Trust was originally incorporated in the State of Maryland on May 25,
1990. The Fund was reorganized under the laws of the state of Delaware as a
business trust on August 31, 1995. The Trust currently offers two separate
portfolios: the Van Kampen American Capital Global Equity Fund and the Fund.
Shares issued by the Fund are fully paid, non-assessable and have no preemptive
or conversion rights.
The Fund is authorized to issue an unlimited number of Class A shares, Class B
shares and Class C shares. Each class of shares represents an interest in the
same assets of the Fund and 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. The par value for each class of shares is
$.01 per share.
The Fund is permitted to issue an unlimited number of classes. Other classes
of shares may be established from time to time in accordance with provisions of
the Trust's Declaration of Trust. Each class of shares is equal as to earnings,
assets and voting privileges, except as noted above, and each class bears the
expenses related to the distribution of its shares. There are no conversion,
preemptive or other subscription rights, except with respect to the conversion
of Class B shares and Class C shares into Class A shares as described above. 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 debt and expenses of the Fund
have been paid. Since Class B shares and Class C shares pay higher distribution
expenses, the liquidation proceeds to Class B shareholders and Class C
shareholders are likely to be lower than to other shareholders.
The Fund does not contemplate holding regular meetings of shareholders to
elect Trustees or otherwise. More detailed information concerning the Fund is
set forth in the Statement of Additional Information.
The Trust's Declaration of Trust provides that no Trustee, officer or
shareholder of the Fund shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of any obligation
or liability of the Fund but the assets of the Fund only shall be liable.
53
<PAGE> 162
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
This Prospectus and the Statement of Additional Information do not contain all
the information set forth in the Registration Statement filed by the Trust with
the SEC under the Securities Act of 1933. Copies of the Registration Statement
may be obtained at a reasonable charge from the SEC or may be examined, without
charge, at the office of the SEC in Washington, D.C.
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 with respect to the Fund.
An investment in the Fund is intended to be a long-term investment, and should
not be used as a trading vehicle.
54
<PAGE> 163
EXISTING SHAREHOLDERS--
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE CALL
THE FUND'S TOLL-FREE
NUMBER--(800) 421-5666
PROSPECTIVE INVESTORS--CALL
YOUR BROKER OR (800) 421-5666
DEALERS--FOR DEALER
INFORMATION, SELLING
AGREEMENTS, WIRE ORDERS, OR
REDEMPTIONS CALL THE
DISTRIBUTOR'S TOLL-FREE
NUMBER--(800) 421-5666
FOR SHAREHOLDER AND DEALER
INQUIRIES THROUGH
TELECOMMUNICATIONS DEVICE
FOR THE DEAF (TDD)
DIAL (800) 772-8889
FOR TELEPHONE TRANSACTIONS
DIAL (800) 421-5684
VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT
SECURITIES FUND
One Parkview Plaza
Oakbrook Terrace, IL 60181
Investment Adviser
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Investment Subadviser
JOHN GOVETT & CO. LIMITED
4 Battle Bridge Lane
London SE1 2HR
England
Distributor
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Transfer Agent
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, MO 64141-9256
Attn: Van Kampen American Capital
Global Government Securities Fund
Custodian
STATE STREET BANK AND
TRUST COMPANY
225 West Franklin Street
P.O. Box 1713
Boston, MA 02105-1713
Attn: Van Kampen American Capital
Global Government Securities Fund
Legal Counsel
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, IL 60606
Independent Accountants
PRICE WATERHOUSE LLP
1201 Louisiana
Suite 2900
Houston, TX 77002
<PAGE> 164
------------------------------------------------------------------------------
GLOBAL GOVERNMENT
SECURITIES FUND
------------------------------------------------------------------------------
P R O S P E C T U S
SEPTEMBER 28, 1996
- ------ ------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 165
STATEMENT OF ADDITIONAL INFORMATION
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
This Statement of Additional Information is not a Prospectus and should be
read in conjunction with the current Prospectus for the Fund (the "Prospectus").
This Statement of Additional Information does not include all the information 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 calling or writing Van
Kampen American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook
Terrace, Illinois 60181 at (800) 421-5666.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information................................................................... B-2
Investment Objectives and Policies.................................................... B-3
Options, Futures and Related Options.................................................. B-4
Repurchase Agreements................................................................. B-11
Loans of Portfolio Securities......................................................... B-11
Investment Restrictions............................................................... B-12
Trustees and Officers................................................................. B-14
Legal Counsel......................................................................... B-21
Investment Advisory and Other Services................................................ B-21
Distributor........................................................................... B-23
Distribution and Service Plans........................................................ B-23
Transfer Agent........................................................................ B-24
Portfolio Transactions and Brokerage.................................................. B-24
Determination of Net Asset Value...................................................... B-25
Purchase and Redemption of Shares..................................................... B-26
Exchange Privilege.................................................................... B-30
Dividends, Distributions and Federal Taxes............................................ B-30
Fund Performance...................................................................... B-32
Other Information..................................................................... B-33
Report of Independent Accountants..................................................... B-35
Financial Statements.................................................................. B-36
Notes to Financial Statements......................................................... B-43
</TABLE>
This Statement of Additional Information is dated September 28, 1996.
B-1
<PAGE> 166
GENERAL INFORMATION
Van Kampen American Capital Global Government Securities Fund, a series of
Van Kampen American Capital World Portfolio Series (the "Trust"), was originally
incorporated in Maryland on May 25, 1990 and reorganized under the laws of the
State of Delaware as a business trust and adopted its present name as of August
31, 1995.
Van Kampen American Capital Asset Management, Inc. (the "Adviser"), Van
Kampen American Capital Distributors, Inc. (the "Distributor"), and ACCESS
Investor Services, Inc. ("ACCESS") are wholly-owned subsidiaries of Van Kampen
American Capital, Inc. ("VKAC"), which is a wholly-owned subsidiary of VK/AC
Holding, Inc. VK/AC Holding, Inc. is controlled, through the ownership of a
substantial majority of its common stock, by The Clayton & Dubilier Private
Equity Fund IV Limited Partnership ("C&D L.P."), a Connecticut limited
partnership. C&D L.P. is managed by Clayton, Dubilier & Rice, Inc., a New York
based private investment firm. The General Partner of C&D L.P. is Clayton &
Dubilier Associates IV Limited Partnership ("C&D Associates L.P."). The general
partners of C&D Associated L.P. are Joseph L. Rice, III, B. Charles Ames,
William A. Barbe, Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr.,
Hubbard C. Howe and Andrall E. Pearson, each of whom is a principal of Clayton,
Dubilier & Rice, Inc. In addition, certain officers, directors and employees of
VKAC own, in the aggregate, not more than 6% of the common stock of VK/AC
Holding, Inc. and have the right to acquire, upon exercise of options,
approximately an additional 12% of the common stock of VK/AC Holding, Inc.
Advantage Capital Corporation, a retail broker-dealer affiliate of the
Distributor, is a wholly owned subsidiary 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.
John Govett & Co. Limited (the "Subadviser") is a wholly owned subsidiary
of Govett & Company Limited, a corporation listed on the London Stock Exchange.
VKAC offers one of the industry's broadest lines of
investments -- encompassing mutual funds, closed-end funds and unit investment
trusts -- and is currently the nation's 5th largest broker-sold mutual fund
group according to Strategic Insight, July 1995. VKAC manages or supervises more
than $50 billion in mutual funds, closed-end funds and unit investment
trusts -- assets which have been entrusted to VKAC in more than 2 million
investor accounts. VKAC has one of the largest research teams (outside of the
rating agencies) in the country, with 86 analysts devoted to various
specializations.
As of September 17, 1996, no one person was known to own beneficially or to
hold of record 5% or more of the outstanding shares of any class of the Fund
except for those listed below:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF
OF HOLDER CLASS SHARES HELD PERCENT
- -------------------------------------------------------- ----- ----------- -------
<S> <C> <C> <C>
Van Kampen American Capital Trust A 1,013,973 23.44%
Company B 1,875,939 16.17%
2800 Post Oak Blvd. C 64,150 5.81%
Houston, TX 77056
AM Council on Education Inc. C 63,627 5.76%
One DuPont Circle
Washington, DC 20036
</TABLE>
Van Kampen American Capital Trust Company acts as custodian for certain
employee benefit plans and independent retirement accounts.
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INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is to provide a high level of current
income through investments primarily in high quality foreign and U.S. Government
bonds. The Fund's secondary objectives are capital appreciation and protection
of principal through active management of the maturity structure and currency
exposure of its portfolio.
DESCRIPTION OF BOND RATINGS
Moody's Investors Service ("Moody's") rates the long-term debt securities
issued by various entities from "Aaa" to "C". High quality ratings are as
follows:
Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge". Interest
payments are protected by a large or exceptionally stable margin, and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- High quality by all standards. They are rated lower than the
best bond because margins of protection may not be as large as in Aaa
securities, fluctuation of protective elements may be of greater amplitude,
or there may be other elements present which make the long-term risks
appear somewhat greater.
Standard & Poor's Corporation ("S&P") rates the long-term debt securities
of various entities in categories ranging from "AAA" to "D" according to
quality. High quality ratings are as follows:
AAA -- Highest rating. Capacity to pay interest and repay principal
is extremely strong.
AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.
COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1," "Prime-2" and "Prime-3" to
indicate commercial paper having the highest capacity for timely repayment.
Issuers rated Prime-1 have a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment capacity will normally be evidenced by
the following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protections; broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and well-established access to a range of financial markets and
assured sources of alternate liquidity. Issues rated Prime-2 have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
S&P ratings of commercial paper are graded into four categories ranging
from "A" for the highest quality obligations to "D" for the lowest. A -- Issues
assigned its highest rating are regarded as having the greatest capacity for
timely payment. Issues in this category are delineated with numbers 1, 2, and 3
to indicate the relative degree of safety. A-1 -- This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming safety
characteristics will be denoted with a plus (+) sign designation.
A-2 -- Capacity for timely payments on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1".
The Fund may write and invest in options, futures contracts and related
options thereon. For further discussion of options, futures and related options
see "Investment Practices" in the Prospectus and "Options, Futures and Related
Options" herein.
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OPTIONS, FUTURES AND RELATED OPTIONS
WRITING CALL AND PUT OPTIONS
Purpose. The principal reason for writing options is to obtain, through
receipt of premiums, a greater current return or total return than would be
realized on the underlying securities alone. Such returns could be expected to
fluctuate because premiums earned from an option writing program and dividend or
interest income yields on portfolio securities vary as economic and market
conditions change. Actively writing options on portfolio securities is likely to
result in a substantially higher portfolio turnover rate than that of most other
investment companies.
Writing Options. The purchaser of a call option pays a premium to the
writer (i.e., the seller) for the right to buy the underlying security from the
writer at a specified price during a certain period. The Fund writes call
options either on a covered basis, or for cross-hedging purposes. A call option
is covered if, at all times during the option period, the Fund owns or has the
right to acquire the underlying subject to the call option. An option is for
cross-hedging purposes if it is not covered but is designed to provide a hedge
against a 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, cash equivalents or high quality,
liquid debt 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 writer (i.e., the
seller) for the right to sell the underlying security to the writer at a
specified price during a certain period. The Fund would write 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 Custodian cash, cash
equivalents or high quality, liquid debt securities in any 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 written 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 write 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 writer 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 writer, but would provide an asset of
equal value to its obligation under the option written. 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 written, it will be required to maintain the
securities subject to the call or the collateral underlying the put 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 writing a call option, the Fund loses the
potential for gain on the underlying security above the exercise price while the
option is outstanding; by writing a put option the Fund might become obligated
to purchase the underlying security at an exercise price that exceeds the then
current market price.
Each of the United States exchanges has established limitations governing
the maximum number of call or put options on the same underlying security
(whether or not covered) that may be written by a single investor, whether
acting alone or in concert with others, regardless of whether such options are
written on one or more accounts or through one or more brokers. An exchange may
order the liquidation of positions found to be in violation of those limits and
it may impose other sanctions or restrictions. These position limits may
restrict the number of options the Fund may be able to write.
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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.
Conversely, put options could 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 could be purchased
for capital appreciation in anticipation of a price decline in the underlying
security and a corresponding increase in the value of the 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.
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 is exempt from
registration as a "commodity pool".
The Fund may enter into contracts for the purchase or sale for future
delivery of fixed-income securities or foreign currencies, or contracts based on
financial indices including any index of U.S. Government Securities, Foreign
Government Securities or corporate debt securities. U.S. futures contracts have
been designed by exchanges which have been designated "contracts markets" by the
CFTC, and must be executed through a futures commission merchant, or brokerage
firm, which is a member of the relevant contract market. Futures contracts trade
on a number of exchange markets, and, through their clearing corporations, the
exchanges guarantee performance of the contracts as between the clearing members
of the exchange. The Fund may enter into futures contracts which are based on
debt securities that are backed by the full faith and credit of the U.S.
Government, such as long-term U.S. Treasury Bonds, Treasury Notes, Government
National Mortgage Association modified pass-through mortgage-backed securities
and three-month U.S. Treasury Bills. The Fund may also enter into futures
contracts which are based on bonds issued by entities other than the U.S.
Government.
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 or 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, cash equivalents or liquid high
grade debt securities equal to a percentage which may range upward from five
percent 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 has purchased a futures contract and the price
of the underlying security or index rises, that position increases in value, and
the Fund will receive from the broker a variation margin payment equal to that
increase in value. Conversely, where the Fund has purchased a futures contract
and the
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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 not fully
invested ("anticipatory hedge"). Such purchase of a futures contract serves 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
substantially reduces 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
with attendant transaction costs.
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 and/or losses in liquidating open positions purchased and/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.
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 correlation between movements in the price of the
futures contracts and of the underlying securities, currency or index, 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, currency or index, 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 (lesser) dollar amount than the dollar amount of
securities being hedged if the historical volatility of the securities being
hedged is greater (lesser) than the historical volatility of the securities,
currency or index, underlying the futures contract. 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, currencies 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, currencies 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 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 the
movements in the futures contracts and movements in the securities or currencies
underlying them, a correct forecast of general market trends by the Advisers 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
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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 on 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 Advisers' ability to
correctly predict the direction of movements in the market. For example, if the
Fund hedges against a rise in interest rates, and interest rates instead fall,
the Fund will lose part or all of the 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
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 in the Prospectus, 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.
CFTC regulations require, among other things, (i) that futures and related
options be used solely for bona fide hedging purposes (or meet certain
conditions as specified in CFTC regulations) and (ii) that the Fund not enter
into futures and related options for which the aggregate initial margin and
premiums exceed five percent of the fair market value of the Fund's assets. In
order to minimize leverage in connection with the purchase of futures contracts
by the Fund, an amount of cash, cash equivalents or liquid high grade debt
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.
Options on futures contracts to be written or purchased by the Fund will be
traded on United States or foreign exchanges or over-the-counter. An option on a
futures contract gives the purchasers 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 purpose as it could sell, 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 would be intended to serve the same purpose as the actual
purchase of the futures contract.
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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 relating to options on futures.
The Advisers will not purchase options on futures on any exchange unless in the
Advisers' 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 level of the index or in
the price of the underlying security, 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 AND FUTURES TRANSACTIONS
Each of the United States exchanges and boards of trade 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 Advisers
are combined for purposes of these limits. An exchange or board of trade 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.
FORWARD COMMITMENTS
Relative to a Forward Commitment purchase, the Fund maintains a segregated
account (which is marked to market daily) of cash, U.S. Government securities or
other high quality liquid debt securities (which may have maturities which are
longer than the term of the Forward Commitment) with the Fund's custodian in an
aggregate amount equal to the amount of its commitment as long as the obligation
to purchase continues. Since the market value of both the securities or currency
subject to the Forward Commitment and the securities or currency held in the
segregated account may fluctuate, the use of Forward Commitments may magnify the
impact of interest rate changes on the Fund's net asset value.
A Forward Commitment sale is covered if the Fund owns or has the right to
acquire the underlying securities or currency subject to the Forward Commitment.
A Forward Commitment sale is for cross-hedging purposes if it is not covered,
but is designed to provide a hedge against a decline in value of a security or
currency which the Fund owns or has the right to acquire. In either
circumstance, the Fund maintains in a segregated account (which is marked to
market daily) either the security or currency covered by the Forward Commitment
or cash, U.S. Government securities or other high quality liquid debt securities
(which may have maturities which are longer than the term of the Forward
Commitment) with the Fund's custodian in an aggregate amount equal to the amount
of its commitment as long as the obligation to sell continues. By entering into
a Forward Commitment sale transaction, the Fund forgoes or reduces the potential
for both gain and loss in the holding which is being hedged by the Forward
Commitment sale.
RISK FACTORS APPLICABLE TO OPTIONS ON U.S. GOVERNMENT SECURITIES
Treasury Bonds and Notes. Because trading interest in options written on
Treasury bonds and notes tends to center on the most recently auctioned issues,
the exchanges will not continue indefinitely to introduce options with new
expirations to replace expiring options on particular issues. Instead, the
expirations introduced at the commencement of options trading on a particular
issue will be allowed to run their course, with the possible addition of a
limited number of new expirations as the original ones expire. Options trading
on each issue of bonds or notes will thus be phased out as new options are
listed on more recent issues, and options representing a full range of
expirations will not ordinarily be available for every issue on which options
are traded.
Treasury Bills. Because the deliverable Treasury bill changes from week to
week, writers of Treasury bill calls cannot provide in advance for their
potential exercise settlement obligations by acquiring and holding
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the underlying security. However, if the Fund holds a long position in Treasury
bills with a principal amount of the securities deliverable upon exercise of the
option, the position may be hedged from a risk standpoint by the writing of a
call option. For so long as the call option is outstanding, the Fund will hold
the Treasury bills in a segregated account with its Custodian so that it will be
treated as being covered.
Mortgage-Related Securities. The following risk factors will be applicable
to options on mortgage-related securities. Currently such options are only
traded over-the-counter. Since the remaining principal balance of a
mortgage-related security declines each month as a result of mortgage payments,
the Fund as a writer of a mortgage-related call holding mortgage-related
securities as "cover" to satisfy its delivery obligation in the event of
exercise may find that the mortgage-related securities it holds no longer have a
sufficient remaining principal balance for this purpose.
OPTIONS ON FOREIGN CURRENCIES
The Fund may purchase and write options on foreign currencies for hedging
purposes in a manner similar to that in which forward contracts or futures
contracts on foreign currencies will be utilized. For example, a decline in the
dollar value of a foreign currency in which portfolio dollar value of a foreign
currency in which portfolio securities are denominated will reduce the dollar
value of such securities, even if their value in the foreign currency remains
constant. In order to protect against such diminutions in the value of portfolio
securities, the Fund may purchase put options on the foreign currency. If the
value of the currency does decline, the Fund will have the right to sell such
currency for a fixed amount in dollars and will thereby offset, in whole or in
part, the adverse effect on its portfolio which otherwise would have resulted.
Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Fund deriving from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent anticipated the Fund could sustain losses on transactions in
foreign currency options which would require it to forego a portion or all of
the benefits of advantageous changes in such rates.
The Fund may write options on foreign currencies for the same types of
hedging purposes. For example, where the Fund anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put option,
write a call option on the relevant currency. If the expected decline occurs,
the option will most likely not be exercised, and the diminution in value of
portfolio securities will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the Fund
could write a put option on the relevant currency which, if rates move in the
manner projected, will expire unexercised and allow the Fund to hedge such
increased cost up to the amount of the premium. As in the case of other types of
options, however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a loss
which may not be offset by the amount of the premium. Through the writing of
options on foreign currencies, the Fund also may be required to forego all or a
portion of the benefits which might otherwise have been obtained from favorable
movements in exchange rates.
The Fund intends to write covered call options on foreign currencies. A
call option written on a foreign currency by the Fund is "covered" if the Fund
owns the underlying foreign currency covered by the call or has an absolute and
immediate right to acquire that foreign currency without additional cash
consideration (or for additional cash consideration held in a segregated account
by its Custodian) upon conversion or exchange of other foreign currency held in
its portfolio. A call option is also covered if the Fund has a call on the same
foreign currency and in the same principal amount as the call written where the
exercise price of the call held (a) is equal to or less than the exercise price
of the call written or (b) is greater than the exercise price of the
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call written if the difference is maintained by the Fund in cash, U.S.
Government Securities and other high grade liquid debt securities in a
segregated account with its Custodian.
The value of foreign currency option is dependent upon the value of the
underlying foreign currency relative to the U.S. dollar. As a result, the price
of the option position may vary with changes in the value of either or both
currencies and has no relationship to the investment merits of a foreign
security. Because foreign currency transactions occurring in the interbank
market (conducted directly between currency traders, usually large commercial
banks, and their customers) involve substantially larger amounts than those that
may be involved in the use of foreign currency options, investors may be
disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Quotation information available is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (i.e., less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options markets.
The Fund also intends to write call options on foreign currencies that are
not covered for cross-hedging purposes. A call option on a foreign currency is
for cross-hedging purposes if it is not covered, but is designed to provide a
hedge against a decline in the U.S. dollar value of a security which the Fund
owns or has the right to acquire and which is denominated in the currency
underlying the option due to an adverse change in the exchange rate. In such
circumstances, the Fund collateralizes the option by maintaining in a segregated
account with the Fund's Custodian, cash or U.S. Government Securities or other
high quality liquid debt securities in an amount not less than the value of the
underlying foreign currency in U.S. dollars marked to market daily.
ADDITIONAL RISKS OF OPTIONS ON FUTURES CONTRACTS, FORWARD CONTRACTS AND OPTIONS
ON FOREIGN CURRENCIES
Unlike transactions entered into by the Fund in futures contracts, options
on foreign currencies and forward contracts are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) by the Securities and Exchange Commission ("SEC"). To the contrary,
such instruments are traded through financial institutions acting as
market-makers, although foreign currency options are also traded on certain
national securities exchanges, such as the Philadelphia Stock Exchange and the
Chicago Board Options Exchange, subject to SEC regulation. Similarly, options on
currencies may be traded over-the-counter. In an over-the-counter trading
environment, many of the protections afforded to exchange participants will not
be available. For example, there are no daily price fluctuation limits, and
adverse market movements could therefore continue to an unlimited extent over a
period of time. Although the purchaser of an option cannot lose more than the
amount of the premium plus related transaction costs, this entire amount could
be lost. Moreover, the option writer and a trader of forward contracts could
lose amounts substantially in excess of their initial investments, due to the
margin and collateral requirements associated with such positions.
Options on foreign currencies traded on national securities exchanges are
within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation ("OCC"),
thereby reducing the risk of counterparty default. Further, a liquid secondary
market in options traded on a national securities exchange may be more readily
available than in the over-the-counter market, potentially permitting the Fund
to liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
B-10
<PAGE> 175
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions, on exercise.
In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by (i) other complex foreign
political and economic factors, (ii) lesser availability than in the United
States of data on which to make trading decisions, (iii) delays in the Fund's
ability to act upon economic events occurring in foreign markets during
nonbusiness hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) lesser trading volume.
REPURCHASE AGREEMENTS
In order to earn interest on funds available for very short-term
investment, the Fund may enter into repurchase agreements with domestic or
foreign banks or broker-dealers deemed to be creditworthy by the Adviser under
guidelines approved by the Trustees. 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, usually not more than seven days from the date of purchase, thereby
determining the yield during the purchaser's holding period. Repurchase
agreements are fully collateralized by the underlying debt securities and are
considered to be loans under the Investment Company Act of 1940, as amended
("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 securities unless the seller defaults under its repurchase
obligation. See "Investment Practices -- Repurchase Agreements" in the
Prospectus for further information.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend portfolio securities to unaffiliated brokers, dealers and
financial institutions provided that cash or U.S. Government securities equal in
value to 100% of the market value of the securities loaned is deposited by the
borrower with the Fund and is marked to market daily. While such securities are
on loan, the borrower is required to pay the Fund any income accruing thereon.
Furthermore, the Fund may invest the cash collateral in portfolio securities
thereby increasing the return to the Fund as well as increasing the market risk
to the Fund. The Fund will not lend its portfolio securities if such loans are
not permitted by the laws or regulations of any state in which its shares are
qualified for sale. However, should the Fund believe that lending securities is
in the best interests of its shareholders, it would consider withdrawing it
shares from sale in any such state.
Loans would be made for short-term purposes and subject to termination by
the Fund in the normal settlement time, currently five business days after
notice, or by the borrower on one day's notice. Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the market price of
the borrowed securities which occurs during the term of the loan inures to the
Fund and its shareholders, but any gain can
B-11
<PAGE> 176
be realized only if the borrower does not default. The Fund may pay reasonable
finders', administrative and custodial fees in connection with a loan.
INVESTMENT RESTRICTIONS
The Fund has adopted the following restrictions which cannot be changed
without approval by the holders of a majority vote of its outstanding shares.
Such majority vote is defined as the lesser of (i) 67% or more of the voting
securities present at the 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. Engage in the underwriting of securities of other issuers, except that
the Fund may sell an investment position even though it may be deemed
to be an underwriter under the federal securities laws.
2. Purchase any security (other than obligations of the United States
Government, its agencies, or instrumentalities) if more than 25% of its
total assets (taken at current value) would then be invested in a
single industry except that, if the value of securities owned by the
Fund with remaining maturities of less than 13 months exceeds 35% of
the value of the Fund's total assets, the Fund will invest at least 25%
of its assets in securities issued by banks. Although this policy is
not applicable to securities issued by government or political
subdivisions because such issues are not members of any industry, the
Fund does not intend to invest more than 25% of its total assets in the
securities issued or guaranteed by any government (except U.S.
Government, its agencies or instrumentalities). For purposes of this
restriction, issuers are not considered to be of a single industry if
their primary economic characteristics are materially different.
3. Borrow money except temporarily from banks to facilitate payment of
redemption requests and then only in amounts not exceeding 33 1/3% of
its net assets, or pledge more than ten percent of its net assets in
connection with permissible borrowings or purchase additional
securities when money borrowed exceeds five percent of its net assets.
Margin deposits or payments in connection with the writing of options,
or in connection with the purchase or sale of forward contracts,
futures, foreign currency futures and related options, are not deemed
to be a pledge or other encumbrance.
4. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend
securities in an amount exceeding 15% of the total assets of the Fund.
The purchase of a portion of an issue of securities described under (i)
above distributed publicly, whether or not the purchase is made on the
original issuance, is not considered the making of a loan.
5. Make short sales of securities, unless at the time of the sale it owns
or has the right to acquire an equal amount of such securities;
provided that this prohibition does not apply to the writing of options
or the sale of forward contracts, futures, foreign currency futures or
related options.
6. Purchase securities on margin but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities. The deposit or payment by the Fund of initial or
maintenance margin in connection with forward contracts, futures,
foreign currency futures or related options is not considered the
purchase of a security on margin.
7. Buy or sell real estate or interests in real estate including real
estate limited partnerships, provided that the foregoing prohibition
does not apply to a purchase and sale of publicly traded (i) securities
which are secured by real estate, (ii) securities representing
interests in real estate, and (iii) securities of companies principally
engaged in investing or dealing in real estate.
8. Make investments for the purpose of exercising control or management
although the Fund retains the right to vote securities held by it.
B-12
<PAGE> 177
9. Invest in commodities or commodity contracts, except that the Fund may
enter into transactions in options, futures contracts or related
options including foreign currency futures contracts and related
options and forward contracts.
10. Issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from (i) making
and collateralizing any permitted borrowings, (ii) making any permitted
loans of its portfolio securities or (iii) entering into repurchase
agreements, utilizing options, futures contracts, options on futures
contracts, forward contracts, forward commitments and other investment
strategies and instruments that would be considered "senior securities"
but for the maintenance by the Fund of a segregated account with its
custodian or some other form of "cover".
11. Write, purchase or sell puts, calls or combinations thereof, except
that the Fund may (a) write covered or fully collateralized call
options, write secured put options, and enter into closing or
offsetting purchase transactions with respect to such options, (b)
purchase and sell options to the extent that the premiums paid for all
such options owned at any time do not exceed ten percent of its total
assets and (c) engage in transactions in interest rate futures
contracts and related options provided that such transactions are
entered into for bona fide hedging purposes (or that the underlying
commodity value of the Fund's long positions do not exceed the sum of
certain identified liquid investments as specified in CFTC
regulations), provided further that the aggregate initial margin and
premiums do not exceed five percent of the fair market value of the
Fund's total assets, and provided further that the Fund may not enter
into net aggregate long and short futures contracts or related options
if more than 50% of the Fund's total assets would be so invested.
In addition to the foregoing fundamental policies which may not be changed
without shareholder approval, the Fund is subject to the following policies
which may be amended by the Trustees and which apply at the time of purchase of
portfolio securities.
1. The Fund may not invest in the securities of other open-end investment
companies, or invest in the securities of closed-end investment
companies except through purchase in the open market in a transaction
involving no commission or profit to a sponsor or dealer (other than the
customary broker's commission) or as part of a merger, consolidation or
other acquisition.
2. The Fund may not invest more than 5% of its net assets in warrants or
rights valued at the lower of cost or market, nor more than 2% of its
net assets in warrants or rights (valued on such basis) which are not
listed on the New York Stock Exchange or American Stock Exchange.
Warrants or rights acquired in units or attached to other securities are
not subject to the foregoing limitation.
3. The Fund may not invest in securities of any company if any officer or
trustee of the Trust or of the Adviser owns more than one-half of one
percent of the outstanding securities of such company, and such officers
and trustees who own more than one-half of one percent own in the
aggregate more than five percent of the outstanding securities of such
issuer.
4. The Fund may not invest in interests in oil, gas, or other mineral
exploration or development programs or invest in oil, gas, or mineral
leases, except that the Fund may acquire securities of public companies
which themselves are engaged in such activities.
5. The Fund may not invest more than 5% of its total assets in securities
of unseasoned issuers which have been in operation directly or through
predecessors for less than three years.
6. The Fund may not purchase or otherwise acquire any security if, as a
result, more than 10% of its net assets (taken at current value) would
be invested in securities that are illiquid by virtue of the absence of
a readily available market. This policy includes repurchase agreements
maturing in more than seven days and over-the-counter options held by
the Fund and that portion of assets used to cover such options. This
policy does not apply to restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 (the "1993 Act")
which the Trustees or the Adviser under Board approved guidelines, may
determine are liquid nor does it apply to other securities for which,
notwithstanding legal or contractual restrictions on resale, a liquid
market exists.
B-13
<PAGE> 178
The Fund made an undertaking with one state to provide written notification
to shareholders of any change in its investment objective at least 30 days prior
to implementing such change and will waive any fee or charge which may result if
the shareholder decides to redeem his or her account as a result of such change
in the investment objectives. In compliance with state securities laws, the Fund
also undertakes that with respect to 75% of its assets, it will not purchase
more than ten percent of the outstanding voting securities of any one issuer.
TRUSTEES AND OFFICERS
The tables below list the trustees and officers of the Fund and their
principal occupations for the last five years and their affiliations, if any,
with Van Kampen American Capital Asset Management, Inc. (the "AC Adviser" or
"Adviser"), Van Kampen American Capital Investment Advisory Corp. (the "VK
Adviser"), Van Kampen American Capital Management, Inc., McCarthy, Crisanti &
Maffei, Inc., MCM Asia Pacific Company, Limited, Van Kampen American Capital
Distributors, Inc. (the "Distributor"), Van Kampen American Capital, Inc. ("Van
Kampen American Capital" or "VKAC") or VK/AC Holding, Inc. For purposes hereof,
the term "Van Kampen American Capital Funds" includes each of the open-end
investment companies advised by the VK Adviser (excluding The Explorer
Institutional Trust) and each of the open-end investment companies advised by
the AC Adviser (excluding the Van Kampen American Capital Exchange Fund and the
Common Sense Trust).
TRUSTEES
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
J. Miles Branagan.................. Co-founder, Chairman, Chief Executive Officer and
Strafford Hall President of MDT Corporation, a company which develops,
Suite 200 manufactures, markets and services medical and scientific
1009 Slater Road equipment. A Trustee of each of the Van Kampen American
Morrisville, NC 27560 Capital Funds.
Date of Birth: 07/14/32
Linda Hutton Heagy................. Managing Partner, Paul Ray Berndston, an executive
10 South Riverside Plaza recruiting and management consulting firm. Formerly,
Suite 720 Executive Vice President of ABN AMRO, N.A., a Dutch bank
Chicago, IL 60606 holding company. Prior to 1992, Executive Vice President
Date of Birth: 06/03/49 of La Salle National Bank. A Trustee of each of the Van
Kampen American Capital Funds.
Roger Hilsman...................... Professor of Government and International Affairs
251-1 Hamburg Cove Emeritus, Columbia University. A Trustee of each of the
Lyme, CT 06371 Van Kampen American Capital Funds.
Date of Birth: 11/23/19
R. Craig Kennedy................... President and Director, German Marshall Fund of the
11 DuPont Circle, N.W. United States. Formerly, advisor to the Dennis Trading
Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive
Date of Birth: 02/29/52 Officer, Director and member of the Investment Committee
of the Joyce Foundation, a private foundation. A Trustee
of each of the Van Kampen American Capital Funds.
</TABLE>
B-14
<PAGE> 179
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Dennis J. McDonnell*............... President, Chief Operating Officer and a Director of the
One Parkview Plaza VK Adviser, the AC Adviser and Van Kampen American
Oakbrook Terrace, IL 60181 Capital Management, Inc. Executive Vice President and a
Date of Birth: 05/20/42 Director of VK/AC Holding, Inc. and Van Kampen American
Capital. Chief Executive Officer of McCarthy, Crisanti &
Maffei, Inc. Chairman and a Director of MCM Asia Pacific
Company, Ltd. Executive Vice President and a Trustee of
each of the Van Kampen American Capital Funds. President
of the closed-end investment companies advised by the VK
Adviser. Prior to December, 1991, Senior Vice President
of Van Kampen Merritt Inc.
Donald C. Miller................... Prior to 1992, Director of Royal Group, Inc., a company
415 North Adams in insurance related businesses. Formerly Vice Chairman
Hinsdale, IL 60521 and Director of Continental Illinois National Bank and
Date of Birth: 03/31/20 Trust Company of Chicago and Continental Illinois
Corporation. A Trustee of each of the Van Kampen American
Capital Funds and Chairman of each Van Kampen American
Capital Fund advised by the VK Adviser.
Jack E. Nelson..................... President of Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President of Nelson Investment Brokerage
Date of Birth: 02/13/36 Services Inc., a member of the National Association of
Securities Dealers, Inc. ("NASD") and Securities
Investors Protection Corp. A Trustee of each of the Van
Kampen American Capital Funds.
Jerome L. Robinson................. President of Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director of Pacesetter Software, a
Date of Birth: 10/10/22 software programming company specializing in white collar
productivity. Director of Panasia Bank. A Trustee of each
of the Van Kampen American Capital Funds.
Fernando Sisto..................... George M. Bond Chaired Professor and, prior to 1995, Dean
Stevens Institute of Graduate School and Chairman, Department of Mechanical
of Technology Engineering, Stevens Institute of Technology. Director of
Castle Point Station Dynalysis of Princeton, a firm engaged in engineering
Hoboken, NJ 07030 research. A Trustee of each of the Van Kampen American
Date of Birth: 08/02/24 Capital Funds and Chairman of the Van Kampen American
Capital Funds advised by the AC Adviser.
Wayne W. Whalen*................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom, legal counsel to the Van Kampen American Capital
Chicago, IL 60606 Funds. A Trustee of each of the Van Kampen American
Date of Birth: 08/22/39 Capital Funds. He also is a Trustee of the Explorer
Institutional Trust and closed-end investment companies
advised by an affiliate of the AC Adviser.
</TABLE>
B-15
<PAGE> 180
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
William S. Woodside................ Vice Chairman of the Board of LSG Sky Chefs, Inc., a
712 Fifth Avenue caterer of airline food. Formerly, Director of Primerica
40th Floor Corporation (currently known as The Traveler's Inc.).
New York, NY 10019 Formerly, Director of James River Corporation, a producer
Date of Birth: 01/31/22 of paper products. Trustee, and former President of
Whitney Museum of American Art. Formerly, Chairman of
Institute for Educational Leadership, Inc., Board of
Visitors, Graduate School of The City University of New
York, Academy of Political Science. Trustee of Committee
for Economic Development. Director of Public Education
Fund Network, Fund for New York City Public Education.
Trustee of Barnard College. Member of Dean's Council,
Harvard School of Public Health. Member of Mental Health
Task Force, Carter Center. A Trustee of each of the Van
Kampen American Capital Funds.
</TABLE>
- ---------------
* Such Trustees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. McDonnell is an interested person of the Adviser and the
Fund by reason of his position with the Adviser. Mr. Whalen is an interested
person of the Fund by reason of his firm acting as legal counsel to the Fund.
OFFICERS
The Fund's Officers other than Messrs. Hegel, Nyberg, Wood, Sullivan,
Dalmaso, Martin, Wetherell and Hill are located at 2800 Post Oak Blvd., Houston,
TX 77056. Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell and
Hill are located at One Parkview Plaza, Oakbrook Terrace, IL 60181.
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
William N. Brown......... Vice President Executive Vice President of the VK Adviser,
Date of Birth: 05/26/53 AC Adviser, VK/AC Holding, Inc., VKAC, Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services,
Inc., Van Kampen American Capital Exchange
Corporation, ACCESS Investor Services,
Inc., and Van Kampen American Capital Trust
Company. Director of American Capital
Shareholders Corporation. Vice President of
each of the Van Kampen American Capital
Funds.
Peter W. Hegel........... Vice President Executive Vice President of the VK Adviser,
Date of Birth: 06/25/56 AC Adviser, Van Kampen American Capital
Advisors, Inc. Director of McCarthy,
Crisanti & Maffei, Inc. and McCarthy,
Crisanti & Maffei Acquisition Corporation.
Vice President of each of the Van Kampen
American Capital Funds. Vice President of
the closed-end funds advised by the VK
Adviser.
Curtis W. Morell......... Vice President and Chief Vice President and Chief Accounting Officer
Date of Birth: 08/04/46 Accounting Officer of most of the investment companies advised
by the AC Adviser.
</TABLE>
B-16
<PAGE> 181
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
Ronald A. Nyberg......... Vice President and Executive Vice President, General Counsel
Date of Birth: 07/29/53 Secretary and Secretary of Van Kampen American
Capital and VK/AC Holding, Inc. Executive
Vice President, General Counsel and a
Director of the Distributor. Executive Vice
President and General Counsel of the VK
Adviser and the AC Adviser, Van Kampen
American Capital Management, Inc., VSM Inc.
VCJ, Inc., Van Kampen Merritt Equity
Advisors Corp., and Van Kampen Merritt
Equity Holdings Corp. Executive Vice
President, General Counsel and Assistant
Secretary of Van Kampen American Capital
Advisors, Inc., American Capital
Contractual Services, Inc., Van Kampen
American Capital Exchange Corporation,
ACCESS 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. Vice President and
Secretary of each of the Van Kampen
American Capital Funds. Secretary of the
closed-end funds advised by the VK Adviser.
Director of ICI Mutual Insurance Co., a
provider of insurance to members of the
Investment Company Institute.
Robert C. Peck, Jr....... Vice President Executive Vice President of the VK Adviser.
Date of Birth: 10/01/46 Executive Vice President and Director of
the AC Adviser. Vice President of each of
the Van Kampen American Capital Funds.
Alan T. Sachtleben....... Vice President Executive Vice President of the VK Adviser.
Date of Birth: 04/20/42 Executive Vice President and a Director of
the AC Adviser. Vice President of each of
the Van Kampen American Capital Funds.
Paul R. Wolkenberg....... Vice President Executive Vice President of the VK Adviser
Date of Birth: 11/10/44 and the AC Adviser. President, Chief
Executive Officer and a Director of Van
Kampen American Capital Trust Company and
ACCESS. Vice President of each of the Van
Kampen American Capital Funds.
Edward C. Wood III....... Vice President and Chief Senior Vice President of VK Adviser and the
Date of Birth: 01/11/56 Financial Officer AC Adviser. Vice President and Chief
Financial Officer of each of the Van Kampen
American Capital Funds. Vice President,
Treasurer and Chief Financial Officer of
the closed-end funds advised by VK Adviser.
John L. Sullivan......... Treasurer First Vice President of the VK Adviser and
Date of Birth: 08/20/55 AC Adviser. Treasurer of each of the Van
Kampen American Capital Funds. Controller
of the closed-end funds advised by the VK
Adviser. Formerly Controller of open-end
funds advised by VK Adviser.
</TABLE>
B-17
<PAGE> 182
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
Tanya M. Loden........... Controller Controller of most of the investment
Date of Birth: 11/19/59 companies advised by the Adviser, formerly
Tax Manager/Assistant Controller.
Nicholas Dalmaso......... Assistant Secretary Assistant Vice President and Senior
Date of Birth: 03/01/65 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Distributor,
the VK Adviser, the AC Adviser, and Van
Kampen American Capital Management, Inc.
Assistant Vice President of Van Kampen
American Capital Advisors, Inc. Assistant
Secretary of each of the Van Kampen
American Capital Funds, Assistant Secretary
of the closed-end funds advised by the VK
Adviser. Prior to May 1992, attorney for
Cantwell & Cantwell, a Chicago law firm.
Huey P. Falgout, Jr...... Assistant Secretary Assistant Vice President and Senior
Date of Birth: 11/15/63 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Distributor,
the VK Adviser, the AC Adviser, Van Kampen
American Capital Management, Inc., Van
Kampen American Capital Advisors, Inc.,
American Capital Contractual Services,
Inc., Van Kampen American Capital Exchange
Corporation, ACCESS, and American Capital
Shareholders Corporation. Assistant
Secretary of each of the Van Kampen
American Capital Funds.
Scott E. Martin.......... Assistant Secretary Senior Vice President, Deputy General
Date of Birth: 08/20/56 Counsel and Assistant Secretary of VKAC.
Senior Vice President, Deputy General
Counsel and Secretary of the VK Adviser,
the AC Adviser and the Distributor, Van
Kampen American Capital Management, Inc.,
Van Kampen American Capital Advisers, Inc.,
VSM Inc., VCJ Inc., American Capital
Contractual Services, Inc., Van Kampen
American Capital Exchange Corporation,
ACCESS 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 Van
Kampen American Capital Funds. Assistant
Secretary of the closed-end funds advised
by the VK Adviser.
</TABLE>
B-18
<PAGE> 183
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
Weston B. Wetherell...... Assistant Secretary Vice President, Associate General Counsel
Date of Birth: 06/15/56 and Assistant Secretary of VKAC, the VK
Adviser, the AC Adviser and the
Distributor, Van Kampen American Capital
Management, Inc. Van Kampen American
Capital Advisors, Inc. Assistant Secretary
of each of the Van Kampen American Capital
Funds. Assistant Secretary of closed-end
funds advised by VK Adviser.
Steven M. Hill........... Assistant Treasurer Assistant Vice President of the VK Adviser
Date of Birth: 10/16/64 and AC Adviser. Assistant Treasurer of each
of the Van Kampen American Capital Funds.
Assistant Treasurer of the closed-end funds
advised by the VK Adviser.
Robert Sullivan.......... Assistant Controller Assistant Controller of each of the Van
Date of Birth: 03/30/33 Kampen American Capital Funds.
</TABLE>
Each of the foregoing trustees and officers holds the same position with
each of the Van Kampen American Capital mutual funds (the "Fund Complex"). Each
trustee who is not an affiliated person of the Adviser, the Distributor or VKAC
(each a "Non-Affiliated Trustee") is compensated by an annual retainer and
meeting fees for services to the funds in the Fund Complex. Each fund in the
Fund Complex provides a deferred compensation plan to its Non-Affiliated
Trustees that allows trustees to defer receipt of his or her compensation and
earn a return on such deferred amounts based upon the return of the common
shares of the funds in the Fund Complex as more fully described below. Each Fund
in the Fund Complex also 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.
The compensation of each Non-Affiliated Trustee includes a retainer by the
funds in the Fund Complex advised by the AC Adviser (the "AC Funds") in an
amount equal to $35,000 per calendar year, due in four quarterly installments on
the first business day of each calendar quarter. The AC Funds pay each Non-
Affiliated Trustee a per meeting fee in the amount of $2,000 per regular
quarterly meeting attended by the Non-Affiliated Trustee, due on the date of
such meeting, plus reasonable expenses incurred by the Non-Affiliated Trustee in
connection with his or her services as a trustee. Payment of the annual retainer
and the regular meeting fee is allocated among the AC Funds (i) 50% on the basis
of the relative net assets of each AC Fund to the aggregate net assets of all
the AC Funds and (ii) 50% equally to each AC Fund, in each case as of the last
business day of the preceding calendar quarter. Each AC Fund participating in
any special meeting of the trustees generally pays each Non-Affiliated Trustee a
per meeting fee in the amount of $125 per special meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee, provided that no compensation will be paid in connection
with certain telephonic special meetings.
The trustees have approved an aggregate compensation cap with respect to
the Fund Complex of $84,000 per Non-Affiliated Trustee per year (excluding any
retirement benefits) for the period July 22, 1995 through December 31, 1996,
subject to the net assets and the number of mutual funds in the Fund Complex as
of July 21, 1995 and certain other exceptions. In addition, the Adviser has
agreed to reimburse each fund in the Fund Complex through December 31, 1996 for
any increase in the aggregate trustee's compensation over the aggregate
compensation paid by such fund in its 1994 fiscal year, provided that if a fund
did not exist for the entire 1994 fiscal year appropriate adjustments will be
made.
Each Non-Affiliated Trustee can elect to defer receipt of all or a portion
of the compensation earned by such Non-Affiliated Trustee until retirement.
Amounts deferred are retained by the Fund and earn a rate of return determined
by reference to the return on the common shares of the Fund or other mutual
funds in the
B-19
<PAGE> 184
Fund Complex as selected by the respective Non-Affiliated Trustee. To the extent
permitted by the 1940 Act, the Fund will invest in securities of those mutual
funds selected by the Non-Affiliated Trustees in order to match the deferred
compensation obligation. The deferred compensation plan is not funded and
obligations thereunder represent general unsecured claims against the general
assets of the Fund.
The Fund adopted a retirement plan on January 25, 1996. Under the Fund's
retirement plan, a Non-Affiliated Trustee who is receiving trustee's fees from
the Fund prior to such Non-Affiliated Trustee's retirement, has at least ten
years of service and retires at or after attaining the age of 60, is eligible to
receive a retirement benefit equal to $2,500 per year for each of the ten years
following such trustee's retirement. Under certain conditions, reduced benefits
are available for early retirement provided the trustee has served at least five
years. As of the date hereof, the retirement plan contains a Fund Complex
retirement benefit cap of $60,000 per year. The Adviser will reimburse the Fund
for expenses related to the retirement plan through December 31, 1996.
Additional information regarding compensation before deferral paid by the
Fund and other funds in the Fund Complex is set forth below.
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
AGGREGATE PENSION OR ESTIMATED BEFORE DEFERRAL
COMPENSATION RETIREMENT ANNUAL FROM FUND
BEFORE DEFERRAL BENEFITS ACCRUED BENEFITS AND FUND
FROM AS PART OF FUND UPON COMPLEX PAID TO
NAME(2) FUND(3) EXPENSES(4) RETIREMENT(5) TRUSTEE(6)
- --------------------------------------- ---------------- ---------------- ----------- ---------------
<S> <C> <C> <C> <C>
J. Miles Branagan...................... $1,180 $-0- 2,500 $84,250
Dr. Richard E. Caruso.................. 590 -0- -0- 57,250
Philip P. Gaughan...................... 610 -0- -0- 76,500
Linda Hutton Heagy..................... 655 -0- 2,500 38,417
Dr. Roger Hilsman...................... 1,205 -0- 1,250 91,250
R. Craig Kennedy....................... 770 -0- 2,500 92,625
Donald C. Miller....................... 720 -0- -0- 94,625
Jack E. Nelson......................... 770 -0- 2,500 93,625
David Rees............................. 1,180 -0- 1,250 83,250
Jerome L. Robinson..................... 770 -0- -0- 89,375
Lawrence J. Sheehan.................... 1,205 -0- -0- 91,250
Dr. Fernando Sisto..................... 1,300 -0- 2,500 98,750
Wayne W. Whalen........................ 700 -0- 2,500 93,375
William S. Woodside.................... 1,130 -0- 1,250 79,125
</TABLE>
- ---------------
(1) As indicated in the other explanatory notes, the amounts in the table relate
to the applicable trustees during the Fund's last fiscal year ended May 31,
1995 or the Fund Complex's last calendar year ended December 31, 1995.
(2) Mr. McDonnell, a trustee of the Fund, is an affiliated person of the Adviser
and is not eligible for compensation or retirement benefits from the
Registrant. Messrs. Gaughan, Kennedy, Miller, Nelson, Robinson and Whalen
were elected by shareholders to the Board of Trustees on July 21, 1995. Ms.
Heagy was appointed to the Board of Trustees on September 7, 1995. Mr.
McDonnell was appointed to the Board of Trustees on January 29, 1996. Mr.
Don G. Powell resigned from the Board of Trustees on August 15, 1996, and
did not receive any compensation or benefits from the Fund while a trustee
because he was an affiliated person of the Adviser. Messrs. Gaughan and Rees
retired from the Board of Trustees on January 26, 1996 and January 29, 1996,
respectively. Messrs. Caruso and Sheehan were removed from the Board of
Trustees effective September 7, 1995 and January 29, 1996, respectively.
(3) The amounts shown in this column are accumulated from the aggregate
compensation paid by the Fund during its fiscal year ended May 31, 1996
before deferral by the trustees under the Fund's deferred compensation plan.
The following trustees deferred all or a portion of their compensation from
the Fund during the fiscal year ended May 31, 1996: Dr. Caruso, $590; Mr.
Gaughan, $200; Ms. Heagy, $460; Mr. Kennedy, $510; Mr. Miller, $460; Mr.
Nelson, $510; Mr. Rees, $250; Mr. Robinson, $510; Dr. Sisto, $565; and Mr.
Whalen, $510. For trustees who have served more than one year and have
deferred account balances, the cumulative deferred compensation (including
interest) accrued with respect to each trustee
B-20
<PAGE> 185
from the Fund as of May 31, 1996 is as follows: Dr. Caruso, $4,719; Mr.
Gaughan, $207; Ms. Heagy, $469; Mr. Kennedy, $519; Mr. Miller, $467; Mr.
Nelson, $519; Mr. Rees, $250; Mr. Robinson, $519; Dr. Sisto, $4,238; and Mr.
Whalen, $519. The deferred compensation plan is described above the
Compensation Table. Amounts deferred are retained by the Fund and earn a
rate of return determined by reference to either the return on the common
shares of the Fund or other mutual funds in the Fund Complex as selected by
the respective Non-Affiliated Trustee. To the extent permitted by the 1940
Act, it is anticipated that the Fund will invest in securities of those
mutual funds selected by the Non-Affiliated Trustees in order to match the
deferred compensation obligation.
(4) The amounts in this column are zero because the Adviser has agreed to
reimburse the Fund for expenses related to the retirement plan through
December 31, 1996. Absent such reimbursement, the aggregate expenses of the
Fund for all trustees would have been approximately $5,200 for the Fund's
1996 fiscal year. The retirement plan is described above the Compensation
Table.
(5) The amounts shown in this column are the annual benefits payable per year
from the Fund for the 10-year period commencing in the year of such
trustee's retirement. The amounts were computed based on each trustee's
anticipated retirement date. The retirement plan is described above the
Compensation Table.
(6) The amounts shown in this column are accumulated from the aggregate
compensation paid by all of the mutual funds in the Fund Complex as of
December 31, 1995 before deferral by the trustees under the Fund's deferred
compensation plan. The following trustees deferred compensation paid by the
Fund and the Fund Complex during the calendar year ended December 31, 1995;
Dr. Caruso, $41,750; Mr. Gaughan, $57,750; Ms. Heagy, $8,750; Mr. Kennedy,
$65,875; Mr. Miller, $65,875; Mr. Nelson, $65,875; Mr. Rees, $8,375; Mr.
Robinson, $62,375; Dr. Sisto, $30,260; and Mr. Whalen, $65,625. The deferred
compensation earns a rate of return determined by reference to the return on
the common shares of the Fund or other mutual funds in the Fund Complex as
selected by the respective Non-Affiliated Trustee. To the extent permitted
by the 1940 Act, it is anticipated that the Fund will invest in securities
of those mutual funds selected by the Non-Affiliated Trustees in order to
match the deferred compensation obligation. The trustees' Fund Complex
compensation cap commenced on July 22, 1995 and covered the period between
July 22, 1995 and December 31, 1995. Compensation received prior to July 22,
1995 was not subject to the cap. For the calendar year ended December 31,
1995, while certain trustees received compensation over $84,000 in the
aggregate, no trustee received compensation in excess of the pro rata amount
of the Fund Complex cap for the period July 22, 1995 through December 31,
1995. In addition to the amounts set forth above, certain trustees received
lump sum retirement benefit distributions not subject to the cap in 1995
related to three mutual funds that ceased investment operations during 1995
as follows: Mr. Gaughan, $22,136; Mr. Miller, $33,205; Mr. Nelson, $30,851;
Mr. Robinson, $11,068; and Mr. Whalen, $27,332. The Adviser and its
affiliates also serve as investment adviser for other investment companies;
however, with the exception of Messrs. Powell, McDonnell and Whalen, the
trustees were not trustees of such investment companies. Combining the Fund
Complex with other investment companies advised by the Adviser and its
affiliates, Mr. Whalen received Total Compensation of $268,857 during the
calendar year ended December 31, 1995.
As of September 17, 1996, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund. As of September 17, 1996, no
trustee or officer of the Fund owns or would be able to acquire 5% or more of
the common stock of VK/AC Holding, Inc. Mr. McDonnell owns, or has the
opportunity to purchase, an equity interest in VK/AC Holding, Inc., the parent
company of VKAC and have entered into employment contracts (for a term of five
years) with VKAC.
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom, Chicago, Illinois.
INVESTMENT ADVISORY AND OTHER SERVICES
The Trust and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Trust 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 programs.
B-21
<PAGE> 186
The Adviser has entered into a subadvisory agreement (the "Sub-advisory
Agreement") with the Subadviser to assist it in performing its investment
advisory functions. The Subadviser will be primarily responsible for
recommending the allocation of investments among various international markets
and currencies; recommendation and selection of particular securities in the
international markets; and placement of portfolio transactions in the foreign
fixed-income markets. For its services, the Subadviser receives from the Adviser
a fee at the annual rate of 50% of the compensation received by the Adviser. The
Adviser and Subadviser are hereinafter sometimes referred to as the "Advisers".
The Adviser also furnishes the services of the Trust's President and such
other executive and clerical personnel as are necessary to prepare the various
reports and statements and conduct the Trust's day-to-day operations. The Trust,
however, bears the cost of its accounting services, which include maintaining
its financial books and records. The costs of such accounting services include
the salaries and overhead expenses of the Trust's Treasurer and the personnel
operating under his direction. Charges are allocated among the investment
companies advised or subadvised by the Adviser. A portion of these amounts were
paid to the Adviser or its parent in reimbursement of personnel, facilities and
equipment costs attributable to the provision of accounting services to the
Trust. The services provided by the Adviser are at cost. The Trust also pays
shareholder service agency fees, distribution fees, custodian fees, legal and
auditing fees, the costs of reports to shareholders, and all other ordinary
business expenses not specifically assumed by the Adviser. The Advisory
Agreement also provides that the Adviser shall not be liable to the Trust for
any actions or omissions if it acted without willful misfeasance, bad faith,
negligence or reckless disregard of its obligations.
Under the Advisory Agreement, the Trust pays to the Adviser, as
compensation for the services rendered, facilities furnished, and expenses paid
by it, a fee payable monthly, computed at the annual rate of .75% of average
daily net assets of the Fund.
The Fund's average net assets are determined by taking the average of all
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 fee payable to the Adviser will be reduced by any commissions, tender
solicitation and other fees, brokerage or similar payments received by the
Adviser or any other direct or indirect majority owned subsidiary of VK/AC
Holding, Inc. in connection with the purchase and sale of portfolio investments
less any direct expenses incurred by such subsidiary of VK/AC Holding, Inc., in
connection with obtaining such commissions, fees, brokerage or similar payments.
The Adviser agrees to use its best efforts to recapture tender solicitation fees
and exchange offer fees for the Trust's benefit and to advise the Trustees of
the Trust of any other commissions, fees, brokerage or similar payments which
may be possible for the Adviser or any other direct or indirect majority owned
subsidiary of VK/AC Holding, Inc. to receive in connection with the Fund's
portfolio transactions or other arrangements which may benefit the Fund.
The Advisory Agreement also provides that, in the event the ordinary
business expenses of the Company, calculated separately for each series, for any
fiscal year should exceed the most restrictive expense limitation applicable in
the states where the Trust's shares are qualified for sale, the compensation due
the Adviser will be reduced by the amount of such excess and that, if the amount
of such excess exceeds the Adviser's monthly compensation, the Adviser will pay
the Trust an amount sufficient to make up the deficiency, subject to
readjustment during the Trust's fiscal year. Ordinary business expenses do not
include (1) interest and taxes, (2) brokerage commissions, (3) certain
litigation and indemnification expenses as described in the Advisory Agreement,
and (4) payments made by the Fund pursuant to the distribution plans (described
below).
The most restrictive applicable limitation is 2 1/2% of the first $30
million, 2% of the next $70 million, and 1 1/2% of the remaining average net
assets. The Advisory Agreement also limits the extent to which the Adviser shall
be liable to the Trust for acts or omissions.
The Advisory Agreement has an initial term of two years and thereafter may
be continued from year to year if specifically approved at least annually (a)(i)
by the Trustees, or (ii) by vote of a majority of the Fund's outstanding voting
securities; and (b) by the 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.
B-22
<PAGE> 187
For the fiscal years ended May 31, 1994, 1995 and 1996 the Adviser received
$1,325,514, $1,568,102 and $1,254,494, respectively, in advisory fees from the
Fund. For such periods the Fund paid $27,600, $28,800 and $31,987, respectively,
for accounting services.
Pursuant to the Advisory Agreement and the Sub-advisory Agreement, the
Trust has agreed to indemnify the Adviser and the Adviser has agreed to
indemnify the Subadviser, respectively, against any taxes imposed by the United
Kingdom on the Trust for its investment related activities as contemplated in
each Agreement. Neither the Adviser nor the Subadviser may be indemnified,
however, with respect to any liabilities incurred by such party's 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
Agreements or to the Trust.
DISTRIBUTOR
The Distributor acts as the principal underwriter of the Trust's shares
pursuant to a written agreement (the "Underwriting Agreement"). The Distributor
has the exclusive right to distribute shares of the Fund through dealers. 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 Funds 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 sales literature and advertising. The
Underwriting Agreement is renewable from year to year if approved (a) by the
Trustees or 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 Underwriting Agreement or interested persons of any party, by
votes cast in person at a meeting called for such purpose. The Underwriting
Agreement provides that it will terminate if assigned, and that it may be
terminated without penalty by either party on 60 days' written notice. Total
underwriting commissions on the sale of shares of the Fund for the last three
fiscal periods is shown in the chart below. Advantage Capital Corporation is a
former affiliated dealer of the Fund.
<TABLE>
<CAPTION>
DEALER REALLOWANCES
AMOUNTS RECEIVED BY
TOTAL UNDERWRITING RETAINED ADVANTAGE CAPITAL
COMMISSIONS BY DISTRIBUTOR CORPORATION
------------------ -------------- -------------------
<S> <C> <C> <C>
Fiscal Year Ended May 31, 1996............. $178,914 $100,311 $ 25,468
Fiscal Year Ended May 31, 1995............. $148,018 $ 16,151 $ 15,083
Fiscal Year Ended May 31, 1994............. $879,237 $ 82,361 $ 131,022
</TABLE>
DISTRIBUTION AND SERVICE PLANS
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 an agreement (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."
B-23
<PAGE> 188
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 either 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
either 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.
For the year ended May 31, 1996, the Fund has paid expenses under the
Distribution Plan of $0, $825,419 and $106,064 for the Class A shares, Class B
shares and Class C shares, respectively; and the Fund paid $107,670, $275,139
and $35,355 under the Service Plan for Class A shares, Class B shares and Class
C shares, respectively.
TRANSFER AGENT
During the fiscal year ended May 31, 1996, 1995 and 1994, ACCESS,
shareholder service agent and dividend disbursing agent for the Fund, received
fees aggregating $357,968, $399,072 and $302,973 for these services. These
services are provided at cost plus a profit.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Advisers are responsible for decisions to buy and sell securities for
the Fund and for the placement of its portfolio business and the negotiation of
the commissions paid on such transactions. It is the policy of the Advisers to
seek the best security price available with respect to each transaction. In
over-the-counter transactions, orders are placed directly with a principal
market maker unless it is believed that a better price and execution can be
obtained by using a broker. Except to the extent that the Fund may pay higher
brokerage commissions for brokerage and research services (as described below)
on a portion of its transactions executed on securities exchanges, the Advisers
seek the best security price at the most favorable commission rate. In selecting
broker/dealers and in negotiating commissions, the Advisers consider the firm's
reliability, the quality of its execution services on a continuing basis and its
financial condition. When more than one firm is believed to meet these criteria,
preference may be given to firms which also provide research services to the
Fund or the Advisers. Consistent with the Rules of Fair Practice of the NASD and
subject to seeking best execution and such other policies as the Trustees may
determine, the Advisers may consider sales of shares of the Funds and of the
other Van Kampen American Capital mutual funds as a factor in the selection of
firms to execute portfolio transactions for the Funds.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, under certain circumstances, to cause an account
to pay a broker who supplies brokerage and research services, a commission for
effecting a securities transaction in excess of the amount of commission another
broker would have charged for effecting the transaction. Brokerage and research
services 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).
Pursuant to provisions of the Advisory Agreement and the Sub-advisory
Agreement, the Trustees have authorized the Advisers to cause the Fund to incur
brokerage commissions in an amount higher than the lowest available rate in
return for research services provided to the Advisers. The Advisers are of the
opinion that the continued receipt of supplemental investment research services
from brokers is essential to its
B-24
<PAGE> 189
provision of high quality portfolio management services to the Fund. The
Advisers undertake that such higher commissions will not be paid by the Fund
unless (a) the Advisers determine in good faith that the amount is reasonable in
relation to the services in terms of the particular transaction or in terms of
the Advisers' overall responsibilities with respect to the accounts they
exercise investment discretion, (b) such payment is made in compliance with the
provisions of Section 28(e) and other applicable state and federal laws, and (c)
in the opinion of the Advisers, the total commissions paid by the Fund are
reasonable in relation to the expected benefits to the Fund over the long term.
The investment advisory fee paid by the Fund under the Advisory Agreement is not
reduced as a result of the Advisers' receipt of research services.
The Advisers place portfolio transactions for other advisory accounts,
including other investment companies. Research services furnished by firms
through which the Fund effects its securities transactions may be used by the
Advisers in servicing all of their accounts; not all of such services may be
used by the Advisers in connection with the Fund. In the opinion of the
Advisers, the benefits from research services to each of the accounts (including
the Fund) managed by the Advisers cannot be measured separately. Because the
volume and nature of the trading activities of the accounts are not uniform, the
amount of commissions in excess of the lowest available rate paid by each
account for brokerage and research services will vary. However, in the opinion
of the Advisers, such costs to the Fund will not be disproportionate to the
benefits received by the Fund on a continuing basis.
The Advisers seek to allocate portfolio transactions equitably whenever
concurrent decisions are made to purchase or sell securities by 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 Advisers are 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 Advisers' brokerage practices are monitored on a quarterly basis by the
Brokerage Review Committee comprised of Trustees are not interested persons (as
defined in the 1940 Act) of the Advisers. Brokerage commissions paid by the Fund
on portfolio transactions for the fiscal years ended May 31, 1994, 1995 and 1996
totalled $4,000, $2,425 and $0, respectively.
Prior to December 20, 1994, the Fund placed brokerage transactions with
brokers who were considered affiliated persons of the Adviser's former parent,
The Travelers Inc. Such affiliated persons included Smith Barney Inc. ("Smith
Barney") and Robinson Humphrey, Inc. ("Robinson Humphrey"). Effective December
20, 1994, Smith Barney and Robinson Humphrey ceased to be affiliates of the
Adviser. The negotiated commission paid to an affiliated broker on any
transaction would be comparable to that payable to a non-affiliated broker in a
similar transaction.
No commissions were paid by the Fund to Robinson Humphrey and Smith Barney
during the fiscal years ended May 31, 1994 and 1995.
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined as of the close of the New York
Stock Exchange (the "Exchange") (currently 4:00 p.m., New York time) on each
business day on which the Exchange is open. The Exchange is currently closed on
weekends and on the following holidays: New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the Exchange is open). In
addition, European or Far Eastern securities trading generally or in a
particular country or countries may not take place on all business days in New
York. Furthermore, trading takes place on all business days in Japanese markets
on certain Saturdays and in various foreign markets on days which are not
business days in New York and on which the Fund's net asset value is not
calculated and on which the Fund does not effect sales, redemptions and
repurchases of its shares. There may be significant variations in
B-25
<PAGE> 190
the net asset value of Fund shares on days when net asset value is not
calculated and on which shareholders cannot redeem on account of changes in
prices of stocks traded in foreign stock markets.
The Fund calculates net asset value per share, and therefore effects sales,
redemptions and repurchases of its shares, as of the close of the Exchange once
on each day on which the Exchange is open. Such calculation does not take place
contemporaneously with the determination of the prices of the majority of the
portfolio securities used in such calculation. If events materially affecting
the value of such securities occur between the time when their price is
determined and the time when the Fund's net asset value is calculated, such
securities will be valued at fair value as determined in good faith by the
Trustees.
The assets belonging to the Class A shares, the Class B shares and the
Class C shares will be invested together in a single portfolio. The net asset
value of each class will be determined separately by subtracting the expenses
and liabilities allocated to that class from the assets belonging to that class
pursuant to an order issued by the SEC.
PURCHASE AND REDEMPTION OF SHARES
The following information supplements the section in the Fund's Prospectus
captioned "Purchase of Shares."
PURCHASE OF SHARES
Shares of the Fund are sold in a continuous offering and may be purchased
on any business day through authorized dealers.
ALTERNATIVE SALES ARRANGEMENTS
The Fund offers three classes of shares: Class A shares, Class B shares and
Class C shares. The three classes of shares each represent interests in the same
portfolio of investments of the Fund, have the same rights and are identical in
all respects, except that Class B shares and Class C shares bear the expenses of
the deferred sales arrangements, distribution fees, and any expenses (including
higher transfer agency costs) resulting from such sales arrangements, and have
exclusive voting rights with respect to the Rule 12b-1 distribution plan
pursuant to which the distribution fee is paid.
During special promotions, the entire sales charge on Class A shares may be
reallowed to dealers, and at such times dealers may be deemed to be underwriters
for purposes of the Securities Act of 1933.
INVESTMENTS BY MAIL
A Shareholder Investment Account may be opened by completing the
application accompanying the Prospectus and forwarding the application, through
the authorized dealer, to ACCESS, at P.O. Box 419319, Kansas City, Missouri
64141-6319. The account is opened only upon acceptance of the application by
ACCESS. The minimum initial investment of at least $500 per class of shares, in
the form of a check payable to the Fund, must accompany the application. This
minimum may be waived by the Distributor for plans involving continuing
investments. Minimum subsequent investments of at least $25 per class of shares
may be mailed directly to ACCESS. All such investments are made at the public
offering price of Fund shares next computed following receipt of payment by
ACCESS. Confirmations of the opening of an account and of all subsequent
transactions in the account are forwarded by ACCESS to the investor's authorized
dealer.
In processing applications and investments, ACCESS acts as agent for the
investor and for the authorized dealer named thereon, and also as agent for the
Distributor, in accordance with the terms of the Prospectus. If ACCESS ceases to
act as such, a successor company named by the Fund will act in the same
capacities so long as the account remains open.
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CUMULATIVE PURCHASE DISCOUNT
The reduced sales charges reflected in the Sales Charge Table as shown in
the Prospectus apply to purchases of Class A shares of the Fund where the
aggregate investment is $100,000 or more. For purposes of determining
eligibility for volume discounts, spouses and their minor children are treated
as a single purchaser, as is a director or other fiduciary purchasing for a
single fiduciary account. An aggregate investment includes all shares of the
Fund and all shares of certain other participating Van Kampen American Capital
mutual funds described in the Prospectus (the "Participating Funds"), which have
been previously purchased and are still owned, plus the shares being purchased.
The current offering price is used to determine the value of all such shares.
The same reduction is applicable to purchases under a Letter of Intent as
described in the next paragraph. THE DEALER MUST NOTIFY THE DISTRIBUTOR AT THE
TIME AN ORDER IS PLACED FOR A PURCHASE WHICH WOULD QUALIFY FOR THE REDUCED
CHARGE ON THE BASIS OF PREVIOUS PURCHASES. SIMILAR NOTIFICATION MUST BE MADE IN
WRITING WHEN SUCH AN ORDER IS PLACED BY MAIL. The reduced sales charge will not
be applied if such notification is not furnished at the time of the order. The
reduced sales charge will also not be applied should a review of the records of
the Distributor or ACCESS fail to confirm the representations concerning the
investor's holdings.
LETTER OF INTENT
Purchases of Class A shares of the Participating Funds described above
under "Cumulative Purchase Discount," made pursuant to the Letter of Intent and
still owned are also included in determining the applicable quantity discount. A
Letter of Intent permits an investor to establish a total investment goal to be
achieved by any number of investments over a 13-month period. Each investment
made during the period receives the reduced sales charge applicable to the
amount represented by the goal as if it were a single investment. Escrowed
shares totalling 5% of the dollar amount of the Letter of Intent are held by
ACCESS in the name of the shareholder. The effective date of a Letter of Intent
may be back-dated up to 90 days in order that any investments made during this
90-day period, valued at the investor's cost, can become subject to the Letter
of Intent. The Letter of Intent does not obligate the investor to purchase the
indicated amount. In the event the Letter of Intent goal is not achieved within
the 13-month period, the investor is required to pay the difference between
sales charges otherwise applicable to the purchases made during this period and
sales charges actually paid. Such payment may be made directly to the
Distributor or, if not paid, the Distributor will liquidate sufficient escrow
shares to obtain such difference. If the goal is exceeded in an amount which
qualifies for a lower sales charge, a price adjustment is made by refunding to
the investor in shares of the Fund, the amount of excess sales charges, if any,
paid during the 13-month period.
CHECK WRITING PRIVILEGE
To establish the check writing privilege for Class A shares, a shareholder
must complete the appropriate section of the application and the Authorization
for Redemption form and return both documents to ACCESS before checks will be
issued. All signatures on the authorization card must be guaranteed if any of
the signatures are persons not referenced in the account registration or if more
than 30 days have elapsed since the shareholder service agent established the
account on its records. Moreover, if the shareholder is a corporation,
partnership, trust, fiduciary, executor or administrator, the appropriate
documents appointing authorized signers (corporate resolutions, partnerships or
trust agreements) must accompany the authorization card. The documents must be
certified in original form, and the certificates must be dated within 60 days of
their receipt by ACCESS.
The privilege does not carry over the accounts established through
exchanges or transfer. It must be requested separately for each fund account.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A
For certain full service participant directed profit sharing and money
purchase plans and qualified 401(k) retirement plans and for investments in the
amount of $1,000,000 or more of Class A shares of the Fund ("Qualified
Purchaser"), the front-end sales charge will be waived and a contingent deferred
sales charge
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("CDSC -- Class A") of 1.00% is imposed in the event of certain redemptions
within one year of the purchase. If a CDSC -- Class A is imposed upon
redemption, the amount of the CDSC -- Class A will be equal to the lesser of one
percent of the net asset value of the shares at the time of purchase, or one
percent of the net asset value of the shares at the time of redemption.
The CDSC -- Class A will only be imposed if a Qualified Purchaser redeems
an amount which causes the value of the account to fall below the total dollar
amount of purchase payments made by the Qualified Purchaser without an initial
sales charge during the one year period prior to the redemption. The CDSC --
Class A will be waived in connection with redemptions by Qualified Purchasers
(e.g., in retirement plans qualified under Section 401(a) of the Code and
deferred compensation plans under Section 457 of the Code) required to obtain
funds to pay distributions to beneficiaries pursuant to the terms of the plans.
Such payments include, but are not limited to, death, disability, retirement, or
separation from service. No CDSC -- Class A will be imposed on exchanges between
funds. 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.
Cumulative Purchase Discounts and Letters of Intent apply to the net asset
value privilege. Also, in order to establish an amount of $1,000,000 or more, a
Qualified Purchaser may aggregate shares of Van Kampen American Capital Reserve
Fund and Van Kampen American Capital Tax Free Money Fund with shares of other
participating funds described as "Participating Funds" in the Prospectus.
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 and Class C shares will be subject to a contingent deferred sales
charge. The CDSC -- Class B and C may be waived on redemptions of Class B shares
and Class C shares in the circumstances described below:
(a) Redemption Upon Disability or Death
The Fund will waive the CDSC -- Class B and C on redemptions following the
death or disability of a Class B and Class C shareholder. An individual will be
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 disability or death, the CDSC -- Class B or C may be waived
where the descendent 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 or 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.
(b) 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 may be waived upon the tax-free rollover or transfer of assets
to another Retirement Plan invested in one or more of American Capital 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
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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), 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 may 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.
(c) Redemption Pursuant to a Fund's Systematic Withdrawal Plan
A shareholder may elect to participate in a systematic withdrawal plan
("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 may 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 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.
(d) Involuntary Redemptions of Shares in Accounts That Do Not Have the
Required Minimum Balance
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.
(e) Reinvestment of Redemption Proceeds in Shares of the Same Fund Within
120 Days After Redemption
A shareholder who has redeemed shares of a Fund may reinvest, 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 shares of
the Fund, provided that the reinvestment is effected within 120 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.
(f) 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.
REDEMPTION OF SHARES
Redemptions are not made on days during which the New York Stock Exchange
is closed, including those holidays listed under "Determination of Net Asset
Value." 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.
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EXCHANGE PRIVILEGE
The following supplements the discussion of "Shareholder
Services -- Exchange Privilege" in the Prospectus:
By use of the exchange privilege, the investor authorizes ACCESS to act on
telephonic, telegraphic or written exchange instructions from any person
representing himself to be the investor or the agent of the investor and
believed by ACCESS to be genuine. Van Kampen American Capital and its
subsidiaries, including ACCESS, 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 American Capital, ACCESS, nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. Van Kampen
American Capital, ACCESS, and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed.
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 his 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 mutual 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.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The Fund's policy is to distribute substantially all of its net investment
income at least monthly to shareholders of Class A shares, Class B shares and
Class C shares. The per share dividends on Class B shares and Class C shares
will be lower than the per share dividends on Class A shares as a result of the
distribution fees and higher transfer agency fees applicable to the Class B
shares and Class C shares. The Fund intends to distribute to shareholders any
net capital gains for each class at least annually. Net capital gains are the
excess, if any, of the Fund's net long-term capital gains over net short-term
capital losses, including capital losses carried forward from prior years in
accordance with the tax laws. Such net capital gains, if any, are distributed at
least once a year. All income dividends and capital gains distributions are
reinvested in shares of the Fund at net asset value without sales charge on the
record date, except that any shareholder may otherwise instruct the shareholder
service agent in writing and receive cash. Shareholders are informed as to the
sources of distributions at the time of payment.
The Fund expects to qualify as a regulated investment company ("RIC") under
Sections 851-855 of the Code. This means the Fund must pay all or substantially
all its taxable net investment income (which includes for this purpose net
short-term capital gains, but not net capital gains) to shareholders of Class A
shares, Class B shares and Class C shares and meet certain diversification and
other requirements. By qualifying as a regulated investment company, the Fund is
not subject to federal income taxes to the extent it distributes its net
investment income and net capital gains. If for any taxable year the Fund does
not qualify for the special
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tax treatment afforded RICs, all of its taxable income, including any net
capital gains, would be subject to tax at regular corporate rates (without any
deduction for distributions to shareholders) and all distributions out of
earnings and profits would be taxed to shareholders as ordinary income.
To the extent the Fund does not distribute to its shareholders during any
calendar year at least 98% of its ordinary taxable income for the 12 months
ended December 31 plus 98% of its capital gains net income for the 12 months
ended October 31 of such calendar year the Fund would be required to pay a 4.00%
excise tax. 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. The Fund intends to distribute
sufficient amounts to avoid liability for the excise tax.
Dividends from net investment income are taxable to shareholders as
ordinary income. To the extent certain requirements are met, a portion of
dividends paid from net investment income may qualify in the case of
corporations for the 70% dividends received deduction. To qualify for the
dividends received deduction, a corporate shareholder must hold the shares on
which the dividend is paid for more than 45 days.
Dividends and distributions declared payable to shareholders of record
after September 30 of any year and paid before February 1 of the following year
are considered taxable income to shareholders on the December 31 prior to the
date of payment even though paid in the next year.
Distributions from net capital gains are taxable to shareholders as
long-term capital gains, regardless of how long the shareholder has held Fund
shares. Any loss on the sale of Fund shares held for less than six months is
treated as a long-term capital loss to the extent of any long-term capital gain
distribution paid on such shares, subject to any exception that may be provided
by IRS regulations for losses incurred under certain systematic withdrawal
plans. All dividends and distributions are taxable to the shareholder whether or
not reinvested in shares. Shareholders are notified annually by the Fund as to
the federal tax status of dividends and distributions paid by the Fund unless
such amount is less than $10.00, in which case no notice is provided.
If shares of the Fund are sold or exchanged within 90 days of acquisition
and shares of the same or a related mutual fund are acquired, to the extent the
sales charge is reduced or waived on the subsequent acquisition, the sales
charge may not be used to determine the basis in the disposed shares for
purposes of determining gain or loss. To the extent the sales charge is not
allowed in determining gain or loss on the initial shares it is capitalized in
the basis of the subsequent shares.
Dividends to foreign shareholders, including shareholders who are
non-resident aliens, may be subject to a 30% United States withholding tax under
existing provisions of the Code unless a reduced rate of withholding or a
withholding exemption is provided under applicable treaty law. Non-resident
shareholders are urged to consult their own tax adviser concerning the
applicability of the United States withholding tax.
The Fund may qualify and may make an election permitted under Section 853
of the Code so that shareholders will be able to claim a credit or deduction on
their income tax returns for, and will be required to treat as part of the
amounts distributed to them, their pro rata portion of qualified taxes paid by
the Fund to foreign countries (which taxes relate primarily to investment
income). In such event, the shareholders of the Fund may claim a foreign tax
credit by reason of the Fund's election under Section 853 of the Code subject to
the certain limitations imposed by Section 904 of the Code. Alternatively, the
shareholders of the Fund may be able to claim a deduction for such taxes
provided, however, that under Section 63 of the Code, no deduction for foreign
taxes may be claimed by shareholders who do not itemize deductions on their
federal income tax returns. It should also be noted that a tax-exempt
shareholder, like other shareholders, will be required to treat as part of the
amounts distributed to it a pro rata portion of the income taxes paid by the
Fund to foreign countries. However, that income will generally be exempt from
United States taxation by virtue of such shareholder's tax-exempt status, and
such a shareholder will not be entitled to either a tax credit or a deduction
with respect to such income.
Some of the Fund's investment practices, including those involving certain
risk management transactions and foreign currency transactions, may be subject
to special provisions of the Code that, among other things, defer the use of
certain losses of the Fund and affect the holding period of the securities held
by the Fund and
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the character of the gains or losses realized by the Fund. These provisions may
also require the Fund to mark-to-market some of the positions in its portfolio
(i.e., treat them as if they were closed out), which may cause the Fund to
recognize income without receiving cash with which to make distributions in
amounts necessary to satisfy the distribution requirements for maintaining its
qualification as a RIC and avoiding federal income and excise taxes. Thus, these
provisions could affect the amount, timing and character of distributions to
shareholders. 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 secure as income each year a portion of this discount
and to distribute such income each year in order to maintain its qualification
as a RIC and to avoid income and excise taxes. In order to generate sufficient
cash to make distributions necessary to maintain its qualification as a RIC and
to avoid income and excise taxes, the Fund may have to dispose of securities
that it would otherwise have continued to hold.
The Fund's ability to liquidate portfolio securities may be limited by the
requirement for qualification as a regulated investment company that the Fund
derive less than 30% of its annual gross income from the sale or disposition of
any of the following assets held for less than three months: (i) stocks or
securities; (ii) options, futures or forward contracts (other than options,
futures or forward contracts on foreign currencies); (iii) foreign currencies
(or options, futures or forward contracts on foreign currencies), but only if
such currencies (or such options, futures or forward contracts) are not directly
related to the Fund's principal business of investing in stock or securities (or
options and futures with respect to stocks or securities).
BACK-UP WITHHOLDING
The Fund is required to withhold and remit to the United States Treasury
31% of (i) reportable taxable dividends and distributions and (ii) the proceeds
of any redemptions of Fund shares with respect to any shareholder who is not
exempt from withholding and who fails to furnish the Fund with a correct
taxpayer identification number, who fails to report fully dividend or interest
income to the Internal Revenue Service, or who fails to certify to the Fund that
he has provided a correct taxpayer identification number and that he is not
subject to withholding. (An individual's taxpayer identification number is his
social security number.) The 31% back-up withholding tax is not an additional
tax and may be credited against a taxpayer's regular federal income tax
liability.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury Regulations promulgated thereunder. The Code and these Treasury
Regulations are subject to change by legislative or administrative action either
prospectively or retroactively.
Dividends and capital gains distributions may also be subject to state and
local taxes. Shareholders are urged to consult their attorneys or tax advisers
regarding specific questions as to federal, state or local taxes.
FUND PERFORMANCE
The Fund's average annual total return (computed in the manner described in
the Prospectus) for Class A shares of the Fund for (i) the one year period
ending May 31, 1996 was (2.06%); (ii) the three years and six and one-half month
periods ending May 31, 1996 was 3.53%. The average annual total return (computed
in the manner described in the Prospectus) for Class B shares of the Fund for
(i) the one year period ending May 31, 1996 was (1.79%); (ii) the three years
and six and one-half month periods ending May 31, 1996 was 3.69%. The average
annual total return (computed in the manner described in the Prospectus) for
Class C shares of the Fund for (i) the one year period ending May 31, 1996 was
(1.24%); (ii) the two year and one and one-half month period (the initial
offering of Class C shares) ending May 31, 1996 was 3.54%. These results are
based on historical earnings and asset value fluctuations and are not intended
to indicate future performance. Such information should be considered in light
of the Fund's investment objective and policies as well as the risks incurred by
the Fund's investment practices.
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The annualized current yield for Class A shares, Class B shares and Class C
shares of the Fund for the 30-day period ended May 31, 1996, was 4.47%, 3.92%
and 3.90%, respectively. The yield for Class A, Class B and Class C shares is
not fixed and will fluctuate in response to prevailing interest rates and the
market value of portfolio securities, and as a function of the type of
securities owned by the Fund, portfolio maturity and the Fund's expenses.
Yield and total return are computed separately for Class A shares, Class B
shares and Class C shares.
The following information is not included in the Annual Report. This
example assumes a purchase of Class A shares of the Fund aggregating less than
$100,000 subject to the schedule of sales charges set forth in the Prospectus at
a price based upon the initial net asset value of Class A shares of the Fund.
<TABLE>
<CAPTION>
MAY 31,
1996
-------
<S> <C>
Net Asset Value Per Class A Share $8.24
Class A Per Share Sales Charge -- 4.75%
of offering price (4.99% of net asset value per share) $ .41
-------
Class A Per Share Offering Price to the Public $8.65
</TABLE>
From time to time, in reports or other communications, or in advertising or
sales material, the Fund may, illustrate in graph or chart form, or otherwise,
total returns of international stock markets as compared with the performance of
the United States market, over a ten year period: 1985 -- Austria - 173.50%,
US - 27.28%, Singapore - (-24.15%); 1986 -- Spain - 112.89%, US - 13.38%,
Norway - (-5.14%); 1987 -- Japan - 41.26%, U.S. - .61%, Germany - (-26.28%);
1988 -- Indonesia - 227.82%, U.S. - 11.64%, Turkey - (-62.73%);
1989 -- Turkey - 471.59%, US - 26.90%, Jordan - (-19.28%);
1990 -- Mexico - 46.02%, US - (-5.57%), Brazil - (-65.53%);
1991 -- Argentina - 401.59%, US - 27.14%, Indonesia - (-46.43%);
1992 -- Philippines - 37.09%, US - 4.17%, Turkey - (-49.86%);
1993 -- Turkey - 207.75%, US - 7.02%; 1994 -- Brazil - 63.82%, US - (-.85%),
Turkey - (-52.56%).
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;
and (3) in reports or other communications to shareholders or in advertising
material, illustrate the benefits of compounding at various assumed rates of
return. Such illustrations may be in the form of charts or graphs and will not
be based on historical returns experienced by the Fund.
From time to time marketing materials may provide a portfolio manager
update, an adviser update and/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, such as duration, maturity, coupon, NAV, rating breakdown, AMT
exposure and number of issues in the portfolio. Materials may also mention how
Van Kampen American Capital believes the Fund compares relative to other Van
Kampen American Capital funds. Materials may also discuss the Dalbar Financial
Services study from 1984 to 1994 which studied investor cash flow into and out
of all types of mutual funds. The ten year study found that investors who bought
mutual fund shares and held such shares outperformed investors who bought and
sold. The Dalbar study conclusions were consistent regardless of if shareholders
purchased their funds in direct or sales force distribution channels. The study
showed that investors working with a professional representative have tended
over time to earn higher returns than those who invested directly. The Fund will
also be marketed on the Internet.
OTHER INFORMATION
CUSTODY OF ASSETS -- State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110 serves as Custodian for the Trust. The custodian has
entered into agreements with foreign sub-custodians approved by the Trustees
pursuant to Rule 17f-5 under the 1940 Act. The Custodian and sub-custodians
generally domestically, and frequently abroad, do not actually hold certificates
for the securities in
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<PAGE> 198
their custody, but instead have book records with domestic and foreign
securities depositories, which in turn have book records with the transfer
agents of the issuers of the securities.
SHAREHOLDER REPORTS -- Semiannual statements are furnished to shareholders, and
annually such statements are audited by the independent accountants.
INDEPENDENT ACCOUNTANTS -- Price Waterhouse LLP, 1201 Louisiana, Houston, Texas
77002, the independent accountants for the Fund, performs an annual audit of the
Fund's financial statements.
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<PAGE> 199
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
In our opinion, the accompanying statement of assets and liabilities, includ-
ing the portfolio of investments, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Van Kampen American Capital Global
Government Securities Fund (the "Fund") at May 31, 1996, and the results of
its operations, the changes in its net assets and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of
the Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence support-
ing the amounts and disclosures in the financial statements, assessing the ac-
counting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at May 31, 1996 by corre-
spondence with the custodian and brokers and the application of alternative
procedures where confirmations from brokers were not received, provide a rea-
sonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
July 16, 1996
B-35
<PAGE> 200
PORTFOLIO OF INVESTMENTS
May 31, 1996
<TABLE>
<CAPTION>
Par
Amount
(000) Description Coupon Maturity Market Value
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES AGENCY & GOVERNMENT
OBLIGATIONS 98.3%
$ 7,532 Government National Mtg
Association, Pools......... 8.00% various $ 7,551,364
*80,000 Treasury Notes............. 8.50 04/15/97 81,825,600
*50,000 Treasury Notes............. 8.75 10/15/97 51,758,000
------------
TOTAL UNITED STATES AGENCY
& GOVERNMENT OBLIGATIONS
(Cost $142,830,525)........ 141,134,964
------------
REPURCHASE AGREEMENT 2.8%
4,010 State Street Bank & Trust
Co., dated 5/31/96
(collateralized by U.S.
Government obligations in a
pooled cash account)
repurchase proceeds
$4,011,761 (Cost
$4,010,000)................ 5.27 06/03/96 4,010,000
------------
TOTAL INVESTMENTS (Cost $146,840,525) 101.1%.................................... 145,144,964
OTHER ASSETS AND LIABILITIES, NET (1.1%)........................................ (1,572,225)
------------
NET ASSETS 100%................................................................. $143,572,739
------------
*Securities placed as collateral for forward commitments (see Note 1D).
FORWARD PURCHASE COMMITMENTS
<CAPTION>
Par Amount Unrealized
(000) Appreciation
(Local Currency) Description Coupon Maturity (Depreciation)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
63,000 DENMARK (Kingdom)
settlement 7/05/96......... 8.00% 03/15/06 $ 150,311
17,000 NETHERLANDS (Government)
settlement 7/15/96......... 7.00 06/15/05 227,852
1,500,000 SPAIN (Kingdom of)
settlement 7/05/96......... 10.15 01/31/06 310,537
97,000 SWEDEN (Kingdom of)
settlement 7/05/96......... 6.00 02/09/05 272,191
---------
960,891
---------
16,500 GERMANY (Treuhandanstalt)
settlement 6/20/96......... 6.75 05/13/04 (31,732)
UNITED STATES
8,000 FHLMC, settlement 6/13/96.. 7.50 12/01/99 (147,420)
32,000 Treasury Note, settlement
8/08/96.................... 5.75 08/15/03 (288,431)
---------
(467,583)
---------
Total Forward Purchase Commitments (Obligation $94,536,709).... $ 493,308
----------
</TABLE>
B-36 See Notes to Financial Statements
<PAGE> 201
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at market value (Cost $146,840,525)................ $145,144,964
Foreign currency, at market value (Cost $51,614)................ 50,036
Cash............................................................ 6,349
Receivable for offsetting forward bond commitments.............. 25,392,728
Unrealized appreciation of forward commitments and currency
exchange contracts.............................................. 2,944,065
Interest receivable............................................. 1,484,356
Receivable for Fund shares sold................................. 32,703
Other assets and receivables.................................... 1,169
------------
Total Assets............................................... 175,056,370
------------
LIABILITIES
Payable for offsetting forward bond commitments................. 25,510,859
Unrealized depreciation of forward commitments and currency
exchange contracts.............................................. 4,749,401
Payable for Fund shares purchased............................... 539,046
Distributions payable........................................... 338,609
Due to Distributor.............................................. 102,158
Due to Adviser.................................................. 88,189
Deferred Trustees' compensation................................. 13,876
Payable to shareholder service agent............................ 29,583
Accrued expenses and other liabilities.......................... 111,910
------------
Total Liabilities.......................................... 31,483,631
------------
NET ASSETS, equivalent to $7.92 per share for Class A, $7.96 per
share for Class B, and $7.91 per share for Class C shares.. $143,572,739
------------
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par; 4,595,368 Class A,
12,261,711 Class B, and 1,201,697 Class C shares
outstanding................................................ $ 180,588
Capital surplus................................................. 176,425,841
Accumulated net realized loss on securities..................... (29,171,823)
Unrealized appreciation (depreciation) of securities
Investments................................................ (1,695,561)
Forward commitments........................................ 493,308
Offsetting forward commitments............................. 174,527
Foreign currency........................................... (1,578)
Forward currency exchange contracts........................ (2,473,171)
Other foreign denominated assets and liabilities........... (4,138)
Accumulated net investment loss................................. (355,254)
------------
NET ASSETS...................................................... $143,572,739
------------
</TABLE>
B-37 See Notes to Financial Statements
<PAGE> 202
STATEMENT OF OPERATIONS
Year Ended May 31, 1996
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest.......................................................... $13,679,934
-----------
EXPENSES
Management fees................................................... 1,254,494
Shareholder service agent's fees and expenses..................... 457,689
Accounting services............................................... 31,987
Service fees--Class A............................................. 107,670
Distribution and service fees--Class B............................ 1,100,558
Distribution and service fees--Class C............................ 141,419
Trustees' fees and expenses....................................... 40,082
Audit fees........................................................ 55,405
Custodian fees.................................................... 150,117
Legal fees........................................................ 5,301
Reports to shareholders........................................... 49,951
Registration and filing fees...................................... 63,425
Organization expenses............................................. 2,807
Miscellaneous..................................................... 17,115
Retirement plan expense reimbursement (see Note 4)................ (5,200)
-----------
Total expenses................................................... 3,472,820
-----------
NET INVESTMENT INCOME............................................. 10,207,114
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain (loss) on securities
Investments and forward commitments.............................. 5,456,144
Futures contracts................................................ 357,264
Foreign currency................................................. (560,266)
Forward currency exchange contracts.............................. (4,709,213)
Net unrealized appreciation (depreciation) of securities during
the period
Investments...................................................... (3,317,255)
Forward purchase commitments..................................... (2,590,003)
Foreign currency................................................. (128)
Forward currency exchange contracts.............................. (1,028,680)
Offsetting forward bond commitments.............................. 569,879
Other foreign denominated assets and liabilities................. (1,653)
-----------
NET REALIZED AND UNREALIZED LOSS ON SECURITIES.................... (5,823,911)
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $ 4,383,203
-----------
</TABLE>
B-38 See Notes to Financial Statements
<PAGE> 203
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended May 31
--------------------------
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period................... $189,779,616 $233,762,956
------------ ------------
OPERATIONS
Net investment income............................ 10,207,114 13,818,216
Net realized gain (loss) on securities........... 543,929 (13,654,555)
Net unrealized appreciation (depreciation) of se-
curities during the period...................... (6,367,840) 12,319,494
------------ ------------
Increase in net assets resulting from operations. 4,383,203 12,483,155
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME
Class A.......................................... (2,860,078) (4,034,848)
Class B.......................................... (6,497,549) (8,907,916)
Class C.......................................... (822,565) (1,423,252)
------------ ------------
(10,180,192) (14,366,016)
------------ ------------
NET EQUALIZATION DEBITS........................... -- (902,657)
------------ ------------
CAPITAL TRANSACTIONS
Proceeds from shares sold
Class A.......................................... 7,095,429 8,153,327
Class B.......................................... 12,820,664 19,270,979
Class C.......................................... 2,226,618 3,154,166
------------ ------------
22,142,711 30,578,472
------------ ------------
Proceeds from shares issued for distributions
reinvested
Class A.......................................... 1,763,615 2,361,328
Class B.......................................... 3,699,958 5,045,660
Class C.......................................... 471,340 875,506
------------ ------------
5,934,913 8,282,494
------------ ------------
Cost of shares redeemed
Class A.......................................... (18,784,532) (24,576,393)
Class B.......................................... (38,363,849) (46,690,375)
Class C.......................................... (11,339,131) (8,792,020)
------------ ------------
(68,487,512) (80,058,788)
------------ ------------
Decrease in net assets resulting from capital
transactions..................................... (40,409,888) (41,197,822)
------------ ------------
DECREASE IN NET ASSETS............................ (46,206,877) (43,983,340)
------------ ------------
NET ASSETS, end of period (including accumulated
net investment loss of $355,254 and undistributed
net investment income of $186,959, respectively).. $143,572,739 $189,779,616
------------ ------------
</TABLE>
B-39 See Notes to Financial Statements
<PAGE> 204
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each of
the
periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------
November 15,
Year Ended May 31 1991(/1/) to
------------------------------- May 31,
1996 1995 1994 1993(/2/) 1992(/2/)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $8.24 $8.26 $9.01 $9.07 $9.43
----- ----- ------ ----- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income............... .69 .72 .92 .98 .62
Expenses........................ (.13) (.12) (.14) (.135) (.03)
----- ----- ------ ----- ------
Net investment income............. .56 .60 .78 .845 .59
Net realized and unrealized gain
(loss) on securities.............. (.328) (.016) (.5715) (.123) (.5245)
----- ----- ------ ----- ------
Total from investment operations.. .232 .584 .2085 .722 .0655
----- ----- ------ ----- ------
LESS DISTRIBUTIONS FROM (See Note
1i)
Net investment income........... (.552) (.604) (.726) (.782) (.4255)
Excess of book-basis net realized
gain on securities ............. -- -- (.2325) -- --
----- ----- ------ ----- ------
Total distributions............... (.552) (.604) (.9585) (.782) (.4255)
----- ----- ------ ----- ------
Net asset value, end of period ... $7.92 $8.24 $8.26 $9.01 $9.07
----- ----- ------ ----- ------
TOTAL RETURN(/3/)................. 2.81% 7.52% 1.89% 8.47% .71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(millions)........................ $36.4 $47.9 $62.8 $36.1 $25.0
Average net assets (millions)..... $43.1 $54.5 $55.6 $32.4 $14.0
Ratios to average net assets
(annualized)(/4/)
Expenses........................ 1.51% 1.42% 1.45% 1.52% .50%
Expenses, without expense
reimbursement................... 1.52% -- -- -- 1.29%
Net investment income........... 6.66% 7.18% 8.12% 9.33% 10.41%
Net investment income, without
expense reimbursement........... 6.65% -- -- -- 9.62%
Portfolio turnover rate........... 239% 209% 236% 301% 289%
</TABLE>
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) See Notes 2 and 4.
B-40 See Notes to Financial Statements
<PAGE> 205
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each
of the periods indicated.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
---------------------------------------------
November 15
Year Ended May 31 1991(/1/)
--------------------------------- to May 31,
1996 1995 1994 1993(/2/) 1992(/2/)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $8.28 $8.30 $9.04 $9.09 $9.43
------ ------ ------ ----- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income........................... .68 .71 .90 .98 .605
Expenses.................................... (.19) (.18) (.21) (.20) (.055)
------ ------ ------ ----- ------
Net investment income......................... .49 .53 .69 .78 .55
Net realized and unrealized gain (loss) on
securities.................................. (.318) (.006) (.5435) (.12) (.5005)
------ ------ ------ ----- ------
Total from investment operations.............. .172 .524 .1465 .66 .0495
------ ------ ------ ----- ------
LESS DISTRIBUTIONS FROM (See Note 1i)
Net investment income....................... (.492) (.544) (.654) (.71) (.3895)
Excess of book-basis net realized gain on
securities ................................. -- -- (.2325) -- --
------ ------ ------ ----- ------
Total distributions........................... (.492) (.544) (.8865) (.71) (.3895)
------ ------ ------ ----- ------
Net asset value, end of period................ $7.96 $8.28 $8.30 $9.04 $9.09
------ ------ ------ ----- ------
TOTAL RETURN(/3/)............................. 2.06% 6.69% 1.07% 7.95% .53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions).......... $ 97.7 $123.4 $147.5 $56.7 $22.5
Average net assets (millions)................. $110.1 $133.3 $107.1 $39.6 $11.0
Ratios to average net assets (annualized)(/4/)
Expenses.................................... 2.27% 2.18% 2.22% 2.19% 1.02%
Expenses, without expense reimbursement..... 2.27% -- -- -- 1.82%
Net investment income....................... 5.91% 6.41% 7.30% 8.66% 9.86%
Net investment income, without expense
reimbursement............................... 5.91% -- -- -- 9.07%
Portfolio turnover rate....................... 239% 209% 236% 301% 289%
</TABLE>
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) See Notes 2 and 4.
B-41 See Notes to Financial Statements
<PAGE> 206
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
------------------------------------
April 12,
Year Ended May 31 1993(/1/) to
--------------------- May 31,
1996 1995 1994(/2/) 1993(/2/)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period...... $8.22 $8.25 $ 8.99 $9.00
----- ----- ------ -----
INCOME FROM INVESTMENT OPERATIONS
Investment income....................... .64 .69 .83 .12
Expenses................................ (.18) (.18) (.20) (.025)
----- ----- ------ -----
Net investment income..................... .46 .51 .63 .095
Net realized and unrealized gain (loss) on
securities................................ (.278) .004 (.4835) .011
----- ----- ------ -----
Total from investment operations.......... .182 .514 .1465 .106
----- ----- ------ -----
LESS DISTRIBUTIONS FROM (See Note 1i)
Net investment income................... (.492) (.544) (.654) (.116)
Excess of book-basis net realized gain on
securities............................ -- -- (.2325) --
----- ----- ------ -----
Total distributions....................... (.492) (.544) (.8865) (.116)
----- ----- ------ -----
Net asset value, end of period............ $7.91 $8.22 $ 8.25 $8.99
----- ----- ------ -----
TOTAL RETURN(/3/)......................... 2.20% 6.60% 1.19% 8.78%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)...... $ 9.5 $18.5 $ 23.5 $ 1.4
Average net assets (millions)............. $14.1 $21.2 $ 14.1 $ 0.4
Ratios to average net assets
(annualized)(/4/)
Expenses................................ 2.27% 2.18% 2.22% 2.63%
Expenses, without expense reimbursement. 2.27% -- -- --
Net investment income................... 5.91% 6.42% 7.13% 10.06%
Net investment income, without expense
reimbursement........................... 5.91% -- -- --
Portfolio turnover rate................... 239% 209% 236% 301%
</TABLE>
(1) Commencement of offering of sales.
(2) Based on average month-end shares outstanding.
(3) Total return for a period of less than one year is not annualized. Total
return does not consider the effect of sales charges.
(4) See Note 4.
B-42 See Notes to Financial Statements
<PAGE> 207
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital World Portfolio Series Trust (formerly American
Capital World Portfolio Series, Inc.) is registered under the Investment Com-
pany Act of 1940, as amended, as an open-end, non-diversified management in-
vestment company which offers shares in two separate portfolios, one of which
is described in this report: Van Kampen American Capital Global Government Se-
curities Fund (the "Fund"). The investment objective of the Fund is to seek to-
tal return through a managed balance of foreign and domestic debt securities.
Investments in foreign securities involve certain risks not ordinarily associ-
ated with investments in securities of domestic issuers, including fluctuations
in foreign exchange rates, future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental laws or
restrictions.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prepa-
ration of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the amounts reported. Actual amounts may differ from the estimates.
A. INVESTMENT VALUATIONS-Securities listed or traded on a national securities
exchange are valued at the mean between the bid and asked prices. Unlisted se-
curities, and listed securities for which prices are not available, are valued
at prices of comparable securities. Futures contracts are valued at the last
sale price or, if no sales are reported, at the mean between the bid and asked
prices. Securities for which market quotations are not readily available are
valued at fair value under a method approved by the Board of Trustees.
Short-term investments with a maturity of 60 days or less when purchased
are valued at amortized cost, which approximates market value. Short-term
investments with a maturity of more than 60 days when purchased are valued
based on market quotations until the remaining days to maturity become less
than 61 days. From such time, until maturity, the investments are valued at
amortized cost. U.S. Treasury Notes are held in the Fund chiefly to support
foreign future or forward positions.
B. FOREIGN CURRENCY TRANSLATION-The market values of foreign securities, for-
ward currency contracts and other assets and liabilities stated in foreign cur-
rency are translated into U.S. dollars based on quoted exchange rates as of
noon Eastern Time. The cost of securities is determined using historical ex-
change rates. Income and expenses are translated at prevailing exchange rates
when accrued or incurred. Gains and losses on the sale of securities are not
segregated for financial reporting purposes between amounts arising from
changes in ex-
B-43
<PAGE> 208
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
change rates and amounts arising from changes in the market prices of securi-
ties. Realized gain and loss on foreign currency includes the net realized
amount from the sale of currency and the amount realized between trade date
and settlement date on security transactions.
C. FORWARD CURRENCY EXCHANGE CONTRACTS-The Fund enters into forward currency
exchange contracts in order to hedge its exposure to changes in foreign cur-
rency exchange rates on its foreign portfolio holdings or to settle transac-
tions. A forward currency exchange contract is a commitment to buy or to sell
a foreign currency at a set price on a future date. Changes in the value of
the contract are recognized by marking the contract to market on a daily basis
to reflect current currency translation rates. The Fund realizes gains or
losses at the time the forward currency exchange contract is closed. Risks may
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts, and from unanticipated movements in the value of a
foreign currency relative to the U.S. dollar.
D. FUTURES CONTRACTS AND FORWARD COMMITMENTS-General--Transactions in futures
contracts and forward commitments are utilized in strategies to manage the
market risk of the Fund's investments. The purchase of a futures contract or
forward commitment increases the impact on net asset value of changes in the
market price of investments. Forward commitments have a risk of loss due to
nonperformance of counterparties. There is also a risk that the market move-
ment of such instruments may not be in the direction forecasted. Note 3--In-
vestment Activity contains additional information.
Futures Contracts--Upon entering into futures contracts, the Fund
maintains securities with a value equal to its obligation under the futures
contracts in a segregated account with its custodian. A portion of these
funds is held as collateral in an account in the name of the broker, the Fund's
agent in acquiring the futures position. During the period the futures
contract is open, changes in the value of the contract ("variation margin") are
recognized by marking the contract to market on a daily basis. As unrealized
gains or losses are incurred, variation margin payments are received from or
made to the broker. Upon the closing or cash settlement of a contract, gains
or losses are realized. The cost of securities acquired through delivery under
a contract is adjusted by the unrealized gain or loss on the contract.
Forward Commitments--The Fund trades certain securities under the terms of
forward commitments, whereby the settlement for payment and delivery occurs at
a specified future date. Forward commitments are privately negotiated transac-
tions between the Fund and dealers. Upon executing a forward commitment and
during the period of obligation, the Fund maintains collateral of cash or se-
curities in a segregated account with its custodian in an amount sufficient to
relieve the obligation. If the intent of the Fund is to accept delivery of a
security traded under a forward purchase commitment, the commitment is re-
corded as a long-
B-44
<PAGE> 209
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
term purchase. For forward purchase commitments for which security settlement
is not intended by the Fund and all forward sale commitments, changes in the
value of the commitment are recognized by marking the commitment to market on a
daily basis. During the commitment, the Fund may either resell or repurchase
the forward commitment and enter into a new forward commitment, the effect of
which is to extend the settlement date. In addition, the Fund may close such
forward commitments prior to delivery. Gains and losses are realized upon the
ultimate closing or cash settlement of forward commitments.
E. REPURCHASE AGREEMENTS-A repurchase agreement is a short-term investment in
which the Fund acquires ownership of a debt security and the seller agrees to
repurchase the security at a future time and specified price. The Fund may in-
vest independently in repurchase agreements, or transfer uninvested cash bal-
ances into a pooled cash account along with other investment companies advised
by Van Kampen American Capital Asset Management, Inc. (the "Adviser"), the
daily aggregate of which is invested in repurchase agreements. Repurchase
agreements are collateralized by the underlying debt security. The Fund will
make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller is re-
quired to maintain the value of the underlying security at not less than the
repurchase proceeds due the Fund.
F. FEDERAL INCOME TAXES-No provision for federal income taxes is required be-
cause the Fund has elected to be taxed as a "regulated investment company" un-
der the Internal Revenue Code and intends to maintain this qualification by
annually distributing all of its taxable net investment income and taxable net
realized gains on investments to its shareholders. It is anticipated that no
distributions of capital gains will be made until tax basis capital loss
carryforwards expire or are offset by net realized capital gains.
The net realized capital loss carryforward of approximately $29.0 million
for federal income tax purposes at the end of the period may be utilized to
offset future capital gains until expiration in 2004. Additionally,
approximately $1.4 million of post October losses are deferred for tax purposes
to the 1997 fiscal year.
G. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME-Investment transac-
tions are accounted for on the trade date. Realized gains and losses on invest-
ments are determined on the basis of identified cost. Interest income is
accrued daily. Under the applicable foreign tax laws, a withholding tax may be
imposed on interest and realized gains generated from foreign investments.
B-45
<PAGE> 210
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
H. DEBT DISCOUNT AND PREMIUM-The Fund accounts for discounts and premiums on
the same basis as is used for federal income tax reporting. Accordingly, orig-
inal issue discounts on debt securities purchased are amortized over the life
of the security. Premiums on debt securities are not amortized. Market dis-
counts are recognized at the time of sale as realized gains for book purposes
and ordinary income for tax purposes.
I. DIVIDENDS AND DISTRIBUTIONS-Dividends and distributions to shareholders are
recorded on the record date. The Fund distributes tax basis earnings in accor-
dance with the minimum distribution requirements of the Internal Revenue Code,
which may differ from generally accepted accounting principles. Such dividends
or distributions may exceed financial statement earnings.
J. EQUALIZATION-At May 31, 1995, the Fund discontinued the accounting practice
of equalization, which it had used since its inception. Equalization is a
practice whereby a portion of the proceeds from sales and costs of redemptions
of Fund shares, equivalent on a per-share basis to the amount of the undis-
tributed net investment income, is charged or credited to undistributed net
investment income.
The balance of equalization included in undistributed net investment
income at the date of change, which was $3,058,279, was reclassified to
capital surplus. Such reclassification had no effect on net assets, results
of operations, or net asset value per share of the Fund.
K. ORGANIZATION COSTS-Organization expenses of approximately $13,000 were de-
ferred and are being amortized over a five-year period ending December, 1996.
NOTE 2--MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager to the Fund. The Adviser has entered
into a subadvisory agreement with John Govett & Co., Ltd. (the "Subadviser"),
who provides advisory services to the Fund and the Adviser with respect to the
Fund's investments in foreign securities. Management fees are calculated
monthly, based on the average daily net assets of the Fund at the annual rate
of .75%. The Adviser pays 50% of its management fee to the Subadviser. From
time to time, the Adviser may elect to reimburse the Fund for a portion of its
management fee. The reimbursement is voluntary and may be discontinued at any
time without prior notice.
At the annual meeting in July 1995, Fund shareholders approved the
reorganization of the Fund as a Delaware business trust and an expansion of
the Board from eight to fourteen trustees (the "Consolidation"). Van
Kampen American Capital ("VKAC") agreed to initially bear the expenses,
aggregating $28,934, relating to the Consolidation. However, if during the
five-
B-46
<PAGE> 211
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
year period ending July, 2000, the Fund realizes a benefit from the Consolida-
tion, the Fund will reimburse VKAC the amount of the savings, not to exceed
the amount of the Consolidation expenses. During the period, savings of $9,774
were realized by the Fund, and reimbursed to VKAC.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as the
Fund's shareholder service agent. These services are provided at cost plus a
profit. For the period, such fees aggregated $357,968.
The Fund was advised that Van Kampen American Capital Distributors, Inc.
(the "Distributor") and Advantage Capital Corp. (the "Retail Dealer"), both
affiliates of the Adviser, received $100,311 and $25,468, respectively, as
their portion of the commissions charged on sales of Fund shares during the
period. As of January 2, 1996, the Retail Dealer was no longer an affiliate of
the Adviser.
Under the Distribution Plans, each class of shares pays up to .25% per
annum of its average net assets to reimburse the Distributor for expenses and
service fees incurred. Class B and C shares pay an additional fee of up to
.75% per annum of their average net assets to reimburse the Distributor for its
distribution expenses. Actual distribution expenses incurred by the Distribu-
tor for Class B and C shares may exceed the amounts reimbursed to the Distrib-
utor by the Fund. At the end of the period, the unreimbursed expenses incurred
by the Distributor under the Class B and C plans aggregated approximately $4.5
million and $185,000, respectively, and may be carried forward and reimbursed
through either the collection of the contingent deferred sales charges from
share redemptions or, subject to the annual renewal of the plans, future Fund
reimbursements of distribution fees.
Legal fees during the period were for services rendered by former counsel
of the Fund, O'Melveny & Myers. A former trustee was of counsel to that
firm. Certain officers and trustees of the Fund are officers and trustees of
the Adviser, the Distributor, and the shareholder service agent.
NOTE 3--INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments and forward commitments, were
$429,931,413 and $428,936,479, respectively.
For federal income tax purposes, the identified cost of investments and
foreign currency owned at the end of the period was $146,896,514. Net unrealized
and gross depreciation of investments aggregated $1,701,514. There was no
gross unrealized appreciation of investments at the end of the period.
At the end of the period, the Fund held the following forward currency ex-
change contracts and offsetting forward bond commitments.
B-47
<PAGE> 212
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
FORWARD CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
Settlement U.S. Dollar Unrealized Unrealized
Currency (000) Date Value Appreciation (Depreciation)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRALIAN DOLLAR
15,000 (payable).......................... 06/20/96 $11,958,023 $ 594,023 $ --
15,000 (receivable)....................... 06/20/96 11,958,023 -- (573,023)
DANISH KRONE
63,000 (payable).......................... 06/20/96 10,700,819 -- (362,488)
DEUTSCHE MARK
23,364 (payable).......................... 06/20/96 17,296,756 -- (803,244)
23,364 (receivable)....................... 06/20/96 17,296,756 663,909 --
16,900 (payable).......................... 06/20/96 11,087,471 -- (415,779)
16,900 (receivable)....................... 06/20/96 11,087,471 201,774 --
FRENCH FRANC
54,742 (payable).......................... 06/20/96 10,598,515 -- (401,485)
54,742 (receivable)....................... 06/20/96 10,598,515 243,533 --
JAPANESE YEN
2,015,910 (payable)....................... 06/20/96 18,718,812 -- (781,188)
NETHERLANDS GUILDER
17,714 (payable).......................... 06/20/96 10,390,189 -- (609,811)
SPANISH PESETA
1,500,000 (payable)....................... 06/20/96 11,643,160 -- (334,800)
SWEDISH KRONA
80,000 (payable).......................... 06/20/96 11,901,339 105,408 --
------------ ---------- -----------
TOTAL FORWARD CURRENCY EXCHANGE CONTRACTS. $165,235,849 $1,808,647 $(4,281,818)
------------ ---------- -----------
</TABLE>
OFFSETTING FORWARD BOND COMMITMENTS
<TABLE>
<CAPTION>
Par Amount U.S. Dollar Value Net Unrealized
(000) Settlement ----------------------- Currency
(Local Currency) Security Date Payable Receivable Appreciation
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
140,000 AUSTRALIA (Commonwealth)
10.00%, 10/07/15......... 07/29/96 $11,623,939 $11,798,274 $ 69,443
19,700 GERMANY (Treuhandanstalt)
6.75%, 05/13/04.......... 06/20/96 13,886,920 13,594,454 105,084
----------- ----------- --------
$25,510,859 $25,392,728 $174,527
----------- ----------- --------
</TABLE>
NOTE 4--TRUSTEE COMPENSATION
Trustees who are not affiliated with the Adviser are compensated by the Fund
at the annual rate of $840 plus a fee of $24 per day for Board and Committee
meetings attended. During the period, such fees aggregated $19,165.
The Fund has a deferred compensation plan and a defined benefits
retirement plan for its trustees not affiliated with the Adviser. These plans
are not funded, and obligations under the plans will be paid solely out of the
Fund's general account. The Fund will not reserve or set aside funds for the
payment of its obligations under the plans by any form of trust or escrow.
B-48
<PAGE> 213
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
Under the deferred compensation plan, trustees may elect to defer all or a
portion of their compensation to a later date. Each trustee covered under the
plan elects to earn on the deferred balances an amount equal to the total re-
turn of the Fund or equal to the income earned by the Fund on its short-term
investments.
Under the retirement plan, which became effective in January 1996,
benefits which are based on years of service will be received by the trustee
for a ten-year period. The maximum annual benefit for each trustee is $2,500.
Retirement plan expenses for the period aggregated $5,200. During the calendar
year 1996, the Adviser has agreed to reimburse the Fund for these plan expenses.
NOTE 5--CAPITAL
The Fund offers three classes of shares at their respective net asset values
per share, plus a sales charge which is imposed either at the time of purchase
(Class A) or at the time of redemption on a contingent deferred basis (Class B
and C). All classes of shares have the same rights, except that Class B and C
shares bear the cost of distribution fees and certain other class specific ex-
penses. Class B and C shares automatically convert to Class A shares six years
and ten years after purchase, respectively, subject to certain conditions.
Realized and unrealized gains or losses, investment income, and expenses (other
than class specific expenses) are allocated daily to each class of shares
based upon the relative proportion of net assets of each class.
B-49
<PAGE> 214
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
The Fund has an unlimited number of shares of $.01 par value beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
Year Ended May 31
-----------------------
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Shares sold
Class A............................................... 863,668 1,027,970
Class B............................................... 1,568,183 2,425,271
Class C............................................... 271,697 390,014
--------- ----------
2,703,548 3,843,255
--------- ----------
Shares issued for distributions reinvested
Class A............................................... 215,647 298,501
Class B............................................... 450,331 637,479
Class C............................................... 57,724 109,085
--------- ----------
723,702 1,045,065
--------- ----------
Shares redeemed
Class A............................................... (2,290,621) (3,117,182)
Class B............................................... (4,655,689) (5,919,339)
Class C............................................... (1,382,547) (1,096,832)
--------- ----------
(8,328,857) (10,133,353)
--------- ----------
Decrease in shares outstanding......................... (4,901,607) (5,245,033)
--------- ----------
</TABLE>
NOTE 6--SUBSEQUENT DIVIDENDS
The Board of Trustees of the Fund declared a dividend of $.046 per share for
Class A shares and $.041 per share for both Class B and Class C shares from
net investment income, payable July 15, 1996 to shareholders of record June
28, 1996.
NOTE 7--FUND REORGANIZATION
On July 21, 1995, the shareholders approved the reorganization of the Fund to
a Delaware Business Trust and the election of fourteen trustees. On August 31,
1995, the reorganization became effective.
B-50
<PAGE> 215
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Included in the Prospectus:
Financial Highlights
Included in the Statement of Additional Information:
Report of Independent Accountants
Financial Statements
Notes to Financial Statements
(b) Exhibits
<TABLE>
<C> <S>
1.1 -- First Amended and Restated Agreement and Declaration of Trust.
1.2 -- Certificate of Amendment.
1.3 -- Certificate of Designation of Van Kampen American Capital Global
Equity Fund.
1.4 -- Certificate of Designation of Van Kampen American Capital Global
Government Securities Fund.
2 -- Amended and Restated Bylaws.
3 -- Inapplicable.
4.1 -- Van Kampen American Capital Global Equity Fund.
(a) Specimen Class A Share Certificate.
(b) Specimen Class B Share Certificate.
(c) Specimen Class C Share Certificate.
4.2 -- Van Kampen American Capital Global Government Securities Fund.
(a) Specimen Class A Share Certificate.
(b) Specimen Class B Share Certificate.
(c) Specimen Class C Share Certificate.
5.1 -- Investment Advisory Agreement.
5.2 -- Investment Sub-Advisory Agreement between Van Kampen American Capital
Asset Management, Inc. and John Govett & Co. Limited with respect to
Van Kampen American Capital Global Equity Fund.
5.3 -- Investment Sub-Advisory Agreement between Van Kampen American Capital
Asset Management, Inc. and John Govett & Co. Limited with respect to
Van Kampen American Capital Global Government Securities Fund.
6.1 -- Distribution and Service Agreement for Van Kampen American Capital
Global Equity Fund.
6.2 -- Distribution and Service Agreement for Van Kampen American Capital
Global Government Securities Fund.
6.3 -- Dealer Agreement.
6.4 -- Broker Fully Disclosed Selling Agreement.
6.5 -- Bank Fully Disclosed Selling Agreement.
7 -- Inapplicable.
8.1 -- Custodian Contract dated December 2, 1993 incorporated herein by
reference (Exhibit 8 to Form N-1A of Van Kampen American Capital
Global Managed Assets Fund, Registration No. 33-74024, Pre-Effective
Amendment No. 2, filed on May 6, 1994).
</TABLE>
C-1
<PAGE> 216
<TABLE>
<C> <S>
8.2 -- Transfer Agency and Servicing Agreement.
9 -- Data Access Services Agreement dated December 2, 1993 incorporated
herein by reference (Exhibit 9.2 to Form N-1A of Van Kampen American
Capital Utilities Income Fund, Registration No. 33-68452,
Post-Effective Amendment No. 1, filed on May 19, 1994).
10.1 -- Opinion of Counsel -- Van Kampen American Capital Global Equity Fund.
10.2 -- Opinion of Counsel -- Van Kampen American Capital Global Government
Securities Fund.
11.1 -- Consent of Independent Accountants -- Van Kampen American Capital
Global Equity Fund.
11.2 -- Consent of Independent Accountants -- Van Kampen American Capital
Global Government Securities Fund.
12 -- Inapplicable.
13 -- Investment Letter incorporated herein by reference (Exhibit 13 to
Form N-1A of Registrant's Pre-Effective Amendment No. 2, filed on
July 19, 1991).
14.1 -- Individual Retirement Account Brochure with Application incorporated
herein by reference (Exhibit 14.1 to Form N-1A of Van Kampen American
Capital Reserve Fund, Registration No. 2-50870, Post-Effective
Amendment No. 31, filed on September 24, 1993).
14.2 -- 403(b)(7) Custodial Account incorporated herein by reference (Exhibit
14.2 to Form N-1A of Van Kampen American Capital Reserve Fund,
Registration No. 2-50870, Post-Effective Amendment No. 30, filed on
September 24, 1992).
14.3 -- ORP 403(b)(7) Custodial Account incorporated herein by reference
(Exhibit 14.3 to Form N-1A of Van Kampen American Capital Reserve
Fund, Registration No. 2-50870, Post-Effective Amendment No. 30,
filed on September 24, 1992).
14.4 -- Retirement Plans for the Small Business-Forms Package and Plan
Documents incorporated herein by reference (Exhibit 14.9 to Form N-1A
of Van Kampen American Capital Government Securities Fund,
Registration No. 2-90482, Post-Effective Amendment No. 18, filed on
February 25, 1994).
14.5 -- Prototype Profit Sharing/Money Purchase Plan and Trust incorporated
herein by reference (Exhibit 14.5 to Form N-1A of Van Kampen American
Capital Growth and Income Fund, Registration No. 2-21657,
Post-Effective Amendment No. 61, filed on March 27, 1991).
14.6 -- Prototype 401(k) Plan and Trust incorporated herein by reference
(Exhibit 14.6 to Form N-1A of Van Kampen American Capital Growth and
Income Fund, Registration No. 2-21657, Post-Effective Amendment No.
61, filed on March 27, 1991).
14.7 -- Salary Reduction Simplified Employee Pension Plan incorporated herein
by reference (Exhibit 14.7 to Form N-1A of Registrant's
Post-Effective Amendment No. 9, filed on September 24, 1993).
15.1 -- Plan of Distribution for Van Kampen American Capital Global Equity
Fund.
15.2 -- Plan of Distribution for Van Kampen American Capital Global
Government Securities Fund.
15.3 -- Service Plan for Van Kampen American Capital Global Equity Fund.
15.4 -- Service Plan for Van Kampen American Capital Global Government
Securities Fund.
16 -- Computation of Performance Information.
17.1 -- List of Certain Investment Companies in Response to Item 29(a).
</TABLE>
C-2
<PAGE> 217
<TABLE>
<C> <S>
17.2 -- List of Officers and Directors of Van Kampen American Capital
Distributors, Inc. in Response to Item 29(b).
18 -- Multiple Class Plan.
19 -- Powers-of-Attorney.
27 -- Financial Data Schedules.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
AS OF SEPTEMBER 17, 1996
<TABLE>
<CAPTION>
(2)
NUMBER OF RECORD
HOLDERS
(1) -------------------------------
TITLE OF CLASS CLASS A CLASS B CLASS C
------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
Van Kampen American Capital Global Equity Fund
Shares of Beneficial Interest, par value $0.01
per share 23,888 15,152 2,712
Van Kampen American Capital Global Government
Securities Fund
Shares of Beneficial Interest, par value $0.01
per share 3,728 6,572 967
</TABLE>
ITEM 27. INDEMNIFICATION.
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 willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. Absent a court determination that
an officer or trustee seeking indemnification was not liable on the merits or
guilty of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office, the decision by the
Registrant to indemnify such person must be based upon the reasonable
determination of independent counsel or non-party independent trustees, after
review of the facts, that such officer or trustee is not guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
The Registrant has purchased insurance on behalf of its officers and
trustees protecting such persons from liability arising from their activities as
officers or trustees of the Registrant. The insurance does not protect or
purport to protect such persons from liability to the Registrant or to its
shareholders to which such officer or trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of their office.
Conditional advancing of indemnification monies may be made if the trustee
or officer undertakes to repay the advance unless it is ultimately determined
that he or she is entitled to the indemnification and only if the following
conditions are met: (1) the trustee or officer provides a security for the
undertaking; (2) the Registrant is insured against losses arising from lawful
advances; or (3) a majority of a quorum of the Registrant's disinterested,
non-party trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that a recipient of
the advance ultimately will be found entitled to indemnification.
C-3
<PAGE> 218
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by the trustee, officer, or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See "Investment Advisory Services" in the Prospectus and "Trustees and
Officers" in the Statement of Additional Information for information regarding
the business of the Adviser. For information as to the business, profession,
vocation and employment of a substantial nature of directors and officers of the
Adviser, reference is made to the Adviser's current Form ADV (File No. 801-1669)
filed under the Investment Advisers Act of 1940, as amended, incorporated herein
by reference.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) The sole principal underwriter is Van Kampen American Capital
Distributors, Inc., which acts as principal underwriter for certain investment
companies and unit investment trusts set forth in Exhibit 17.1 incorporated by
reference herein.
(b) Van Kampen American Capital Distributors, Inc. is an affiliated person
of an affiliated person of Registrant and is the only principal underwriter for
Registrant. The name, principal business address and positions and offices with
Van Kampen American Capital Distributors, Inc. of each of the directors and
officers thereof are set forth in Exhibit 17.2. 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 Registrant.
(c) Not applicable.
ITEM 30. LOCATION OF BOOKS AND RECORDS.
All accounts, books and other documents required by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder to be maintained (i) by
Registrant will be maintained at its offices, located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181. ACCESS Investor Services, Inc. 7501 Tiffany
Springs Parkway, Kansas City, Missouri 64153, or at the State Street Bank and
Trust Company, 1776 Heritage Drive, North Quincy, MA; (ii) by the Adviser, will
be maintained at its offices, located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181; and (iii) by the Distributor, the principal underwriter, will be
maintained at its offices located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181.
ITEM 31. MANAGEMENT SERVICES.
There are no management related services contracts not discussed in Part A.
ITEM 32. UNDERTAKINGS.
Registrant hereby undertakes to furnish to each person to whom a prospectus
is delivered a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
Registrant hereby undertakes, if requested to do so by the holders of 10%
of Registrant's outstanding shares, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a director or directors and to
assist in communications with other shareholders as required by Section 16(c) of
the Investment Company Act of 1940.
C-4
<PAGE> 219
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Van Kampen American Capital
World Portfolio Series Trust, certifies that it meets all of the requirements
for effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized in the City of Oakbrook Terrace and State of Illinois, on the
27th day of September, 1996.
VAN KAMPEN AMERICAN CAPITAL
WORLD PORTFOLIO SERIES TRUST
By: /s/ RONALD A. NYBERG
------------------------------------
Ronald A. Nyberg, Vice President and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to this Registration Statement has been signed on September 27, 1996 by the
following persons in the capacities indicated:
<TABLE>
<C> <S>
Principal Executive Officer:
/s/ DENNIS J. MCDONNELL* President and Trustee
- ---------------------------------------------
(Dennis J. McDonnell)
Principal Financial Officer:
/s/ EDWARD C. WOOD III* Vice President and Chief
- --------------------------------------------- Financial Officer
(Edward C. Wood III)
Trustees:
/s/ J. MILES BRANAGAN* Trustee
- ---------------------------------------------
(J. Miles Branagan)
/s/ LINDA H. HEAGY Trustee
- ---------------------------------------------
(Linda H. Heagy)
/s/ ROGER HILSMAN* Trustee
- ---------------------------------------------
(Roger Hilsman)
/s/ R. CRAIG KENNEDY* Trustee
- ---------------------------------------------
(R. Craig Kennedy)
/s/ DONALD C. MILLER* Trustee
- ---------------------------------------------
(Donald C. Miller)
/s/ JACK E. NELSON* Trustee
- ---------------------------------------------
(Jack E. Nelson)
/s/ JEROME L. ROBINSON* Trustee
- ---------------------------------------------
(Jerome L. Robinson)
/s/ FERNANDO SISTO* Trustee
- ---------------------------------------------
(Fernando Sisto)
/s/ WAYNE W. WHALEN* Trustee
- ---------------------------------------------
(Wayne W. Whalen)
/s/ WILLIAM S. WOODSIDE* Trustee
- ---------------------------------------------
(William S. Woodside)
</TABLE>
* Signed by Ronald A. Nyberg pursuant to a power-of attorney.
<TABLE>
<S> <C>
/s/ RONALD A. NYBERG September 27, 1996
- ---------------------------------------------
Ronald A. Nyberg
Attorney-in-Fact
</TABLE>
<PAGE> 220
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
INDEX TO EXHIBITS TO POST-EFFECTIVE AMENDMENT NO. 12 TO FORM N-1A
AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION
ON SEPTEMBER 27, 1996
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
1.1 -- First Amended and Restated Agreement and Declaration of Trust.
1.2 -- Certificate of Amendment.
1.3 -- Certificate of Designation of Van Kampen American Capital Global Equity
Fund.
1.4 -- Certificate of Designation of Van Kampen American Capital Global
Government Securities Fund.
2 -- Amended and Restated Bylaws.
4.1 --Van Kampen American Capital Global Equity Fund.
(a) Specimen Class A Share Certificate.
(b) Specimen Class B Share Certificate.
(c) Specimen Class C Share Certificate.
4.2 -- Van Kampen American Capital Global Governments Fund.
(a) Specimen Class A Share Certificate.
(b) Specimen Class B Share Certificate.
(c) Specimen Class C Share Certificate.
5.1 -- Investment Advisory Agreement.
5.2 -- Investment Sub-Advisory Agreement between Van Kampen American Capital
Asset Management, Inc. and John Govett & Co. Limited with respect to Van
Kampen American Capital Global Equity Fund.
5.3 -- Investment Sub-Advisory Agreement between Van Kampen American Capital
Asset Management, Inc. and John Govett & Co. Limited with respect to Van
Kampen American Capital Global Government Securities Fund.
6.1 -- Distribution and Service Agreement for Van Kampen American Capital
Global Equity Fund.
6.2 -- Distribution and Service Agreement for Van Kampen American Capital
Global Government Securities Fund.
6.3 -- Dealer Agreement.
6.4 -- Broker Fully Disclosed Selling Agreement.
6.5 -- Bank Fully Disclosed Selling Agreement.
8.2 -- Transfer Agency and Servicing Agreement.
10.1 -- Opinion of Counsel for Van Kampen American Capital Global Equity Fund.
10.2 -- Opinion of Counsel for Van Kampen American Capital Global Government
Securities Fund.
11.1 -- Consent of Independent Accountants for Van Kampen American Capital
Global Equity Fund.
11.2 -- Consent of Independent Accountants for Van Kampen American Capital
Global Government Securities Fund.
15.1 -- Plan of Distribution for Van Kampen American Capital Global Equity Fund.
15.2 -- Plan of Distribution for Van Kampen American Capital Global Government
Securities Fund.
15.3 -- Service Plan for Van Kampen American Capital Global Equity Fund.
</TABLE>
<PAGE> 221
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
15.4 -- Service Plan for Van Kampen American Capital Global Government
Securities Fund.
16 -- Computation of Performance Information.
17.1 -- List of Certain Investment Companies in Response to Item 29(a).
17.2 -- List of Officers and Directors of Van Kampen American Capital
Distributors, Inc. in Response to Item 29(b).
18 -- Multiple Class Plan.
19 -- Power of Attorney.
27 -- Financial Data Schedules.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
FIRST AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VAN KAMPEN
AMERICAN CAPITAL
WORLD PORTFOLIO
SERIES TRUST
DATED: JUNE 21, 1995
<PAGE> 2
FIRST AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
<TABLE>
<CAPTION>
INDEX
-----------------------------------------------------------------------
<S> <C> <C>
RECITALS ....................................................................... 1
ARTICLE I THE TRUST.............................................................. 2
SECTION 1.1. Name................................................................... 2
SECTION 1.2. Location............................................................... 2
SECTION 1.3. Nature of Trust........................................................ 2
SECTION 1.4. Definitions............................................................ 2
SECTION 1.5. Real Property to be Converted into Personal Property................... 5
ARTICLE 2 PURPOSE OF THE TRUST................................................... 5
ARTICLE 3 POWERS OF THE TRUSTEES................................................. 6
SECTION 3.1. Powers in General...................................................... 6
(a) Investments....................................................................... 7
(b) Disposition of Assets............................................................. 7
(c) Ownership Powers.................................................................. 7
(d) Form of Holding................................................................... 7
(e) Reorganization, etc............................................................... 7
(f) Voting Trusts, etc............................................................... 7
(g) Contracts, etc.................................................................... 8
(h) Guarantees, etc................................................................... 8
(i) Partnerships, etc................................................................ 8
(j) Insurance........................................................................ 8
(k) Pensions, etc..................................................................... 8
(l) Power of Collection and Litigation............................................... 8
(m) Issuance and Repurchase of Shares.................................................. 9
(n) Offices........................................................................... 9
(o) Expenses.......................................................................... 9
(p) Agents, etc....................................................................... 9
(q) Accounts.......................................................................... 9
(r) Valuation........................................................................ 9
(s) Indemnification.................................................................. 9
(t) General.......................................................................... 9
SECTION 3.2. Borrowings; Financings; Issuance of Securities......................... 10
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
INDEX
-----------------------------------------------------------------------
<S> <C> <C>
SECTION 3.3. Deposits............................................................... 10
SECTION 3.4. Allocations............................................................ 10
SECTION 3.5. Further Powers; Limitations............................................ 10
ARTICLE 4 TRUSTEES AND OFFICERS.................................................. 11
SECTION 4.1. Number, Designation, Election, Term, etc............................... 11
(a) Initial Trustee................................................................... 11
(b) Number............................................................................ 11
(c) Election and Term................................................................. 11
(d) Resignation and Retirement........................................................ 12
(e) Removal........................................................................... 12
(f) Vacancies........................................................................ 12
(g) Acceptance of Trusts.............................................................. 12
(h) Effect of Death, Resignation, etc................................................. 12
(i) Conveyance....................................................................... 12
(j) No Accounting.................................................................... 13
SECTION 4.2. Trustees' Meetings; Participation by Telephone, etc.................... 13
SECTION 4.3. Committees; Delegation................................................. 13
SECTION 4.4. Officers............................................................... 13
SECTION 4.5. Compensation of Trustees and Officers.................................. 13
SECTION 4.6. Ownership of Shares and Securities of the Trust........................ 14
SECTION 4.7. Right of Trustees and Officers to Own Property or to Engage in 14
Business; Authority of Trustees to Permit Others to Do Likewise........
SECTION 4.8. Reliance on Experts.................................................... 14
SECTION 4.9. Surety Bonds........................................................... 15
SECTION 4.10. Apparent Authority of Trustees and Officers............................ 15
SECTION 4.11. Other Relationships Not Prohibited..................................... 15
SECTION 4.12. Payment of Trust Expenses.............................................. 15
SECTION 4.13. Ownership of the Trust Property........................................ 16
</TABLE>
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SECTION 4.14. By-Laws................................................................ 16
ARTICLE 5 DELEGATION OF MANAGERIAL RESPONSIBILITIES.............................. 16
SECTION 5.1. Appointment; Action by Less than All Trustees.......................... 16
SECTION 5.2. Certain Contracts...................................................... 16
(a) Advisory........................................................................... 17
(b) Administration..................................................................... 17
(c) Underwriting....................................................................... 17
(d) Custodian.......................................................................... 17
(e) Transfer and Dividend Disbursing Agent............................................. 18
(f) Shareholder Servicing.............................................................. 18
(g) Accounting......................................................................... 18
SECTION 5.3. Distribution Arrangements.............................................. 18
SECTION 5.4. Service Arrangements................................................... 18
ARTICLE 6 SERIES AND SHARES...................................................... 18
SECTION 6.1. Description of Series and Shares....................................... 18
(a) General............................................................................ 18
(b) Establishment, etc. of Series; Authorization of Shares............................. 19
(c) Character of Separate Series and Shares Thereof.................................... 19
(d) Consideration for Shares........................................................... 19
(e) Assets Belonging to Series......................................................... 20
(f) Liabilities of Series.............................................................. 20
(g) Dividends.......................................................................... 20
(h) Liquidation........................................................................ 21
(i) Voting............................................................................ 21
(j) Redemption by Shareholder......................................................... 21
(k) Redemption at the Option of the Trust.............................................. 22
(l) Net Asset Value................................................................... 22
(m) Transfer............................................................................ 22
(n) Equality........................................................................... 23
(o) Rights of Fractional Shares........................................................ 23
(p) Conversion Rights.................................................................. 23
SECTION 6.2. Ownership of Shares.................................................... 24
SECTION 6.3. Investments in the Trust............................................... 24
SECTION 6.4. No Pre-emptive Rights.................................................. 24
</TABLE>
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SECTION 6.5. Status of Shares....................................................... 24
ARTICLE 7 SHAREHOLDERS' VOTING POWERS AND MEETINGS............................... 24
SECTION 7.1. Voting Powers.......................................................... 24
SECTION 7.2. Number of Votes and Manner of Voting; Proxies.......................... 25
SECTION 7.3. Meetings............................................................... 25
SECTION 7.4. Record Dates........................................................... 26
SECTION 7.5. Quorum and Required Vote............................................... 26
SECTION 7.6. Action by Written Consent.............................................. 26
SECTION 7.7. Inspection of Records.................................................. 27
SECTION 7.8. Additional Provisions.................................................. 27
ARTICLE 8 LIMITATION OF LIABILITY; INDEMNIFICATION............................... 27
SECTION 8.1. Trustees, Shareholders, etc. Not Personally Liable; Notice............. 27
SECTION 8.2. Trustees' Good Faith Action; Expert Advice; No Bond or Surety.......... 27
SECTION 8.3. Indemnification of Shareholders........................................ 28
SECTION 8.4. Indemnification of Trustees, Officers, etc............................. 28
SECTION 8.5. Compromise Payment..................................................... 29
SECTION 8.6. Indemnification Not Exclusive, etc..................................... 29
SECTION 8.7. Liability of Third Persons Dealing with Trustees....................... 29
ARTICLE 9 DURATION; REORGANIZATION; INCORPORATION; AMENDMENTS.................... 30
SECTION 9.1. Duration of Trust...................................................... 30
SECTION 9.2. Termination of Trust................................................... 30
SECTION 9.3. Reorganization......................................................... 30
SECTION 9.4. Incorporation.......................................................... 31
</TABLE>
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SECTION 9.5. Amendments; etc........................................................ 31
SECTION 9.6. Filing of Copies of Declaration and Amendments......................... 31
ARTICLE 10 MISCELLANEOUS.......................................................... 32
SECTION 10.1. Notices................................................................ 32
SECTION 10.2. Governing Law.......................................................... 32
SECTION 10.3. Counterparts........................................................... 32
SECTION 10.4. Reliance by Third Parties.............................................. 32
SECTION 10.5. References; Headings................................................... 32
SECTION 10.6. Provisions in Conflict With Law or Regulation.......................... 32
SECTION 10.7. Use of the Name "Van Kampen American Capital".......................... 33
Signature............................................................................... 34
Acknowledgments......................................................................... 35
</TABLE>
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<PAGE> 7
AGREEMENT AND DECLARATION OF TRUST
OF
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
As amended and restated as of June 21, 1995
This CONSENT TO AMENDMENT AND RESTATEMENT, made as of this 21st day of
June, 1995, by the Trustees whose signatures are set forth below:
WITNESSETH THAT:
WHEREAS, the AGREEMENT AND DECLARATION OF TRUST of Van Kampen American
Capital World Portfolio Series Trust, a trust organized as a business trust
under Delaware law (the "Trust"), was signed and delivered on May 10, 1995, by
Van Kampen American Capital, Inc. as Settlor (the "Settlor"), and Ronald A.
Nyberg as trustee (the "Initial Trustee"), in the city of Oakbrook Terrace,
Illinois; and
WHEREAS, a Certificate of Trust relating to the Trust was thereafter filed
in the offices of the Secretary of State of the State of Delaware; and
WHEREAS, Article IX, Sections 9.5 and 9.6 of the Declaration provide
certain procedures for the amendment and restatement thereof; and
WHEREAS, the Trustees have determined that it is desirable and in the best
interests of the Trust and the Shareholders that the Declaration be amended and
restated as herein provided.
NOW, THEREFORE, the undersigned, being at least a Majority of the Trustees,
do hereby consent, pursuant to Section 9.5 of the Declaration, to the first
amendment and restatement of the Agreement and Declaration of Trust, and hereby
declare, for the benefit of all Persons who shall hereafter become holders of
Shares of the Trust (or of any Series thereof), that the Trustees will hold the
sum delivered to the Initial Trustee upon his execution of the Declaration, and
all other and further cash, securities and other property of every type and
description which they may in any way acquire in their capacity as such
Trustees, together with the income therefrom and the proceeds thereof, IN TRUST
NEVERTHELESS, to manage and dispose of the same for the benefit of the holders
from time to time of the Shares being issued and to be issued hereunder and in
the manner and subject to the provisions hereof, to wit:
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<PAGE> 8
ARTICLE I
THE TRUST
SECTION 1.1 Name. The name of the Trust shall be
"VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST"
and so far as may be practicable, the Trustees shall conduct the Trust's
activities, execute all documents and sue or be sued under that name, which name
(and the word "Trust" wherever used in this Agreement and Declaration of Trust,
except where the context otherwise requires) shall refer to the Trustees in
their capacity as Trustees, and not individually or personally, and shall not
refer to the officers, agents or employees of the Trust or of such Trustees, or
to the holders of the Shares of the Trust or any Series. If the Trustees
determine that the use of such name is not practicable, legal or convenient at
any time or in any jurisdiction, or if the Trust is required to discontinue the
use of such name pursuant to Section 10.7 hereof, then subject to that Section,
the Trustees may use such other designation, or they may adopt such other name
for the Trust as they deem proper, and the Trust may hold property and conduct
its activities under such designation or name.
SECTION 1.2. Location. The Trust shall maintain a registered office in the
State of Delaware and may have such other offices or places of business as the
Trustees may from time to time determine to be necessary or expedient.
SECTION 1.3. Nature of Trust. The Trust shall be a trust with transferable
shares under the laws of The State of Delaware, of the type defined in Title 12,
Chapter 38, Section 3801 of the Delaware Code as a business trust. The Trust is
not intended to be, shall not be deemed to be, and shall not be treated as, a
general partnership, limited partnership, joint venture, corporation or joint
stock company. The Shareholders shall be beneficiaries and their relationship to
the Trustees shall be solely in that capacity in accordance with the rights
conferred upon them hereunder.
SECTION 1.4. Definitions. As used in this Agreement and Declaration of
Trust, the following terms shall have the meanings set forth below unless the
context thereof otherwise requires:
"Accounting Agent" shall have the meaning designated in Section 5.2(g)
hereof.
"Administrator" shall have the meaning designated in Section 5.2(b) hereof.
"Affiliated Person" shall have the meaning assigned to it in the 1940 Act.
"By-Laws" shall mean the By-Laws of the Trust, as amended from time to
time.
"Certificate of Designation" shall have the meaning designated in Section
6.1 hereof.
"Certificate of Termination" shall have the meaning designated in Section
6.1 hereof.
"Class" or "Classes" shall mean, with respect to the Trust (of any Series
thereof), any unissued Shares of the Trust (or such Series) in respect of which
the Trustees shall from time to time fix and determine any special provisions
relating to sales charges, any rights of redemption and the price, terms and
manner of redemption, special and relative rights as to dividends and other
distributions and on
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<PAGE> 9
liquidation, sinking or purchase fund provisions, conversion rights, and
conditions under which the Shareholders of such Class shall have separate voting
rights or no voting rights.
"Commission" shall have the same meaning as in the 1940 Act.
"Contracting Party" shall have the meaning designated in the preamble to
Section 5.2 hereof.
"Conversion Date" shall mean with respect to Shares of any Class that are
convertible automatically into Shares of any other Class of the Trust (or Series
thereof) the date fixed by the Trustees for such conversion.
"Covered Person" shall have the meaning designated in Section 8.4 hereof.
"Custodian" shall have the meaning designated in Section 5.2(d) hereof.
"Declaration" and "Declaration of Trust" shall mean this Agreement and
Declaration of Trust and all amendments or modifications thereof as from time to
time in effect. This Agreement and Declaration of Trust is the "governing
instrument" of the Trust within the meaning of the laws of the State of Delaware
with respect to Delaware Business Trusts. References in this Agreement and
Declaration of Trust to "hereof", "herein" and "hereunder" shall be deemed to
refer to the Declaration of Trust generally, and shall not be limited to the
particular text, Article or Section in which such words appear.
"Disabling Conduct" shall have the meaning designated in Section 8.4
hereof.
"Distributor" shall have the meaning designated in Section 5.2(c) hereof.
"Dividend Disbursing Agent" shall have the meaning designated in Section
5.2(e) hereof.
"General Items" shall have the meaning defined in Section 6.2(a) hereof.
"Initial Trustee" shall have the meaning defined in the preamble hereto.
"Investment Advisor" shall have the meaning defined in Section 5.2(a)
hereof.
"Majority of the Trustees" shall mean a majority of the Trustees in office
at the time in question. At any time at which there shall be only one (1)
Trustee in office, such term shall mean such Trustee.
"Majority Shareholder Vote," as used with respect to (a) the election of
any Trustee at a meeting of Shareholders, shall mean the vote for the election
of such Trustee of a plurality of all outstanding Shares of the Trust, without
regard to Series, represented in person or by proxy and entitled to vote
thereon, provided that a quorum (as determined in accordance with the By-Laws)
is present, (b) any other action required or permitted to be taken by
Shareholders, shall mean the vote for such action of the holders of that
majority of all outstanding Shares (or, where a separate vote of Shares of any
particular Series is to be taken, the affirmative vote of that majority of the
outstanding Shares of that Series) of the Trust which consists of: (i) a
majority of all Shares (or of Shares of the particular Series) represented in
person or by proxy and entitled to vote on such action at the meeting of
Shareholders at which such action is to be taken, provided that a quorum (as
determined in accordance with the By-Laws) is present; or (ii) if such action is
to be taken by written consent of Shareholders, a majority of all Shares (or of
Shares of the particular Series) issued and outstanding and entitled to vote on
such action; provided that (iii) as used
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<PAGE> 10
with respect to any action requiring the affirmative vote of "a majority of the
outstanding voting securities," as the quoted phrase is defined in the 1940 Act,
of the Trust or of any Series, "Majority Shareholder Vote" means the vote for
such action at a meeting of Shareholders of the smallest majority of all
outstanding Shares of the Trust (or of Shares of the particular Series) entitled
to vote on such action which satisfies such 1940 Act voting requirement.
"1940 Act" shall mean the provisions of the Investment Company Act of 1940
and the rules and regulations thereunder, both as amended from time to time, and
any order or orders thereunder which may from time to time be applicable to the
Trust.
"Person" shall mean and include individuals, as well as corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, banks, trust companies, land trusts, business trusts or
other organizations established under the laws of any jurisdiction, whether or
not considered to be legal entities, and governments and agencies and political
subdivisions thereof.
"Principal Underwriter" shall have the meaning designated in Section 5.2(c)
hereof.
"Prospectus," as used with respect to the Trust (or the Shares of a
particular Series), shall mean the prospectus relating to the Trust (or such
Series) which constitutes part of the currently effective Registration Statement
of the Trust under the Securities Act of 1933, as such prospectus may be amended
or supplemented from time to time.
"Securities" shall have the same meaning ascribed to that term in the
Securities Act of 1993.
"Series" shall mean one or more of the series of Shares authorized by the
Trustees to represent the beneficial interest in one or more separate components
of the assets of the Trust which are now or hereafter established and designated
under or in accordance with the provisions of Article 6 hereof.
"Settlor" shall have the meaning defined in the preamble hereto.
"Shareholder" shall mean as of any particular time any Person shown of
record at such time on the books of the Trust as a holder of outstanding Shares
of any Series, and shall include a pledgee into whose name any such Shares are
transferred in pledge.
"Shareholder Servicing Agent" shall have the meaning designated in Section
5.2(f) hereof.
"Shares" shall mean the transferable units into which the beneficial
interest in the Trust and each Series of the Trust (as the context may require)
shall be divided from time to time, and includes fractions of Shares as well as
whole Shares. All references herein to "Shares" which are not accompanied by a
reference to any particular Series or Class shall be deemed to apply to
outstanding Shares without regard to Series or Class.
"Single Class Voting," as used with respect to any matter to be acted upon
at a meeting or by written consent of Shareholders, shall mean a style of voting
in which each holder of one or more Shares shall be entitled to one vote on the
matter in question for each Share standing in his name on the records of the
Trust, irrespective of Series or Class of a Series, and all outstanding Shares
of all Series vote as a single class.
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<PAGE> 11
"Statement of Additional Information," as used with respect to the Trust
(or any Series), shall mean the statement of additional information relating to
the Trust (or such Series) which constitutes part of the currently effective
Registration Statement of the Trust under the Securities Act of 1933, as such
statement of additional information may be amended or supplemented from time to
time.
"Transfer Agent" shall have the meaning defined in Section 5.2(e) hereof.
"Trust" shall mean the trust named in Section 1.1 hereof.
"Trust Property" shall mean, as of any particular time, any and all
property which shall have been transferred, conveyed or paid to the Trust or the
Trustees, and all interest, dividends, income, earnings, profits and gains
therefrom, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and which at
such time is owned or held by, or for the account of, the Trust or the Trustees,
without regard to the Series to which such property is allocated.
"Trustees" shall mean, collectively, the Initial Trustee, so long as he
shall continue in office, and all other individuals who at the time in question
have been duly elected or appointed as Trustees of the Trust in accordance with
the provisions hereof and who have qualified and are then in office. At any time
at which there shall be only one (I) Trustee in office, such term shall mean
such single Trustee.
SECTION 1.5. Real Property to be Converted into Personal Property.
Notwithstanding any other provision hereof, any real property at any time
forming part of the Trust Property shall be held in trust for sale and
conversion into personal property at such time or times and in such manner and
upon such terms as the Trustees shall approve, but the Trustees shall have power
until the termination of this Trust to postpone such conversion as long as they
in their uncontrolled discretion shall think fit, and for the purpose of
determining the nature of the interest of the Shareholders therein, all such
real property shall at all times be considered as personal property.
ARTICLE 2
PURPOSE OF THE TRUST
The purpose of the Trust shall be to (a) manage, conduct, operate and carry
on the business of an investment company; (b) subscribe for, invest in, reinvest
in, purchase or otherwise acquire, hold, pledge, sell, assign, transfer,
exchange, distribute or otherwise deal in or dispose of any and all sorts of
property, tangible or intangible, including but not limited to Securities of any
type whatsoever, whether equity or nonequity, of any issuer, evidences of
indebtedness of any person and any other rights, interest, instruments or
property of any sort to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investment of every kind
and description, including without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more Persons
to exercise any of said rights, powers and privileges in respect of any of said
investments. The Trustees shall not be limited by any law limiting the
investments which may be made by fiduciaries.
5
<PAGE> 12
ARTICLE 3
POWERS OF THE TRUSTEES
SECTION 3.1. Powers in General. The Trustees shall have, without other or
further authorization, full, entire, exclusive and absolute power, control and
authority over, and management of, the business of the Trust and over the Trust
Property, to the same extent as if the Trustees were the sole owners of the
business and property of the Trust in their own right, and with such powers of
delegation as may be permitted by this Declaration, subject only to such
limitations as may be expressly imposed by this Declaration of Trust or by
applicable law. The enumeration of any specific power or authority herein shall
not be construed as limiting the aforesaid power or authority or any specific
power or authority. Without limiting the foregoing; they may select, and from
time to time change, the fiscal year of the Trust; they may adopt and use a seal
for the Trust, provided that unless otherwise required by the Trustees, it shall
not be necessary to place the seal upon, and its absence shall not impair the
validity of, any document, instrument or other paper executed and delivered by
or on behalf of the Trust; they may from time to time in accordance with the
provisions of Section 6.1 hereof establish one or more Series to which they may
allocate such of the Trust Property, subject to such liabilities, as they shall
deem appropriate, each such Series to be operated by the Trustees as a separate
and distinct investment medium and with separately defined investment objectives
and policies and distinct investment purposes, all as established by the
Trustees, or from time to time changed by them; they may as they consider
appropriate elect and remove officers and appoint and terminate agents and
consultants and hire and terminate employees, any one or more of the foregoing
of whom may be a Trustee; they may appoint from their own number, and terminate,
any one or more committees consisting of one or more Trustees, including without
implied limitation an Executive Committee, which may, when the Trustees are not
in session and subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; in accordance with
Section 5.2 they may employ one or more Investment Advisers, Administrators and
Custodians and may authorize any such service provider to employ one or more
other or service providers and to deposit all or any part of such assets in a
system or systems for the central handling of Securities, retain Transfer,
Dividend Disbursing, Accounting or Shareholder Servicing Agents or any of the
foregoing, provide for the distribution of Shares by the Trust through one or
more Distributors, Principal Underwriters or otherwise, set record dates or
times for the determination of Shareholders entitled to participate in, benefit
from or act with respect to various matters; and in general they may delegate to
any officer of the Trust, to any Committee of the Trustees and to any employee,
Investment Adviser, Administrator, Distributor, Custodian, Transfer Agent,
Dividend Disbursing Agent, or any other agent or consultant of the Trust, such
authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust, including
without implied limitation the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as attorney-in-fact for
the Trustees. Without limiting the foregoing and to the extent not inconsistent
with the 1940 Act or other applicable law, the Trustees shall have power and
authority:
(a) Investments. To subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or
otherwise deal in or dispose of any and all sorts of property, tangible or
intangible, including but not limited to Securities of any type whatsoever,
whether equity or nonequity, of any issuer, evidences of indebtedness of any
person and any other rights, interest, instruments or property of any sort, to
exercise any and all rights, powers and privileges of ownership or
6
<PAGE> 13
interest in respect of any and all such investments of every kind and
description, including without limitation the right to consent and otherwise act
with respect thereto, with power to designate one or more Persons to exercise
any of said rights, powers and privileges in respect of any of said investments,
in every case without being limited by any law limiting the investments which
may be made by fiduciaries;
(b) Disposition of Assets. Upon such terms and conditions as they deem
best, to lend, sell, exchange, mortgage, pledge, hypothecate, grant security
interests in, encumber, negotiate, convey, transfer or otherwise dispose of, and
to trade in, any and all of the Trust Property, free and clear of all trusts,
for cash or on terms, with or without advertisement, and on such terms as to
payment, security or otherwise, all as they shall deem necessary or expedient;
(c) Ownership Powers. To vote or give assent, or exercise any and all other
rights, powers and privileges of ownership with respect to, and to perform any
and all duties and obligations as owners of, any Securities or other property
forming part of the Trust Property, the same as any individual might do; to
exercise powers and rights of subscription or otherwise which in any manner
arise out of ownership of Securities, and to receive powers of attorney from,
and to execute and deliver proxies or powers of attorney to, such Person or
Persons as the Trustees shall deem proper, receiving from or granting to such
Person or Persons such power and discretion with relation to Securities or other
property of the Trust, all as the Trustees shall deem proper;
(d) Form of Holding. To hold any Security or other property in a form not
indicating any trust, whether in bearer, unregistered or other negotiable form,
or in the name of the Trustees or of the Trust, or of the Series to which such
Securities or property belong, or in the name of a Custodian, subcustodian or
other nominee or nominees, or otherwise, upon such terms, in such manner or with
such powers, as the Trustees may determine, and with or without indicating any
trust or the interest of the Trustees therein;
(e) Reorganizations etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
Security of which is or was held in the Trust or any Series; to consent to any
contract, lease, mortgage, purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect to any Security forming
part of the Trust Property;
(f) Voting Trusts, etc. To join with other holders of any Securities in
acting through a committee, depository, voting trustee or otherwise, and in that
connection to deposit any Security with, or transfer any Security to, any such
committee, depository or trustee, and to delegate to them such power and
authority with relation to any Security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
(g) Contracts. etc. To enter into, make and perform all such obligations,
contracts, agreements and undertakings of every kind and description, with any
Person or Persons, as the Trustees shall in their discretion deem expedient in
the conduct of the business of the Trust, for such terms as they shall see fit,
whether or not extending beyond the term of office of the Trustees, or beyond
the possible expiration of the Trust; to amend, extend, release or cancel any
such obligations, contracts, agreements or understandings; and to execute,
acknowledge, deliver and record all written instruments which they may deem
necessary or expedient in the exercise of their powers;
(h) Guarantees. etc. To endorse or guarantee the payment of any notes or
other obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;
7
<PAGE> 14
and to mortgage and pledge the Trust Property or any part thereof to secure any
of or all such obligations;
(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or association;
(j) Insurance. To purchase and pay for entirely out of Trust Property
such insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, Investment Advisers, managers,
Administrators, Distributors, Principal Underwriters, or other independent
contractors, or any thereof (or any Person connected therewith), of the Trust,
individually, against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such Person in
any such capacity, whether or not the Trust would have the power to indemnify
such Person against such liability;
(k) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit sharing, share bonus, share purchase, savings, thrift, deferred
compensation and other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and annuity contracts as
a means of providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust;
(l) Power of Collection and Litigation. To collect, sue for and receive
all sums of money coming due to the Trust, to employ counsel, and to commence,
engage in, prosecute, intervene in, join, defend, compound, compromise, adjust
or abandon, in the name of the Trust, any and all actions, suits, proceedings,
disputes, claims, controversies, demands or other litigation or legal
proceedings relating to the Trust, the business of the Trust, the Trust
Property, or the Trustees, officers, employees, agents and other independent
contractors of the Trust, in their capacity as such, at law or in equity, or
before any other bodies or tribunals, and to compromise, arbitrate or otherwise
adjust any dispute to which the Trust may be a party, whether or not any suit is
commenced or any claim shall have been made or asserted. Except to the extent
required for a Delaware Business Trust, the Shareholders shall have no power to
vote as to whether or not a court action, legal proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or the Shareholders.
(m) Issuance and Repurchase of Shares. To authorize, issue, sell,
repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of,
transfer, and otherwise deal in Shares of any Series, and, subject to Article 6
hereof, to apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares of any Series, any of the assets belonging to the Series
to which such Shares relate, whether constituting capital or surplus or
otherwise, to the full extent now or hereafter permitted by applicable law;
provided that any Shares belonging to the Trust shall not be voted, directly or
indirectly;
(n) Offices. To have one or more offices, and to carry on all or any of
the operations and business of the Trust, in any of the States, Districts or
Territories of the United States, and in any and all foreign countries, subject
to the laws of such State, District, Territory or country;
8
<PAGE> 15
(o) Expenses. To incur and pay any and all such expenses and charges as
they may deem advisable (including without limitation appropriate fees to
themselves as Trustees), and to pay all such sums of money for which they may be
held liable by way of damages, penalty, fine or otherwise;
(p) Agents, etc. To retain and employ any and all such servants, agents,
employees, attorneys, brokers, Investment Advisers, accountants, architects,
engineers, builders, escrow agents, depositories, consultants, ancillary
trustees, custodians, agents for collection, insurers, banks and officers, as
they think best for the business of the Trust or any Series, to supervise and
direct the acts of any of the same, and to fix and pay their compensation and
define their duties;
(q) Accounts. To determine, and from time to time change, the method or
form in which the accounts of the Trust or any Series shall be kept;
(r) Valuation. Subject to the requirements of the 1940 Act, to determine
from time to time the value of all or any part of the Trust Property and of any
services, Securities, property or other consideration to be furnished to or
acquired by the Trust, and from time to time to revalue all or any part of the
Trust Property in accordance with such appraisals or other information as is, in
the Trustees' sole judgment, necessary and satisfactory;
(s) Indemnification. In addition to the mandatory indemnification provided
for in Article 8 hereof and to the extent permitted by law, to indemnify or
enter into agreements with respect to indemnification with any Person with whom
this Trust has dealings, including, without limitation, any independent
contractor, to such extent as the Trustees shall determine; and
(t) General. Subject to the fundamental policies in effect from time to
time with respect to the Trust, to do all such other acts and things and to
conduct, operate, carry on and engage in such other lawful businesses or
business activities as they shall in their sole and absolute discretion consider
to be incidental to the business of the Trust or any Series as an investment
company, and to exercise all powers which they shall in their discretion
consider necessary, useful or appropriate to carry on the business of the Trust
or any Series, to promote any of the purposes for which the Trust is formed,
whether or not such things are specifically mentioned herein, in order to
protect or promote the interests of the Trust or any Series, or otherwise to
carry out the provisions of this Declaration.
SECTION 3.2. Borrowings; Financings: Issuance of Securities. The Trustees
have power, subject to the fundamental policies in effect from time to time with
respect to the Trust, to borrow or in any other manner raise such sum or sums of
money, and to incur such other indebtedness for goods or services, or for or in
connection with the purchase or other acquisition of property, as they shall
deem advisable for the purposes of the Trust, in any manner and on any terms,
and to evidence the same by negotiable or nonnegotiable Securities which may
mature at any time or times, even beyond the possible date of termination of the
Trust; to issue Securities of any type for such cash, property, services or
other considerations, and at such time or times and upon such terms, as they may
deem advisable; and to reacquire any such Securities. Any such Securities of the
Trust may, at the discretion of the Trustees, be made convertible into Shares of
any Series, or may evidence the right to purchase, subscribe for or otherwise
acquire Shares of any Series, at such times and on such terms as the Trustees
may prescribe.
SECTION 3.3. Deposits. Subject to the requirements of the 1940 Act, the
Trustees shall have power to deposit any moneys or Securities included in the
Trust Property with any one or more banks, trust companies or other banking
institutions, whether or not such deposits will draw interest. Such deposits
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are to be subject to withdrawal in such manner as the Trustees may determine,
and the Trustees shall have no responsibility for any loss which may occur by
reason of the failure of the bank, trust company or other banking institution
with which any such moneys or Securities have been deposited, except as provided
in Section 8.2 hereof.
SECTION 3.4. Allocations. The Trustees shall have power to determine
whether moneys or other assets received by the Trust shall be charged or
credited to income or capital, or allocated between income and capital,
including the power to amortize or fail to amortize any part or all of any
premium or discount, to treat any part or all of the profit resulting from the
maturity or sale of any asset, whether purchased at a premium or at a discount,
as income or capital, or to apportion the same between income and capital, to
apportion the sale price of any asset between income and capital, and to
determine in what manner any expenses or disbursements are to be borne as
between income and capital, whether or not in the absence of the power and
authority conferred by this Section 3.4 such assets would be regarded as income
or as capital or such expense or disbursement would be charged to income or to
capital; to treat any dividend or other distribution on any investment as income
or capital, or to apportion the same between income and capital; to provide or
fail to provide reserves, including reserves for depreciation, amortization or
obsolescence in respect of any Trust Property in such amounts and by such
methods as they shall determine; to allocate less than all of the consideration
paid for Shares of any Series to surplus with respect to the Series to which
such Shares relate and to allocate the balance thereof to paid-in capital of
that Series, and to reallocate such amounts from time to time; all as the
Trustees may reasonably deem proper.
SECTION 3.5. Further Powers: Limitations. The Trustees shall have power to
do all such other matters and things, and to execute all such instruments, as
they deem necessary, proper or desirable in order to carry out, promote or
advance the interests of the Trust, although such matters or things are not
herein specifically mentioned. Any determination as to what is in the interests
of the Trust made by the Trustees in good faith shall be conclusive. In
construing the provisions of this Declaration of Trust, the presumption shall be
in favor of a grant of power to the Trustees. The Trustees shall not be required
to obtain any court order to deal with the Trust Property. The Trustees may
limit their right to exercise any of their powers through express restrictive
provisions in the instruments evidencing or providing the terms for any
Securities of the Trust or in other contractual instruments adopted on behalf of
the Trust.
ARTICLE 4
TRUSTEES AND OFFICERS
SECTION 4.1. Number. Designation, Election. Term, etc.
(a) Initial Trustee. Upon his execution of this Agreement and Declaration
of Trust dated May 10, 1995 or a counterpart hereof or some other writing in
which he accepted such Trusteeship and agreed to the provisions hereof, the
individual whose signature is affixed thereto as Initial Trustee became the
Initial Trustee thereof.
(b) Number. The Trustees serving as such, whether named above or hereafter
becoming Trustees, may increase (to not more than fourteen (14)) or decrease the
number of Trustees to a number other than the number theretofore determined by a
written instrument signed by a Majority
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(or a supermajority if required by the By-Laws) of the Trustees). No decrease in
the number of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his term, but the number of Trustees may be decreased
in conjunction with the removal of a Trustee pursuant to subsection (e) of this
Section 4.1.
(c) Election and Term. The Trustees shall be elected by the Shareholders
of the Trust at the first meeting of Shareholders immediately prior to the
initial issuance of shares of the Trust in a public offering and the term of
office of any Trustees in office before such election shall terminate at the
time of such election. Subject to Section 16(a) of the 1940 Act and to the
preceding sentence of this subsection (c) and to any requirements specified in
the By-Laws, the Trustees shall have the power to set and alter the terms of
office of the Trustees, and at any time to lengthen or shorten their own terms
or make their terms of unlimited duration, to elect their own successors and,
pursuant to subsection (f) of this Section 4.1, to appoint Trustees to fill
vacancies; provided that Trustees shall be elected by a Majority Shareholder
Vote at any such time or times as the Trustees shall determine that such action
is required under Section 16(a) of the 1940 Act or, if not so required, that
such action is advisable; and further provided that, after the initial election
of Trustees by the Shareholders, the term of office of any incumbent Trustee
shall continue until the termination of this Trust or his earlier death,
resignation, retirement, bankruptcy, adjudicated incompetency or other
incapacity or removal, or if not so terminated, until the election of such
Trustee's successor in office has become effective in accordance with this
subsection (c).
(d) Resignation and Retirement. Any Trustee may resign his trust or retire
as a Trustee, by a written instrument signed by him and delivered to the other
Trustees or to any officer of the Trust, and such resignation or retirement
shall take effect upon such delivery or upon such later date as is specified in
such instrument.
(e) Removal. Any Trustee may be removed: (i) with cause at any time by
written instrument, signed by at least two thirds ( 2/3) of the number of
Trustees prior to such removal, specifying the date upon which such removal
shall become effective; or (ii) by vote of Shareholders holding a majority of
the Shares of the Trust then outstanding, cast in person or by proxy at any
meeting called for the purpose; or (iii) by a written declaration signed by
Shareholders holding not less than a majority of the Shares of the Trust then
outstanding. Notwithstanding any other provisions set forth in this Declaration
of Trust, this Section 4.1(e) may not be amended (either directly or indirectly
through a reorganization) without the approval of (i) 80% of the Trustees then
in office or (ii) by vote of Shareholders holding a majority of the Shares of
the Trust then outstanding.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including an increase in the number of Trustees, may (but need not
unless required by the 1940 Act) be filled by a Majority (or a supermajority if
required by the By-Laws) of the Trustees, subject to the provisions of Section
16(a) of the 1940 Act, through the appointment in writing of such other
individual as such remaining Trustees in their discretion shall determine;
provided that if there shall be no Trustees in office, such vacancy or vacancies
shall be filled by Majority Shareholders Vote. Any such appointment or election
shall be effective upon such individual's written acceptance of his appointment
as a Trustee and his agreement to be bound by the provisions of this Declaration
of Trust, except that any such appointment in anticipation of a vacancy to occur
by reason of retirement, resignation or increase in the number of Trustees to be
effective at a later date shall become effective only at or after the effective
date of said retirement, resignation or increase in the number of Trustees.
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(g) Acceptance of Trusts. Whenever any conditions to the appointment or
election of any individual as a Trustee hereunder who was not, immediately prior
to such appointment or election, acting as a Trustee shall have been satisfied,
such individual shall become a Trustee and the Trust estate shall vest in the
new Trustee, together with the continuing Trustees, without any further act or
conveyance. Such new Trustee shall accept such appointment or election in
writing and agree in such writing to be bound by the provisions hereof, but the
execution of such writing shall not be requisite to the effectiveness of the
appointment or election of a new Trustee.
(h) Effect of Death. Resignation, etc. No vacancy, whether resulting from
the death, resignation, retirement, bankruptcy, adjudicated incompetency,
incapacity, or removal of any Trustee, an increase in the number of Trustees or
otherwise, shall operate to annul or terminate the Trust hereunder or to revoke
or terminate any existing agency or contract created or entered into pursuant to
the terms of this Declaration of Trust. Until such vacancy is filled as provided
in this Section 4.1, the Trustees in office (if any), regardless of their
number, shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Declaration. Upon incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require in order to effect
the purpose of this Paragraph.
(i) Convevance. In the event of the resignation or removal of a Trustee
or his otherwise ceasing to be a Trustee, such former Trustee or his legal
representative shall, upon request of the continuing Trustees, execute and
deliver such documents as may be required for the purpose of consummating or
evidencing the conveyance to the Trust or the remaining Trustees of any Trust
Property held in such former Trustee's name, but the execution and delivery of
such documents shall not be requisite to the vesting of title to the Trust
Property in the remaining Trustees, as provided in subsection (g) of this
Section 4.1 and in Section 4.13 hereof.
(j) No Accounting. Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no Person ceasing to be
a Trustee (nor the estate of any such Person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
SECTION 4.2. Trustees' Meetings: Participation by Telephone. etc. Annual
and special meetings may be held from time to time, in each case, upon the call
of such officers as may be thereunto authorized by the By-Laws or vote of the
Trustees, or by any three (3) Trustees, or pursuant to a vote of the Trustees
adopted at a duly constituted meeting of the Trustees, and upon such notice as
shall be provided in the By-Laws. Any such meeting may be held within or without
the state of Delaware. The Trustees may act with or without a meeting, and a
written consent to any matter, signed by all of the Trustees, shall be
equivalent to action duly taken at a meeting of the Trustees, duly called and
held. Except as otherwise provided by the 1940 Act or other applicable law, or
by this Declaration of Trust or the By-Laws, any action to be taken by the
Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum, consisting of at least a Majority of the Trustees, being
present), within or without Delaware. If authorized by the By-Laws, all or any
one or more Trustees may participate in a meeting of the Trustees or any
Committee thereof by means of conference telephone or similar means of
communication by means of which all Persons participating in the meeting can
hear each other, and participation in a meeting pursuant to such means of
communication shall constitute presence in person at such meeting. The minutes
of any meeting thus held shall be prepared in the same manner as a meeting at
which all participants were present in person.
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SECTION 4.3. Committees; Delegation. The Trustees shall have power,
consistent with their ultimate responsibility to supervise the affairs of the
Trust, to delegate from time to time to one or more other Committees, or to any
single Trustee, the doing of such things and the execution of such deeds or
other instruments, either in the name of the Trust or the names of the Trustees
or as their attorney or attorneys in fact, or otherwise as the Trustees may from
time to time deem expedient, and any agreement, deed, mortgage, lease or other
instrument or writing executed by the Trustee or Trustees or other Person to
whom such delegation was made shall be valid and binding upon the Trustees and
upon the Trust.
SECTION 4.4. Officers. The Trustees shall annually elect such officers or
agents, who shall have such powers, duties and responsibilities as the Trustees
may deem to be advisable, and as they shall specify by resolution or in the
By-Laws. Except as may be provided in the By-Laws, any officer elected by the
Trustees may be removed at any time with or without cause. Any two (2) or more
offices may be held by the same individual.
SECTION 4.5. Compensation of Trustees and Officers. The Trustees shall fix
the compensation of all officers and Trustees. Without limiting the generality
of any of the provisions hereof, the Trustees shall be entitled to receive
reasonable compensation for their general services as such, and to fix the
amount of such compensation, and to pay themselves or any one or more of
themselves such compensation for special services, including legal, accounting,
or other professional services, as they in good faith may deem reasonable. No
Trustee or officer resigning (except where a right to receive compensation for a
definite future period shall be expressly provided in a written agreement with
the Trust, duly approved by the Trustees) and no Trustee or officer removed
shall have any right to any compensation as such Trustee or officer for any
period following his resignation or removal, or any right to damages on account
of his removal, whether his compensation be by the month, or the year or
otherwise.
SECTION 4.6. Ownership of Shares and Securities of the Trust. Any Trustee,
and any officer, employee or agent of the Trust, and any organization in which
any such Person is interested, may acquire, own, hold and dispose of Shares of
any Series and other Securities of the Trust for his or its individual account,
and may exercise all rights of a holder of such Shares or Securities to the same
extent and in the same manner as if such Person were not such a Trustee,
officer, employee or agent of the Trust; subject, in the case of Trustees and
officers, to the same limitations as directors or officers (as the case may be)
of a Delaware business corporation; and the Trust may issue and sell or cause to
be issued and sold and may purchase any such Shares or other Securities from any
such Person or any such organization, subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Series or other Securities of the Trust generally.
SECTION 4.7. Right of Trustees and Officers to Own Property or to Engage in
Business; Authority of Trustees to Permit Others to Do Likewise. The Trustees,
in their capacity as Trustees, and (unless otherwise specifically directed by
vote of the Trustees) the officers of the Trust in their capacity as such, shall
not be required to devote their entire time to the business and affairs of the
Trust. Except as otherwise specifically provided by vote of the Trustees, or by
agreement in any particular case, any Trustee or officer of the Trust may
acquire, own, hold and dispose of, for his own individual account, any property,
and acquire, own, hold, carry on and dispose of, for his own individual account,
any business entity or business activity, whether similar or dissimilar to any
property or business entity or business activity invested in or carried on by
the Trust, and without first offering the same as an investment opportunity to
the Trust, and may exercise all rights in respect thereof as if he were not a
Trustee or officer of the Trust. The Trustees shall also have power, generally
or in specific cases, to permit
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employees or agents of the Trust to have the same rights (or lesser rights) to
acquire, hold, own and dispose of property and businesses, to carry on
businesses, and to accept investment opportunities without offering them to the
Trust, as the Trustees have by virtue of this Section 4.7.
SECTION 4.8. Reliance on Experts. The Trustees and officers may consult
with counsel, engineers, brokers, appraisers, auctioneers, accountants,
investment bankers, securities analysts or other Persons (any of which may be a
firm in which one or more of the Trustees or officers is or are members or
otherwise interested) whose profession gives authority to a statement made by
them on the subject in question, and who are reasonably deemed by the Trustees
or officers in question to be competent, and the advice or opinion of such
Persons shall be full and complete personal protection to all of the Trustees
and officers in respect of any action taken or suffered by them in good faith
and in reliance on or in accordance with such advice or opinion. In discharging
their duties, Trustees and officers, when acting in good faith, may rely upon
financial statements of the Trust represented to them to be correct by any
officer of the Trust having charge of its books of account, or stated in a
written report by an independent certified public accountant fairly to present
the financial position of the Trust. The Trustees and officers may rely, and
shall be personally protected in acting, upon any instrument or other document
believed by them to be genuine.
SECTION 4.9. Surety Bonds. No Trustee, officer, employee or agent of the
Trust shall, as such, be obligated to give any bond or surety or other security
for the performance of any of his duties, unless required by applicable law or
regulation, or unless the Trustees shall otherwise determine in any particular
case.
SECTION 4.10. Apparent Authority of Trustees and Officers. No purchaser,
lender, transfer agent or other Person dealing with the Trustees or any officer
of the Trust shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Trustees or by such officer, or to make
inquiry concerning or be liable for the application of money or property paid,
loaned or delivered to or on the order of the Trustees or of such officer.
SECTION 4.11. Other Relationships Not Prohibited. The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party (as defined in Section 5.2 hereof), or of or for any
parent or affiliate of any Contracting Party, or that the Contracting Party
or any parent or affiliate thereof is a Shareholder or has an interest in
the Trust or any Series, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or have other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or to the holders of Shares of any Series; provided that, in the case
of any relationship or interest referred to in the preceding clause (i) on the
part of any Trustee or officer of the Trust, either (x) the material facts as to
such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority
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of such Trustees not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all of the
Trustees), (y) the material facts as to such relationship or interest and as to
the contract have been disclosed to or are known by the Shareholders entitled to
vote thereon and the contract involved is specifically approved in good faith by
vote of the Shareholders, or (z) the specific contract involved is fair to the
Trust as of the time it is authorized, approved or ratified by the Trustees or
by the Shareholders.
SECTION 4.12. Payment of Trust Expenses. The Trustees are authorized to pay
or to cause to be paid out of the principal or income of the Trust, or partly
out of principal and partly out of income, and according to any allocation to a
particular Series and Class made by them pursuant to Section 6.1(f) hereof, all
expenses, fees, charges, taxes and liabilities incurred or arising in connection
with the business and affairs of the Trust or in connection with the management
thereof, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
Investment Adviser, Administrator, Distributor, Principal Underwriter, auditor,
counsel, Custodian, Transfer Agent, Dividend Disbursing Agent, Accounting Agent,
Shareholder Servicing Agent, and such other agents, consultants, and independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur.
SECTION 4.13. Ownership of the Trust Property. Legal title to all the Trust
Property shall be vested in the Trustees as joint tenants, except that the
Trustees shall have power to cause legal title to any Trust Property to be held
by or in the name of one or more of the Trustees, or in the name of the Trust,
or of any particular Series, or in the name of any other Person as nominee, on
such terms as the Trustees may determine; provided that the interest of the
Trust and of the respective Series therein is appropriately protected. The
right, title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
termination of the term of office of a Trustee as provided in Section 4.1(c),
(d) or (e) hereof, such Trustee shall automatically cease to have any right,
title or interest in any of the Trust Property, and the right, title and
interest of such Trustee in the Trust Property shall vest automatically in the
remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to Section 4.1(i) hereof.
SECTION 4.14. By-Laws. The Trustees may adopt and from time to time amend
or repeal By-Laws for the conduct of the business of the Trust.
ARTICLE 5
DELEGATION OF MANAGERIAL RESPONSIBILITIES
SECTION 5.1. Appointment; Action by Less than All Trustees. The Trustees
shall be responsible for the general operating policy of the Trust and for the
general supervision of the business of the Trust conducted by officers, agents,
employees or advisers of the Trust or by independent contractors, but the
Trustees shall not be required personally to conduct all the business of the
Trust and, consistent with their ultimate responsibility as stated herein, the
Trustees may appoint, employ or contract with one or more officers, employees
and agents to conduct, manage and/or supervise the operations of the Trust, and
may grant or delegate such authority to such officers, employees and/or agents
as the Trustees may, in their sole discretion, deem to be necessary or
desirable, without regard to whether such authority is normally granted or
delegated by trustees. With respect to those matters of the operation and
business of
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the Trust which they shall elect to conduct themselves, except as otherwise
provided by this Declaration or the By-Laws, if any, the Trustees may authorize
any single Trustee or defined group of Trustees, or any committee consisting of
a number of Trustees less than the whole number of Trustees then in office
without specification of the particular Trustees required to be included
therein, to act for and to bind the Trust, to the same extent as the whole
number of Trustees could do, either with respect to one or more particular
matters or classes of matters, or generally.
SECTION 5.2. Certain Contracts. Subject to compliance with the provisions
of the 1940 Act, but notwithstanding any limitations of present and future law
or custom in regard to delegation of powers by trustees generally, the Trustees
may, at any time and from time to time in their discretion and without limiting
the generality of their powers and authority otherwise set forth herein, enter
into one or more contracts with any one or more corporations, trusts,
associations, partnerships, limited partnerships or other types of
organizations, or individuals ("Contracting Party"), to provide for the
performance and assumption of some or all of the following services, duties and
responsibilities to, for or on behalf of the Trust and/or any Series, and/or the
Trustees, and to provide for the performance and assumption of such other
services, duties and responsibilities in addition to those set forth below, as
the Trustees may deem appropriate:
(a) Advisory. An investment advisory or management agreement whereby the
agent shall undertake to furnish the Trust (or any Series thereof) such
management, investment advisory or supervisory, statistical and research
facilities and services, and such other facilities and services, if any, as the
Trustees shall from time to time consider desirable, all upon such terms and
conditions as the Trustees may in their discretion determine to be not
inconsistent with this Declaration, the applicable provisions of the 1940 Act or
any applicable provisions of the By-Laws (any such agent being herein referred
to as an "Investment Adviser"). To the extent required by the 1940 Act, any such
advisory or management agreement and any amendment thereto shall be subject to
approval by a Majority Shareholder Vote at a meeting of the Shareholders of the
Trust (or applicable Series). Notwithstanding any provisions of this
Declaration, the Trustees may authorize the Investment Adviser (subject to such
general or specific instructions as the Trustees may from time to time adopt) to
effect purchases, sales, loans or exchanges of securities of the Trust on behalf
of the Trustees or may authorize any officer or employee of the Trust or any
Trustee to effect such purchases, sales, loans or exchanges pursuant to
recommendations of the Investment Adviser (and all without further action by the
Trustees). Any such purchases, sales, loans and exchanges shall be deemed to
have been authorized by all of the Trustees. The Trustees may, in their sole
discretion, call a meeting of Shareholders in order to submit to a vote of
Shareholders of the Trust (or applicable Series) at such meeting the approval of
continuance of any such investment advisory or management agreement.
(b) Administration. An agreement whereby the agent, subject to the general
supervision of the Trustees and in conformity with any policies of the Trustees
with respect to the operations of the Trust and each Series thereof, will
supervise all or any part of the operations of the Trust (or any Series
thereof), and will provide all or any part of the administrative and clerical
personnel, office space and office equipment and services appropriate for the
efficient administration and operations of the Trust (or any Series thereof)
(any such agent being herein referred to as an "Administrator").
(c) Underwriting. An agreement providing for the sale of Shares of the
Trust (or any Series thereof) to net the Trust not less than the net asset value
per Share (as described in Section 6.1(l) hereof) and pursuant to which the
Trust may appoint the other party to such agreement as its principal underwriter
or sales agent for the distribution of such Shares. The agreement shall contain
such terms and
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conditions as the Trustees may in their discretion determine to be not
inconsistent with this Declaration, the applicable provisions of the 1940 Act
and any applicable provisions of the By-Laws (any such agent being herein
referred to as a "Distributor" or a "Principal Underwriter," as the case may
be).
(d) Custodian. The appointment of an agent meeting the requirements for a
custodian for the assets of Investment Companies contained in the 1940 Act as
custodian of the Securities and cash of the Trust (or any Series thereof) and of
the accounting records in connection therewith (any such agent being herein
referred to as a "Custodian").
(e) Transfer and Dividend Disbursing Agent. An agreement with an agent to
maintain records of the ownership of outstanding Shares, the issuance and
redemption and the transfer thereof (any such agent being herein referred to as
a "Transfer Agent"), and to disburse any dividends declared by the Trustees and
in accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends (any such agent being
herein referred to as a "Dividend Disbursing Agent").
(f) Shareholder Servicing. An agreement with an agent to provide service
with respect to the relationship of the Trust and its Shareholders, records with
respect to Shareholders and their Shares, and similar matters (any such agent
being herein referred to as a "Shareholder Servicing Agent").
(g) Accounting. An agreement with an agent to handle all or any part of the
accounting responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise (any such agent being herein referred to as an
"Accounting Agent").
In addition, the Trustees may from time to time cause the Trust (or any Series
thereof) to enter into agreements with respect to such other services and upon
such other terms and conditions as they may deem necessary, appropriate or
desirable. The same Person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into subcontractual arrangements relative to any
of the matters referred to in subsections (a) through (g) of this Section 5.2.
Section 5.3. Distribution Arrangements. Subject to compliance with the 1940
Act, the Trustees may adopt and amend or repeal from time to time and implement
one or more plans of distribution pursuant to Rule 12b-1 of the 1940 Act which
plan(s) will provide for the payment of specified marketing, distribution and
shareholder relations expenses of the Trust and any or all Series and their
agents and the agents of such agents.
Section 5.4. Service Arrangements. Subject to compliance with the 1940 Act,
the Trustees may adopt and amend or repeal from time to time and implement one
or more service plans which plans will provide for the payment of ongoing
services to holders of the shares of such Trust (or any Series thereof) and in
connection with the maintenance of such shareholders' accounts.
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ARTICLE 6
SERIES AND SHARES
SECTION 6.1. Description of Series and Shares.
(a) General. The beneficial interest in the Trust shall be divided into
Shares (either full or fractional) with $.01 par value per Share, of which an
unlimited number may be issued. The Trustees shall have the authority from time
to time to establish and designate one or more separate, distinct and
independent Series of Shares (each of which Series shall represent interests
only in the asset attributed by the Trustees to such Series), and to authorize
separate Classes of Shares of the Trust (or any such Series), as they deem
necessary or desirable. All Shares shall be of one class, provided that the
Trustees shall have the power to classify or reclassify any unissued Shares of
any Series into any number of additional Classes of such Series.
(b) Establishment. etc. of Series and Classes; Authorization of Shares. The
establishment and designation of any Series and the authorization of the Shares
thereof shall be effective upon the execution by a Majority of the Trustees (or
by an officer of the Trust pursuant to the vote of a Majority of the Trustees)
of an instrument setting forth such establishment and designation and the
relative rights and preferences of the Shares of such Series or Class and the
manner in which the same may be amended (a "Certificate of Designation"), and
may provide that the number of Shares of such Series or Class which may be
issued is unlimited, or may limit the number issuable. At any time that there
are no Shares outstanding of any particular Series or Class previously
established and designated, the Trustees may by an instrument executed by a
Majority of the Trustees (or by an officer of the Trust pursuant to the vote of
a Majority of the Trustees) terminate such Series or Class and the establishment
and designation thereof and the authorization of its Shares (a "Certificate of
Termination"). Each Certificate of Designation, Certificate of Termination and
any instrument amending a Certificate of Designation shall have the status of an
amendment to this Declaration of Trust.
(c) Character of Separate Series and Shares Thereof. Each Series
established hereunder shall represent beneficial interests in a separate
component of the assets of the Trust. Holders of Shares of a Series shall be
considered Shareholders of such Series, but such Shareholders shall also be
considered Shareholders of the Trust for purposes of receiving reports and
notices and, except as otherwise provided herein or in the Certificate of
Designation of a particular Series, or as required by the 1940 Act or other
applicable law, the right to vote, all without distinction by Series. The
Trustees shall have exclusive power without the requirement of Shareholder
approval to establish and designate such separate and distinct Series, and to
fix and determine the relative rights and preferences as between the shares of
the respective Series, and as between the Classes of the Trust (or any Series
thereof), as to rights of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other distributions
and on liquidation, sinking or purchase fund provisions, conversion rights, and
conditions under which the Shareholders of the several Series or the several
Classes of any Series of Shares shall have separate voting rights or no voting
rights. Except as otherwise provided as to a particular Series herein, or in the
Certificate of Designation therefor, the Trustees shall have all the rights and
powers, and be subject to all the duties and obligations, with respect to each
such Series and the assets and affairs thereof as they have under this
Declaration with respect to the Trust and the Trust Property in general.
Separate and distinct records shall be maintained for each Series of Shares and
the assets and liabilities attributable thereto.
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(d) Consideration for Shares. The Trustees may issue Shares of the Trust
(or any Series thereof) for such consideration (which may include property
subject to, or acquired in connection with the assumption of, liabilities) and
on such terms as they may determine (or for no consideration if pursuant to a
Share dividend or split-up), all without action or approval of the Shareholders.
All Shares when so issued on the terms determined by the Trustees shall be fully
paid and nonassessable (but may be subject to mandatory contribution back to the
Trust (or applicable Series) as provided in Section 6.1(l) hereof. The Trustees
may classify or reclassify any unissued Shares, or any Shares of the Trust (or
any Series thereof) previously issued and reacquired by the Trust, into Shares
of the Trust or one or more other Series that may be established and designated
from time to time.
(e) Assets Belonging to Series. Any portion of the Trust Property allocated
to a particular Series, and all consideration received by the Trust for the
issue or sale of Shares of such Series, together with all assets in which such
consideration is invested or reinvested, all interest, dividends, income,
earnings, profits and gains therefrom, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall be held by the Trustees in trust for the benefit of
the holders of Shares of that Series and shall irrevocably belong to that Series
for all purposes, and shall be so recorded upon the books of account of the
Trust, and the Shareholders of such Series shall not have, and shall be
conclusively deemed to have waived, any claims to the assets of any Series of
which they are not Shareholders. Such consideration, assets, interest,
dividends, income, earnings, profits, gains and proceeds, together with any
General Items allocated to that Series as provided in the following sentence,
are herein referred to collectively as assets "belonging to" that Series. In the
event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular Series (collectively, "General Items"), the Trustees shall
allocate such General Items to and among any one or more of the Series
established and designated from time to time in such manner and on such basis as
they, in their sole discretion, deem fair and equitable; and any General Items
so allocated to a particular Series shall belong to and be part of the assets
belonging to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all purposes.
(f) Liabilities of Series. The assets belonging to each particular Series
shall be charged with the liabilities in respect of that Series and all
expenses, costs, charges and reserves attributable to that Series, and any
general liabilities, expenses, costs, charges or reserves of the Trust which are
not readily identifiable as pertaining to any particular Series shall be
allocated and charged by the Trustees to and among any one or more of the Series
established and designated from time to time in such manner and on such basis as
the Trustees in their sole discretion deem fair and equitable. The indebtedness,
expenses, costs, charges and reserves allocated and so charged to a particular
Series are herein referred to as "liabilities of" that Series. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all purposes. Any
creditor of any Series may look only to the assets belonging to that Series to
satisfy such creditor's debt.
(g) Dividends. Dividends and distributions on Shares of a particular Series
may be paid with such frequency as the Trustees may determine, which may be
daily or otherwise pursuant to a standing resolution or resolutions adopted only
once or with such frequency as the Trustees may determine, to the Shareholders
of that Series, from such of the income, accrued or realized, and capital gains,
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realized or unrealized, and out of the assets belonging to that Series, as the
Trustees may determine, after providing for actual and accrued liabilities of
that Series. All dividends and distributions on Shares of a particular Series
shall be distributed pro rata to the Shareholders of that Series in proportion
to the number of such Shares held by such holders at the date and time of record
established for the payment of such dividends or distributions, except that the
dividends and distributions of investment income and capital gains with respect
to each Class of Shares of a particular Series shall be in such amount as may be
declared from time to time by the Trustees, and such dividends and distributions
may vary as between such Classes to reflect differing allocations of the
expenses of the Series between the Shareholders of such several Classes and any
resultant differences between the net asset value of such several Classes to
such extent and for such purposes as the Trustees may deem appropriate and
further except that, in connection with any dividend or distribution program or
procedure, the Trustees may determine that no dividend or distribution shall be
payable on Shares as to which the Shareholder's purchase order and/or payment
have not been received by the time or times established by the Trustees under
such program or procedure, or that dividends or distributions shall be payable
on Shares which have been tendered by the holder thereof for redemption or
repurchase, but the redemption or repurchase proceeds of which have not yet been
paid to such Shareholder. Such dividends and distributions may be made in cash,
property or Shares of any Class of that Series or a combination thereof as
determined by the Trustees, or pursuant to any program that the Trustees may
have in effect at the time for the election by each Shareholder of the mode of
the making of such dividend or distribution to that Shareholder. Any such
dividend or distribution paid in Shares will be paid at the net asset value
thereof as determined in accordance with subsection (l) of this Section 6.1.
(h) Liquidation. In the event of the liquidation or dissolution of the
Trust (or any particular Series), the Shareholders of the Trust (or that Series)
shall be entitled to receive, when and as declared by the Trustees, the excess
of the assets belonging to the Trust (or that Series) over the liabilities of
such Series. The assets so distributable to the Shareholders of the Trust (or
that Series) shall be distributed among such Shareholders in proportion to the
number of Shares of the Trust (or that Series) held by them and recorded on the
books of the Trust. The liquidation of the Trust (or any particular Series) may
be authorized by vote of a Majority of the Trustees, subject to the affirmative
vote of "a majority of the outstanding voting securities" of that Series, as the
quoted phrase is defined in the 1940 Act, determined in accordance with clause
(iii) of the definition of "Majority Shareholder Vote" in Section 1.4 hereof.
(i) Voting. The Shareholders shall have the voting rights set forth in or
determined under Article 7 hereof.
(j) Redemption by Shareholder. Each holder of Shares of the Trust (or a
particular Series thereof) shall have the right at such times as may be
permitted by the Trust, but no less frequently than required by the 1940 Act, to
require the Trust (or such Series) to redeem all or any part of his Shares of
the Trust (or such Series) at a redemption price equal to the net asset value
per Share of the Trust (or Series) next determined in accordance with subsection
(l) of this Section 6.1 after the Shares are properly tendered for redemption;
provided, that the Trustees may from time to time, in their discretion,
determine and impose a fee for such redemption and that the proceeds of the
redemption of Shares (including a fractional Share) of any Class of the Trust
(or any Series thereof) shall be reduced by the amount of any applicable
contingent deferred sales charge or other sales charge, if any, payable on such
redemption to the distributor of Shares of such Class pursuant to the terms of
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the initial issuance of the Shares of such Class (to the extent consistent with
the 1940 Act or regulations or exemptions thereunder) and the Trust shall
promptly pay to such distributor the amount of such deferred sales charge.
Payment of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may
make payment wholly or partly in Securities or other assets belonging to such
Series at the value of such Securities or assets used in such determination of
net asset value. Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the holders of Shares of
the Trust (or any Series thereof) to require the Trust to redeem Shares of the
Trust (or such Series) during any period or at any time when and to the extent
permissible under the 1940 Act.
(k) Redemption at the Option of the Trust. The Trustees shall have the
power to redeem Shares of the Trust (or any Series thereof) at a redemption
price determined in accordance with Section 6.1(j), if at any time (i) the total
investment in such account does not have a value of at least such minimum amount
as may be specified in the Prospectus for the Trust (or such Series) from time
to time (ii) the number of Shares held in such account is equal to or in excess
of a specified percentage of Shares of the Trust or any Series as set forth from
time to time in the applicable Prospectus. In the event the Trustees determine
to exercise their power to redeem Shares provided in this Section 6.1(k), the
Shareholder shall be notified that the value of his account is less than the
applicable minimum amount and shall be allowed 30 days to make an appropriate
investment before redemption is processed.
(l) Net Asset Value. The net asset value per Share of the Trust (or any
Series or Class) at any time shall be the quotient obtained by dividing the
value of the net assets of the Trust (or such Series or Class) at such time
(being the current value of the assets belonging to the Trust (or such Series or
Class), less its then existing liabilities) by the total number of Shares of the
Trust (or such Series) then outstanding, all determined in accordance with the
methods and procedures, including without limitation those with respect to
rounding, established by the Trustees from time to time in accordance with the
requirements of the 1940 Act. The net asset value of the several Classes of the
Trust (or a particular Series) shall be separately computed, and may vary from
one another. The Trustees shall establish procedures for the allocation of
investment income or capital gains and expenses and liabilities of a particular
Series between the several Classes of the Trust (or such Series). The Trustees
may determine to maintain the net asset value per Share of the Trust or any
Series or Class at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declaration of income attributable to the Trust or such Series or
Class as dividends payable in additional Shares of the Trust or such Series or
Class at the designated constant dollar amount and for the handling of any
losses attributable to the Trust or such Series or Class. Such procedures may
provide that in the event of any loss each Shareholder shall be deemed to have
contributed to the shares of beneficial interest account of the Trust or such
Series or Class his pro rata portion of the total number of Shares required to
be canceled in order to permit the net asset value per Share of the Trust or
such Series or Class to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Trust shall be deemed
to have expressly agreed, by his investment in the Trust (or any Series thereof)
with respect to which the Trustees shall have adopted any such procedure, to
make the contribution referred to in the preceding sentence in the event of any
such loss.
(m) Transfer. All Shares of the Trust and each Series shall be
transferable, but transfers of Shares of the
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Trust or a particular Series will be recorded on the Share transfer records of
the Trust applicable to the Trust or such Series only at such times as
Shareholders shall have the right to require the Trust to redeem Shares of the
Trust or such Series and at such other times as may be permitted by the
Trustees.
(n) Equality. All Shares of each particular Series shall represent an equal
proportionate interest in the assets belonging to that Series (subject to the
liabilities of that Series), and each Share of any particular Series shall be
equal to each other Share thereof; but the provisions of this sentence shall not
restrict any distinctions between the several Classes of a Series permissible
under this Section 6.1 or under Section 7. 1 hereof nor any distinctions
permissible under subsection (g) of this Section 6.1 that may exist with respect
to dividends and distributions on Shares of the same Series. The Trustees may
from time to time divide or combine the Shares of any class of particular Series
into a greater or lesser number of Shares of that class of a Series without
thereby changing the proportionate beneficial interest in the assets belonging
to that Series or in any way affecting the rights of the holders of Shares of
any other Series.
(o) Rights of Fractional Shares. Any fractional Share of the Trust (or any
Series thereof) shall carry proportionately all the rights and obligations of a
whole Share of the Trust (or such Series), including rights and obligations with
respect to voting, receipt of dividends and distributions, redemption of Shares,
and liquidation of the Trust or of the Series to which they pertain.
(p) Conversion Rights. (i) Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Series shall have the right to convert said Shares into Shares of
one or more other Series, that holders of any Class of the Trust or a Series of
Shares shall have the right to convert said Shares of such Class into Shares of
one or more other Classes of the Trust or such Series, and that Shares of any
Class of the Trust or a Series shall be automatically converted into Shares of
another Class of the Trust or such Series, in each case in accordance with such
requirements and procedures as the Trustees may establish.
(ii) The number of Shares of into which a convertible Share shall convert
shall equal the number (including for this purpose fractions of a Share)
obtained by dividing the net asset value per Share for purposes of sales and
redemptions of the converting Share on the Conversion Date by the net asset
value per Share for purposes of sales and redemptions of the Class of Shares
into which it is converting on the Conversion Date.
(iii) On the Conversion Date, the Share converting into another share will
cease to accrue dividends and will no longer be deemed outstanding and the
rights of the holders thereof (except the right to receive the number of target
Shares into which the converting Shares have been converted and declared but
unpaid dividends to the Conversion Date) will cease. Certificates representing
Shares resulting from the conversion need not be issued until certificates
representing Shares converted, if issued, have been received by the Trust or its
agent duly endorsed for transfer.
(vi) The Trust will appropriately reflect the conversion of Shares of one
Class of the Trust (or a Series thereof) into Shares of another Class of the
Trust (or such Series) on the first periodic statements of account sent to
Shareholders of record affected which provide account information with respect
to a reporting period which includes the date such conversion occurred.
SECTION 6.2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust or of a Transfer Agent or similar agent for the Trust,
which books shall be maintained
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separately for the Shares of each Series that has been authorized. Certificates
evidencing the ownership of Shares need not be issued except as the Trustees may
otherwise determine from time to time, and the Trustees shall have power to call
outstanding Share certificates and to replace them with book entries. The
Trustees may make such rules as they consider appropriate for the issuance of
Share certificates, the use of facsimile signatures, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
Transfer Agent or similar agent, as the case may be, shall be conclusive as to
who are the Shareholders and as to the number of Shares of the Trust and, if
designated, each Series thereof held from time to time by each such Shareholder.
The holders of Shares of the Trust and, if designated, each Series thereof
shall upon demand disclose to the Trustees in writing such information with
respect to their direct and indirect ownership of Shares of the Trust or, if
designated, such Series as the Trustees deem necessary to comply with the
provisions of the Internal Revenue Code, or to comply with the requirements of
any other authority.
SECTION 6.3. Investments in the Trust. The Trustees may accept investments
in any Series of the Trust from such Persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any Distributor,
Principal Underwriter, Custodian, Transfer Agent or other Person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares, whether or not conforming to such
authorized terms.
SECTION 6.4. No Preemptive Rights. No Shareholder, by virtue of holding
Shares of the Trust or, if designated, any Series thereof, shall have any
preemptive or other right to subscribe to any additional Shares of the Trust or
such Series, or to any shares of any other Series, or any other Securities
issued by the Trust.
SECTION 6.5. Status of Shares. Every Shareholder, by virtue of having
become a Shareholder, shall be held to have expressly assented and agreed to the
terms hereof and to have become a party hereto. Shares shall be deemed to be
personal property, giving only the rights provided herein. Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole or any part of
the Trust Property or right to call for a partition or division of the same or
for an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. The death of a Shareholder during the continuance of the Trust shall
not operate to terminate the Trust or any Series, nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Declaration of Trust.
ARTICLE 7
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.1. Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Sections 4.1(c) and
(e) hereof, (ii) with respect to the approval or termination in accordance with
the 1940 Act of any contract with a Contracting Party as provided in Section 5.2
hereof as to which Shareholder approval is required by the 1940 Act, (iii) with
respect to any termination or reorganization of the Trust or any Series to the
extent and as provided in Sections 9.2, 9.3 and 9.4 hereof, (iv) with respect to
any amendment of this Declaration of Trust to the extent and as provided in
Section 9.5 hereof, (v) to the same extent as the stockholders of a Delaware
business
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corporation as to whether or not a court action, proceeding or claim should or
should not be brought or maintained derivatively or as a class action on behalf
of the Trust or any Series, or the Shareholders of any of them (provided.
however, that a Shareholder of a particular Series shall not in any event be
entitled to maintain a derivative or class action on behalf of any other Series
or the Shareholders thereof), and (vi) with respect to such additional matters
relating to the Trust as may be required by the 1940 Act, this Declaration of
Trust, the By-Laws or any registration of the Trust with the Commission (or any
successor agency) or any State, or as the Trustees may consider necessary or
desirable. If and to the extent that the Trustees shall determine that such
action is required by law or by this Declaration, they shall cause each matter
required or permitted to be voted upon at a meeting or by written consent of
Shareholders to be submitted to a separate vote of the outstanding Shares of
each Series entitled to vote thereon; provided, that (i) when expressly required
by the 1940 Act or by other law, actions of Shareholders shall be taken by
Single Class Voting of all outstanding Shares whose holders are entitled to vote
thereon; and (ii) when the Trustees determine that any matter to be submitted to
a vote of Shareholders affects only the rights or interests of Shareholders of
one or more but not all Series or of one or more but not all Classes of the
Trust or a single Series (including without limitation any distribution plan
pursuant to Rule 12b-1 of the 1940 Act applicable to such Class), then only the
Shareholders of the Series or Classes so affected shall be entitled to vote
thereon. Any matter required to be submitted to shareholders and affecting one
or more Series shall require separate approval by the required vote of
Shareholders of the Trust or each affected Series; provided, however, that to
the extent required by the 1940 Act, there shall be no separate Series votes on
the election or removal of Trustees, the selection of auditors for the Trust and
its Series or approval of any agreement or contract entered into by the Trust or
any Series. Shareholders of a particular Series shall not be entitled to vote on
any matter that affects only one or more other Series.
SECTION 7.2. Number of Votes and Manner of Voting: Proxies. On each matter
submitted to a vote of the Shareholders, each holder of Shares of the Trust or,
if applicable, any Series shall be entitled to a number of votes equal to the
number of Shares of the Trust or such Series standing in his name on the books
of the Trust. There shall be no cumulative voting in the election or removal of
Trustees. Shares may be voted in person or by proxy. A proxy with respect to
Shares held in the name of two (2) or more Persons shall be valid if executed by
any one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by Shareholders.
SECTION 7.3. Meetings. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided, or upon
any other matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be given by
the Trustees by mailing such notice at least seven (7) days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the Trust
when requested to do so in writing by Shareholders holding not less than ten
percent (10%) of the Shares then outstanding. If the Trustees shall fail to call
or give notice of any meeting of Shareholders for a period of thirty (30) days
after written application by Shareholders holding at least ten percent (10%) of
the Shares then outstanding requesting that a
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meeting be called for any other purpose requiring action by the Shareholders as
provided herein or in the By-Laws, then Shareholders holding at least ten
percent (10%) of the Shares then outstanding may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner provided for
herein in case of call thereof by the Trustees. Any meetings may be held within
or without The State of Delaware. Shareholders may only act with respect to
matters set forth in the notice to Shareholders.
SECTION 7.4. Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding thirty (30) days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than ninety (90) days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or any adjournment thereof or to be treated as
Shareholders of record for purposes of such other action, and any Shareholder
who was a Shareholder at the date and time so fixed shall be entitled to vote at
such meeting or any adjournment thereof or to be treated as a Shareholder of
record for purposes of such other action, even though he has since that date and
time disposed of his Shares, and no Shareholder becoming such after that date
and time shall be so entitled to vote at such meeting or any adjournment thereof
or to be treated as a Shareholder of record for purposes of such other action.
SECTION 7.5. Quorum and Required Vote. A majority of the Shares entitled to
vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held within a reasonable time after the
date set for the original meeting without the necessity of further notice. A
Majority Shareholder Vote at a meeting of which a quorum is present shall decide
any question, except when a different vote is required or permitted by any
provision of the 1940 Act or other applicable law or by this Declaration of
Trust or the By-Laws, or when the Trustees shall in their discretion require a
larger vote or the vote of a majority or larger fraction of the Shares of one or
more particular Series.
SECTION 7.6. Action By Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof or of the Shares of any particular Series as
shall be required by the 1940 Act or by any express provision of this
Declaration of Trust or the By-Laws or as shall be permitted by the Trustees)
consent to the action in writing and if the writings in which such consent is
given are filed with the records of the meetings of Shareholders, to the same
extent and for the same period as proxies given in connection with a
Shareholders' meeting. Such consent shall be treated for all purposes as a vote
taken at a meeting of Shareholders.
SECTION 7.7. Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders of
a Delaware business corporation under the Delaware business corporation law.
SECTION 7.8. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
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ARTICLE 8
LIMITATION OF LIABILITY: INDEMNIFICATION
SECTION 8.1. Trustees. Shareholders. etc. Not Personally Liable; Notice.
The Trustees, officers, employees and agents of the Trust, in incurring any
debts, liabilities or obligations, or in limiting or omitting any other actions
for or in connection with the Trust, are or shall be deemed to be acting as
Trustees, officers, employees or agents of the Trust and not in their own
capacities. No Shareholder shall be subject to any personal liability whatsoever
in tort, contract or otherwise to any other Person or Persons in connection with
the assets or the affairs of the Trust or of any Series, and subject to Section
8.4 hereof, no Trustee, officer, employee or agent of the Trust shall be subject
to any personal liability whatsoever in tort, contract, or otherwise, to any
other Person or Persons in connection with the assets or affairs of the Trust or
of any Series, save only that arising from his own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office or the discharge of his functions. The Trust (or if the
matter relates only to a particular Series, that Series) shall be solely liable
for any and all debts, claims, demands, judgments, decrees, liabilities or
obligations of any and every kind, against or with respect to the Trust or such
Series in tort, contract or otherwise in connection with the assets or the
affairs of the Trust or such Series, and all Persons dealing with the Trust or
any Series shall be deemed to have agreed that resort shall be had solely to the
Trust Property of the Trust or the Series Assets of such Series, as the case may
be, for the payment or performance thereof.
The Trustees shall use their best efforts to ensure that every note, bond,
contract, instrument, certificate or undertaking made or issued by the Trustees
or by any officers or officer shall give notice that a Certificate of Trust in
respect of the Trust is on file with the Secretary of the state of Delaware and
shall recite to the effect that the same was executed or made by or on behalf of
the Trust or by them as Trustees or Trustee or as officers or officer, and not
individually, and that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, or the particular Series in question, as the
case may be, but the omission thereof shall not operate to bind any Trustees or
Trustee or officers or officer or Shareholders or Shareholder individually, or
to subject the Series Assets of any Series to the obligations of any other
Series.
SECTION 8.2. Trustees' Good Faith Action; Expert Advice: No Bond or Surety.
The exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. Subject to Section 8.4 hereof, a Trustee shall
be liable for his own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee, and for nothing else, and shall not be liable for errors of judgment or
mistakes of fact or law. Subject to the foregoing, (i) the Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any officer,
agent, employee, consultant, Investment Adviser, Administrator, Distributor or
Principal Underwriter, Custodian or Transfer Agent, Dividend Disbursing Agent,
Shareholder Servicing Agent or Accounting Agent of the Trust, nor shall any
Trustee be responsible for the act or omission of any other Trustee; (ii) the
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and their duties as Trustees, and
shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice; and (iii) in discharging their
duties, the Trustees, when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer, partner or
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<PAGE> 33
responsible employee of a Contracting Party appointed by the Trustees pursuant
to Section 5.2 hereof. The Trustees as such shall not be required to give any
bond or surety or any other security for the performance of their duties.
SECTION 8.3. Indemnification of Shareholders. If any Shareholder (or former
Shareholder) of the Trust shall be charged or held to be personally liable for
any obligation or liability of the Trust solely by reason of being or having
been a Shareholder and not because of such Shareholder's acts or omissions or
for some other reason, the Trust (upon proper and timely request by the
Shareholder) may assume the defense against such charge and satisfy any judgment
thereon or may reimburse the Shareholders for expenses, and the Shareholder or
former Shareholder (or the heirs, executors, administrators or other legal
representatives thereof, or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled (but solely out of the
assets of the Series of which such Shareholder or former Shareholder is or was
the holder of Shares) to be held harmless from and indemnified against all loss
and expense arising from such liability.
SECTION 8.4. Indemnification of Trustees. Officers, etc. Subject to the
limitations, if applicable, hereinafter set forth in this Section 8.4, the Trust
shall indemnify (from the assets of one or more Series to which the conduct in
question relates) each of its Trustees, officers, employees and agents
(including Persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter, together with such Person's
heirs, executors, administrators or personal representative, referred to as a
"Covered Person")) against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such Covered Person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief that such Covered
Person's action was in or not opposed to the best interests of the Trust; (ii)
had acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(iii) for a criminal proceeding, had reasonable cause to believe that his
conduct was unlawful (the conduct described in (i), (ii) and (iii) being
referred to hereafter as "Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
Covered Person to be indemnified was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding against a
Covered Person for insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that the indemnitee
was not liable by reason of Disabling Conduct by (a) a vote of a majority of a
quorum of Trustees who are neither "interested persons" of the Trust as defined
in Section 2(a)(19) of the 1940 Act nor parties to the proceeding (the
"Disinterested Trustees"), or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees so incurred by any
such Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by one or
more Series to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided that the Covered
Person shall have undertaken to repay the amounts so paid to such Series if it
is ultimately determined that indemnification of such expenses is not authorized
under this Article 8 and (i) the Covered Person shall
27
<PAGE> 34
have provided security for such undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful advances, or (iii) a majority of
a quorum of the Disinterested Trustees, or an independent legal counsel in a
written opinion, shall have determined, based on a review of readily available
facts (as opposed to a full trial type inquiry), that there is reason to believe
that the Covered Person ultimately will be found entitled to indemnification.
SECTION 8.5. Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 8.4 hereof,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of a quorum of the
Disinterested Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Trustees pursuant to clause (i) or by independent legal
counsel pursuant to clause (ii) shall not prevent the recovery from any Covered
Person of any amount paid to such Covered Person in accordance with either of
such clauses as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in or not opposed
to the best interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the Covered Person's
office.
SECTION 8.6. Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article 8 shall not be exclusive of or affect
any other rights to which any such Covered Person or shareholder may be
entitled. As used in this Article 8, a "disinterested" Person is one against
whom none of the actions, suits or other proceedings in question, and no other
action, suit or other proceeding on the same or similar grounds is then or has
been pending or threatened. Nothing contained in this Article 8 shall affect any
rights to indemnification to which personnel of the Trust, other than Trustees
and officers, and other Persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such Person.
SECTION 8.7. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE 9
DURATION: REORGANIZATION: INCORPORATION; AMENDMENTS
SECTION 9.1. Duration of Trust. Unless terminated as provided herein, the
Trust shall have perpetual existence.
SECTION 9.2. Termination of Trust. The Trust may be terminated at any time
by a Majority of the Trustees, subject to the favorable vote of the holders of
not less than a majority of the Shares outstanding and entitled to vote of each
Series of the Trust, or by an instrument or instruments in writing without a
meeting, consented to by the holders of not less than a majority of such Shares,
or by such greater or different vote of Shareholders of any Series as may be
established by the Certificate of Designation by which such Series was
authorized. Upon termination, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or anticipated
as may be
28
<PAGE> 35
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, Securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of Section 6.1(h) hereof. After termination of the Trust or any
Series and distribution to the Shareholders as herein provided, a majority of
the Trustees shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination. Upon
termination of the Trust, the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder, and the rights and interests of all
Shareholders shall thereupon cease. Upon termination of any Series, the Trustees
shall thereupon be discharged from all further liabilities and duties with
respect to such Series, and the rights and interests of all Shareholders of such
Series shall thereupon cease.
SECTION 9.3. Reorganization. The Trustees may sell, convey and transfer all
or substantially all of the assets of the Trust, or the assets belonging to any
one or more Series, to another trust, partnership, association, corporation or
other entity organized under the laws of any state of the United States, or may
transfer such assets to another Series of the Trust, in exchange for cash,
Shares or other Securities (including, in the case of a transfer to another
Series of the Trust, Shares of such other Series), or to the extent permitted by
law then in effect may merge or consolidate the Trust or any Series with any
other Trust or any corporation, partnership, or association organized under the
laws of any state of the United States, all upon such terms and conditions and
for such consideration when and as authorized by vote or written consent of a
Majority of the Trustees and approved by the affirmative vote of the holders of
not less than a majority of the Shares outstanding and entitled to vote of each
Series whose assets are affected by such transaction, or by an instrument or
instruments in writing without a meeting, consented to by the holders of not
less than a majority of such Shares, and/or by such other vote of any Series as
may be established by the Certificate of Designation with respect to such
Series. Following such transfer, the Trustees shall distribute the cash, Shares
or other Securities or other consideration received in such transaction (giving
due effect to the assets belonging to and indebtedness of, and any other
differences among, the various Series of which the assets have so been
transferred) among the Shareholders of the Series of which the assets have been
so transferred; and if all of the assets of the Trust have been so transferred,
the Trust shall be terminated. Nothing in this Section 9.3 shall be construed as
requiring approval of Shareholders for the Trustees to organize or assist in
organizing one or more corporations, trusts, partnerships, associations or other
organizations, and to sell, convey or transfer less than substantially all of
the Trust Property or the assets belonging to any Series to such organizations
or entities.
SECTION 9.4. Incorporation. Upon approval by Majority Shareholder Vote, the
Trustees may cause to be organized or assist in organizing a corporation or
corporations under the laws of any jurisdiction or any other trust, partnership,
association or other organization to take over all of the Trust Property or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust Property to any such
corporation, trust, association or organization, in exchange for the shares or
securities thereof, or otherwise, and to lend money to, subscribe for the shares
of securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization in which the Trust holds or is about to
acquire shares or any other interests. The Trustees may also cause a merger or
consolidation between the Trust or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporation,
trusts,
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<PAGE> 36
partnerships, associations or other organizations and selling, conveying or
transferring a portion of the Trust Property to such organizations or entities.
SECTION 9.5. Amendments; etc. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or the prohibition of assessment upon the Shareholders (otherwise than as
permitted under Section 6.1(l)) without the express consent of each Shareholder
or Trustee involved. Subject to the foregoing, the provisions of this
Declaration of Trust (whether or not related to the rights of Shareholders) may
be amended at any time, so long as such amendment does not adversely affect the
rights of any Shareholder with respect to which such amendment is or purports to
be applicable and so long as such amendment is not in contravention of
applicable law, including the 1940 Act, by an instrument in writing signed by a
Majority of the Trustees (or by an officer of the Trust pursuant to the vote of
a Majority of the Trustees). Any amendment to this Declaration of Trust that
adversely affects the rights of all Shareholders may be adopted at any time by
an instrument in writing signed by a Majority of the Trustees (or by an officer
of the Trust pursuant to a vote of a Majority of the Trustees) when authorized
to do so by the vote in accordance with Section 7.I hereof of Shareholders
holding a majority of all the Shares outstanding and entitled to vote, without
regard to Series, or if said amendment adversely affects the rights of the
Shareholders of less than all of the Series, by the vote of the holders of a
majority of all the Shares entitled to vote of each Series so affected.
Notwithstanding any other provisions set forth in this Declaration of Trust, a
provision in this Declaration of Trust requiring shareholder approval of any
action may be amended only with like shareholder approval.
SECTION 9.6. Filing of Copies of Declaration and Amendments. The original
or a copy of this Declaration and of each amendment hereto (including each
Certificate of Designation and Certificate of Termination) shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A restated
Declaration, integrating into a single instrument all of the provisions of this
Declaration which are then in effect and operative, may be executed from time to
time by a Majority of the Trustees and shall, upon execution, be conclusive
evidence of all amendments contained therein and may thereafter be referred to
in lieu of the original Declaration and the various amendments thereto. A
Certificate of Trust shall be filed in the office of the Secretary of State of
the State of Delaware.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Notices. Any and all notices to which any Shareholder
hereunder may be entitled and any and all communications shall be deemed duly
served or given if mailed, postage prepaid, addressed to any Shareholder of
record at his last known address as recorded on the applicable register of the
Trust.
SECTION 10.2. Governing Law. This Declaration of Trust is, with reference
to the laws thereof, and the rights of all parties and the construction and
effect of every provision hereof shall be, subject to and construed according to
the laws of said The State of Delaware.
SECTION 10.3. Counterparts. This Declaration of Trust and any amendment
thereto may be simultaneously executed in several counterparts, each of which so
executed shall be deemed to be an
30
<PAGE> 37
original, and such counterparts, together, shall constitute but one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
SECTION 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust is a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or Shareholders, (b) the
due authorization of the execution of any instrument or writing, (c) the form of
any vote passed at a meeting of Trustees or Shareholders, (d) the fact that the
number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration of Trust, (e)
the form of any By-Law adopted, or the identity of any officers elected, by the
Trustees, (f) the existence or nonexistence of any fact or facts which in any
manner relate to the affairs of the Trust, or (g) the name of the Trust or the
establishment of a Series shall be conclusive evidence as to the matters so
certified in favor of any Person dealing with the Trustees, or any of them, and
the successors of such Person.
SECTION 10.5. References; Headings. The masculine gender shall include the
feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part of this Declaration or control
or affect the meaning, construction or effect hereof.
SECTION 10.6. Provisions in Conflict With Law or Regulation. (a) The
provisions of this Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code of 1986 or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
SECTION 10.7. Use of the Name "Van Kampen American Capital". Van Kampen
American Capital, Inc. ("Van Kampen American Capital") has consented to the use
by the Trust and by each Series and each Series thereof to the identifying words
"Van Kampen" or "Van Kampen Merritt" or any combination thereof in the name of
the Trust and of each Series and Series thereof. Such consent is conditioned
upon the Trust's employment of Van Kampen American Capital, its successors or a
subsidiary or affiliate thereof as investment adviser to the Trust and to each
Series and each Series thereof. As between Van Kampen American Capital and the
Trust, Van Kampen American Capital shall control the use of such name insofar as
such name contains the identifying words "Van Kampen" or "Van Kampen Merritt".
Van Kampen American Capital may from time to time use the identifying words
"American Capital,"Van Kampen" or "Van Kampen Merritt" in other connections and
for other purposes, including without limitation in the names of other
investment companies, corporations or businesses that it may manage, advise,
sponsor or own or in which it may have a financial interest. Van Kampen American
Capital may require the Trust or any Series or Series thereof to cease using the
identifying words "Van Kampen" or "Van Kampen Merritt" in the name of the Trust
or any Series or any Series thereof if the Trust or any Series or Series thereof
ceases to employ Van Kampen American Capital, its successors or a subsidiary or
affiliate thereof as investment adviser.
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<PAGE> 38
IN WITNESS WHEREOF, the undersigned, being at least a majority of the
Trustees of the Trust, have set their hands and seal, for themselves and their
assigns, unto this First Amended and Restated Agreement and Declaration of Trust
of Van Kampen American Capital World Portfolio Series Trust, as of the day and
year first above written.
<TABLE>
<S> <C>
/s/ J. MILES BRANAGAN /s/ RICHARD E. CARUSO
- -------------------------------------------- --------------------------------------------
J. Miles Branagan Richard E. Caruso
/s/ ROGER HILSMAN /s/ DON G. POWELL
- -------------------------------------------- --------------------------------------------
Roger Hilsman Don G. Powell
/s/ DAVID REES /s/ LAWRENCE J. SHEEHAN
- -------------------------------------------- --------------------------------------------
David Rees Lawrence J. Sheehan
/s/ FERNANDO SISTO /s/ WILLIAM S. WOODSIDE
- -------------------------------------------- --------------------------------------------
FERNANDO SISTO WILLIAM S. WOODSIDE
</TABLE>
32
<PAGE> 39
ACKNOWLEDGMENT
STATE OF TEXAS )
) ss
COUNTY OF HARRIS )
June 21, 1995
------------------------------
(Date)
Then personally appeared the above named individuals and each one
acknowledged the foregoing instrument to be his free act and deed.
Before me,
/s/ PAMELA J.McLEMORE
------------------------------------
(Notary Public)
My commission expires: 9-3-97
33
<PAGE> 1
EXHIBIT 1.2
CERTIFICATE OF AMENDMENT DATED SEPTEMBER 7, 1995
TO
FIRST AMENDED AND RESTATED AGREEMENT
AND DECLARATION OF TRUST DATED JUNE 21, 1995
WHEREAS, the Trustees of Van Kampen American Capital World Portfolio Series
Trust, a Delaware business trust (the "Trust") have approved the amendment of
the Trust's First Amended and Restated Agreement and Declaration of Trust dated
June 21, 1995 ("Declaration of Trust") in accordance with Section 9.5 thereof;
WHEREAS, the Trustees have authorized the proper officers of the Trust,
including the officer whose name appears below, to effect such amendment;
NOW, THEREFORE, the Declaration of Trust is amended as follows:
1. The first sentence of Section 4.1(b) is amended and restated in its
entirety to read as follows:
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase (to not more than fifteen
(15)) or decrease the number of Trustees to a number other than the
number theretofore determined by a written instrument signed by a
Majority (or a supermajority if required by the By-Laws) of the Trustees
(or by an officer of the Trust pursuant to the vote of a Majority (or a
supermajority if required by the By-Laws) of the Trustees).
2. Section 4.1(e) is amended and restated in its entirety to read as follows:
(e) Removal. Any Trustee may be removed: (i) with cause at any time by
written instrument, signed by at least two-thirds ( 2/3) of the number
of Trustees prior to such removal, specifying the date upon which such
removal shall become effective; or (ii) without cause at any time by
written instrument, signed by at least two-thirds ( 2/3) of the number
of Trustees prior to such removal, specifying the date upon which such
removal shall become effective; or (iii) by vote of shareholders holding
a majority of the Shares of the Trust then outstanding, cast in person
or by proxy at any meeting called for the purpose; or (iv) by a written
declaration signed by Shareholders holding not less than a majority of
the Shares of the Trust then outstanding. Notwithstanding any other
provisions set forth in this Declaration of Trust, this Section 4.1(e)
may not be amended (either directly or indirectly through a reorganization)
without the approval of (i) two-thirds ( 2/3) of the Trustees then in office or
(ii) by vote of Shareholders holding a majority of the Shares of the Trust then
outstanding.
EXECUTED, to be effective as of September 7, 1995
/s/ NORI L. GABERT
------------------------------------
Nori L. Gabert,
Secretary
<PAGE> 1
EXHIBIT 1.3
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
Certificate of Designation
of
Van Kampen American Capital Global Equity Fund
>The undersigned, being the Secretary of Van Kampen American Capital World
Portfolio Series Trust, a Delaware business trust (the "Trust"), pursuant to the
authority conferred upon the Trustees of the Trust by Section 6.1 of the Trust's
First Amended and Restated Agreement and Declaration of Trust ("Declaration"),
and by the affirmative vote of a Majority of the Trustees does hereby establish
and designate as a Series of the Trust the Van Kampen American Capital Global
Equity Fund (the "Fund") with following the rights, preferences and
characteristics:
1. Shares. The beneficial interest in the Fund shall be divided into
Shares having a nominal or par value of $0.01 per Share, of which an unlimited
number may be issued, which Shares shall represent interests only in the Fund.
The Trustees shall have the authority from time to time to authorize separate
Series of Shares for the Trust as they deem necessary or desirable.
2. Classes of Shares. The Shares of the Fund shall be initially divided
into three classes--Class A, Class B and Class C. The Trustees shall have the
authority from time to time to authorize additional Classes of Shares of the
Fund.
3. Sales Charges. Each Class A, Class B and Class C Share shall be
subject to such sales charges, if any, as may be established from time to time
by the Trustees in accordance with the Investment Company Act of 1940 (the "1940
Act") and applicable rules and regulations of the National Association of
Securities Dealers, Inc., all as set forth in the Fund's prospectus.
4. Conversion. Each Class B and Class C Share of the Fund shall be
converted automatically, and without any action or choice on the part of the
Shareholder thereof, into Class A Shares of the Fund at such times and pursuant
to such terms, conditions and restrictions as may be established by the Trustees
and as set forth in the Fund's Prospectus.
5. Allocation of Expenses Among Classes. Expenses related solely to a
particular Class (including, without limitation, distribution expenses under an
administrative or service agreement, plan or other arrangement, however
designated) shall be borne by that Class and shall be appropriately reflected
(in a manner determined by the Trustees) in the net asset value, dividends,
distribution and liquidation rights of the Shares of that Class.
6. Special Meetings. A special meeting of Shareholders of a Class of the
Fund may be called with respect to the Rule 12b-1 distribution plan applicable
to such Class or with respect to any
1
<PAGE> 2
other proper purpose affecting only holders of shares of such Class at any time
by a Majority of the Trustees.
7. Other Rights Governed by Declaration. All other rights, preferences,
qualifications, limitations and restrictions with respect to Shares of any
Series of the Trust or with respect to any Class of Shares set forth in the
Declaration shall apply to Shares of the Fund unless otherwise specified in this
Certificate of Designation, in which case this Certificate of Designation shall
govern.
8. Amendments, etc. Subject to the provisions and limitations of Section
9.5 of the Declaration and applicable law, this Certificate of Designation may
be amended by an instrument signed in writing by a Majority of the Trustees (or
by and officer of the Trust pursuant to the vote of a Majority of the Trustees)
or when authorized to do so by the vote in accordance with the Declaration of
the holders of a majority of all the Shares of the Fund outstanding and entitled
to vote or, if such amendment affects the Shares of one or more but not all of
the Classes of the Fund, the holders of a majority of all the Shares of the
affected Classes outstanding and entitled to vote.
9. Incorporation of Defined Terms. All capitalized terms which are not
defined herein shall have the same meaning as ascribed to those terms in the
Declaration.
June 21, 1995
/s/ NORI L. GABERT
- ---------------------------------------------
Nori L. Gabert,
Secretary
2
<PAGE> 1
EXHIBIT 1.4
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
Certificate of Designation
of
Van Kampen American Capital Global Government Securities Fund
The undersigned, being the Secretary of Van Kampen American Capital World
Portfolio Series Trust, a Delaware business trust (the "Trust"), pursuant to the
authority conferred upon the Trustees of the Trust by Section 6.1 of the Trust's
First Amended and Restated Agreement and Declaration of Trust ("Declaration"),
and by the affirmative vote of a Majority of the Trustees does hereby establish
and designate as a Series of the Trust the Van Kampen American Capital Global
Government Securities Fund (the "Fund") with following the rights, preferences
and characteristics:
1. Shares. The beneficial interest in the Fund shall be divided into
Shares having a nominal or par value of $0.01 per Share, of which an unlimited
number may be issued, which Shares shall represent interests only in the Fund.
The Trustees shall have the authority from time to time to authorize separate
Series of Shares for the Trust as they deem necessary or desirable.
2. Classes of Shares. The Shares of the Fund shall be initially divided
into three classes--Class A, Class B and Class C. The Trustees shall have the
authority from time to time to authorize additional Classes of Shares of the
Fund
3. Sales Charges. Each Class A, Class B and Class C Share shall be
subject to such sales charges, if any, as may be established from time to time
by the Trustees in accordance with the Investment Company Act of 1940 (the "1940
Act") and applicable rules and regulations of the National Association of
Securities Dealers, Inc., all as set forth in the Fund's prospectus.
4. Conversion. Each Class B and Class C Share of the Fund shall be
converted automatically, and without any action or choice on the part of the
Shareholder thereof, into Class A Shares of the Fund at such times and pursuant
to such terms, conditions and restrictions as may be established by the Trustees
and as set forth in the Fund's Prospectus.
5. Allocation of Expenses Among Classes. Expenses related solely to a
particular Class (including, without limitation, distribution expenses under an
administrative or service agreement, plan or other arrangement, however
designated) shall be borne by that Class and shall be appropriately reflected
(in a manner determined by the Trustees) in the net asset value, dividends,
distribution and liquidation rights of the Shares of that Class.
6. Special Meetings. A special meeting of Shareholders of a Class of the
Fund may be called with respect to the Rule 12b-1 distribution plan applicable
to such Class or with respect to any
1
<PAGE> 2
other proper purpose affecting only holders of shares of such Class at any time
by a Majority of the Trustees.
7. Other Rights Governed by Declaration. All other rights, preferences,
qualifications, limitations and restrictions with respect to Shares of any
Series of the Trust or with respect to any Class of Shares set forth in the
Declaration shall apply to Shares of the Fund unless otherwise specified in this
Certificate of Designation, in which case this Certificate of Designation shall
govern.
8. Amendments, etc. Subject to the provisions and limitations of Section
9.5 of the Declaration and applicable law, this Certificate of Designation may
be amended by an instrument signed in writing by a Majority of the Trustees (or
by and officer of the Trust pursuant to the vote of a Majority of the Trustees)
or when authorized to do so by the vote in accordance with the Declaration of
the holders of a majority of all the Shares of the Fund outstanding and entitled
to vote or, if such amendment affects the Shares of one or more but not all of
the Classes of the Fund, the holders of a majority of all the Shares of the
affected Classes outstanding and entitled to vote.
9. Incorporation of Defined Terms. All capitalized terms which are not
defined herein shall have the same meaning as ascribed to those terms in the
Declaration.
June 21, 1995
/s/ NORI L. GABERT
- ---------------------------------------------
Nori L. Gabert,
Secretary
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<PAGE> 1
EXHIBIT 2
VAN KAMPEN AMERICAN CAPITAL
WORLD PORTFOLIO SERIES TRUST
AMENDED AND RESTATED BYLAWS
(AS AMENDED NOVEMBER 17, 1995)
<PAGE> 2
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
AMENDED AND RESTATED BYLAWS
(AS AMENDED NOVEMBER 17, 1995)
INDEX
<TABLE>
<C> <S> <C>
ARTICLE 1 SHAREHOLDERS AND SHAREHOLDERS' MEETINGS.................................. 1
Section 1.1. Meetings................................................................. 1
Section 1.2. Presiding Officer; Secretary............................................. 1
Section 1.3. Authority of Chairman of Meeting to Interpret Declaration and Bylaws..... 1
Section 1.4. Voting; Quorum........................................................... 2
Section 1.5. Inspectors............................................................... 2
Section 1.6. Records at Shareholder Meetings.......................................... 2
Section 1.7. Shareholders Action in Writing........................................... 2
ARTICLE 2 TRUSTEES AND TRUSTEES' MEETINGS.......................................... 2
Section 2.1. Number of Trustees....................................................... 2
Section 2.2. Regular Meetings of Trustees............................................. 2
Section 2.3. Special Meetings of Trustees............................................. 3
Section 2.4. Notice of Meetings....................................................... 3
Section 2.5. Quorum; Presiding Trustee................................................ 3
Section 2.6. Participation by Telephone............................................... 3
Section 2.7. Location of Meetings..................................................... 3
Section 2.8. Actions by Trustees...................................................... 3
Section 2.9. Rulings of Presiding Trustee............................................. 4
Section 2.10. Trustees' Action in Writing.............................................. 4
Section 2.11. Resignations............................................................. 4
Section 2.12. Tenure of Trustees....................................................... 4
</TABLE>
<PAGE> 3
<TABLE>
<C> <S> <C>
ARTICLE 3 OFFICERS................................................................. 4
Section 3.1 Officers of the Trust.................................................... 4
Section 3.2 Time and Terms of Election............................................... 5
Section 3.3 Resignation and Removal.................................................. 5
Section 3.4 Fidelity Bond............................................................ 5
Section 3.5 President................................................................ 5
Section 3.6 Vice Presidents.......................................................... 5
Section 3.7 Treasurer and Assistant Treasurers....................................... 5
Section 3.8 Controller and Assistant Controllers..................................... 6
Section 3.9 Secretary and Assistant Secretaries...................................... 6
Section 3.10 Substitutions............................................................ 6
Section 3.11 Execution of Deeds, etc.................................................. 6
Section 3.12 Power to Vote Securities................................................. 6
ARTICLE 4 COMMITTEES............................................................... 7
Section 4.1 Power of Trustees to Designate Committees................................ 7
Section 4.2 Rules for Conduct of Committee Affairs................................... 7
Section 4.3 Trustees May Alter, Abolish, etc., Committees............................ 7
Section 4.4 Minutes; Review by Trustees.............................................. 7
ARTICLE 5 SEAL..................................................................... 7
ARTICLE 6 SHARES................................................................... 8
Section 6.1 Issuance of Shares....................................................... 8
Section 6.2 Uncertificated Shares.................................................... 8
Section 6.3 Share Certificates....................................................... 8
Section 6.4 Lost, Stolen, etc., Certificates......................................... 8
</TABLE>
<PAGE> 4
<TABLE>
<C> <S> <C>
ARTICLE 7 STOCK TRANSFERS.......................................................... 9
Section 7.1 Transfer Agents, Registrars, etc......................................... 9
Section 7.2 Transfer of Shares....................................................... 9
Section 7.3 Registered Shareholders.................................................. 9
ARTICLE 8 AMENDMENTS............................................................... 9
Section 8.1 Bylaws Subject to Amendment.............................................. 9
Section 8.2 Notice of Proposal to Amend Bylaws Required.............................. 9
</TABLE>
<PAGE> 5
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
AMENDED AND RESTATED BYLAWS
(AS AMENDED NOVEMBER 17, 1995)
These are the Bylaws of Van Kampen American Capital World Portfolio Series
Trust, a trust with transferable shares established under the laws of The State
of Delaware (the "Trust"), pursuant to an Agreement and Declaration of Trust of
the Trust (the "Declaration") made the 10th day of May, 1995, as amended, and a
Certificate of Trust filed in the office of the Secretary of State pursuant to
Section 3810 of The Delaware Business Trust Act, Title 12, Chapter 38 of the
Delaware Code. These Bylaws have been adopted by the Trustees pursuant to the
authority granted by Section 4.14 of the Declaration.
All words and terms capitalized in these Bylaws, unless otherwise defined
herein, shall have the same meanings as they have in the Declaration.
ARTICLE 1
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
SECTION 1.1. Meetings. A meeting of the Shareholders of the Trust shall be
held whenever called by the Chairman, the President or a majority of the
Trustees and whenever election of a Trustee or Trustees by Shareholders is
required by the provisions of the 1940 Act. Meetings of Shareholders shall also
be called by the Trustees when requested in writing by Shareholders holding at
least ten percent (10%) of the Shares then outstanding for the purpose of voting
upon removal of any Trustee, or if the Trustees shall fail to call or give
notice of any such meeting of Shareholders for a period of thirty (30) days
after such application, then Shareholders holding at least ten percent (10%) of
the Shares then outstanding may call and give notice of such meeting. Notice of
Shareholders' meetings shall be given as provided in the Declaration.
SECTION 1.2. Presiding Officer; Secretary. The President shall preside at
each Shareholders' meeting as chairman of the meeting, or in the absence of the
President, the Trustees present at the meeting shall elect one of their number
as chairman of the meeting. Unless otherwise provided for by the Trustees, the
Secretary of the Trust shall be the secretary of all meetings of Shareholders
and shall record the minutes thereof.
SECTION 1.3. Authority of Chairman of Meeting to Interpret Declaration and
Bylaws. At any Shareholders' meeting the chairman of the meeting shall be
empowered to determine the construction or interpretation of the Declaration or
these Bylaws, or any part thereof or hereof, and their ruling shall be final.
SECTION 1.4. Voting; Quorum. At each meeting of Shareholders, except as
otherwise provided by the Declaration, every holder of record of Shares entitled
to vote shall be entitled to a number of votes equal to the number of Shares
standing in his name on the Share register of the Trust on the record date of
the meeting. Shareholders may vote by proxy and the form of any such proxy may
be prescribed from time to time by the Trustees. A quorum shall exist if the
holders of a majority of the outstanding Shares of the Trust entitled to vote
are present in person or by proxy, but any lesser
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number shall be sufficient for adjournments. At all meetings of the
Shareholders, votes shall be taken by ballot for all matters which may be
binding upon the Trustees pursuant to Section 7.1 of the Declaration. On other
matters, votes of Shareholders need not be taken by ballot unless otherwise
provided for by the Declaration or by vote of the Trustees, or as required by
the 1940 Act, but the chairman of the meeting may in his discretion authorize
any matter to be voted upon by ballot.
SECTION 1.5. Inspectors. At any meeting of Shareholders, the chairman of
the meeting may appoint one or more Inspectors of Election or Balloting to
supervise the voting at such meeting or any adjournment thereof. If Inspectors
are not so appointed, the chairman of the meeting may, and on the request of any
Shareholder present or represented and entitled to vote shall, appoint one or
more Inspectors for such purpose. Each Inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of Inspector of Election or Balloting, as the case may be, at such
meeting with strict impartiality and according to the best of his ability. If
appointed, Inspectors shall take charge of the polls and, when the vote is
completed, shall make a certificate of the result of the vote taken and of such
other facts as may be required by law.
SECTION 1.6. Records at Shareholder Meetings. At each meeting of the
Shareholders there shall be open for inspection the minutes of the last previous
Meeting of Shareholders of the Trust and a list of the Shareholders of the
Trust, certified to be true and correct by the Secretary or other proper agent
of the Trust, as of the record date of the meeting or the date of closing of
transfer books, as the case may be. Such list of Shareholders shall contain the
name of each Shareholder. Shareholders shall have such other rights and
procedures of inspection of the books and records of the Trust as are granted to
shareholders of a Delaware corporation.
SECTION 1.7. Shareholders' Action in Writing. Nothing in this Article 1
shall limit the power of the Shareholders to take any action by means of written
instruments without a meeting, as permitted by Section 7.6 of the Declaration.
ARTICLE 2
TRUSTEES AND TRUSTEES' MEETINGS
SECTION 2.1. Number of Trustees. The number of Trustees shall be fifteen
(15), provided that such number shall be reduced upon the death, resignation or
retirement of any Trustee until the number of Trustees is eight (8), unless the
Trustees shall find by a majority vote that such reduction is not in the best
interest of the Fund's shareholders, in which case the number of Trustees shall
not be reduced and a vacancy shall be created upon such death, resignation or
retirement of such Trustees.
SECTION 2.2. Regular Meetings of Trustees. Regular meetings of the Trustees
may be held without call or notice at such places and at such times as the
Trustees may from time to time determine; provided, that notice of such
determination, and of the time and place of the first regular meeting
thereafter, shall be given to each absent Trustee in accordance with Section 2.4
hereof.
SECTION 2.3. Special Meetings of Trustees. Special meetings of the Trustees
may be held at any time and at any place when called by the President or the
Treasurer or by three (3) or more
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Trustees, or if there shall be less than three (3) Trustees, by any Trustee;
provided, that notice of the time and place thereof is given to each Trustee in
accordance with Section 2.4 hereof by the Secretary or an Assistant Secretary or
by the officer or the Trustees calling the meeting.
SECTION 2.4. Notice of Meetings. Notice of any regular or special meeting
of the Trustees shall be sufficient if given in writing to each Trustee, and if
sent by mail at least five (5) days, by a nationally recognized overnight
delivery service at least two (2) days or by facsimile at least twenty-four (24)
hours, before the meeting, addressed to his usual or last known business or
residence address, or if delivered to him in person at least twenty-four (24)
hours before the meeting. Notice of a special meeting need not be given to any
Trustee who was present at an earlier meeting, not more than thirty-one (31)
days prior to the subsequent meeting, at which the subsequent meeting was
called. Unless statute, these bylaws or a resolution of the Trustees might
otherwise dictate, notice need not state the business to be transacted at or the
purpose of any meeting of the Board of Trustees. Notice of a meeting may be
waived by any Trustee by written waiver of notice, executed by him or her before
or after the meeting, and such waiver shall be filed with the records of the
meeting. Attendance by a Trustee at a meeting shall constitute a waiver of
notice, except where a Trustee attends a meeting for the purpose of protesting
prior thereto or at its commencement the lack of notice. No notice need be given
of action proposed to be taken by unanimous written consent.
SECTION 2.5. Quorum: Presiding Trustee. At any meeting of the Trustees, a
Majority of the Trustees shall constitute a quorum. Any meeting may be adjourned
from time to time by a majority of the votes cast upon the question, whether or
not a quorum is present, and the meeting may be held as adjourned without
further notice. Unless the Trustees shall otherwise elect, generally or in a
particular case, the Chairman shall be the presiding Trustee at each meeting of
the Trustees or in the absence of the Chairman, the President shall preside over
the meeting. In the absence of both the Chairman and the President, the Trustees
present at the meeting shall elect one of their number as presiding Trustee of
the meeting.
SECTION 2.6. Participation by Telephone. One or more of the Trustees may
participate in a meeting thereof or of any Committee of the Trustees by means of
a conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
SECTION 2.7. Location of Meetings. Trustees' meetings may be held at any
place, within or without the State of Delaware.
SECTION 2.8. Actions by Trustees. Unless statute, the charter or By-laws
requires a greater proportion, action of a majority of the Trustees present at a
meeting at which a quorum is present is action of the Board of Trustees. The
results of all voting shall be recorded by the Secretary in the minute book.
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SECTION 2.9. Rulings of Presiding Trustee. All other rules of conduct
adopted and used at any Trustees' meeting shall be determined by the presiding
Trustee of such meeting, whose ruling on all procedural matters shall be final.
SECTION 2.10. Trustees' Action in Writing. Nothing in this Article 2 shall
limit the power of the Trustees to take action by means of a written instrument
without a meeting, as provided in Section 4.2 of the Declaration.
SECTION 2.11. Resignations. Any Trustee may resign at any time by written
instrument signed by him and delivered to the Chairman, the President or the
Secretary or to a meeting of the Trustees. Such resignation shall be effective
upon receipt unless specified to be effective at some other time.
SECTION 2.12. Tenure of Trustees. Notwithstanding any other provision
herein to the contrary, the term of office of each Trustee shall end on December
31st of the year such Trustee reaches the age of seventy-two (72); provided that
the term of office of each Trustee shall end on December 31, 1996 for each
Trustee who had been elected before January 1, 1987 as a trustee or director of
any open-end investment company managed by Van Kampen American Capital Asset
Management, Inc. (formerly American Capital Asset Management, Inc. and, prior
thereto, American General Capital Management, Inc.) if such Trustee reaches the
age of seventy-two (72) or more by December 31, 1995; provided the term of
office of each Trustee shall end on December 31st of the year such Trustee
reaches the age of seventy-six (76) for each Trustee who had been elected before
January 1, 1987 as a trustee or director of any open-end investment company
managed by Van Kampen American Capital Asset Management, Inc. if such Trustee is
less than the age of seventy-two (72) by December 31, 1995; provided that the
term of office of each Trustee shall end on December 31st of the year such
Trustee reaches the age of seventy-five (75) for each Trustee first elected on
or after July 1, 1995 and prior to December 1, 1995 who was over the age of
seventy-two and one-half (72 1/2) and under the age of seventy-five (75) at the
time of such election; and further provided that the term of office of each
Trustee shall end on December 31st of the year such Trustee reaches the age of
seventy-six (76) for each Trustee first elected on or after July 1, 1995 and
prior to December 1, 1995 who was the age of seventy-five (75) or older at the
time of such election.
SECTION 2.13. Chairman of the Board. The Trustees shall from time to time
elect one of the Trustees to serve as Chairman of the Board of Trustees,
provided that the chairman shall be a Trustee who is not an "interested person"
of the Trust or the Trust's investment adviser, within the meaning of the 1940
Act.
ARTICLE 3
OFFICERS
SECTION 3.1. Officers of the Trust. The officers of the Trust shall consist
of a President, a Treasurer and a Secretary, and may include a Controller and
one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries, and
such other officers as the Trustees may designate. Any person may hold more than
one office.
SECTION 3.2. Time and Terms of Election. The President, the Treasurer and
the Secretary shall be elected by the Trustees at their first meeting and
thereafter at the annual meeting of the Trustees, as provided in Section 4.2 of
the Declaration. Such officers shall hold office until the next
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annual meeting of the Trustees and until their successors shall have been duly
elected and qualified, and may be removed at any meeting by the affirmative vote
of a Majority of the Trustees. All other officers of the Trust may be elected or
appointed at any meeting of the Trustees. Such officers shall hold office for
any term, or indefinitely, as determined by the Trustees, and shall be subject
to removal, with or without cause, at any time by the Trustees.
SECTION 3.3. Resignation and Removal. Any officer may resign at any time by
giving written notice to the Trustees. Such resignation shall take effect at the
time specified therein, and, unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective. If the office
of any officer or agent becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office or otherwise, the Trustees may
choose a successor, who shall hold office for the unexpired term in respect of
which such vacancy occurred. Except to the extent expressly provided in a
written agreement with the Trust, no officer resigning or removed shall have any
right to any compensation for any period following such resignation or removal,
or any right to damage on account of such removal.
SECTION 3.4. Fidelity Bond. The Trustees may, in their discretion, direct
any officer appointed by them to furnish at the expense of the Trust a fidelity
bond approved by the Trustees, in such amount as the Trustees may prescribe.
SECTION 3.5. President. The President shall be the chief executive officer
of the Trust and, subject to the supervision of the Trustees, shall have general
charge and supervision of the business, property and affairs of the Trust and
such other powers and duties as the Trustees may prescribe.
SECTION 3.6. Vice Presidents. In the absence or disability of the
President, the Vice President or, if there shall be more than one, the Vice
Presidents in the order of their seniority or as otherwise designated by the
Trustees, shall exercise all of the powers and duties of the President. The Vice
Presidents shall have the power to execute bonds, notes, mortgages and other
contracts, agreements and instruments in the name of the Trust, and shall do and
perform such other duties as the Trustees or the President shall direct.
SECTION 3.7. Treasurer and Assistant Treasurers. The Treasurer shall be the
chief financial officer of the Trust, and shall have the custody of the Trust's
funds and Securities, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Trust and shall deposit all moneys, and
other valuable effects in the name and to the credit of the Trust, in such
depositories as may be designated by the Trustees, taking proper vouchers for
such disbursements, shall have such other duties and powers as may be prescribed
from time to time by the Trustees, and shall render to the Trustees, whenever
they may require it, an account of all his transactions as Treasurer and of the
financial condition of the Trust. If no Controller is elected, the Treasurer
shall also have the duties and powers of the Controller, as provided in these
Bylaws. Any Assistant Treasurer shall have such duties and powers as shall be
prescribed from time to time by the Trustees or the Treasurer, and shall be
responsible to and shall report to the Treasurer. In the absence or disability
of the Treasurer, the Controller shall have the powers and duties of the
Treasurer. If no Controller is elected, the Assistant Treasurer or, if there
shall be more than one, the Assistant Treasurers in the order of their seniority
or as otherwise designated by the Trustees or the Chairman, shall have the
powers and duties of the Treasurer.
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SECTION 3.8. Controller and Assistant Controllers. If a Controller is
elected, the Controller shall be the chief accounting officer of the Trust and
shall be in charge of its books of account and accounting records and of its
accounting procedures, and shall have such duties and powers as are commonly
incident to the office of a controller, and such other duties and powers as may
be prescribed from time to time by the Trustees. The Controller shall be
responsible to and shall report to the Trustees, but in the ordinary conduct of
the Trust's business, shall be under the supervision of the Treasurer. Any
Assistant Controller shall have such duties and powers as shall be prescribed
from time to time by the Trustees or the Controller, and shall be responsible to
and shall report to the Controller. In the absence or disability of the
Controller, the Assistant Controller or, if there shall be more than one, the
Assistant Controllers in the order of their seniority or as otherwise designated
by the Trustees, shall have the powers and duties of the Controller.
SECTION 3.9. Secretary and Assistant Secretaries. The Secretary shall, if
and to the extent requested by the Trustees, attend all meetings of the
Trustees, any Committee of the Trustees and/or the Shareholders and record all
votes and the minutes of proceedings in a book to be kept for that purpose,
shall give or cause to be given notice of all meetings of the Trustees, any
Committee of the Trustees, and of the Shareholders and shall perform such other
duties as may be prescribed by the Trustees. The Secretary, or in his absence
any Assistant Secretary, shall affix the Trust's seal to any instrument
requiring it, and when so affixed, it shall be attested by the signature of the
Secretary or an Assistant Secretary. The Secretary shall be the custodian of the
Share records and all other books, records and papers of the Trust (other than
financial) and shall see that all books, reports, statements, certificates and
other documents and records required by law are properly kept and filed. In the
absence or disability of the Secretary, the Assistant Secretary or, if there
shall be more than one, the Assistant Secretaries in the order of their
seniority or as otherwise designated by the Trustees, shall have the powers and
duties of the Secretary.
SECTION 3.10. Substitutions. In case of the absence or disability of any
officer of the Trust, or for any other reason that the Trustees may deem
sufficient, the Trustees may delegate, for the time being, the powers or duties,
or any of them, of such officer to any other officer, or to any Trustee.
SECTION 3.11. Execution of Deeds, etc. Except as the Trustees may generally
or in particular cases otherwise authorize or direct, all deeds, leases,
transfers, contracts, proposals, bonds, notes, checks, drafts and other
obligations made, accepted or endorsed by the Trust shall be signed or endorsed
on behalf of the Trust by its properly authorized officers or agents as provided
in the Declaration.
SECTION 3.12. Power to Vote Securities. Unless otherwise ordered by the
Trustees, the Treasurer shall have full power and authority on behalf of the
Trust to give proxies for, and/or to attend and to act and to vote at, any
meeting of stockholders of any corporation in which the Trust may hold stock,
and at any such meeting the Treasurer or his proxy shall possess and may
exercise any and all rights and powers incident to the ownership of such stock
which, as the owner thereof, the Trust might have possessed and exercised if
present. The Trustees, by resolution from time to time, or, in the absence
thereof, the Treasurer, may confer like powers upon any other person or persons
as attorneys and proxies of the Trust.
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ARTICLE 4
COMMITTEES
SECTION 4.1. Power of Trustees to Designate Committees. The Trustees, by
vote of a Majority of the Trustees, may elect from their number an Executive
Committee and any other Committees and may delegate thereto some or all of their
powers except those which by law, by the Declaration or by these Bylaws may not
be delegated; provided, that an Executive Committee shall not be empowered to
elect the President, the Treasurer or the Secretary, to amend the Bylaws, to
exercise the powers of the Trustees under this Section 4.1 or under Section 4.3
hereof, or to perform any act for which the action of a Majority of the Trustees
is required by law, by the Declaration or by these Bylaws. The members of any
such Committee shall serve at the pleasure of the Trustees.
SECTION 4.2. Rules for Conduct of Committee Affairs. Except as otherwise
provided by the Trustees, each Committee elected or appointed pursuant to this
Article 4 may adopt such standing rules and regulations for the conduct of its
affairs as it may deem desirable, subject to review and approval of such rules
and regulations by the Trustees at the next succeeding meeting of the Trustees,
but in the absence of any such action or any contrary provisions by the
Trustees, the business of each Committee shall be conducted, so far as
practicable, in the same manner as provided herein and in the Declaration for
the Trustees.
SECTION 4.3. Trustees May Alter, Abolish, etc., Committees Trustees may at
any time alter or abolish any Committee, change membership of any Committee, or
revoke, rescind, waive or modify action of any Committee or the authority of any
Committee with respect to any matter or class of matters; provided, that no such
action shall impair the rights of any third parties.
SECTION 4.4. Minutes: Review by Trustees. Any Committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees.
ARTICLE 5
SEAL
The seal of the Trust, if any, may be affixed to any instrument, and the
seal and its attestation may be lithographed, engraved or otherwise printed on
any document with the same force and effect as if had been imprinted and affixed
manually in the same manner and with the same force and effect as if done by a
Delaware corporation. Unless otherwise required by the Trustees, the seal shall
not be necessary to be placed on, and its absence shall not impair the validity
of, any document, instrument or other paper executed and delivered by or on
behalf of the Trust.
ARTICLE 6
SHARES
SECTION 6.1. Issuance of Shares. The Trustees may issue an unlimited number
of Classes of Shares of any or all Series either in certificated or
uncertificated form, they may issue certificates to the
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holders of a Class of Shares of a Series which was originally issued in
uncertificated form, and if they have issued Shares of any Series in
certificated form, they may at any time discontinue the issuance of Share
certificates for such Series and may, by written notice to such Shareholders of
such Series require the surrender of their Share certificates to the Trust for
cancellation, which surrender and cancellation shall not affect the ownership of
Shares for such Series.
SECTION 6.2. Uncertificated Shares. For any Class of Shares for which the
Trustees issue Shares without certificates, the Trust or the Transfer Agent may
either issue receipts therefor or may keep accounts upon the books of the Trust
for the record holders of such Shares, who shall in either case be deemed, for
all purposes hereunder, to be the holders of such Shares as if they had received
certificates therefor and shall be held to have expressly assented and agreed to
the terms hereof and of the Declaration.
SECTION 6.3. Share Certificates. For any Class of Shares for which the
Trustees shall issue Share certificates, each Shareholder of such Class shall be
entitled to a certificate stating the number of Shares owned by him in such form
as shall be prescribed from time to time by the Trustees. Such certificate shall
be signed by the President or a Vice President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Trust.
Such signatures may be facsimiles if the certificate is countersigned by a
Transfer Agent, or by a Registrar, other than a Trustee, officer or employee of
the Trust. In case any officer who has signed or whose facsimile signature has
been placed on such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he were such officer at the time of its issue.
SECTION 6.4. Lost, Stolen, etc., Certificates. If any certificate for
certificated Shares shall be lost, stolen, destroyed or mutilated, the Trustees
may authorize the issuance of a new certificate of the same tenor and for the
same number of Shares in lieu thereof. The Trustees shall require the surrender
of any mutilated certificate in respect of which a new certificate is issued,
and may, in their discretion, before the issuance of a new certificate, require
the owner of a lost, stolen or destroyed certificate, or the owner's legal
representative, to make an affidavit or affirmation setting forth such facts as
to the loss, theft or destruction as they deem necessary, and to give the Trust
a bond in such reasonable sum as the Trustees direct, in order to indemnify the
Trust.
ARTICLE 7
TRANSFER OF SHARES
SECTION 7.1. Transfer Agents, Registrars, etc. As approved in Section
5.2(e) of the Declaration, the Trustees shall have the authority to employ and
compensate such transfer agents and registrars with respect to the Shares of the
Trust as the Trustees shall deem necessary or desirable. In addition, the
Trustees shall have the power to employ and compensate such dividend dispersing
agents, warrant agents and agents for reinvestment of dividends as they shall
deem necessary or desirable. Any of such agents shall have such power and
authority as is delegated to any of them by the Trustees.
SECTION 7.2 Transfer of Shares. The Shares of the Trust shall be
transferable on the books of the Trust only upon delivery to the Trustees or a
transfer agent of the Trust of proper documentation as provided in Section
6.1(m) of the Declaration. The Trust, or its transfer agents, shall be
authorized to
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refuse any transfer unless and until presentation of such evidence as may be
reasonably required to show that the requested transfer is proper.
SECTION 7.3 Registered Shareholders. The Trust may deem and treat the
holder of record of any Shares the absolute owner thereof for all purposes and
shall not be required to take any notice of any right or claim of right of any
other person.
ARTICLE 8
AMENDMENTS
SECTION 8.1. Bylaws Subject to Amendment. These Bylaws may be altered,
amended or repealed, in whole or in part, at any time by vote of the holders of
a majority of the Shares issued, outstanding and entitled to vote. The Trustees,
by vote of a Majority of the Trustees (unless a greater vote is required by
Section 2.8 hereof), may alter, amend or repeal these Bylaws, in whole or in
part, including Bylaws adopted by the Shareholders, except with respect to any
provision hereof which by law, the Declaration or these Bylaws requires action
by the Shareholders. Bylaws adopted by the Trustees may be altered, amended or
repealed by the Shareholders.
SECTION 8.2. Notice of Proposal to Amend Bylaws Required. No proposal to
amend or repeal these Bylaws or to adopt new Bylaws shall be acted upon at a
meeting unless either (i) such proposal is stated in the notice or in the waiver
of notice, as the case may be, of the meeting of the Trustees or Shareholders at
which such action is taken, or (ii) all of the Trustees or Shareholders, as the
case may be, are present at such meeting and all agree to consider such proposal
without protesting the lack of notice.
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<PAGE> 1
EXHIBIT 4.1 (a)
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
CLASS A
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________
CUSIP 92113U104
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Equity Fund, transferable
on the books of the Fund by the holder thereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This
certificate is not valid unless countersigned by the Transfer Agent.
WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.
Dated
[VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
DELAWARE SEAL]
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
NUMBER CLASS A SHARES
KC
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH I.D. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:
ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
REQUIREMENTS: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE 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.
- --------------------------------------------------------------------------------
For value received, hereby sell, assign and transfer unto
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, _________________________________________ 19 ______
__________________________________________________________________
Owner
__________________________________________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.
SIGNATURE(S) guaranteed by:
________________________________________________________________________________
- --------------------------------------------------------------------------------
*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants UNIF GIFT MIN. ACT - ________ Custodian _________
in common (Cust) (Minor)
under Uniform Gifts to
TEN ENT - as tenants by Minors Act
the entireties
____________________________
JT TEN - as joint tenants (State)
with right of sur-
vivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list
- --------------------------------------------------------------------------------
________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE> 1
EXHIBIT 4.1(b)
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
CLASS B
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________
CUSIP 92113U203
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Equity Fund, transferable
on the books of the Fund by the holder thereof in person or by duly
authorized attorney upon surrender of this certificate properly endorsed. This
certificate is not valid unless countersigned by the Transfer Agent.
WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.
Dated
[VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
DELAWARE SEAL]
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
NUMBER CLASS B SHARES
KC
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH I.D. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:
ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
REQUIREMENTS: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE 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.
- --------------------------------------------------------------------------------
For value received, hereby sell, assign and transfer unto
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, _________________________________________ 19 ______
__________________________________________________________________
Owner
__________________________________________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.
SIGNATURE(S) guaranteed by:
________________________________________________________________________________
- --------------------------------------------------------------------------------
*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants UNIF GIFT MIN. ACT - ________ Custodian _________
in common (Cust) (Minor)
under Uniform Gifts to
TEN ENT - as tenants by Minors Act
the entireties
____________________________
JT TEN - as joint tenants (State)
with right of sur-
vivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list
- --------------------------------------------------------------------------------
________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE> 1
EXHIBIT 4.1(c)
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
CLASS C
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________
CUSIP 92113U302
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Equity Fund, transferable
on the books of the Fund by the holder thereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This certificate
is not valid unless countersigned by the Transfer Agent.
WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.
Dated
[VAN KAMPEN AMERICAN CAPITAL
GLOBAL EQUITY FUND
DELAWARE SEAL]
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
NUMBER CLASS C SHARES
KC
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH I.D. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:
ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
REQUIREMENTS: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE 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.
- --------------------------------------------------------------------------------
For value received, hereby sell, assign and transfer unto
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, _________________________________________ 19 ______
__________________________________________________________________
Owner
__________________________________________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.
SIGNATURE(S) guaranteed by:
________________________________________________________________________________
- --------------------------------------------------------------------------------
*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants UNIF GIFT MIN. ACT - ________ Custodian _________
in common (Cust) (Minor)
under Uniform Gifts to
TEN ENT - as tenants by Minors Act
the entireties
____________________________
JT TEN - as joint tenants (State)
with right of sur-
vivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list
- --------------------------------------------------------------------------------
________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE> 1
EXHIBIT 4.2 (a)
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
CLASS A
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________
CUSIP 92113U401
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Government Securities
Fund, transferable on the books of the Fund by the holder thereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent.
WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.
Dated
[VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT SECURITIES FUND
DELAWARE SEAL]
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
NUMBER CLASS A SHARES
KC
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH I.D. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:
ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
REQUIREMENTS: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE 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.
- --------------------------------------------------------------------------------
For value received, hereby sell, assign and transfer unto
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, _________________________________________ 19 ______
__________________________________________________________________
Owner
__________________________________________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.
SIGNATURE(S) guaranteed by:
________________________________________________________________________________
- --------------------------------------------------------------------------------
*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants UNIF GIFT MIN. ACT - ________ Custodian _________
in common (Cust) (Minor)
under Uniform Gifts to
TEN ENT - as tenants by Minors Act
the entireties
____________________________
JT TEN - as joint tenants (State)
with right of sur-
vivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list
- --------------------------------------------------------------------------------
________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE> 1
EXHIBIT 4.2 (b)
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
CLASS B
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________
CUSIP 92113U500
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Government Securities
Fund, transferable on the books of the Fund by the holder thereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent.
WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.
Dated
[VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT SECURITIES FUND
DELAWARE SEAL]
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
NUMBER CLASS B SHARES
KC
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH I.D. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:
ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
REQUIREMENTS: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE 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.
- --------------------------------------------------------------------------------
For value received, hereby sell, assign and transfer unto
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, _________________________________________ 19 ______
__________________________________________________________________
Owner
__________________________________________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.
SIGNATURE(S) guaranteed by:
________________________________________________________________________________
- --------------------------------------------------------------------------------
*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants UNIF GIFT MIN. ACT - ________ Custodian _________
in common (Cust) (Minor)
under Uniform Gifts to
TEN ENT - as tenants by Minors Act
the entireties
____________________________
JT TEN - as joint tenants (State)
with right of sur-
vivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list
- --------------------------------------------------------------------------------
________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE> 1
EXHIBIT 4.2(c)
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
CLASS C
ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES that is the owner of
*SEE REVERSE FOR CERTAIN DEFINITIONS
_________________
CUSIP 92113U609
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Government Securities
Fund, transferable on the books of the Fund by the holder thereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent.
WITNESS THE FACSIMILE SEAL OF THE FUND AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.
Dated
[VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT SECURITIES FUND
DELAWARE SEAL]
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
NUMBER CLASS C SHARES
KC
ACCOUNT NO. ALPHA CODE DEALER NO. CONFIRM NO.
TRADE DATE CONFIRM DATE BATCH I.D. NO.
CHANGE NOTICE: IF THE ABOVE INFORMATION
IS INCORRECT OR MISSING, PLEASE PRINT
THE CORRECT INFORMATION BELOW, AND RETURN
TO:
ACCESS
P.O. BOX 418256
KANSAS CITY, MISSOURI 64141-9256
----------------------------------------
----------------------------------------
----------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
REQUIREMENTS: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
THE 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.
- --------------------------------------------------------------------------------
For value received, hereby sell, assign and transfer unto
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
________________________________________________________________________________
_________________________________________________________________________ Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint _____________________________________________
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated, _________________________________________ 19 ______
__________________________________________________________________
Owner
__________________________________________________________________
Signature of Co-Owner, if any
IMPORTANT { BEFORE SIGNING, READ AND COMPLY CAREFULLY
{ WITH REQUIREMENTS PRINTED ABOVE.
SIGNATURE(S) guaranteed by:
________________________________________________________________________________
- --------------------------------------------------------------------------------
*The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants UNIF GIFT MIN. ACT - ________ Custodian _________
in common (Cust) (Minor)
under Uniform Gifts to
TEN ENT - as tenants by Minors Act
the entireties
____________________________
JT TEN - as joint tenants (State)
with right of sur-
vivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list
- --------------------------------------------------------------------------------
________________________________________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
<PAGE> 1
EXHIBIT 5.1
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 31st day of August, 1995 by and between VAN KAMPEN AMERICAN
CAPITAL WORLD PORTFOLIO SERIES TRUST, a Delaware business trust hereinafter
referred to as the "FUND", and VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT,
INC., a Delaware corporation, hereinafter referred to as the "ADVISER".
The FUND and the ADVISER agree as follows:
1. APPOINTMENT
a. The FUND hereby appoints the ADVISER to act as investment adviser to the
FUND's American Capital Global Equity Fund ("Global Equity") and American
Capital Global Government Securities Fund ("Global Government") (collectively,
the "Portfolios"), for the period and on the terms set forth in this Agreement.
The ADVISER accepts such appointment and agrees to furnish the services herein
set forth for the compensation herein provided.
b. In the event that the FUND establishes one or more portfolios other than the
Portfolios with respect to which it desires to retain the ADVISER to act as
investment adviser hereunder, it shall notify the ADVISER in writing. If the
ADVISER is willing to render such services it shall notify the FUND in writing
whereupon such portfolio shall become a Portfolio hereunder and the compensation
payable by such new portfolio to the ADVISER will be as agreed in writing at the
time.
2. SUBADVISERS
It is understood that the ADVISER, subject to the prior approval of the FUND's
Trustees, will from time to time employ or associate itself with such person or
persons as the ADVISER may believe to be particularly fitted to assist it in the
performance of this Agreement, provided, however, that the compensation of such
person or persons shall be paid by the ADVISER and that the ADVISER shall be as
fully responsible to the FUND for the acts and omissions of any subadviser as it
is for its own acts and omissions. Without limiting the generality of the
foregoing, it is agreed that subadvisory services to the Portfolios may be
provided by John Govett & Co. Limited pursuant to a subadvisory agreement with
the ADVISER ("Subadvisory Agreement").
3. SERVICES RENDERED AND EXPENSES PAID BY ADVISER
The ADVISER, subject to the overall policies, control, direction, supervision
and review of the FUND's Trustees and in conformity with applicable laws, the
FUND's Agreement and Declaration of Trust ("Declaration of Trust"), Bylaws,
registration statements, prospectuses and stated investment objectives, policies
and restrictions of each Portfolio, shall:
a. manage the investment and reinvestment of the FUND's assets
<PAGE> 2
including, by way of illustration, the evaluation of pertinent economic,
statistical, financial and other data, determination of the industries and
companies to be represented in the FUND's Portfolios, and formulation and
implementation of investment programs;
b. place all orders for the purchase and sale of portfolio investments for
the account of each Portfolio of the FUND with brokers or dealers selected by
the ADVISER;
c. conduct and manage the day-to-day operations of the FUND including, by
way of illustration, the preparation of registration statements, reports, and
amendments thereto, and the furnishing of legal services except for services
provided by outside counsel to the FUND selected by the Trustees; and
d. pay the compensation of each FUND trustee and FUND officer who is an
affiliated person of the ADVISER, except the compensation of the FUND's
Treasurer and related expenses as provided below.
In performing the services described in paragraph b. above, the ADVISER
shall use its best efforts to obtain for the FUND and each Portfolio the most
favorable price and execution available and shall maintain records adequate to
demonstrate compliance with this requirement. Subject to prior authorization by
the FUND's Trustees of appropriate policies and procedures, the ADVISER may, to
the extent authorized by law, cause the FUND to pay a broker or dealer that
provides brokerage and research services to the ADVISER an amount of commission
for effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction. To the extent authorized by law the ADVISER shall not be deemed to
have acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of such action.
Except as otherwise agreed, or as otherwise provided herein, the FUND shall
pay, or arrange for others to pay, all its expenses other than those expressly
stated to be payable by the ADVISER hereunder, which expenses payable by the
FUND shall include (i) interest and taxes; (ii) brokerage commissions and other
costs in connection with the purchase and sale of portfolio investments; (iii)
compensation of its trustees and officers other than those who are affiliated
persons of the ADVISER; (iv) compensation of its Treasurer, compensation of
personnel working under the Treasurer's direction, and expenses of office space,
facilities, and equipment used by the Treasurer and such personnel in the
performance of their normal duties for the FUND which consist of maintenance of
the accounts, books and other documents which constitute the record forming the
basis for the FUND's financial statements, preparation of such financial
statements and other FUND documents and reports of a financial nature required
by federal and state laws, and participation in the production of the FUND's
registration statements, prospectuses, proxy solicitation materials and reports
to shareholders; (v) fees of outside counsel to and of independent accountants
of the FUND selected by the Trustees; (vi) custodian,
2
<PAGE> 3
registrar and transfer agent fees and expenses; (vii) expenses related to the
repurchase or redemption of its shares; (viii) expenses related to the issuance
of its shares against payment therefor by or on behalf of the subscribers
thereto; (ix) fees and related expenses of registering and qualifying the FUND
and its shares for distribution under state and federal securities laws; (x)
expenses of printing and mailing of registration statements, prospectuses,
reports, notices and proxy solicitation materials of the FUND; (xi) all other
expenses incidental to holding meetings of the FUND's shareholders including
proxy solicitations therefor; (xii) expenses for servicing shareholder accounts;
(xiii) insurance premiums for fidelity coverage and errors and omissions
insurance; (xiv) dues for the FUND's membership in trade associations approved
by the Trustees; and (xv) such nonrecurring expenses as may arise, including
those associated with actions, suits, or proceedings to which the FUND is a
party and the legal obligation which the FUND may have to indemnify its officers
and trustees with respect thereto. To the extent that any of the foregoing
expenses are allocated between the FUND and any other party, such allocations
shall be pursuant to methods approved by the Trustees.
4. RESTRICTION ON THE ADVISER'S POWERS
The ADVISER shall not commit any Portfolio to any extent beyond the amount
of the cash and securities placed by such Portfolio under the control of the
ADVISER.
In carrying out its duties hereunder the ADVISER shall comply with all
reasonable instructions of the Portfolio in connection therewith. Such
instructions may be given by the Trustees or by any other person authorized by a
resolution of the Trustees provided a certified copy of such resolution has been
supplied to the ADVISER.
All securities, cash, and other assets of each Portfolio shall be placed
and maintained in the care of a member bank of the Federal Reserve System of the
United States approved by the Board as custodian and one or more "Eligible
Foreign Custodians" (as defined in Rule 17f-5 under the 1940 Act) is approved by
the Board as sub-custodians.
Persons authorized by resolution of the Trustees shall have the right to
inspect and copy contracts, notes, vouchers, and copies of entries in books or
electronic recording media relating to the Portfolio's transactions at the
registered office of the ADVISER at any time during normal business hours.
5. ROLE OF ADVISER
The ADVISER, and any person controlled by or under common control with the
ADVISER, shall be free to render similar services to others and engage in other
activities, so long as the services rendered to the FUND are not impaired.
Except as otherwise required by the Investment Company Act of 1940
3
<PAGE> 4
any of the shareholders, trustees, officers and employees of the FUND may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the ADVISER, and in any person controlled by or under common control with the
ADVISER, and the ADVISER, and any person controlled by or under common control
with the ADVISER, may have an interest in the FUND.
Except as otherwise agreed, in the absence of willful misfeasance, bad
faith, negligence, or reckless disregard of obligations or duties hereunder on
the part of the ADVISER, the ADVISER shall not be subject to liability to the
FUND, or to any shareholder of the FUND, for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security.
6. COMPENSATION PAYABLE TO ADVISER
The FUND shall pay to the ADVISER, as compensation for the services
rendered and expenses paid by the ADVISER, with respect to the Global Equity, a
monthly fee computed at 1.00%, per annum, of the Portfolio's average daily net
assets and with respect to Global Government, a monthly fee computed at .75%,
per annum of the Portfolio's average daily net assets.
For purposes of these calculations, assets of each Portfolio shall be
considered separately in calculating the investment advisory fee. Average daily
net assets of these Portfolios shall be determined by taking the average of the
net assets for each business day during a given calendar month, calculated in
the manner provided in the FUND's Declaration of Trust. Such fee shall be
payable for each calendar month as soon as practicable after the end of that
month.
The fees payable to the ADVISER by the FUND pursuant to this Section 6
shall be reduced by any commissions, tender solicitation and other fees,
brokerage or similar payments received by the ADVISER, or any other direct or
indirect majority owned subsidiary of VK/AC Holding, Inc., in connection with
the purchase and sale of portfolio investments of the FUND, less any direct
expenses incurred by the ADVISER, or any other direct or indirect majority owned
subsidiary of VK/AC Holding, Inc. in connection with obtaining such commissions,
fees, brokerage or similar payments. The ADVISER shall use its best efforts to
recapture all available tender offer solicitation fees and exchange offer fees
in connection with the FUND's portfolio transactions and shall advise the
Trustees of any other commissions, fees, brokerage or similar payments which may
be possible for the ADVISER or any other direct or indirect majority owned
subsidiary of VK/AC Holding, Inc. to receive in connection with the FUND's
portfolio transactions or other arrangements which may benefit the FUND.
In the event that the ordinary business expenses of the FUND, calculated
separately for each Portfolio, for any fiscal year should exceed the most
restrictive expense limitation applicable in the states where the FUND's shares
are qualified for sale, the
4
<PAGE> 5
compensation due the ADVISER for such fiscal year shall be reduced by the amount
of such excess. The ADVISER's compensation shall be so reduced by a reduction or
a refund thereof, at the time such compensation is payable after the end of each
calendar month during such fiscal year of the FUND, and if such amount should
exceed such monthly compensation, the ADVISER shall pay the FUND an amount
sufficient to make up the deficiency, subject to readjustment during the FUND's
fiscal year. For purposes of this paragraph, all ordinary business expenses of
the FUND include the investment advisory fee and other operating costs paid by
the FUND except (i) for interest and taxes; (ii) for brokerage commissions;
(iii) as a result of litigation in connection with a suit involving a claim for
recovery by the FUND; (iv) as a result of litigation involving a defense against
a liability asserted against the FUND, provided that, if the ADVISER made the
decision or took the actions which resulted in such claim, it acted in good
faith without negligence or misconduct; (v) any indemnification paid by the FUND
to its officers and trustees and the ADVISER in accordance with applicable state
and federal laws as a result of such litigation; and (vi) amounts paid to Van
Kampen American Capital Distributors, Inc., the distributor of the FUND's shares
in connection with a distribution plan adopted by the FUND's Trustees pursuant
to Rule 12b-1 under the Investment Company Act of 1940.
If the ADVISER shall serve for less than the whole of any month, the
foregoing compensation shall be prorated.
7. Books and Records
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
ADVISER hereby agrees that all records which it maintains for the FUND are the
property of the FUND and further agrees to surrender promptly to the FUND any of
such records upon the FUND's request. The ADVISER further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records required to
be maintained by Rule 31a-1 under the Act.
8. Duration and Termination
This Agreement will become effective with respect to the Portfolios on the
date hereof, and with respect to any additional Portfolios, on the date of
receipt by the FUND of notice from the ADVISER in accordance with Section 1(b)
hereof that the ADVISER is willing to serve as investment adviser with respect
to such Portfolio, provided that this Agreement (as supplemented by the terms
specified in any notice and agreement pursuant to Section 1(b) hereof) shall
have been approved by the shareholders of each Portfolio subject to this
Agreement, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect for a period of
two years. Thereafter, if not terminated, this Agreement shall continue in
effect as to a particular Portfolio for successive periods of twelve months
each, or such shorter period as may be agreed upon,
5
<PAGE> 6
provided such continuance is specifically approved at least annually, (a) by the
vote of a majority of those members of the FUND's Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the vote of a
majority of the FUND's Trustees or by vote of a majority of the outstanding
voting securities of such Portfolio. Notwithstanding the foregoing this
Agreement may be terminated as to any Portfolio at any time, without the payment
of any penalty, by the FUND (by vote of the FUND's Trustees or by vote of a
majority of the outstanding voting securities of such Portfolio), or by the
ADVISER, on sixty days' written notice. This Agreement will immediately
terminate in the event of its assignment.
This Agreement shall terminate forthwith by notice in writing on the
happening of any of the following events:
a. if the FUND or the ADVISER shall go into liquidation (except a voluntary
liquidation for the purpose of and followed by a bona fide reconstruction or
amalgamation upon terms previously approved in writing by the party not in
liquidation) or if a receiver or receiver and manager of any of the assets of
any of them is appointed; or
b. if either of the parties hereto shall commit any breach of the
provisions hereof and shall not have remedied such breach within 30 days after
the service of notice by the party not in breach on the other requiring the same
to be remedied.
Termination shall be without prejudice to the completion of any
transactions which the ADVISER shall have committed to on behalf of a Portfolio
prior to the time of termination. The ADVISER shall not effect and the FUND
shall not be entitled to instruct the ADVISER to effect any further transactions
on behalf of a Portfolio subsequent to the time termination takes effect.
On the termination of this Agreement and completion of all matters referred
to in the foregoing paragraph, the ADVISER shall deliver or cause to be
delivered to the FUND all documents, records, books and any other properties
which are in its possession, power or control and which are valid and in force
at the date of termination.
9. Amendment of this Agreement
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought. No amendment of this Agreement shall be effective as to a particular
Portfolio until approved by vote of a majority of the outstanding voting series
of such Portfolio.
10. Miscellaneous Provisions
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<PAGE> 7
(a) Definitions
For the purposes of this Agreement, the terms "affiliated person,"
"assignment,"interested person," and "majority of the outstanding voting
securities" shall have their respective meanings defined in the Investment
Company Act of 1940 and the Rules and Regulations thereunder, subject, however,
to such exemptions as may be granted to either the ADVISER or the FUND by the
Securities and Exchange Commission, or such interpretive positions as may be
taken by the Commission or its staff, under said Act, and the term "brokerage
and research services" shall have the meaning given in the Securities Exchange
Act of 1934 and the Rules and Regulations thereunder.
(b) Indemnity for U.K. Taxes
i) Notwithstanding any other provision of this Agreement, the FUND shall
indemnify and save the ADVISER harmless from, against, for and in respect of all
liabilities incurred pursuant to Section 3.4 of the Subadvisory Agreement.
ii) The FUND will not be liable under this indemnification provision with
respect to any liabilities incurred by the ADVISER'S willful misfeasance, bad
faith, or gross negligence in the performance of the ADVISER'S duties or by
reason of the ADVISER'S reckless disregard of obligations and duties under this
Agreement or to the FUND.
iii) The FUND will not be liable under this indemnification provision with
respect to any claim made against the ADVISER unless the ADVISER shall have
notified the FUND in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the ADVISER (or after the ADVISER shall have received notice of
such service on any designated agent). In case any such action is brought
against the ADVISER, the FUND will be entitled to participate, at its own
expense, in the defense thereof. The FUND also will be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the FUND to such party of the FUND's election to assume the
defense thereof, such party will bear the fees and expenses of any additional
counsel retained by it, and the FUND will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof.
(c) Choice of Law
This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the State of
Texas.
(d) Other
The execution of this Agreement has been authorized by the FUND's
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<PAGE> 8
Trustees and by the sole shareholder. This Agreement is executed on behalf of
the Fund or the Trustees of the FUND as Trustees and not individually and that
the obligations of this Agreement are not binding upon any of the Trustees,
officers or shareholders of the FUND individually but are binding only upon the
assets and property of the FUND. A Certificate of Trust in respect of the Fund
is on file with the Secretary of State of Delaware.
The parties hereto each have caused this Agreement to be signed in duplicate on
its behalf by its duly authorized officer as of the above date.
VAN KAMPEN AMERICAN CAPITAL WORLD
PORTFOLIO SERIES TRUST
By: /s/ NORI L. GABERT
------------------------------------
Name: Nori L. Gabert
------------------------------------
Its: Vice President
VAN KAMPEN AMERICAN CAPITAL ASSET
MANAGEMENT, INC.
By: /s/ HUEY P. FALGOUT, JR.
------------------------------------
Name: Huey P. Falgout, Jr.
------------------------------------
Its: Vice President
------------------------------------
8
<PAGE> 1
EXHIBIT 5.2
INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
and
JOHN GOVETT & CO. LIMITED
THIS AGREEMENT is made as of this 31st day of August, 1995 by and between
JOHN GOVETT & CO. LIMITED ("JOHN GOVETT") of Shackleton House, 4 Battle Bridge
Lane, London SE1 2HR, England, and VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT,
INC.
("VKAC") of 2800 Post Oak Boulevard, Houston, Texas 77056.
WHEREAS, VKAC has heretofore sponsored and acts as Investment Adviser to
Van Kampen American Capital World Portfolio Series Trust (the "Trust") with
respect to -- Van Kampen American Capital Global Equity Fund (the "Fund"); and
WHEREAS, JOHN GOVETT has available a staff of experienced investment
personnel and facilities for providing investment sub-advisory services
applicable to that portion of the investment portfolio invested in non-U.S.
securities; and
WHEREAS, VKAC represents that it is a non-private investor with regard to
the Investment Management Regulatory Organization Limited ("IMRO") rules.
WHEREAS, JOHN GOVETT is a member of IMRO, a self-regulating organization
recognized under the Financial Services Act 1986 of the United Kingdom and is
willing to provide VKAC with investment advisory services on the terms and
conditions hereinafter set forth; and
WHEREAS, VKAC and JOHN GOVETT (jointly referred to as "the Advisers")
desire to enter into an agreement for JOHN GOVETT to provide sub-advisory
services to the Fund and to VKAC with respect to the Fund's non-U.S.
investments.
NOW THEREFORE it is mutually agreed:
1. INVESTMENT SUB-ADVISORY SERVICES
1.1 INVESTMENT ADVICE
a) Subject to the overall policies, control, direction and review of the
Fund's Trustees, JOHN GOVETT shall keep under review the non-U.S. investments of
the Fund and continuously furnish to the Fund and to VKAC (1) investment advice
primarily for investments in securities for which the principal trading
market(s) are in non-U.S. countries; (2) economic, statistical and research
information and advice, including advice on the allocation of investments among
countries, relating only to such portion of the Fund's assets as
<PAGE> 2
the Advisers shall from time to time designate ("Non-U.S. Securities"),
generally with respect to securities issued outside the United States and
Canada; (3) recommendations as to the voting of proxies solicited by or with
respect to Non-U.S. Securities; and (4) an investment program with respect to
Non-U.S. Securities and recommendations as to what securities shall be
purchased, sold or exchanged, and what portion, if any, of the Non-U.S.
Securities shall be held in money market instruments.
b) The Advisers are responsible for the allocation of the Fund's assets
among the various securities markets of the world. The Advisers will determine
at least quarterly the percentage of the assets that shall be allocated to each
of the Advisers (the "Asset Allocation"). The Asset Allocation will specify the
percentage and nature of the assets of the Fund allocated to each of the
Advisers for management on the effective date of the determination and will
apply to cash inflows or outflows and income and expense accruals thereafter
until such time as the Asset Allocation is redetermined. Each of the Advisers
will be responsible for the allocation of assets among the securities markets
within the area for which it is responsible. If the Advisers cannot agree on an
Asset Allocation, the Trustees shall make the final determination since the
Trustees retains in all events the control and management of the business and
affairs of the Fund.
c) Unless otherwise instructed by VKAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VKAC or by the Trustees, JOHN GOVETT shall determine the
Non-U.S. Securities to be purchased and sold by the Fund and shall place orders
for the purchase, sale or exchange of Non-U.S. Securities for the Fund's
accounts with brokers or dealers and to that end JOHN GOVETT is authorized by
the Trustees to give instructions to the Custodian and any Sub-Custodian of the
Fund as to deliveries of such Non-U.S. Securities, transfers of currencies and
payments of cash for the account of the Fund.
d) In performing these services, JOHN GOVETT shall adhere to the Fund's
investment objectives, restrictions and limitations as contained in its
Prospectus, Statement of Additional Information, or Agreement and Declaration of
Trust and shall comply with all statutory and regulatory restrictions,
limitations and requirements applicable to the activity of the Fund.
e) Unless otherwise instructed by VKAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VKAC or by the Trustees, JOHN GOVETT shall have executed and
performed on behalf of and at the expense of the Fund:
i) Purchases, sales, exchanges, conversions, and placement or
2
<PAGE> 3
orders for execution, and
ii) Reporting of all transactions to VKAC and to other entities as
directed by VKAC or by the Trustees.
f) JOHN GOVETT shall provide the Trustees at least quarterly, in advance
of the regular meetings of the Trustees, a report of its activities hereunder on
behalf of the Fund and its proposed strategy for the next quarter, all in such
form and detail as requested by the Trustees. JOHN GOVETT shall also make an
investment officer available to attend such meetings of the Trustees as the
Trustees may reasonably request.
1.2 RESTRICTION OF JOHN GOVETT'S POWERS
(a) JOHN GOVETT shall not commit the Fund to any extent beyond the amount
of the cash and securities placed by the Fund under the control of the JOHN
GOVETT.
(b) In carrying out its duties hereunder JOHN GOVETT shall comply with all
reasonable instruction of the Fund or VKAC in connection therewith. Such
instructions may be given by letter, telex, telefax or telephone confirmed by
telex, by the Trustees or by any other person authorized by a resolution of the
Trustees provided a certified copy of such resolution has been supplied to JOHN
GOVETT.
(c) All securities, cash, and other assets of the Fund shall be placed and
maintained in the care of a member bank of the Federal Reserve System of the
United States approved by the Trustees as custodian and one or more "Eligible
Foreign Custodians" (as defined in Rule 17f-5 under the Investment Company Act
of 1940 (the "1940 Act")) approved by the Trustees as sub-custodians.
(d) Persons authorized by resolution of the Trustees shall have the right
to inspect and copy contracts, notes, vouchers, and copies of entries in books
or electronic recording media relating to the Fund's transactions at the
registered office of JOHN GOVETT at any time during normal business hours. Such
records, in relation to each transaction effected by JOHN GOVETT on behalf of
the Fund shall be maintained by JOHN GOVETT for a period of seven years from the
date of such transaction.
1.3 PURCHASE AND SALE OF SECURITIES
In performing the services described above, JOHN GOVETT shall use its best
efforts to obtain for the Fund the most favorable price and execution available.
Subject to prior authorization of appropriate policies and procedures by the
Trustees, JOHN GOVETT may, to the extent authorized by law, cause the Fund to
pay a broker or dealer who provides brokerage and research services an
3
<PAGE> 4
amount of commission for effecting the Fund's investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, in recognition of the brokerage and research
services provided by the broker or dealer. To the extent authorized by law, JOHN
GOVETT shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of such action.
1.4 CUSTODIAN
JOHN GOVETT shall not act as Custodian for the securities or any other
assets of the Fund. All such assets shall be held by the Custodian or
Sub-Custodian appointed by the Trustees.
2. DUTIES OF VKAC
2.1 PROVISION OF INFORMATION
VKAC shall advise JOHN GOVETT from time to time with respect to the Fund of
its investment objectives and of any changes or modifications thereto, as well
as any specific investment restrictions or limitations by sending to JOHN GOVETT
a copy of each registration statement relating to the Fund as filed with the
Securities and Exchange Commission. As requested by JOHN GOVETT, VKAC shall
furnish such information to JOHN GOVETT as to holdings, purchases, and sales of
the securities under its management as will reasonably enable JOHN GOVETT to
furnish its investment advice under this Agreement.
2.2 COMPENSATION TO JOHN GOVETT
The fee for the services provided under this Agreement will be determined
as follows:
(a) An amount for each month (or such other valuation period as may be
mutually agreed upon) equivalent, on an annual basis, to 50% of the compensation
actually received by VKAC pursuant to the investment advisory fee schedule set
forth in the Investment Advisory Agreement between the Fund and VKAC taking into
account any waiver or return to the Fund of any or all of such advisory fee by
VKAC (with any such return of fees to be treated as if not actually received).
The value of the assets of the Fund shall be computed as of the close of
business on the last day of each valuation period for the Fund, using the
average of all the daily determinations of the net value of the assets of the
Fund.
(b) The foregoing fee shall be paid in cash by VKAC to JOHN GOVETT within
five (5) business days after the last day of the valuation period.
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<PAGE> 5
3. MISCELLANEOUS
3.1 ACTIVITIES OF JOHN GOVETT
The services of JOHN GOVETT as Sub-Adviser to VKAC under this Agreement are
not to be deemed exclusive, JOHN GOVETT and its affiliates being free to render
services to others. It is understood that shareholders, trustees, officers and
employees of JOHN GOVETT may become interested in the Fund or VKAC as a
shareholder, trustee, officer, partner or otherwise.
3.2 SERVICES TO OTHER CLIENTS
VKAC acknowledges that JOHN GOVETT may have investment responsibilities, or
render investment advice to, or perform other investment advisory services for,
other individuals or entities, ("Clients"). Subject to the provisions of this
paragraph, VKAC agrees that JOHN GOVETT may give advice or exercise investment
responsibility and take such other action with respect to such Clients which may
differ from advice given or the timing or nature of action taken with respect to
the Fund, provided that JOHN GOVETT acts in good faith, and provided, further,
that it is JOHN GOVETT policy to allocate, within its reasonable discretion,
investment opportunities to the Fund over a period of time on a fair and
equitable basis relative to the Clients, taking into account the investment
objectives and policies of the Fund and any specific investment restrictions
applicable thereto. VKAC acknowledges that one or more of the Clients may at any
time hold, acquire, increase, decrease, dispose of or otherwise deal with
positions in investments in which the Fund may have an interest from time to
time, whether in transactions which may involve the Fund or otherwise. JOHN
GOVETT shall have no obligation to acquire for the Fund a position in any
investment which any Client may acquire, and VKAC shall have no first refusal,
coinvestment or other rights in respect of any such investment, either for the
Fund or otherwise.
3.3 BEST EFFORTS
It is understood and agreed that in furnishing the investment advice and
other services as herein provided, JOHN GOVETT shall use its best professional
judgment to recommend actions which will provide favorable results for the Fund.
JOHN GOVETT shall not be liable to the Fund or to any shareholder of the Fund to
any greater degree than VKAC.
3.4 INDEMNITY FOR TAXES
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<PAGE> 6
a) Notwithstanding any other provision of this Agreement, VKAC shall
indemnify and save JOHN GOVETT and each of its affiliates, officers, trustees
and employees (each an "Indemnified Party") harmless from, against, for and in
respect of all taxes imposed by the United Kingdom on VKAC or the Fund, in
relation to the matters contemplated by this Agreement in the event that any
such tax is assessed or charged on an Indemnified Party as a branch or agent of
VKAC or the Fund.
b) VKAC will not be liable under this indemnification provision with
respect to any liabilities incurred by reason of an Indemnified Party's willful
misfeasance, bad faith, or gross negligence in the performance of such
Indemnified Party's duties or by reason of such Indemnified Party's reckless
disregard of obligations and duties under this Agreement or to the Fund.
c) VKAC will not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified VKAC in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent). In case any such action is brought against the Indemnified Parties, VKAC
will be entitled to participate, at its own expense, in the defense thereof.
VKAC also will be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from VKAC to such
party of VKAC's election to assume the defense thereof, the Indemnified Party
will bear the fees and expenses of any additional counsel retained by it, and
VKAC will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof.
3.5 DURATION OF AGREEMENT
a) This Agreement, unless terminated pursuant to paragraph b or c below,
shall have an initial term of two years, and thereafter shall continue in effect
from year to year, provided its continued applicability is specifically approved
at least annually by the Trustees or by a vote of the holders of a majority of
the outstanding shares of the Fund. In addition, such continuation shall be
approved by vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. As used in this paragraph,
the term "interested person" shall have the same meaning as set forth in the
1940 Act.
b) This Agreement may be terminated by sixty (60) days' written notice by
either VKAC or JOHN GOVETT to the other party. The Agreement may also be
terminated at any time, without the payment
6
<PAGE> 7
of any penalty, by the Fund (by vote of the Trustees or, by the vote of a
majority of the outstanding voting securities of such Fund), on sixty (60) days'
written notice to both VKAC and JOHN GOVETT. This Agreement shall automatically
terminate in the event of the termination of the investment advisory agreement
between VKAC and the Fund.
c) This Agreement shall terminate in the event of its assignment. The term
"assignment" for this purpose shall have the same meaning set forth in Section
2(a)(4) of the 1940 Act.
d) Termination shall be without prejudice to the completion of any
transactions which JOHN GOVETT shall have committed to on behalf of the Fund
prior to the time of termination. JOHN GOVETT shall not effect and the Fund
shall not be entitled to instruct JOHN GOVETT to effect any further transactions
on behalf of the Fund subsequent to the time termination takes effect.
e) This Agreement shall terminate forthwith by notice in writing on the
happening of any of the following events:
i) if VKAC or JOHN GOVETT shall go into liquidation (except a voluntary
liquidation for the purpose of and followed by a bona fide reconstruction or
amalgamation upon terms previously approved in writing by the party not in
liquidation) or if a receiver or receiver and manager of any of the assets of
any of them is appointed; or
ii) if either of the parties hereto shall commit any breach of the
provisions hereof and shall not have remedied such breach within 30 days after
the service of notice by the party not in breach on the other requiring the same
to be remedied.
f) On the termination of this Agreement and completion of all matters
referred to in the foregoing paragraph (d) JOHN GOVETT shall deliver or cause to
be delivered to the Fund copies of all documents, records and books of the Fund
required to be maintained pursuant to Rules 31a-1 or 31a-2 of the 1940 Act which
are in JOHN GOVETT's possession, power or control and which are valid and in
force at the date of termination.
3.6 Notices
Any notice, request, instruction, or other document to be given under this
Agreement by any party hereto to the other parties shall be in writing and
delivered personally or sent by mail or telecopy (with a hard copy to follow),
If to JOHN GOVETT, to:
Shackleton House
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<PAGE> 8
4 Battle Bridge Lane
London SE1 2HR
England
attn: The Hon. Kevin Pakenham
with a copy to:
650 California Street
28th Floor
San Francisco, CA 94108
telecopy: (415) 249-0554
attn: Michael J. Mayer
and a copy to:
650 California Street
28th Floor
San Francisco, CA 94108
telecopy: (415) 249-0553
attn: Robert A. Cornman, Esq.
and a copy to:
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, CA 94104
telecopy: (415) 772-6268
attn: Mitchell E. Nichter, Esq.
If to VKAC, to:
2800 Post Oak Blvd.
Houston, TX 77056
telecopy: (713) 993-4300
attn: Don Powell
with a copy to:
2800 Post Oak Blvd.
Houston, TX 77056
telecopy: (713) 993-4317
attn: Nori L. Gabert, Esq.
or at such other address for a party as shall be specified by like notice. Any
notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
addressed and mailed in the manner herein provided shall be presumed to have
been duly given to the party to which it is addressed, on the date three
8
<PAGE> 9
(3) days after mailing, and in the case of delivery by telecopy, on the date the
hard copy is received.
3.7 IMRO Rules
As a member of IMRO and in light of IMRO Rules, the Sub-Adviser places on
record that it regards this Agreement as not necessitating any ancillary
agreement with the Fund or VKAC on the grounds that, within meanings of the IMRO
Rules (a) the Fund is a series of an open-ended investment company and a
business investor, (b) VKAC is a professional investor and (c) the subject
matter of this Agreement is a scheme management activity.
3.8 Choice of Law
This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the United
States and the State of California.
3.9 Miscellaneous Provisions
The execution of this Agreement has been authorized by the Trust's Trustees
and by the sole shareholder. This Agreement is executed on behalf of the Trust
or the Trustees of the Trust as Trustees and not individually and that the
obligations of this Agreement are not binding upon any of the Trustees, officers
or shareholders of the Trust individually but are binding only upon the assets
and property of the Trust. A Certificate of Trust in respect of the Trust is on
file with the Secretary of State of Delaware.
IN WITNESS WHEREOF, the Agreement has been executed as of the date first
above given.
JOHN GOVETT & CO. LIMITED
<TABLE>
<S> <C>
By: /s/ KEVIN PAKENHAM
------------------------------------
Name: Kevin Pakenham
------------------------------------
Its: Chief Executive
------------------------------------
</TABLE>
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
<TABLE>
<S> <C>
By: /s/ NORI L. GABERT
------------------------------------
Name: Nori L. Gabert
------------------------------------
Its: Vice President
------------------------------------
</TABLE>
9
<PAGE> 1
EXHIBIT 5.3
INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN VAN KAMPEN AMERICAN CAPITAL ASSET
MANAGEMENT, INC.
and
JOHN GOVETT & CO. LIMITED
THIS AGREEMENT is made as of this 31st day of August, 1995 by and between
JOHN GOVETT & CO. LIMITED ("JOHN GOVETT") of Shackleton House, 4 Battle Bridge
Lane, London SE1 2HR, England, and VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT,
INC.
("VKAC") of 2800 Post Oak Boulevard, Houston, Texas 77056.
WHEREAS, VKAC has heretofore sponsored and acts as Investment Adviser to
Van Kampen American Capital World Portfolio Series Trust (the "Trust") with
respect to -- Van Kampen American Capital Global Government Securities Fund (the
"Fund"); and
WHEREAS, JOHN GOVETT has available a staff of experienced investment
personnel and facilities for providing investment sub-advisory services
applicable to that portion of the investment portfolio invested in non-U.S.
securities; and
WHEREAS, VKAC represents that it is a non-private investor with regard to
the Investment Management Regulatory Organization Limited ("IMRO") rules.
WHEREAS, JOHN GOVETT is a member of IMRO, a self-regulating organization
recognized under the Financial Services Act 1986 of the United Kingdom and is
willing to provide VKAC with investment advisory services on the terms and
conditions hereinafter set forth; and
WHEREAS, VKAC and JOHN GOVETT (jointly referred to as "the Advisers")
desire to enter into an agreement for JOHN GOVETT to provide sub-advisory
services to the Fund and to VKAC with respect to the Fund's non-U.S.
investments.
NOW THEREFORE it is mutually agreed:
1. INVESTMENT SUB-ADVISORY SERVICES
1.1 INVESTMENT ADVICE
a) Subject to the overall policies, control, direction and review of the
Fund's Trustees, JOHN GOVETT shall keep under review the non-U.S. investments of
the Fund and continuously furnish to the Fund and to VKAC (1) investment advice
primarily for investments in securities for which the principal trading
market(s) are in non-U.S. countries; (2) economic, statistical and research
information and advice, including advice on the allocation of investments among
countries, relating only to such portion of the Fund's assets as the Advisers
shall from time to time designate ("Non-U.S. Securities"), generally with
respect to securities issued outside
<PAGE> 2
the United States and Canada; (3) recommendations as to the voting of proxies
solicited by or with respect to Non-U.S. Securities; and (4) an investment
program with respect to Non-U.S. Securities and recommendations as to what
securities shall be purchased, sold or exchanged, and what portion, if any, of
the Non-U.S. Securities shall be held in money market instruments.
b) The Advisers are responsible for the allocation of the Fund's assets
among the various securities markets of the world. The Advisers will determine
at least quarterly the percentage of the assets that shall be allocated to each
of the Advisers (the "Asset Allocation"). The Asset Allocation will specify the
percentage and nature of the assets of the Fund allocated to each of the
Advisers for management on the effective date of the determination and will
apply to cash inflows or outflows and income and expense accruals thereafter
until such time as the Asset Allocation is redetermined. Each of the Advisers
will be responsible for the allocation of assets among the securities markets
within the area for which it is responsible. If the Advisers cannot agree on an
Asset Allocation, the Trustees shall make the final determination since the
Trustees retains in all events the control and management of the business and
affairs of the Fund.
c) Unless otherwise instructed by VKAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VKAC or by the Trustees, JOHN GOVETT shall determine the
Non-U.S. Securities to be purchased and sold by the Fund and shall place orders
for the purchase, sale or exchange of Non-U.S. Securities for the Fund's
accounts with brokers or dealers and to that end JOHN GOVETT is authorized by
the Trustees to give instructions to the Custodian and any Sub-Custodian of the
Fund as to deliveries of such Non-U.S. Securities, transfers of currencies and
payments of cash for the account of the Fund.
d) In performing these services, JOHN GOVETT shall adhere to the Fund's
investment objectives, restrictions and limitations as contained in its
Prospectus, Statement of Additional Information, or Agreement and Declaration of
Trust and shall comply with all statutory and regulatory restrictions,
limitations and requirements applicable to the activity of the Fund.
e) Unless otherwise instructed by VKAC or the Trustees, and subject to the
provisions of this Agreement and to any guidelines or limitations specified from
time to time by VKAC or by the Trustees, JOHN GOVETT shall have executed and
performed on behalf of and at the expense of the Fund:
i) Purchases, sales, exchanges, conversions, and placement or orders for
execution, and
ii) Reporting of all transactions to VKAC and to other entities as
2
<PAGE> 3
directed by VKAC or by the Trustees.
f) JOHN GOVETT shall provide the Trustees at least quarterly, in advance
of the regular meetings of the Trustees, a report of its activities hereunder on
behalf of the Fund and its proposed strategy for the next quarter, all in such
form and detail as requested by the Trustees. JOHN GOVETT shall also make an
investment officer available to attend such meetings of the Trustees as the
Trustees may reasonably request.
1.2 RESTRICTION OF JOHN GOVETT'S POWERS
(a) JOHN GOVETT shall not commit the Fund to any extent beyond the amount
of the cash and securities placed by the Fund under the control of the JOHN
GOVETT.
(b) In carrying out its duties hereunder JOHN GOVETT shall comply with all
reasonable instruction of the Fund or VKAC in connection therewith. Such
instructions may be given by letter, telex, telefax or telephone confirmed by
telex, by the Trustees or by any other person authorized by a resolution of the
Trustees provided a certified copy of such resolution has been supplied to JOHN
GOVETT.
(c) All securities, cash, and other assets of the Fund shall be placed and
maintained in the care of a member bank of the Federal Reserve System of the
United States approved by the Trustees as custodian and one or more "Eligible
Foreign Custodians" (as defined in Rule 17f-5 under the Investment Company Act
of 1940 (the "1940 Act")) approved by the Trustees as sub-custodians.
(d) Persons authorized by resolution of the Trustees shall have the right
to inspect and copy contracts, notes, vouchers, and copies of entries in books
or electronic recording media relating to the Fund's transactions at the
registered office of JOHN GOVETT at any time during normal business hours. Such
records, in relation to each transaction effected by JOHN GOVETT on behalf of
the Fund shall be maintained by JOHN GOVETT for a period of seven years from the
date of such transaction.
1.3 PURCHASE AND SALE OF SECURITIES
In performing the services described above, JOHN GOVETT shall use its best
efforts to obtain for the Fund the most favorable price and execution available.
Subject to prior authorization of appropriate policies and procedures by the
Trustees, JOHN GOVETT may, to the extent authorized by law, cause the Fund to
pay a broker or dealer who provides brokerage and research services an amount of
commission for effecting the Fund's investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, in recognition of the brokerage and research services provided
by the broker or dealer. To the extent authorized by law, JOHN GOVETT
3
<PAGE> 4
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of such action.
1.4 CUSTODIAN
JOHN GOVETT shall not act as Custodian for the securities or any other
assets of the Fund. All such assets shall be held by the Custodian or
Sub-Custodian appointed by the Trustees.
2. DUTIES OF VKAC
2.1 PROVISION OF INFORMATION
VKAC shall advise JOHN GOVETT from time to time with respect to the Fund of
its investment objectives and of any changes or modifications thereto, as well
as any specific investment restrictions or limitations by sending to JOHN GOVETT
a copy of each registration statement relating to the Fund as filed with the
Securities and Exchange Commission. As requested by JOHN GOVETT, VKAC shall
furnish such information to JOHN GOVETT as to holdings, purchases, and sales of
the securities under its management as will reasonably enable JOHN GOVETT to
furnish its investment advice under this Agreement.
2.2 COMPENSATION TO JOHN GOVETT
The fee for the services provided under this Agreement will be determined
as follows:
(a) An amount for each month (or such other valuation period as may be
mutually agreed upon) equivalent, on an annual basis, to 50% of the compensation
actually received by VKAC pursuant to the investment advisory fee schedule set
forth in the Investment Advisory Agreement between the Fund and VKAC taking into
account any waiver or return to the Fund of any or all of such advisory fee by
VKAC (with any such return of fees to be treated as if not actually received).
The value of the assets of the Fund shall be computed as of the close of
business on the last day of each valuation period for the Fund, using the
average of all the daily determinations of the net value of the assets of the
Fund.
(b) The foregoing fee shall be paid in cash by VKAC to JOHN GOVETT within
five (5) business days after the last day of the valuation period.
3. MISCELLANEOUS
3.1 ACTIVITIES OF JOHN GOVETT
The services of JOHN GOVETT as Sub-Adviser to VKAC under this Agreement are
not to be deemed exclusive, JOHN GOVETT and its
4
<PAGE> 5
affiliates being free to render services to others. It is understood that
shareholders, trustees, officers and employees of JOHN GOVETT may become
interested in the Fund or VKAC as a shareholder, trustee, officer, partner or
otherwise.
3.2 SERVICES TO OTHER CLIENTS
VKAC acknowledges that JOHN GOVETT may have investment responsibilities, or
render investment advice to, or perform other investment advisory services for,
other individuals or entities, ("Clients"). Subject to the provisions of this
paragraph, VKAC agrees that JOHN GOVETT may give advice or exercise investment
responsibility and take such other action with respect to such Clients which may
differ from advice given or the timing or nature of action taken with respect to
the Fund, provided that JOHN GOVETT acts in good faith, and provided, further,
that it is JOHN GOVETT policy to allocate, within its reasonable discretion,
investment opportunities to the Fund over a period of time on a fair and
equitable basis relative to the Clients, taking into account the investment
objectives and policies of the Fund and any specific investment restrictions
applicable thereto. VKAC acknowledges that one or more of the Clients may at any
time hold, acquire, increase, decrease, dispose of or otherwise deal with
positions in investments in which the Fund may have an interest from time to
time, whether in transactions which may involve the Fund or otherwise. JOHN
GOVETT shall have no obligation to acquire for the Fund a position in any
investment which any Client may acquire, and VKAC shall have no first refusal,
coinvestment or other rights in respect of any such investment, either for the
Fund or otherwise.
3.3 BEST EFFORTS
It is understood and agreed that in furnishing the investment advice and
other services as herein provided, JOHN GOVETT shall use its best professional
judgment to recommend actions which will provide favorable results for the Fund.
JOHN GOVETT shall not be liable to the Fund or to any shareholder of the Fund to
any greater degree than VKAC.
3.4 INDEMNITY FOR TAXES
a) Notwithstanding any other provision of this Agreement, VKAC shall
indemnify and save JOHN GOVETT and each of its affiliates, officers, trustees
and employees (each an "Indemnified Party") harmless from, against, for and in
respect of all taxes imposed by the United Kingdom on VKAC or the Fund, in
relation to the matters contemplated by this Agreement in the event that any
such tax is assessed or charged on an Indemnified Party as a branch or agent of
VKAC or the Fund.
b) VKAC will not be liable under this indemnification provision with
respect to any liabilities incurred by reason of an
5
<PAGE> 6
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement or to
the Fund.
c) VKAC will not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified VKAC in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent). In case any such action is brought against the Indemnified Parties, VKAC
will be entitled to participate, at its own expense, in the defense thereof.
VKAC also will be entitled to assume the defense thereof, with counsel
satisfactory to the party named in the action. After notice from VKAC to such
party of VKAC's election to assume the defense thereof, the Indemnified Party
will bear the fees and expenses of any additional counsel retained by it, and
VKAC will not be liable to such party under this Agreement for any legal or
other expenses subsequently incurred by such party independently in connection
with the defense thereof.
3.5 DURATION OF AGREEMENT
a) This Agreement, unless terminated pursuant to paragraph b or c below,
shall have an initial term of two years, and thereafter shall continue in effect
from year to year, provided its continued applicability is specifically approved
at least annually by the Trustees or by a vote of the holders of a majority of
the outstanding shares of the Fund. In addition, such continuation shall be
approved by vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval. As used in this paragraph,
the term "interested person" shall have the same meaning as set forth in the
1940 Act.
b) This Agreement may be terminated by sixty (60) days' written notice by
either VKAC or JOHN GOVETT to the other party. The Agreement may also be
terminated at any time, without the payment of any penalty, by the Fund (by vote
of the Trustees or, by the vote of a majority of the outstanding voting
securities of such Fund), on sixty (60) days' written notice to both VKAC and
JOHN GOVETT. This Agreement shall automatically terminate in the event of the
termination of the investment advisory agreement between VKAC and the Fund.
c) This Agreement shall terminate in the event of its assignment. The term
"assignment" for this purpose shall have the same meaning set forth in Section
2(a)(4) of the 1940 Act.
d) Termination shall be without prejudice to the completion of any
6
<PAGE> 7
transactions which JOHN GOVETT shall have committed to on behalf of the Fund
prior to the time of termination. JOHN GOVETT shall not effect and the Fund
shall not be entitled to instruct JOHN GOVETT to effect any further transactions
on behalf of the Fund subsequent to the time termination takes effect.
e) This Agreement shall terminate forthwith by notice in writing on the
happening of any of the following events:
i) if VKAC or JOHN GOVETT shall go into liquidation (except a voluntary
liquidation for the purpose of and followed by a bona fide reconstruction or
amalgamation upon terms previously approved in writing by the party not in
liquidation) or if a receiver or receiver and manager of any of the assets of
any of them is appointed; or
ii) if either of the parties hereto shall commit any breach of the
provisions hereof and shall not have remedied such breach within 30 days after
the service of notice by the party not in breach on the other requiring the same
to be remedied.
f) On the termination of this Agreement and completion of all matters
referred to in the foregoing paragraph (d) JOHN GOVETT shall deliver or cause to
be delivered to the Fund copies of all documents, records and books of the Fund
required to be maintained pursuant to Rules 31a-1 or 31a-2 of the 1940 Act which
are in JOHN GOVETT's possession, power or control and which are valid and in
force at the date of termination.
3.6 NOTICES
Any notice, request, instruction, or other document to be given under this
Agreement by any party hereto to the other parties shall be in writing and
delivered personally or sent by mail or telecopy (with a hard copy to follow),
If to JOHN GOVETT, to:
Shackleton House
4 Battle Bridge Lane
London SE1 2HR
England
attn: The Hon. Kevin Pakenham
with a copy to:
650 California Street
28th Floor
San Francisco, CA 94108
telecopy: (415) 249-0554
attn: Michael J. Mayer
7
<PAGE> 8
and a copy to:
650 California Street
28th Floor San Francisco, CA 94108
telecopy: (415) 249-0553
attn: Robert A. Cornman, Esq.
and a copy to:
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, CA 94104
telecopy: (415) 772-6268
attn: Mitchell E. Nichter, Esq.
If to VKAC, to:
2800 Post Oak Blvd.
Houston, TX 77056
telecopy: (713) 993-4300
attn: Don Powell
with a copy to:
2800 Post Oak Blvd.
Houston, TX 77056
telecopy: (713) 993-4317
attn: Nori L. Gabert, Esq.
or at such other address for a party as shall be specified by like notice.
Any notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
addressed and mailed in the manner herein provided shall be presumed to have
been duly given to the party to which it is addressed, on the date three (3)
days after mailing, and in the case of delivery by telecopy, on the date the
hard copy is received.
3.7 IMRO RULES
As a member of IMRO and in light of IMRO Rules, the Sub-Adviser places on
record that it regards this Agreement as not necessitating any ancillary
agreement with the Fund or VKAC on the grounds that, within meanings of the IMRO
Rules (a) the Fund is a series of an open-ended investment company and a
business investor,
8
<PAGE> 9
(b) VKAC is a professional investor and (c) the subject matter of this
Agreement is a scheme management activity.
3.8 CHOICE OF LAW
This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the United
States and the State of California.
3.9 MISCELLANEOUS PROVISIONS
The execution of this Agreement has been authorized by the Trust's Trustees
and by the sole shareholder. This Agreement is executed on behalf of the Trust
or the Trustees of the Trust as Trustees and not individually and that the
obligations of this Agreement are not binding upon any of the Trustees, officers
or shareholders of the Trust individually but are binding only upon the assets
and property of the Trust. A Certificate of Trust in respect of the Trust is on
file with the Secretary of State of Delaware.
IN WITNESS WHEREOF, the Agreement has been executed as of the date first
above given.
JOHN GOVETT & CO. LIMITED
<TABLE>
<S> <C>
By: /s/ KEVIN PAKENHAM
------------------------------------
Name: Kevin Pakenham
------------------------------------
Its: Chief Executive
------------------------------------
</TABLE>
VAN KAMPEN AMERICAN CAPITAL
ASSET MANAGEMENT, INC.
<TABLE>
<S> <C>
By: /s/ NORI L. GABERT
------------------------------------
Name: Nori L. Gabert
------------------------------------
Its: Vice President
------------------------------------
</TABLE>
9
<PAGE> 1
EXHIBIT 6.1
DISTRIBUTION AND SERVICE AGREEMENT
THIS DISTRIBUTION AND SERVICE AGREEMENT dated as of July 26, 1996 (the
"Agreement") by and between VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES
TRUST, a Delaware business trust (the "Trust"), on behalf of its series, VAN
KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND (the "Fund"), and VAN KAMPEN
AMERICAN CAPITAL DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
1. Appointment of Distributor. The Fund appoints the Distributor as a
principal underwriter and exclusive distributor of each class of its shares of
beneficial interest (the "Shares") offered for sale from time to time pursuant
to the then current prospectus of the Fund, subject to different combinations
of front-end sales charges, distribution fees, service fees and contingent
deferred sales charges. Classes of shares, if any, subject to a front-end
sales charge and a distribution and/or service fee are referred to herein as
"FESC Classes" and the Shares of such classes are referred to herein as "FESC
Shares." Classes of shares, if any, subject to a contingent-deferred sales
charge and a distribution and/or a service fee are referred to herein as "CDSC
Classes" and Shares of such classes are referred to herein as "CDSC Shares."
Classes of shares, if any, subject to a front-end sales charge, a
contingent-deferred sales charge and a distribution and/or service fee are
referred to herein as "Combination Classes" and Shares of such class are
referred to herein as "Combination Shares." The Fund reserves the right to
refuse at any time or times to sell Shares hereunder for any reason deemed
adequate by the Board of Trustees of the Fund.
The Distributor will use its best efforts to sell, through its
organization and through other dealers and agents, the Shares which the
Distributor has the right to purchase under Section 2 hereof, but the
Distributor does not undertake to sell any specific number of Shares.
The Distributor agrees that it will not take any long or short
positions in the Shares, except for long positions in those Shares purchased by
the Distributor in accordance with any systematic sales plan described in the
then current Prospectus of the Fund and except as permitted by Section 2
hereof, and that so far as it can control the situation, it will prevent any of
its trustees, officers or shareholders from taking any long or short positions
in the Shares, except for legitimate investment purposes.
2. Sale of Shares to Distributor. The Fund hereby grants to the
Distributor the exclusive right, except as herein otherwise provided, to
purchase Shares directly from the Fund upon the terms herein set forth. Such
exclusive right hereby granted shall not apply to Shares issued or transferred
or sold at net asset value: (a) in connection with the merger or consolidation
of the Fund with any other investment company or the acquisition by the Fund of
all or substantially all of the assets of or the outstanding Shares of any
investment company; (b) in connection with a pro rata distribution directly to
the holders of Fund Shares in the nature of a stock dividend or stock split or
in connection with any other recapitalization approved by the Board of
Trustees; (c) upon the exercise of purchase or subscription rights granted to
the holders of Shares on a pro rata basis; (d) in connection with the automatic
reinvestment of dividends and distributions from the Fund; or (e) in connection
with the issue and sale of Shares to trustees, officers and employees of the
Fund; to directors, officers and employees of the investment adviser of the
Fund or any principal underwriter (including the Distributor) of the Fund; to
retirees of the Distributor that purchased shares of any mutual fund
distributed by the Distributor prior to retirement; to directors, officers and
employees of Van Kampen American Capital, Inc. (formerly The Van Kampen Merritt
Companies, Inc.) (the parent of the Distributor), VK/AC Holding, Inc. (formerly
VKM Holdings, Inc.)(the parent of The Van Kampen Merritt Companies, Inc.) and
to the subsidiaries of VK/AC Holding, Inc.; and to any trust, pension,
profit-sharing or other benefit plan for any of the aforesaid persons as
permitted by Rule 22d-1 under the Investment Company Act of 1940 (the "1940
Act").
The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of transmission
1
<PAGE> 2
and cancellation of orders) to fill unconditional orders for Shares received by
the Distributor from dealers, agents and investors during each period when
particular net asset values and public offering prices are in effect as
provided in Section 3 hereof; and the price which the Distributor shall pay for
the Shares so purchased shall be the respective net asset value used in
determining the public offering price on which such orders were based. The
Distributor shall notify the Fund at the end of each such period, or as soon
thereafter on that business day as the orders received in such period have been
compiled, of the number of Shares of each class that the Distributor elects to
purchase hereunder.
3. Public Offering Price. The public offering price per Share shall
be determined in accordance with the then current Prospectus of the Fund. In
no event shall the public offering price exceed the net asset value per Share,
plus, with respect to the FESC Shares, a front-end sales charge not in excess
of the applicable maximum sales charge permitted under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., as in effect
from time to time. The net asset value per share for each class of Shares,
respectively, shall be determined in the manner provided in the Declaration of
Trust and By-Laws of the Trust as then amended, the Certificate of Designation
with respect to the Fund, as amended, and in accordance with the then current
Prospectus of the Fund consistent with the terms and conditions of the
exemptive order with respect to the Fund (Release No. IC-19600) issued by the
Securities and Exchange Commission on July 28, 1993, as it may be amended from
time to time or succeeded by other exemptive orders or rules promulgated by the
Securities and Exchange Commission under the 1940 Act. The Fund will cause
immediate notice to be given to the Distributor of each change in net asset
value as soon as it is determined. Discounts to dealers purchasing FESC Shares
from the Distributor for resale and to brokers and other eligible agents making
sales of FESC Shares to investors and compensation payable from the Distributor
to dealers, brokers and other eligible agents making sales of CDSC Shares and
Combination Shares shall be set forth in the selling agreements between the
Distributor and such dealers or agents, respectively, as from time to time
amended, and, if such discounts and compensation are described in the then
current Prospectus for the Fund, shall be as so set forth.
4. Compliance with NASD Rules, SEC Orders, etc. In selling Fund
Shares, the Distributor will in all respects duly comply with all state and
federal laws relating to the sale of such securities and with all applicable
rules and regulations of all regulatory bodies, including without limitation
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and all applicable rules and regulations of the Securities and Exchange
Commission under the 1940 Act, and will indemnify and save the Fund harmless
from any damage or expense on account of any unlawful act by the Distributor or
its agents or employees. The Distributor is not, however, to be responsible
for the acts of other dealers or agents, except to the extent that they shall
be acting for the Distributor or under its direction or authority. None of the
Distributor, any dealer, any agent or any other person is authorized by the
Fund to give any information or to make any representations, other than those
contained in the Registration Statement or Prospectus heretofore or hereafter
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "1933 Act") (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved by
the Fund in connection with the offer or sale of Shares. None of the
Distributor, any dealer, any broker or any other person is authorized to act as
agent for the Fund in connection with the offering or sale of Shares to the
public or otherwise. All such sales shall be made by the Distributor as
principal for its own account.
In selling Shares to investors, the Distributor will adopt and comply
with certain standards, as set forth in Exhibit III attached hereto as to when
each respective class of Shares may appropriately be sold to particular
investors. The Distributor will require every broker, dealer and other
eligible agent participating in the offering of the Shares to agree to adopt
and comply with such standards as a condition precedent to their participation
in the offering.
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<PAGE> 3
5. Expenses.
(a) The Fund will pay or cause to be paid:
(i) all expenses in connection with the registration of
Shares under the federal securities laws, and the Fund
will exercise its best efforts to obtain said
registration and qualification;
(ii) all expenses in connection with the printing of any
notices of shareholders' meetings, proxy and proxy
statements and enclosures therewith, as well as any
other notice or communication sent to shareholders in
connection with any meeting of the shareholders or
otherwise, any annual, semiannual or other reports or
communications sent to the shareholders, and the
expenses of sending prospectuses relating to the Shares
to existing shareholders;
(iii) all expenses of any federal or state original-issue tax
or transfer tax payable upon the issuance, transfer or
delivery of Shares from the Fund to the Distributor;
and
(iv) the cost of preparing and issuing any Share
certificates which may be issued to represent Shares.
(b) The Distributor will also permit its officers and employees
to serve without compensation as trustees and officers of the Fund if duly
elected to such positions.
(c) The Fund shall reimburse the Distributor for out-of-pocket
costs and expenses actually incurred by it in connection with distribution of
each class of Shares respectively in accordance with the terms of a plan (the
"12b-1 Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act as
such 12b-1 Plan may be in effect from time to time; provided, however, that no
payments shall be due or paid to the Distributor hereunder with respect to a
class of Shares unless and until this Agreement shall have been approved for
each such class by a majority of the Board of Trustees of the Fund and by a
majority of the "Disinterested Trustees" (as such term is defined in such 12b-1
Plan) by vote cast in person at a meeting called for the purpose of voting on
this Agreement. A copy of such 12b-1 Plan as in effect on the date of this
Agreement is attached as Exhibit I hereto. The Fund reserves the right to
terminate such 12b-1 Plan with respect to a class of Shares at any time, as
specified in the Plan. The persons authorized to direct the payment of funds
pursuant to this Agreement and the 12b-1 Plan shall provide to the Fund's Board
of Trustees, and the Trustees shall review, at least quarterly, a written
report with respect to each of the classes of Shares of the amounts so paid and
the purposes for which such expenditures were made for each such class of
Shares.
(d) The Fund shall compensate the Distributor for providing
services to, and the maintenance of, shareholder accounts in the Fund
(including prepaying service fees to eligible brokers, dealers and financial
intermediaries and expenses incurred in connection therewith) and the
Distributor may pay as agent for and on behalf of the Fund a service fee with
respect to each class of Shares to brokers, dealers and financial
intermediaries for the provision of shareholder services and the maintenance of
shareholder accounts in the Fund in the amount with respect to each class of
Shares set forth from time to time in the Fund's prospectus. The Fund shall
compensate the Distributor for such expenses in accordance with the terms of a
service plan (the "Service Plan"), as such Service Plan may be in effect from
time to time; provided, however, that no service fee payments shall be due or
paid to the Distributor hereunder with respect to a class of Shares unless and
until this Agreement shall have been approved for each such class by a majority
of the Board of Trustees of the Fund and by a majority of the Disinterested
Trustees by vote cast in person at a meeting called for the purpose of voting
on this Agreement. A copy of such Service Plan as in effect on the date of
this Agreement is attached as Exhibit II hereto. The Fund reserves the right
to terminate such Service Plan with respect to a class of Shares at any time,
as specified in the Plan. The persons authorized to direct the payment of
funds pursuant to this Agreement and the Service Plan shall provide to the
Fund's Board of Trustees, and the Trustees shall
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<PAGE> 4
review, at least quarterly, a written report with respect to each of the
classes of Shares of the amounts paid as service fees for each such class of
Shares.
6. Redemption of Shares. In connection with the Fund's redemption of
its Shares, the Fund hereby authorizes the Distributor to repurchase, upon the
terms and conditions hereinafter set forth, as the Fund's agent and for the
Fund's account, such Shares as may be offered for sale to the Fund from time to
time by holders of such Shares or their agents.
(a) Subject to and in conformity with all applicable federal
and state legislation, any applicable rules of the National Association of
Securities Dealers, Inc., and any applicable rules and regulations of the
Securities and Exchange Commission under the 1940 Act, the Distributor may
accept offers of holders of Shares to resell such Shares to the Fund on such
terms and conditions and at such prices as described and provided for in the
then current Prospectus of the Fund.
(b) The Distributor agrees to notify the Fund at such times as
the Fund may specify of the number of each class of Shares, respectively,
repurchased for the Fund's account and the time or times of such repurchases,
and the Fund shall notify the Distributor of the prices and, in the case of a
class of CDSC Shares or Combination Shares, of the deferred sales charge as
described below, if any, applicable to repurchases of Shares of such class.
(c) The Fund shall have the right to suspend or revoke the
foregoing authorization at any time; unless otherwise stated, any such
suspension or revocation shall be effective forthwith upon receipt of notice
thereof by telegraph or by written instrument from any of the Fund's officers.
In the event that the Distributor's authorization is, by the terms of such
notice, suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote of
the Board of Trustees of the Fund.
(d) The Distributor agrees that all repurchases of Shares made
by the Distributor shall be made only as agent for the Fund's account and
pursuant to the terms and conditions herein set forth.
(e) The Fund agrees to authorize and direct its Custodian to
pay, for the Fund's account, the repurchase price (together with any applicable
contingent deferred sales charge) of any Shares so repurchased for the Fund
against the authorized transfer of book shares from an open account and against
delivery of any other documentation required by the Board of Trustees of the
Fund or, in the case of certificated Shares, against delivery of the
certificates representing such Shares in proper form for transfer to the Fund.
(f) The Distributor shall receive no commissions or other
compensation in respect of any repurchases of FESC Shares for the Fund under
the foregoing authorization and appointment as agent. With respect to any
repurchase of CDSC Shares or Combination Shares, the Distributor shall receive
the deferred sales charge, if any, applicable to the respective class of Shares
that have been held for less than a specified period of time with respect to
such class as set forth from time to time in the Fund's Prospectus. The
Distributor shall receive no other commission or other compensation in respect
of any repurchases of CDSC Shares or Combination Shares for the Fund under the
foregoing authorization and appointment as agent.
(g) If any FESC Shares sold to the Distributor under the terms
of this Agreement are redeemed or repurchased by the Fund or by the Distributor
as agent or are tendered for redemption within seven business days after the
date of the Distributor's confirmation of the original purchase by the
Distributor, the Distributor shall forfeit the amount above the net asset value
received by it in respect of such Shares, provided that the portion, if any, of
such amount re-allowed by the Distributor to dealers or agents shall be
repayable to the Fund only to the extent recovered by the Distributor from the
dealer or agent concerned. The Distributor shall include in agreements with
such dealers and agents a corresponding provision for the forfeiture by them of
their concession with respect to FESC Shares
4
<PAGE> 5
purchased by them or their principals and redeemed or repurchased by the
Fund or by the Distributor as agent within seven business days after the date
of the Distributor's confirmation of such initial purchases.
7. Indemnification. The Fund agrees to indemnify and hold harmless
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, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage,
or expense and reasonable counsel fees incurred in connection therewith),
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 Fund (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
therein, in light of the circumstances under which they were made, not
misleading under the 1933 Act or any other statute or the common law. However,
the Fund 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 Fund by or on behalf of the
Distributor. In no case (i) is the indemnity of the Fund 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 securityholders 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 this
Agreement, or (ii) is the Fund to be liable under its indemnity agreement
contained in this Section with respect to any claim made against the
Distributor or any person indemnified unless the Distributor or any such person
shall have notified the Fund in writing of the claim within a reasonable time
after the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Distributor or any such
person (or after the Distributor or the person shall have received notice of
service on any designated agent). However, failure to notify the Fund of any
claim shall not relieve the Fund from any liability which it may have to the
Distributor or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. The Fund shall
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense, of any suit brought to enforce any claims, but
if the Fund elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Fund elects to assume
the defense of any suit and retain counsel, the Distributor, officers or
trustees or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them.
If the Fund does not elect to assume the defense of any suit, it will reimburse
the Distributor, officers or trustees or controlling person or persons,
defendant or defendants in the suit for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees to notify the Distributor promptly
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of the
Shares.
The Distributor also covenants and agrees that it will indemnify and
hold harmless the Fund and each of its trustees and officers and each person,
if any, who controls the Fund within the meaning of Section 15 of the 1933 Act
against any loss, liability, damage, claim or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, damage, claim
or expense and reasonable counsel fees incurred in connection therewith)
arising by reason of any person acquiring any Shares, based upon the 1933 Act
or any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (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 therein, in light of the
circumstances under which they were made, not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any person
indemnified to be deemed to protect the Fund or any such person against any
liability to which the Fund 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 obligation and duties
under this Amended Agreement, or (ii) is the Distributor to be liable under its
5
<PAGE> 6
indemnity agreement contained in this paragraph with respect to any claim made
against the Fund or any person indemnified unless the Fund or person, as the
case may be, shall have notified the Distributor in writing of the claim within
a reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Fund or
person (or after the Fund or such person shall have received notice of service
on any designated agent). However, failure to notify the Distributor of any
claim shall not relieve the Distributor from any liability which it may have to
the Fund or any person against whom the action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. In the case of
any notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense, or, if it so elects, to assume the defense, of any
suit brought to enforce the claim, but if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, to its officers and trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Distributor elects to assume the defense of any suit and retain counsel, the
Fund or controlling persons, defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Distributor does
not elect to assume the defense of any suit, it will reimburse the Fund,
officers and trustees or controlling person or persons, defendant or defendants
in the suit, for the reasonable fees and expenses of any counsel retained by
them. The Distributor agrees to notify the Fund promptly of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any of the Shares.
8. Continuation, Amendment or Termination of This Agreement. This
Agreement shall become effective on the Effective Date and thereafter shall
continue in full force and effect year to year with respect to each class of
Shares so long as such continuance is approved at least annually (i) by the
Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the respective class of Shares of the Fund, and (ii) by
vote of a majority of the Trustees who are not parties to this Agreement or
interested persons in any such party (the "Independent Trustee") cast in person
at a meeting called for the purpose of voting on such approval, provided,
however, that (a) this Agreement may at any time be terminated with respect to
either class of Shares of the Fund without the payment of any penalty either by
vote of a majority of the Disinterested Trustees, or by vote of a majority of
the outstanding voting securities of the respective class of Shares of the
Fund, on written notice to the Distributor; (b) this Agreement shall
immediately terminate in the event of its assignment; and (c) this Agreement
may be terminated by the Distributor on ninety (90) days' written notice to the
Fund. Upon termination of this Agreement with respect to either class of
Shares of the Fund, the obligations of the parties hereunder shall cease and
terminate with respect to such class of Shares as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to such termination.
This Agreement may be amended with respect to either class of Shares at
any time by mutual consent of the parties, provided that such consent on the
part of the Fund shall have been approved (i) by the Board of Trustees of the
Fund, or by a vote of the majority of the outstanding voting securities of the
respective class of Shares of the Fund, and (ii) by vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such amendment.
For the purpose of this section, the terms "vote of a majority of the
outstanding voting securities", "interested persons" and "assignment" shall
have the meanings defined in the 1940 Act, as amended.
9. Limited Liability of Shareholder. Notwithstanding anything to the
contrary contained in this Agreement, you acknowledge and agree that, as
provided by Section 8.1 of the Agreement and Declaration of Trust of the Trust,
this Agreement is executed by the Trustees of the Trust and/or Officers of the
Fund by them not individually but as such Trustees and/or Officers, and the
obligations of the Fund hereunder are not binding upon any of the Trustees,
Officers or Shareholders individually, but bind only the trust estate.
10. Notice. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the other party at any
office of such party or at such other address as such party shall have
designated in writing.
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<PAGE> 7
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF ILLINOIS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF
LAWS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
VAN KAMPEN AMERICAN CAPITAL WORLD
PORTFOLIO SERIES TRUST, on behalf of its
series, VAN KAMPEN AMERICAN CAPITAL GLOBAL
EQUITY FUND
By: /s/ Ronald A. Nyberg
------------------------------------
Name: Ronald A. Nyberg
Title: Secretary
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
By: /s/ Ronald A. Nyberg
------------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President
7
<PAGE> 1
EXHIBIT 6.2
DISTRIBUTION AND SERVICE AGREEMENT
THIS DISTRIBUTION AND SERVICE AGREEMENT dated as of July 26, 1996 (the
"Agreement") by and between VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES
TRUST, a Delaware business trust (the "Trust"), on behalf of its series, VAN
KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND (the "Fund"), and VAN
KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC., a Delaware corporation (the
"Distributor").
1. Appointment of Distributor. The Fund appoints the Distributor as a
principal underwriter and exclusive distributor of each class of its shares of
beneficial interest (the "Shares") offered for sale from time to time pursuant
to the then current prospectus of the Fund, subject to different combinations
of front-end sales charges, distribution fees, service fees and contingent
deferred sales charges. Classes of shares, if any, subject to a front-end
sales charge and a distribution and/or service fee are referred to herein as
"FESC Classes" and the Shares of such classes are referred to herein as "FESC
Shares." Classes of shares, if any, subject to a contingent-deferred sales
charge and a distribution and/or a service fee are referred to herein as "CDSC
Classes" and Shares of such classes are referred to herein as "CDSC Shares."
Classes of shares, if any, subject to a front-end sales charge, a
contingent-deferred sales charge and a distribution and/or service fee are
referred to herein as "Combination Classes" and Shares of such class are
referred to herein as "Combination Shares." The Fund reserves the right to
refuse at any time or times to sell Shares hereunder for any reason deemed
adequate by the Board of Trustees of the Fund.
The Distributor will use its best efforts to sell, through its
organization and through other dealers and agents, the Shares which the
Distributor has the right to purchase under Section 2 hereof, but the
Distributor does not undertake to sell any specific number of Shares.
The Distributor agrees that it will not take any long or short
positions in the Shares, except for long positions in those Shares purchased by
the Distributor in accordance with any systematic sales plan described in the
then current Prospectus of the Fund and except as permitted by Section 2
hereof, and that so far as it can control the situation, it will prevent any of
its trustees, officers or shareholders from taking any long or short positions
in the Shares, except for legitimate investment purposes.
2. Sale of Shares to Distributor. The Fund hereby grants to the
Distributor the exclusive right, except as herein otherwise provided, to
purchase Shares directly from the Fund upon the terms herein set forth. Such
exclusive right hereby granted shall not apply to Shares issued or transferred
or sold at net asset value: (a) in connection with the merger or consolidation
of the Fund with any other investment company or the acquisition by the Fund of
all or substantially all of the assets of or the outstanding Shares of any
investment company; (b) in connection with a pro rata distribution directly to
the holders of Fund Shares in the nature of a stock dividend or stock split or
in connection with any other recapitalization approved by the Board of
Trustees; (c) upon the exercise of purchase or subscription rights granted to
the holders of Shares on a pro rata basis; (d) in connection with the automatic
reinvestment of dividends and distributions from the Fund; or (e) in connection
with the issue and sale of Shares to trustees, officers and employees of the
Fund; to directors, officers and employees of the investment adviser of the
Fund or any principal underwriter (including the Distributor) of the Fund; to
retirees of the Distributor that purchased shares of any mutual fund
distributed by the Distributor prior to retirement; to directors, officers and
employees of Van Kampen American Capital, Inc. (formerly The Van Kampen Merritt
Companies, Inc.) (the parent of the Distributor), VK/AC Holding, Inc. (formerly
VKM Holdings, Inc.)(the parent of The Van Kampen Merritt Companies, Inc.) and
to the subsidiaries of VK/AC Holding, Inc.; and to any trust, pension,
profit-sharing or other benefit plan for any of the aforesaid persons as
permitted by Rule 22d-1 under the Investment Company Act of 1940 (the "1940
Act").
The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of transmission
1
<PAGE> 2
and cancellation of orders) to fill unconditional orders for Shares received by
the Distributor from dealers, agents and investors during each period when
particular net asset values and public offering prices are in effect as
provided in Section 3 hereof; and the price which the Distributor shall pay for
the Shares so purchased shall be the respective net asset value used in
determining the public offering price on which such orders were based. The
Distributor shall notify the Fund at the end of each such period, or as soon
thereafter on that business day as the orders received in such period have been
compiled, of the number of Shares of each class that the Distributor elects to
purchase hereunder.
3. Public Offering Price. The public offering price per Share shall
be determined in accordance with the then current Prospectus of the Fund. In
no event shall the public offering price exceed the net asset value per Share,
plus, with respect to the FESC Shares, a front-end sales charge not in excess
of the applicable maximum sales charge permitted under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., as in effect
from time to time. The net asset value per share for each class of Shares,
respectively, shall be determined in the manner provided in the Declaration of
Trust and By-Laws of the Trust as then amended, the Certificate of Designation
with respect to the Fund, as amended, and in accordance with the then current
Prospectus of the Fund consistent with the terms and conditions of the
exemptive order with respect to the Fund (Release No. IC-19600) issued by the
Securities and Exchange Commission on July 28, 1993, as it may be amended from
time to time or succeeded by other exemptive orders or rules promulgated by the
Securities and Exchange Commission under the 1940 Act. The Fund will cause
immediate notice to be given to the Distributor of each change in net asset
value as soon as it is determined. Discounts to dealers purchasing FESC Shares
from the Distributor for resale and to brokers and other eligible agents making
sales of FESC Shares to investors and compensation payable from the Distributor
to dealers, brokers and other eligible agents making sales of CDSC Shares and
Combination Shares shall be set forth in the selling agreements between the
Distributor and such dealers or agents, respectively, as from time to time
amended, and, if such discounts and compensation are described in the then
current Prospectus for the Fund, shall be as so set forth.
4. Compliance with NASD Rules, SEC Orders, etc. In selling Fund
Shares, the Distributor will in all respects duly comply with all state and
federal laws relating to the sale of such securities and with all applicable
rules and regulations of all regulatory bodies, including without limitation
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and all applicable rules and regulations of the Securities and Exchange
Commission under the 1940 Act, and will indemnify and save the Fund harmless
from any damage or expense on account of any unlawful act by the Distributor or
its agents or employees. The Distributor is not, however, to be responsible
for the acts of other dealers or agents, except to the extent that they shall
be acting for the Distributor or under its direction or authority. None of the
Distributor, any dealer, any agent or any other person is authorized by the
Fund to give any information or to make any representations, other than those
contained in the Registration Statement or Prospectus heretofore or hereafter
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "1933 Act") (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved by
the Fund in connection with the offer or sale of Shares. None of the
Distributor, any dealer, any broker or any other person is authorized to act as
agent for the Fund in connection with the offering or sale of Shares to the
public or otherwise. All such sales shall be made by the Distributor as
principal for its own account.
In selling Shares to investors, the Distributor will adopt and comply
with certain standards, as set forth in Exhibit III attached hereto as to when
each respective class of Shares may appropriately be sold to particular
investors. The Distributor will require every broker, dealer and other
eligible agent participating in the offering of the Shares to agree to adopt
and comply with such standards as a condition precedent to their participation
in the offering.
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<PAGE> 3
5. Expenses.
(a) The Fund will pay or cause to be paid:
(i) all expenses in connection with the registration of
Shares under the federal securities laws, and the Fund
will exercise its best efforts to obtain said
registration and qualification;
(ii) all expenses in connection with the printing of any
notices of shareholders' meetings, proxy and proxy
statements and enclosures therewith, as well as any
other notice or communication sent to shareholders in
connection with any meeting of the shareholders or
otherwise, any annual, semiannual or other reports or
communications sent to the shareholders, and the
expenses of sending prospectuses relating to the Shares
to existing shareholders;
(iii) all expenses of any federal or state original-issue tax
or transfer tax payable upon the issuance, transfer or
delivery of Shares from the Fund to the Distributor;
and
(iv) the cost of preparing and issuing any Share
certificates which may be issued to represent Shares.
(b) The Distributor will also permit its officers and employees
to serve without compensation as trustees and officers of the Fund if duly
elected to such positions.
(c) The Fund shall reimburse the Distributor for out-of-pocket
costs and expenses actually incurred by it in connection with distribution of
each class of Shares respectively in accordance with the terms of a plan (the
"12b-1 Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act as
such 12b-1 Plan may be in effect from time to time; provided, however, that no
payments shall be due or paid to the Distributor hereunder with respect to a
class of Shares unless and until this Agreement shall have been approved for
each such class by a majority of the Board of Trustees of the Fund and by a
majority of the "Disinterested Trustees" (as such term is defined in such 12b-1
Plan) by vote cast in person at a meeting called for the purpose of voting on
this Agreement. A copy of such 12b-1 Plan as in effect on the date of this
Agreement is attached as Exhibit I hereto. The Fund reserves the right to
terminate such 12b-1 Plan with respect to a class of Shares at any time, as
specified in the Plan. The persons authorized to direct the payment of funds
pursuant to this Agreement and the 12b-1 Plan shall provide to the Fund's Board
of Trustees, and the Trustees shall review, at least quarterly, a written
report with respect to each of the classes of Shares of the amounts so paid and
the purposes for which such expenditures were made for each such class of
Shares.
(d) The Fund shall compensate the Distributor for providing
services to, and the maintenance of, shareholder accounts in the Fund
(including prepaying service fees to eligible brokers, dealers and financial
intermediaries and expenses incurred in connection therewith) and the
Distributor may pay as agent for and on behalf of the Fund a service fee with
respect to each class of Shares to brokers, dealers and financial
intermediaries for the provision of shareholder services and the maintenance of
shareholder accounts in the Fund in the amount with respect to each class of
Shares set forth from time to time in the Fund's prospectus. The Fund shall
compensate the Distributor for such expenses in accordance with the terms of a
service plan (the "Service Plan"), as such Service Plan may be in effect from
time to time; provided, however, that no service fee payments shall be due or
paid to the Distributor hereunder with respect to a class of Shares unless and
until this Agreement shall have been approved for each such class by a majority
of the Board of Trustees of the Fund and by a majority of the Disinterested
Trustees by vote cast in person at a meeting called for the purpose of voting
on this Agreement. A copy of such Service Plan as in effect on the date of
this Agreement is attached as Exhibit II hereto. The Fund reserves the right
to terminate such Service Plan with respect to a class of Shares at any time,
as specified in the Plan. The persons authorized to direct the payment of
funds pursuant to this Agreement and the Service Plan shall provide to the
Fund's Board of Trustees, and the Trustees shall
3
<PAGE> 4
review, at least quarterly, a written report with respect to each of the
classes of Shares of the amounts paid as service fees for each such class of
Shares.
6. Redemption of Shares. In connection with the Fund's redemption of
its Shares, the Fund hereby authorizes the Distributor to repurchase, upon the
terms and conditions hereinafter set forth, as the Fund's agent and for the
Fund's account, such Shares as may be offered for sale to the Fund from time to
time by holders of such Shares or their agents.
(a) Subject to and in conformity with all applicable federal
and state legislation, any applicable rules of the National Association of
Securities Dealers, Inc., and any applicable rules and regulations of the
Securities and Exchange Commission under the 1940 Act, the Distributor may
accept offers of holders of Shares to resell such Shares to the Fund on such
terms and conditions and at such prices as described and provided for in the
then current Prospectus of the Fund.
(b) The Distributor agrees to notify the Fund at such times as
the Fund may specify of the number of each class of Shares, respectively,
repurchased for the Fund's account and the time or times of such repurchases,
and the Fund shall notify the Distributor of the prices and, in the case of a
class of CDSC Shares or Combination Shares, of the deferred sales charge as
described below, if any, applicable to repurchases of Shares of such class.
(c) The Fund shall have the right to suspend or revoke the
foregoing authorization at any time; unless otherwise stated, any such
suspension or revocation shall be effective forthwith upon receipt of notice
thereof by telegraph or by written instrument from any of the Fund's officers.
In the event that the Distributor's authorization is, by the terms of such
notice, suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote of
the Board of Trustees of the Fund.
(d) The Distributor agrees that all repurchases of Shares made
by the Distributor shall be made only as agent for the Fund's account and
pursuant to the terms and conditions herein set forth.
(e) The Fund agrees to authorize and direct its Custodian to
pay, for the Fund's account, the repurchase price (together with any applicable
contingent deferred sales charge) of any Shares so repurchased for the Fund
against the authorized transfer of book shares from an open account and against
delivery of any other documentation required by the Board of Trustees of the
Fund or, in the case of certificated Shares, against delivery of the
certificates representing such Shares in proper form for transfer to the Fund.
(f) The Distributor shall receive no commissions or other
compensation in respect of any repurchases of FESC Shares for the Fund under
the foregoing authorization and appointment as agent. With respect to any
repurchase of CDSC Shares or Combination Shares, the Distributor shall receive
the deferred sales charge, if any, applicable to the respective class of Shares
that have been held for less than a specified period of time with respect to
such class as set forth from time to time in the Fund's Prospectus. The
Distributor shall receive no other commission or other compensation in respect
of any repurchases of CDSC Shares or Combination Shares for the Fund under the
foregoing authorization and appointment as agent.
(g) If any FESC Shares sold to the Distributor under the terms
of this Agreement are redeemed or repurchased by the Fund or by the Distributor
as agent or are tendered for redemption within seven business days after the
date of the Distributor's confirmation of the original purchase by the
Distributor, the Distributor shall forfeit the amount above the net asset value
received by it in respect of such Shares, provided that the portion, if any, of
such amount re-allowed by the Distributor to dealers or agents shall be
repayable to the Fund only to the extent recovered by the Distributor from the
dealer or agent concerned. The Distributor shall include in agreements with
such dealers and agents a corresponding provision for the forfeiture by them of
their concession with respect to FESC Shares
4
<PAGE> 5
purchased by them or their principals and redeemed or repurchased by the Fund
or by the Distributor as agent within seven business days after the date
of the Distributor's confirmation of such initial purchases.
7. Indemnification. The Fund agrees to indemnify and hold harmless
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, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage,
or expense and reasonable counsel fees incurred in connection therewith),
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 Fund (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
therein, in light of the circumstances under which they were made, not
misleading under the 1933 Act or any other statute or the common law. However,
the Fund 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 Fund by or on behalf of the
Distributor. In no case (i) is the indemnity of the Fund 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 securityholders 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 this
Agreement, or (ii) is the Fund to be liable under its indemnity agreement
contained in this Section with respect to any claim made against the
Distributor or any person indemnified unless the Distributor or any such person
shall have notified the Fund in writing of the claim within a reasonable time
after the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Distributor or any such
person (or after the Distributor or the person shall have received notice of
service on any designated agent). However, failure to notify the Fund of any
claim shall not relieve the Fund from any liability which it may have to the
Distributor or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. The Fund shall
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense, of any suit brought to enforce any claims, but
if the Fund elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Fund elects to assume
the defense of any suit and retain counsel, the Distributor, officers or
trustees or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them.
If the Fund does not elect to assume the defense of any suit, it will reimburse
the Distributor, officers or trustees or controlling person or persons,
defendant or defendants in the suit for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees to notify the Distributor promptly
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of the
Shares.
The Distributor also covenants and agrees that it will indemnify and
hold harmless the Fund and each of its trustees and officers and each person,
if any, who controls the Fund within the meaning of Section 15 of the 1933 Act
against any loss, liability, damage, claim or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, damage, claim
or expense and reasonable counsel fees incurred in connection therewith)
arising by reason of any person acquiring any Shares, based upon the 1933 Act
or any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (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 therein, in light of the
circumstances under which they were made, not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any person
indemnified to be deemed to protect the Fund or any such person against any
liability to which the Fund 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 obligation and duties
under this Amended Agreement, or (ii) is the Distributor to be liable under its
5
<PAGE> 6
indemnity agreement contained in this paragraph with respect to any claim made
against the Fund or any person indemnified unless the Fund or person, as the
case may be, shall have notified the Distributor in writing of the claim within
a reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Fund or
person (or after the Fund or such person shall have received notice of service
on any designated agent). However, failure to notify the Distributor of any
claim shall not relieve the Distributor from any liability which it may have to
the Fund or any person against whom the action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. In the case of
any notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense, or, if it so elects, to assume the defense, of any
suit brought to enforce the claim, but if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, to its officers and trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Distributor elects to assume the defense of any suit and retain counsel, the
Fund or controlling persons, defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Distributor does
not elect to assume the defense of any suit, it will reimburse the Fund,
officers and trustees or controlling person or persons, defendant or defendants
in the suit, for the reasonable fees and expenses of any counsel retained by
them. The Distributor agrees to notify the Fund promptly of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any of the Shares.
8. Continuation, Amendment or Termination of This Agreement. This
Agreement shall become effective on the Effective Date and thereafter shall
continue in full force and effect year to year with respect to each class of
Shares so long as such continuance is approved at least annually (i) by the
Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the respective class of Shares of the Fund, and (ii) by
vote of a majority of the Trustees who are not parties to this Agreement or
interested persons in any such party (the "Independent Trustee") cast in person
at a meeting called for the purpose of voting on such approval, provided,
however, that (a) this Agreement may at any time be terminated with respect to
either class of Shares of the Fund without the payment of any penalty either by
vote of a majority of the Disinterested Trustees, or by vote of a majority of
the outstanding voting securities of the respective class of Shares of the
Fund, on written notice to the Distributor; (b) this Agreement shall
immediately terminate in the event of its assignment; and (c) this Agreement
may be terminated by the Distributor on ninety (90) days' written notice to the
Fund. Upon termination of this Agreement with respect to either class of
Shares of the Fund, the obligations of the parties hereunder shall cease and
terminate with respect to such class of Shares as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to such termination.
This Agreement may be amended with respect to either class of Shares at
any time by mutual consent of the parties, provided that such consent on the
part of the Fund shall have been approved (i) by the Board of Trustees of the
Fund, or by a vote of the majority of the outstanding voting securities of the
respective class of Shares of the Fund, and (ii) by vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such amendment.
For the purpose of this section, the terms "vote of a majority of the
outstanding voting securities", "interested persons" and "assignment" shall
have the meanings defined in the 1940 Act, as amended.
9. Limited Liability of Shareholder. Notwithstanding anything to the
contrary contained in this Agreement, you acknowledge and agree that, as
provided by Section 8.1 of the Agreement and Declaration of Trust of the Trust,
this Agreement is executed by the Trustees of the Trust and/or Officers of the
Fund by them not individually but as such Trustees and/or Officers, and the
obligations of the Fund hereunder are not binding upon any of the Trustees,
Officers or Shareholders individually, but bind only the trust estate.
10. Notice. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the other party at any
office of such party or at such other address as such party shall have
designated in writing.
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<PAGE> 7
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF ILLINOIS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF
LAWS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
VAN KAMPEN AMERICAN CAPITAL WORLD
PORTFOLIO SERIES TRUST, on behalf of
its series, VAN KAMPEN AMERICAN CAPITAL
GLOBAL GOVERNMENT SECURITIES FUND
By: /s/ Ronald A. Nyberg
----------------------------------
Name: Ronald A. Nyberg
Title: Secretary
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
By: /s/ Ronald A. Nyberg
--------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President
7
<PAGE> 1
EXHIBIT 6.3
-------------------------------------------------------
DEALER AGREEMENT
WITH VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
REGARDING VAN KAMPEN AMERICAN CAPITAL
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 American Capital open-end investment companies (the
"Open-End Funds" or, individually, an "Open-End Fund") and Van Kampen American
Capital closed-end investment companies (the "Closed-End Funds" or,
individually, a "Closed-End Fund") distributed by Van Kampen American Capital
Distributors, Inc. ("VKAC") 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".
VKAC 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, VKAC 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 VKAC 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 VKAC, 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 VKAC.
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 VKAC.
(c) In the event that you transmit indications of
interest to VKAC 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 VKAC 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 VKAC will
be deemed by VKAC to be orders for shares of such class of shares of the Fund.
(e) All indications of interest and orders
transmitted to VKAC 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 VKAC, VKAC will inform you as to the
jurisdictions in which VKAC believes shares of a Fund have been qualified for
sale under the respective securities or "blue sky" laws of such jurisdictions.
VKAC understands and agrees that qualification of any shares of a Fund for sale
in such jurisdictions shall be solely VKAC's 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. VKAC will furnish additional copies of a Fund's
current Prospectus and sales literature issued by VKAC in reasonable quantities
upon request.
8. Orders received from you will be accepted by VKAC 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 VKAC 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 VKAC confirmation at the office of VKAC's
clearing agent, by check payable to the order of the Fund which reserves VKAC's
right to delay issuance or transfer of shares until such check has cleared. If
such payment is not received by VKAC, VKAC 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, VKAC 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 VKAC 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. VKAC 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 VKAC, 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. VKAC will have no liability to you, except for lack of
good faith and for obligations expressly assumed by VKAC in this Agreement.
15. All communications to VKAC shall be sent to One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, 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 VKAC in writing.
16. Neither this Agreement nor the performance of the
services hereunder shall be considered to create a joint venture or partnership
between VKAC 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 VKAC
reserves the right in its discretion, without notice, to suspend or withdraw
the offering of any shares of a Fund entirely. VKAC 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 VKAC.
(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 VKAC 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 Fund or, if not so provided, as provided to you
from time to time in writing by VKAC.
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 VKAC or from your customers. If you purchase shares of an Open-End Fund
from VKAC, 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. VKAC 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 VKAC 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 VKAC 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 VKAC 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 VKAC 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 VKAC, 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 VKAC, you agree to pay your customer
not less than the price that you receive from VKAC. If you act as agent for
your customer in selling shares of a class of shares of an Open-End Fund to
VKAC, 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 VKAC 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 VKAC 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 VKAC as agent for the Fund or are tendered for redemption within
seven business days after the date of VKAC's 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. VKAC 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 VKAC or to the
Fund, and you shall forthwith refund to VKAC the full dealer discount allowed
to you on such sale. VKAC agrees, in the event of any such repurchase or
redemption, to refund to the Fund its share of any discount allowed to VKAC
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. VKAC 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 VKAC within the time period as specified in such Closed-End
Fund's Prospectus (or in the time period as extended by VKAC in writing). You
also agree to transmit any customer order received during the Continuous
Offering Period to VKAC 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 VKAC for shares of a Closed-End
Fund, you will be entitled to receive a concession paid out of VKAC's 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 VKAC for any such sales concessions or other
additional compensation or pay any such concession or other additional
compensation or allowance directly to you. VKAC 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, VKAC 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, VKAC 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 VKAC, 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 VKAC shall be made by VKAC and shall
be conclusive.
31. During the Initial Offering Period and any Continuous
Offering Period for any Closed-End Fund, you agree to supply VKAC, 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 VKAC 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 VKAC 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
VKAC's 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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<PAGE> 7
34. Unlike the other Closed-End Funds, the Continuous
Offering period with respect to the Van Kampen American Capital 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 VKAC, 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 VKAC.
(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 VKAC 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
VAN KAMPEN AMERICAN CAPITAL
________________________________________ DISTRIBUTORS, INC.
Address
________________________________________
City, State, Zip
By: ________________________________________
Signature
________________________________________
Name
________________________________________
Title
_________________________________________
Phone
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<PAGE> 8
EXHIBIT A
POLICIES AND PROCEDURES
WITH RESPECT TO SALES UNDER THE
ALTERNATIVE DISTRIBUTION PLAN
As certain Van Kampen American Capital open-end investment
companies (the "funds") offer multiple classes of shares subject to either
front-end sales charges ("FESC Shares") or contingent deferred sales charges
("CDSC Shares"), it is important for an investor not only to choose the Fund
that best suits his or her investment objectives, but also to choose the
alternative distribution method that best suits his or her particular
situation. To assist investors in these decisions, we (the selling firm) are
instituting the following policy.
1. Any purchase order for $1 million or more must be for
Class A Shares.
2. Any purchase order for $100,000 but less than $1
million is subject to approval by [appropriate selling firm supervisor], who
must approve the purchase order ticket for the appropriate class of shares in
light of the relevant facts and circumstances, including:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold
his shares; and
(c) any other relevant circumstances, such as the
availability of purchase price discounts under a Letter of Intent or a Quantity
Discount.
There are instances when one financing method may be more
appropriate than the other. For example, investors who would qualify for a
significant purchase price discount from the maximum sales charge on shares of
a class of FESC Shares that has such purchase price discounts may determine
that payment of such a reduced front-end sales charge is superior to electing
to purchase shares of a class of CDSC Shares with no front-end service charge
but subject to a higher aggregate distribution and service fee. On the other
hand, an investor whose order would not qualify for such purchase price
discounts and intends to remain invested until after the expiration of the
applicable CDSC may wish to defer the sales charge and have all his funds
invested in Class B Shares initially. In addition if such investor
anticipates that he or she will redeem such shares prior to the expiration of
the CDSC period applicable to Class B Shares the investor may, depending on the
amount of his purchase, wish to acquire Class C Shares. However, investors who
intend to hold their shares for a significantly long time may not wish to
continue to bear the ongoing distribution and service expenses of shares of
Class C Shares, irrespective of the fact that a contingent deferred sales
charge would eventually not apply to a redemption of such shares.
[The appropriate selling firm supervisor] must ensure that all
employees receiving investor inquiries about the purchase of shares from funds
subject to Van Kampen American Capital Distributors, Inc.'s alternative
distribution plan advise the investor of the available alternative distribution
methods offered by such funds and the impact of choosing one method over
another. It may be appropriate for [the appropriate selling firm supervisor]
to discuss the purchase with the investor.
This policy is effective immediately with respect to any order
for the purchase of shares from a fund subject to Van Kampen American Capital
Distributors, Inc.'s alternative distribution plan.
Questions relating to this policy should be directed to
[appropriate selling firm supervisor].
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<PAGE> 1
EXHIBIT 6.4
---------------------------------------------------------
BROKER FULLY DISCLOSED CLEARING AGREEMENT
WITH VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
REGARDING VAN KAMPEN AMERICAN CAPITAL
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 American Capital open-end investment
companies (the "Open-End Funds" or, individually, an "Open-End Fund") and Van
Kampen American Capital closed-end investment companies (the "Closed-End Funds"
or, individually, a "Closed-End Fund") distributed by Van Kampen American
Capital Distributors, Inc. ("VKAC") 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 VKAC would confirm
transactions of your customers in a Fund directly to them.
VKAC 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, VKAC 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 VKAC 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 VKAC and not of
your firm. VKAC 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 due 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 basis. Nothing herein
shall cause your firm's customers to be interpreted as customers of VKAC 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 VKAC.
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 VKAC for accumulation prior to the Effective Date, upon your
instruction VKAC 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 VKAC prior to the Effective Date are subject to acceptance or
rejection by VKAC 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 VKAC will
be deemed by VKAC to be orders for Shares.
(e) Upon your instruction, VKAC will send
confirmations of orders accepted by VKAC (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 VKAC of any errors or discrepancies that
you discover and will promptly bring to VKAC's 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 VKAC are subject to the terms and conditions of the Fund's
Prospectus and this Agreement and are subject to acceptance or rejection by
VKAC 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 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 VKAC, VKAC will inform you as to the
jurisdictions in which VKAC believes shares of a Fund have been qualified for
sale under the respective securities or "blue sky" laws of such jurisdictions.
VKAC understands and agrees that qualification of any shares of a Fund for sale
in such jurisdictions shall be solely VKAC's 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. VKAC will furnish additional copies of a Fund's
current Prospectus and sales literature issued by VKAC 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 VKAC.
10. Orders received from you will be accepted by VKAC 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 VKAC shall
communicate from time to time to you. All orders are subject to acceptance or
rejection by VKAC 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 VKAC of any errors
or discrepancies that you discover and shall promptly bring to VKAC's 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 VKAC confirmation at the office of VKAC's
clearing agent, by check payable to the order of the Fund which reserves VKAC's
right to delay issuance of transfer of shares until such check has cleared. If
such payment is not received by VKAC, VKAC 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, VKAC 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 VKAC 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. VKAC 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 VKAC, 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, VKAC
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 VKAC 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. VKAC will have no liability to you, except for lack of
good faith and for obligations expressly assumed by VKAC in this Agreement.
18. All communications to VKAC shall be sent to One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, 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 VKAC in writing.
19. Neither this Agreement nor the performance of the
services hereunder shall be considered to create a joint venture or partnership
between VKAC 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 VKAC
reserves the right in its discretion, without notice, to suspend or withdraw
the offering of any shares of a Fund entirely. VKAC 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 VKAC.
(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 VKAC 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 VKAC.
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
VKAC and (iii) to cover orders already received by you from your customers.
VKAC 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 VKAC as agent for the Fund or are tendered for redemption
within seven business days after the date of VKAC's 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. VKAC 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 VKAC or to
the Fund, and you shall forthwith refund to VKAC the full agency commission
allowed to you on such sale. VKAC agrees, in the event of any such repurchase
or redemption, to refund to the Fund its share of any discount allowed to VKAC
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 VKAC as agent for the Fund or are tendered for redemption within seven
business days after the date of VKAC's 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 VKAC or to the Fund, and you
shall forthwith refund to VKAC 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. VKAC 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 VKAC within the time period as specified in such Closed-End
Fund's Prospectus (or in the time period as extended by VKAC in writing). You
also agree to transmit any customer order received during the Continuous
Offering Period to VKAC 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 VKAC for shares of a Closed-End
Fund, you will be entitled to receive a concession paid out of VKAC's 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 VKAC for any such sales concessions or other additional compensation
or pay any such concession or other additional compensation or allowance
directly to you. VKAC 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, VKAC 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, VKAC 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 VKAC, 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 VKAC shall
be made by VKAC and shall be conclusive.
33. During the Initial Offering Period and any Continuous
Offering Period for any Closed-End Fund, you agree to supply VKAC, 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 VKAC 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 VKAC 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
VKAC's 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 American Capital 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 VKAC 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 VKAC.
(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 VKAC 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
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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 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:
VAN KAMPEN AMERICAN CAPITAL
__________________________________________ DISTRIBUTORS, INC.
Broker-Dealer Name
________________________________________
Broker-Dealer Taxpayer ID Number
________________________________________
Address
________________________________________
City, State, Zip
By: ________________________________________
Signature
________________________________________
Name
________________________________________
Title
________________________________________
Phone
7
<PAGE> 8
EXHIBIT A
POLICIES AND PROCEDURES
WITH RESPECT TO SALES UNDER THE
ALTERNATIVE DISTRIBUTION PLAN
As certain Van Kampen American Capital open-end investment
companies (the "funds") offer multiple classes of shares subject to either
front-end sales charges ("FESC Shares") or contingent deferred sales charges
("CDSC Shares"), it is important for an investor not only to choose the Fund
that best suits his or her investment objectives, but also to choose the
alternative distribution method that best suits his or her particular
situation. To assist investors in these decisions, we (the selling firm) are
instituting the following policy.
1. Any purchase order for $1 million or more must be for
Class A Shares.
2. Any purchase order for $100,000 but less than $1
million is subject to approval by [appropriate selling firm supervisor], who
must approve the purchase order ticket for the appropriate class of shares in
light of the relevant facts and circumstances, including:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold
his shares; and
(c) any other relevant circumstances, such as the
availability of purchase price discounts under a Letter of Intent or a Quantity
Discount.
There are instances when one financing method may be more
appropriate than the other. For example, investors who would qualify for a
significant purchase price discount from the maximum sales charge on shares of
a class of FESC Shares that has such purchase price discounts may determine
that payment of such a reduced front-end sales charge is superior to electing
to purchase shares of a class of CDSC Shares with no front-end service charge
but subject to a higher aggregate distribution and service fee. On the other
hand, an investor whose order would not qualify for such purchase price
discounts and intends to remain invested until after the expiration of the
applicable CDSC may wish to defer the sales charge and have all his funds
invested in Class B Shares initially. In addition if such investor
anticipates that he or she will redeem such shares prior to the expiration of
the CDSC period applicable to Class B Shares the investor may, depending on the
amount of his purchase, wish to acquire Class C Shares. However, investors who
intend to hold their shares for a significantly long time may not wish to
continue to bear the ongoing distribution and service expenses of shares of
Class C Shares, irrespective of the fact that a contingent deferred sales
charge would eventually not apply to a redemption of such shares.
[The appropriate selling firm supervisor] must ensure that all
employees receiving investor inquiries about the purchase of shares from funds
subject to Van Kampen American Capital Distributors, Inc.'s alternative
distribution plan advise the investor of the available alternative distribution
methods offered by such funds and the impact of choosing one method over
another. It may be appropriate for [the appropriate selling firm supervisor]
to discuss the purchase with the investor.
This policy is effective immediately with respect to any order
for the purchase of shares from a fund subject to Van Kampen American Capital
Distributors, Inc.'s alternative distribution plan.
Questions relating to this policy should be directed to
[appropriate selling firm supervisor].
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<PAGE> 1
EXHIBIT 6.5
----------------------------------------------------------------------
BANK FULLY DISCLOSED CLEARING AGREEMENT
WITH VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
REGARDING VAN KAMPEN AMERICAN CAPITAL
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 American Capital open-end investment
companies (the "Open-End Funds" or, individually, an "Open-End Fund") and Van
Kampen American Capital closed-end investment companies (the "Closed-End Funds"
or, individually, a "Closed-End Fund") distributed by Van Kampen American
Capital Distributors, Inc. ("VKAC") 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 VKAC 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.
VKAC 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, VKAC 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 VKAC 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 VKAC. 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 VKAC and not of
your firm. VKAC 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 due 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 basis. Nothing herein
shall cause your firm's customers to be interpreted as customers of VKAC for
any other purpose, or to negate
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<PAGE> 2
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 VKAC. The customers in question are for all purposes your customers and
not customers of VKAC. 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 VKAC 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 VKAC for accumulation
prior to the Effective Date, upon your instruction VKAC 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 VKAC prior to the Effective Date are
subject to acceptance or rejection by VKAC 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 VKAC will
be deemed by VKAC to be orders for Shares solely to the extent permitted by
applicable law.
(f) Upon your instruction, VKAC will send
confirmations of orders accepted by VKAC (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 VKAC of any errors or discrepancies that
you discover and will promptly bring to VKAC's 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 VKAC are subject to the terms and conditions of the Fund's
Prospectus and this Agreement and are subject to acceptance or rejection by
VKAC in its sole discretion.
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<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 VKAC, VKAC will inform you as to the
jurisdictions in which VKAC believes shares of a Fund have been qualified for
sale under the respective securities or "blue sky" laws of such jurisdictions.
VKAC understands and agrees that qualification of any shares of a Fund for sale
in such jurisdictions shall be solely VKAC's 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. VKAC will furnish additional copies of a Fund's
current Prospectus and sales literature issued by VKAC 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
VKAC.
10. Orders received from you will be accepted by VKAC 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 VKAC shall
communicate from time to time to you. All orders are subject to acceptance or
rejection by VKAC 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 VKAC of any errors
or discrepancies that you discover and shall promptly bring to VKAC's 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 VKAC confirmation at the office of VKAC's
clearing agent, by check payable to the order of the Fund which reserves VKAC's
right to delay issuance or transfer of shares until such check has cleared. If
such payment is not received by VKAC, VKAC 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, VKAC 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 VKAC 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. VKAC 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
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<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 VKAC, 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, VKAC 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 VKAC 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. VKAC will have no liability to you, except for lack of
good faith and for obligations expressly assumed by VKAC in this Agreement.
18. All communications to VKAC shall be sent to One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, 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 VKAC in writing.
19. Neither this Agreement nor the performance of the
services hereunder shall be considered to create a joint venture or partnership
between VKAC 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 VKAC
reserves the right in its discretion, without notice, to suspend or withdraw
the offering of any shares of a Fund entirely. VKAC 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 VKAC.
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<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 VKAC 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 VKAC.
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
VKAC and (iii) to cover orders already received by you from your customers.
VKAC 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 VKAC as agent for the Fund or are tendered for
redemption within seven business days after the date of VKAC's 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. VKAC 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 VKAC or
to the Fund, and you shall forthwith refund to VKAC the full agency commission
allowed to you on such sale. VKAC agrees, in the event of any such repurchase
or redemption, to refund to the Fund its share of any discount allowed to VKAC
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 VKAC as agent for the Fund or are tendered for redemption within seven
business days after the date of VKAC's 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 VKAC or to the Fund, and you
shall forthwith refund to VKAC 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. VKAC 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 VKAC within
the time period as specified in such Closed-End Fund's Prospectus (or in the
time period as extended by VKAC in writing). You also agree to transmit any
customer order received during the
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<PAGE> 6
Continuous Offering Period to VKAC 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 VKAC for shares of a Closed-End
Fund, you will be entitled to receive a concession paid out of VKAC's 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 VKAC for any such sales concessions or other
additional compensation or pay any such concession or other additional
compensation or allowance directly to you. VKAC 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, VKAC 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, VKAC
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 VKAC,
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 VKAC shall be made by VKAC and shall be conclusive.
33. During the Initial Offering Period or any Continuous
Offering Period for any Closed-End Fund, you agree to supply VKAC, 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 VKAC 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 VKAC 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
VKAC's 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 American Capital 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 VKAC 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 VKAC.
(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 VKAC 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 AMERICAN CAPITAL
DISTRIBUTORS, INC.
________________________________________
Bank Taxpayer ID Number
________________________________________
Address
________________________________________
City, State, Zip
________________________________________
Phone
________________________________________
Signature
________________________________________
Name
________________________________________
Title
7
<PAGE> 8
EXHIBIT A
POLICIES AND PROCEDURES
WITH RESPECT TO SALES UNDER THE
ALTERNATIVE DISTRIBUTION PLAN
As certain Van Kampen American Capital open-end investment
companies (the "funds") offer multiple classes of shares subject to either
front-end sales charges ("FESC Shares") or contingent deferred sales charges
("CDSC Shares"), it is important for an investor not only to choose the Fund
that best suits his or her investment objectives, but also to choose the
alternative distribution method that best suits his or her particular
situation. To assist investors in these decisions, we (the selling firm) are
instituting the following policy.
1. Any purchase order for $1 million or more must be for
Class A Shares.
2. Any purchase order for $100,000 but less than $1
million is subject to approval by [appropriate selling firm supervisor], who
must approve the purchase order ticket for the appropriate class of shares in
light of the relevant facts and circumstances, including:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold
his shares; and
(c) any other relevant circumstances, such as the
availability of purchase price discounts under a Letter of Intent or a Quantity
Discount.
There are instances when one financing method may be more
appropriate than the other. For example, investors who would qualify for a
significant purchase price discount from the maximum sales charge on shares of
a class of FESC Shares that has such purchase price discounts may determine
that payment of such a reduced front-end sales charge is superior to electing
to purchase shares of a class of CDSC Shares with no front-end service charge
but subject to a higher aggregate distribution and service fee. On the other
hand, an investor whose order would not qualify for such purchase price
discounts and intends to remain invested until after the expiration of the
applicable CDSC may wish to defer the sales charge and have all his funds
invested in Class B Shares initially. In addition if such investor
anticipates that he or she will redeem such shares prior to the expiration of
the CDSC period applicable to Class B Shares the investor may, depending on the
amount of his purchase, wish to acquire Class C Shares. However, investors who
intend to hold their shares for a significantly long time may not wish to
continue to bear the ongoing distribution and service expenses of shares of
Class C Shares, irrespective of the fact that a contingent deferred sales
charge would eventually not apply to a redemption of such shares.
[The appropriate selling firm supervisor] must ensure that all
employees receiving investor inquiries about the purchase of shares from funds
subject to Van Kampen American Capital Distributors, Inc.'s alternative
distribution plan advise the investor of the available alternative distribution
methods offered by such funds and the impact of choosing one method over
another. It may be appropriate for [the appropriate selling firm supervisor]
to discuss the purchase with the investor.
This policy is effective immediately with respect to any order
for the purchase of shares from a fund subject to Van Kampen American Capital
Distributors, Inc.'s alternative distribution plan.
Questions relating to this policy should be directed to
[appropriate selling firm supervisor].
8
<PAGE> 1
EXHIBIT 8.2
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 31st day of July, 1995 by and between each of
the VAN KAMPEN AMERICAN CAPITAL OPEN END FUNDS set forth on Schedule "A" hereto,
which are organized under the laws of the state and as the entities set forth in
Schedule "A" hereto, having their principal office and place of business at
Houston, Texas (collectively, the "Funds"), and ACCESS INVESTOR SERVICES, INC.,
a Delaware corporation, having its principal office at Houston, Texas, and its
principal place of business at Kansas City, Missouri ("ACCESS").
R E C I T A L:
WHEREAS, each of the Funds desires to appoint ACCESS as its transfer
agent, dividend disbursing agent and shareholder service agent, and ACCESS
desires to accept such appointments;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1. TERMS OF APPOINTMENT; DUTIES OF ACCESS.
1.01 Subject to the terms and conditions set forth in this
Agreement, each of the Funds hereby employs and appoints ACCESS as its transfer
agent, dividend disbursing agent and shareholder service agent.
1.02 ACCESS hereby accepts such employment and appointments and
agrees that on and after the effective date of this Agreement it will act as
the transfer agent, dividend disbursing agent and shareholder service agent for
each of the Funds on the terms and conditions set forth herein.
1.03 ACCESS agrees that its duties and obligations hereunder
will be performed in a competent, efficient and workmanlike manner with due
diligence in accordance with reasonable industry practice, and that the
necessary facilities, equipment and personnel for such performance will be
provided.
1.04 In order to assure compliance with section 1.03 and to
implement a cooperative effort to improve the quality of transfer agency and
shareholder services received by each of the Funds and its shareholders,
1
<PAGE> 2
ACCESS agrees to provide and maintain quantitative performance objectives,
including maximum target turn-around times and maximum target error rates, for
the various services provided hereunder. ACCESS also agrees to provide a
reporting system designed to provide the Board of Trustees or Board of
Directors of each of the Funds (the "Board") on a quarterly basis with
quantitative data comparing actual performance for the period with the
performance objectives. The foregoing procedures are designed to provide a
basis for continuing monitoring by the Board of the quality of services
rendered hereunder.
ARTICLE 2. FEES AND EXPENSES.
2.01 For the services to be performed by ACCESS pursuant to this
Agreement, each of the Funds agrees to pay ACCESS the fees provided in the fee
schedules agreed upon from time to time by each of the Funds and ACCESS.
2.02 In addition to the amounts paid under section 2.01 above,
each of the Funds agrees to reimburse ACCESS promptly for such Fund's
reasonable out-of-pocket expenses or advances paid on its behalf by ACCESS in
connection with its performance under this Agreement for postage, freight,
envelopes, checks, drafts, continuous forms, reports and statements, telephone,
telegraph, costs of outside mailing firms, necessary outside record storage
costs, media for storage of records (e.g., microfilm, microfiche and computer
tapes) and printing costs incurred due to special requirements of such Fund.
In addition, any other special out-of-pocket expenses paid by ACCESS at the
specific request of any of the Funds will be promptly reimbursed by the
requesting Fund. Postage for mailings of dividends, proxies, Fund reports and
other mailings to all shareholder accounts shall be advanced to ACCESS by the
concerned Fund three business days prior to the mailing date of such materials.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF ACCESS.
ACCESS represents and warrants to each of the Funds that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware.
3.02 It is duly qualified to carry on its business in the states
of Texas and Missouri.
3.03 It is empowered under applicable laws and by its charter
and bylaws to enter into and perform this Agreement.
2
<PAGE> 3
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have during the term of this
Agreement access to the necessary facilities, equipment and personnel to
perform its duties and obligations hereunder.
3.06 It will maintain a system regarding "as of" transactions as
follows:
(a) Each "as of" transaction effected at a price other
than that in effect on the day of processing for which an estimate has
not been given to any of the affected Funds and which is necessitated
by ACCESS' error, or delay for which ACCESS is responsible or which
could have been avoided through the exercise of reasonable care, will
be identified, and the net effect of such transactions determined, on
a daily basis for each such Fund.
(b) The cumulative net effect of the transactions
included in paragraph (a) above will be determined each day throughout
each month. If, on any day during the month, the cumulative net
effect upon any Fund is negative and exceeds an amount equivalent to
1/2 of 1 cent per share of such Fund, ACCESS shall promptly make a
payment to such Fund (in cash or through use of a credit as described
in paragraph (c) below) in such amount as necessary to reduce the
negative cumulative net effect to less than 1/2 of 1 cent per share of
such Fund. If on the last business day of the month the cumulative
net effect (adjusted by the amount of any payments pursuant to the
preceding sentence) upon any Fund is negative, such Fund shall be
entitled to a reduction in the monthly transfer agency fee next
payable by an equivalent amount, except as provided in paragraph (c)
below. If on the last business day of the month the cumulative net
effect (similarly adjusted) upon any Fund is positive, ACCESS shall be
entitled to recover certain past payments and reductions in fees, and
to a credit against all future payments and fee reductions made under
this paragraph to such Fund, as described in paragraph (c) below.
(c) At the end of each month, any positive cumulative
net effect upon any Fund shall be deemed to be a credit to ACCESS
which shall first be applied to recover any payments and fee
reductions made by ACCESS to such Fund under paragraph (b) above
during the calendar year by increasing the amount of the monthly
transfer agency fee next payable in an amount equal to prior payments
and fee
3
<PAGE> 4
of the monthly transfer agency fee next payable in an amount equal to
prior payments and fee reductions made during such year, but not
exceeding the sum of that month's credit and credits arising in prior
months during such year to the extent such prior credits have not
previously been utilized as contemplated by this paragraph (c). Any
portion of a credit to ACCESS not so used shall remain as a credit to
be used as payment against the amount of any future negative
cumulative net effects that would otherwise require a payment or fee
reduction to such Fund pursuant to paragraph (b) above.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE FUNDS.
Each of the Funds hereby represents and warrants on behalf
of itself only and not any other Funds that are a party to this Agreement that:
4.01 It is duly organized and existing and in good standing under
the laws of the Commonwealth of Massachusetts.
4.02 It is empowered under applicable laws and regulations and by
its Declaration of Trust or Articles of Incorporation and by-laws to enter into
and perform this Agreement.
4.03 All requisite proceedings have been taken by its Board to
authorize it to enter into and perform this Agreement.
4.04 It is an open-end, diversified, management investment
company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933,
as amended, is currently effective and will remain effective, and appropriate
state securities laws filings have been made and will continue to be made, with
respect to all of its shares being offered for sale.
ARTICLE 5. INDEMNIFICATION.
5.01 ACCESS shall not be responsible for and each of the Funds
shall indemnify and hold ACCESS harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liabilities arising out of or attributable to:
4
<PAGE> 5
(a) All actions of ACCESS required to be taken by
ACCESS for the benefit of such Fund pursuant to this Agreement,
provided ACCESS has acted in good faith with due diligence and without
negligence or willful misconduct.
(b) The reasonable reliance by ACCESS on, or
reasonable use by ACCESS of, information, records and documents which
have been prepared or maintained by or on behalf of such Fund or have
been furnished to ACCESS by or on behalf of such Fund.
(c) The reasonable reliance by ACCESS on, or the
carrying out by ACCESS of, any instructions or requests of such Fund.
(d) The offer or sale of such Fund's shares in
violation of any requirement under the federal securities laws or
regulations or the securities laws or regulations of any state or in
violation of any stop order or other determination or ruling by any
federal agency or any state with respect to the offer or sale of such
shares in such state unless such violation results from any failure by
ACCESS to comply with written instructions of such Fund that no offers
or sales of such Fund's shares be made in general or to the residents
of a particular state.
(e) Such Fund's refusal or failure to comply with the
terms of this Agreement, or such Fund's lack of good faith, negligence
or willful misconduct or the breach of any representation or warranty
of such Fund hereunder.
5.02 ACCESS shall indemnify and hold each of the Funds harmless
from and against any and all losses, damages, costs, charges, reasonable
counsel fees, payments, expenses and liability arising out of or attributable
to ACCESS' refusal or failure to comply with the terms of this Agreement, or
ACCESS' lack of good faith, negligence or willful misconduct, or the breach of
any representation or warranty of ACCESS hereunder.
5.03 At any time ACCESS may apply to any authorized officer of
any of the Funds for instructions, and may consult with any of the Funds' legal
counsel, at the expense of such concerned Fund, with respect to any matter
arising in connection with the services to be performed by ACCESS under this
Agreement, and ACCESS shall not be liable and shall be indemnified by such
concerned Fund for any action taken or omitted by it in good faith in
reasonable reliance upon such instructions or upon the opinion of such counsel.
ACCESS shall be protected and
5
<PAGE> 6
indemnified in acting upon any paper or document reasonably believed by ACCESS
to be genuine and to have been signed by the proper person or persons and shall
not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the concerned Fund. ACCESS shall also
be protected and indemnified in recognizing stock certificates which ACCESS
reasonably believes to bear the proper manual or facsimile signatures of the
officers of the concerned Fund, and the proper countersignature of any former
transfer agent or registrar, or of a co-transfer agent or co-registrar.
5.04 In the event any party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage, or other causes reasonably beyond
its control, such party shall not be liable for damages to the other for any
damages resulting from such failure to perform or otherwise from such causes.
5.05 In no event and under no circumstances shall any party to
this Agreement be liable to another party for consequential damages under any
provision of this Agreement or for any act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in
this Article 5 shall apply, upon the assertion of a claim for which one party
may be required to indemnify another, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent.
ARTICLE 6. COVENANTS OF EACH OF THE FUNDS AND ACCESS.
6.01 Each of the Funds shall promptly furnish to ACCESS the
following:
(a) Certified copies of the resolution of its Board
authorizing the appointment of ACCESS and the execution and delivery
of this Agreement.
(b) Certified copies of its Declaration of Trust or
Articles of Incorporation and by-laws and all amendments thereto.
6
<PAGE> 7
6.02 ACCESS hereby agrees to maintain facilities and procedures
reasonably acceptable to each of the Funds for safekeeping of share
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 ACCESS shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable; provided,
however, that all accounts, books and other records of each of the Funds
(hereinafter referred to as "Fund Records") prepared or maintained by ACCESS
hereunder shall be maintained and kept current in compliance with Section 31 of
the Investment Company Act of 1940 and the Rules thereunder (such Section and
Rules being hereinafter referred to as the "1940 Act Requirements"). To the
extent required by the 1940 Act Requirements, ACCESS agrees that all Fund
Records prepared or maintained by ACCESS hereunder are the property of the
concerned Fund and shall be preserved and made available in accordance with the
1940 Act Requirements, and shall be surrendered promptly to the concerned Fund
on its request. ACCESS agrees at such reasonable times as may be requested by
the Board and at least quarterly to provide (i) written confirmation to the
Board that all Fund Records are maintained and kept current in accordance with
the 1940 Act Requirements, and (ii) such other reports regarding its
performance hereunder as may be reasonably requested by the Board.
6.04 ACCESS and each of the Funds agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
6.05 In case of any requests or demands for the inspection of
any of the Fund Records, ACCESS will endeavor to notify each of the concerned
Funds and to secure instructions from an authorized officer of each
of the concerned Funds as to such inspection. ACCESS reserves the right,
however, to exhibit such Fund Records to any person whenever it is advised by
its counsel that it may be held liable for the failure to exhibit such Fund
Records to such person.
ARTICLE 7. TERM AND TERMINATION OF AGREEMENT.
7.01 This Agreement shall remain in effect from the date hereof
through December 31, 1996; provided, however, that this Agreement may be
terminated by any party with respect to that party for good and reasonable
7
<PAGE> 8
cause at any time by giving written notice to the other party at least 120 days
prior to the date on which such termination is to be effective. Any unpaid fees
or reimbursable expenses payable to ACCESS shall be due on any such termination
date. ACCESS agrees to use its best efforts to cooperate with each of the
Funds and the successor transfer agent or agents in accomplishing an orderly
transition.
7.02 Subject to the prior approval of the Board, this Agreement shall
be renewed and extended for periods of not more than one year each, unless and
until this Agreement is terminated in accordance with section 7.01 above.
ARTICLE 8. MISCELLANEOUS.
8.01 Except as provided in section 8.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by any party without
the written consent of ACCESS or the concerned Fund, as the case may be;
provided, however, that no consent shall be required for any merger of any of
the Funds with, or any sale of all or substantially all the assets of any of
the Funds to, another investment company.
8.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
8.03 ACCESS may, without further consent on the part of any of the
Funds, subcontract with DST, Inc., a Missouri corporation, or any other
qualified servicer, for the performance of data processing activities;
provided, however, that ACCESS shall be as fully responsible to each of the
Funds for the acts and omissions of DST, Inc., or other qualified servicer as
it is for its own acts and omissions.
8.04 ACCESS may, without further consent on the part of any of the
Fund, provide services to its affiliated companies. Such services may be
provided at cost.
8.05 This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof, and supersedes any
prior agreement with respect thereto, whether oral or written, and this
Agreement may not be modified except be written instrument executed by the
affected parties.
8.06 The execution of this Agreement has been authorized by the
Funds' Trustees. This Plan is executed on behalf of the Funds or the Trustees
of the Funds as Trustees and not individually and that the obligations of this
Agreement are not binding upon any of
8
<PAGE> 9
the Trustees, officers or shareholders of the Funds individually but are
binding only upon the assets and property of the Funds. A Certificate of Trust
in respect of each of the Funds is on file with the Secretary of the State of
Delaware.
8.07 For each of those Funds that have one or more portfolios as
set forth in Schedule "A" hereto, all obligations of those Funds under this
Agreement shall apply only on a portfolio-by-portfolio basis and the assets of
one portfolio shall not be liable for the obligations of any other.
8.08 In the event of a change in the business or regulatory
environment affecting all or any portion of this Agreement, the parties hereto
agree to renegotiate such affected portions in good faith.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf and through their duly
authorized officers, as of the date first above written.
EACH OF THE VAN KAMPEN AMERICAN CAPITAL
OPEN END FUNDS LISTED ON SCHEDULE "A"
HERETO
BY: /s/ Nori L. Gabert
------------------------------------
Vice President
ATTEST:
/s/ Huey Falgout
- ------------------------------------
Assistant Secretary
ACCESS INVESTOR SERVICES, INC.
BY: /s/ Nori L. Gabert
------------------------------------
Vice President
ATTEST:
/s/ Huey Falgout
- ------------------------------------
Assistant Secretary
10
<PAGE> 11
SCHEDULE "A"
VAN KAMPEN AMERICAN CAPITAL OPEN END FUNDS
NOTE: All of the entities listed below are organized as Delaware business
trusts
FUND NAME
(INCLUDING PORTFOLIOS)
===============================================================================
Van Kampen American Capital Comstock Fund
Van Kampen American Capital Corporate Bond Fund
Van Kampen American Capital Emerging Growth Fund
Van Kampen American Capital Enterprise Fund
Van Kampen American Capital Equity Income Fund
Van Kampen American Capital Limited Maturity Government Fund
Van Kampen American Capital Global Managed Assets Fund
Van Kampen American Capital Government Securities Fund
Van Kampen American Capital Government Target Fund
Van Kampen American Capital Growth and Income Fund
Van Kampen American Capital Harbor Fund
Van Kampen American Capital High Income Corporate Bond Fund
Van Kampen American Capital Life Investment Trust
Common Stock Fund
Domestic Strategic Income Fund
Emerging Growth Fund
Global Equity Fund
Government Fund
Money Market Fund
Multiple Strategy Fund
Real Estate Securities Fund
Van Kampen American Capital Municipal Bond Fund
Van Kampen American Capital Pace Fund
Van Kampen American Capital Real Estate Securities Fund
Van Kampen American Capital Reserve Fund
Van Kampen American Capital Small Capitalization Fund
Van Kampen American Capital Tax-Exempt Trust
Van Kampen American Capital High Yield Municipal Fund
Van Kampen American Capital Insured Municipal Fund
Van Kampen American Capital Texas Tax Free Income Fund
Van Kampen American Capital U.S. Government Trust For Income
Van Kampen American Capital Utilities Income Fund
Van Kampen American Capital World Portfolio Series Trust
Van Kampen American Capital Global Equity Fund
Van Kampen American Capital Global Government Securities Fund
11
<PAGE> 1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM]
EXHIBIT 10.1
September 27, 1996
Van Kampen American Capital
Global Equity Fund
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital
World Portfolio Series Trust --
Registration Statement on Form N-1A
(File Nos. 33-37879 and 811-6220)
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Van Kampen American Capital Global
Equity Fund (the "Fund"), a series of Van Kampen American Capital World
Portfolio Series Trust (the "Trust"), a Delaware business trust, in connection
with the preparation of Post-Effective Amendment No. 12 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 September 27, 1996.
The Registration Statement relates to the registration under the 1933 Act and
1940 Act of an indefinite number of each of Class A Shares of beneficial
interest, par value $.01 per share, Class B Shares of beneficial interest,
par value $.01 per share, and Class C Shares of beneficial interest, par value
$.01 per share, of the Fund (collectively, the "Shares").
This opinion is delivered in accordance with the requirements
of Item 24(b)(10) of Form N-1A under the 1933 Act and the 1940 Act.
<PAGE> 2
Van Kampen American Capital
Global Equity Fund
September 27, 1996
Page 2
In connection with this opinion, we have examined the
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Certificate of Trust filed with the Secretary of State of Delaware,
(ii) the Agreement and Declaration of Trust and By-Laws of the Trust, each as
amended to date (the "Declaration of Trust" and "By-Laws", respectively), (iii)
the Certificate of Designation establishing the Fund as a series of the Trust,
(iv) the resolutions adopted by the Board of Trustees of the Trust relating to
the authorization, issuance and sale of the Shares, the filing of the
Registration Statement and any amendments or supplements thereto and related
matters and (v) such other documents 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 this firm are admitted to the practice of law in
the State of Delaware and we express no opinion as to the law of any other
jurisdiction.
Based upon and subject to the foregoing, we are of the opinion
that the issuance and sale of Shares by the Trust 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 American Capital
Global Equity Fund
September 27, 1996
Page 3
We hereby consent to the filing of this opinion with the
Commission as Exhibit 10 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
<PAGE> 1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM]
EXHIBIT 10.2
September 27, 1996
Van Kampen American Capital
Global Government Securities Fund
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital
World Portfolio Series Trust --
Registration Statement on Form N-1A
(File Nos. 33-37879 and 811-6220)
----------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Van Kampen American Capital Global
Government Securities Fund (the "Fund"), a series of Van Kampen American World
Portfolio Series Trust (the "Trust"), a Delaware business trust, in connection
with the preparation of Post-Effective Amendment No. 12 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 September 27, 1996.
The Registration Statement relates to the registration under the 1933 Act and
1940 Act of an indefinite number of each of Class A Shares of beneficial
interest, par value $.01 per share, Class B Shares of beneficial interest,
par value $.01 per share, and Class C Shares of beneficial interest, par
value $.01 per share, of the Fund (collectively, the "Shares").
This opinion is delivered in accordance with the requirements
of Item 24(b)(10) of Form N-1A under the 1933 Act and the 1940 Act.
<PAGE> 2
Van Kampen American Capital
Global Government Securities Fund
September 27, 1996
Page 2
In connection with this opinion, we have examined the
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Certificate of Trust filed with the Secretary of State of Delaware,
(ii) the Agreement and Declaration of Trust and By-Laws of the Trust, each as
amended to date (the "Declaration of Trust" and "By-Laws", respectively), (iii)
the Certificate of Designation establishing the Fund as a series of the Trust,
(iv) the resolutions adopted by the Board of Trustees of the Trust relating to
the authorization, issuance and sale of the Shares, the filing of the
Registration Statement and any amendments or supplements thereto and related
matters and (v) such other documents 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 this firm are admitted to the practice of law in
the State of Delaware and we express no opinion as to the law of any other
jurisdiction.
Based upon and subject to the foregoing, we are of the opinion
that the issuance and sale of Shares by the Trust 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 American Capital
Global Government Securities Fund
September 27, 1996
Page 3
We hereby consent to the filing of this opinion with the
Commission as Exhibit 10 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
<PAGE> 1
EXHIBIT 11.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 12, Amendment No. 13, to
the registration statement on Form N-1A (the "Registration Statement") of our
report dated July 22, 1996, relating to the financial statements and financial
highlights of Van Kampen American Capital Global Equity Fund, a series of Van
Kampen American Capital World Portfolio Series Trust, which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the references to us under the headings "Financial
Highlights" and "Independent Accountants" in such Prospectus and to the
reference to us under the heading "Independent Accountants" in such Statement of
Additional Information.
/s/ PRICE WATERHOUSE LLP
Houston, Texas
September 26, 1996
<PAGE> 1
EXHIBIT 11.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 12, Amendment No. 13, to
the registration statement on Form N-1A (the "Registration Statement") of our
report dated July 16, 1996, relating to the financial statements and financial
highlights of Van Kampen American Capital Global Government Securities Fund, a
series of Van Kampen American Capital World Portfolio Series Trust, which
appears in such Statement of Additional Information, and to the incorporation by
reference of our report into the Prospectus which constitutes part of this
Registration Statement. We also consent to the references to us under the
headings "Financial Highlights" and "Independent Accountants" in such Prospectus
and to the reference to us under the heading "Independent Accountants" in such
Statement of Additional Information.
/s/ PRICE WATERHOUSE LLP
Houston, Texas
September 26, 1996
<PAGE> 1
Exhibit 15.1
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
The plan set forth below (the "Distribution Plan") is the written plan
contemplated by Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), for the VAN KAMPEN AMERICAN CAPITAL GLOBAL
EQUITY FUND (the "Fund"), a series of the Van Kampen American Capital World
Portfolio Series Trust (the "Trust"). This Distribution Plan describes the
material terms and conditions under which assets of the Fund may be used in
connection with financing distribution related activities with respect to each
of its classes of shares of beneficial interest (the "Shares"), each of which
is offered and sold subject to a different combination of front-end sales
charges, distribution fees, service fees and contingent deferred sales
charges.1 Classes of shares, if any, subject to a front-end sales charge and a
distribution and/or service fee are referred to herein as "Front-End Classes"
and the Shares of such classes are referred to herein as "Front-End Shares."
Classes of shares, if any, subject to a contingent-deferred sales charge and a
distribution and/or a service fee are referred to herein as "CDSC Classes" and
Shares of such classes are referred to herein as "CDSC Shares." Classes of
shares, if any, subject to a front-end sales charge, a contingent-deferred
sales charge and a distribution and/or service fee are referred to herein as
"Combination Classes" and Shares of such class are referred to herein as
"Combination Shares."
The Fund has adopted a service plan (the "Service Plan") pursuant to
which the Fund is authorized to expend on an annual basis a portion of its
average net assets attributable to any or each class of Shares in connection
with the provision by the principal underwriter (within the meaning of the 1940
Act) of the Shares and by brokers, dealers and other financial intermediaries
(collectively, "Financial Intermediaries") of personal services to holders of
Shares and/or the maintenance of shareholder accounts. The Fund also has
entered into a distribution and services agreement (the "Distribution and
Services Agreement") with Van Kampen American Capital Inc. (the "Distributor"),
pursuant to which the Distributor acts as the principal underwriter with
respect to each class of Shares and provides services to the Fund and acts as
agent on behalf of the Fund in connection with the implementation of the
Service Plan. The Distributor may enter into selling agreements (the "Selling
Agreements") with Financial Intermediaries in order to implement the
Distribution and Services Agreement, the Service Plan and this Distribution
Plan.
The Fund hereby is authorized to pay the Distributor a distribution
fee with respect to each class of its Shares to compensate the Distributor for
activities which are primarily intended to result in the sale of such Shares
("distribution related activities") performed by the Distributor with respect
to the respective class of Shares of the Fund. Such distribution related
activities include without limitation: (a) printing and distributing copies of
any prospectuses and annual and interim reports of the Fund (after the Fund has
prepared and set in type such materials) that are used by such Distributor in
connection with the offering of Shares; (b) preparing, printing or otherwise
manufacturing and distributing any other literature or materials of any nature
used by such Distributor in connection with promoting, distributing or offering
the Shares; (c) advertising, promoting and selling Shares to broker-dealers,
banks and the public; (d) distribution related overhead and the provision of
information programs and shareholder services intended to enhance the
attractiveness of investing in the Fund; (e) incurring initial outlay expenses
in connection with compensating Financial Intermediaries for (i) selling CDSC
Shares and Combination Shares and (ii) providing personal services to
shareholders and the maintenance of
____________________
1 The Fund is authorized to offer multiple classes of shares pursuant to a
Rule 18f-3 Plan adopted under the 1940 Act.
1
<PAGE> 2
shareholder accounts of all classes of Shares, including paying interest on and
incurring other carrying costs on funds borrowed to pay such initial outlays;
and (f) acting as agent for the Fund in connection with implementing this
Distribution Plan pursuant to the Selling Agreements.
The amount of the distribution fee hereby authorized with respect to
each class of Shares of the Fund shall be as follows:
With respect to Class A Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 0.25% of the Fund's average daily net
assets attributable to Class A Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to Class A Shares. The
Fund may pay a distribution fee as determined from time to time by its Board of
Trustees in an annual amount not to exceed the lesser of (i) (A) 0.25% of the
Fund's average daily net asset value during such year attributable to Class A
Shares sold on or after the date on which this Distribution Plan was first
implemented with respect to Class A Shares minus (B) the amount of the service
fee with respect to the Class A Shares actually expended during such year by
the Fund pursuant to the Service Plan and (ii) the actual amount of
distribution related expenses incurred by the Distributor with respect to Class
A Shares.
With respect to Class B Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class B Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class B Shares. The
Fund may pay a distribution fee with respect to the Class B Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class B Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class B
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class B Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class B Shares.
With respect to Class C Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class C Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class C Shares. The
Fund may pay a distribution fee with respect to the Class C Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class C Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class C
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class C Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class C Shares.
Payments pursuant to this Distribution Plan shall not be made more
often than monthly upon receipt by the Fund of a separate written expense
report with respect to each class of Shares setting forth the expenses
qualifying for such reimbursement allocated to each class of Shares and the
purposes thereof.
In the event that amounts payable hereunder with respect to shares of
a Front-End Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of such class, there
is no carryforward of reimbursement obligations to succeeding years. In the
event the amounts payable hereunder with respect to shares of a CDSC Class or a
Combination Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of the respective
class, such unreimbursed distribution expenses will be carried forward and paid
by the Fund hereunder in future years so long as this Distribution Plan remains
in effect, subject to applicable laws
2
<PAGE> 3
and regulations. Reimbursements for distribution related expenses payable
hereunder with respect to a particular class of Shares may not be used to
subsidize the sale of Shares of any other class of Shares.
The Fund shall not compensate the Distributor, and neither the Fund
nor the Distributor shall compensate any Financial Intermediary, for any
distribution related expenses incurred with respect to a class of Shares prior
to the later of (a) the implementation of this Distribution Plan with respect
to such class of Shares or (b) the date that such Financial Intermediary enters
into a Selling Agreement with the Distributor.
The Fund hereby authorizes the Distributor to enter into Selling
Agreements with certain Financial Intermediaries to provide compensation to
such Financial Intermediaries for activities and services of the type referred
to in Paragraph 1 hereof. Prior to the implementation of a Selling Agreement,
such agreement shall be approved by a majority of the Board of Trustees of the
Trust and a majority of the Disinterested Trustees (within the meaning of the
1940 Act) by a vote cast in person at a meeting called for the purpose of
voting on such Selling Agreements. The Distributor may reallocate all or a
portion of its distribution fee to such Financial Intermediaries as
compensation for the above-mentioned activities and services. Such
reallocation shall be in an amount as set forth from time to time in the Fund's
prospectus. Such Selling Agreements shall provide that the Financial
Intermediaries shall provide the Distributor with such information as is
reasonably necessary to permit the Distributor to comply with the reporting
requirements set forth in Paragraphs 3 and 8 hereof.
Subject to the provisions of this Distribution Agreement, the Fund is
hereby authorized to pay a distribution fee to any person that is not an
"affiliated person" or "interested person" of the Fund or its "investment
adviser" or "principal underwriter" (as such terms are defined in the 1940 Act)
who provides any of the foregoing services for the Fund. Such fee shall be
paid only pursuant to written agreements between the Fund and such other person
the terms of which permit payments to such person only in accordance with the
provisions of this Distribution Agreement and which have the approval of a
majority of the Disinterested Trustees by vote cast separately with respect to
each class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.
The Fund and the Distributor shall prepare separate written reports
for each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Distribution Plan, the Service
Plan and the agreements contemplated hereby, the purposes for which such
payments were made and such other information as the Board of Trustees or the
Disinterested Trustees may reasonably request from time to time, and the Board
of Trustees shall review such reports and other information.
This Distribution Plan shall become effective upon its approval by (a)
a majority of the Board of Trustees and a majority of the Disinterested
Trustees by vote cast separately with respect to each class of Shares cast in
person at a meeting called for the purpose of voting on this Distribution Plan,
and (b) with respect to each class of Shares, a "majority of the outstanding
voting securities" (as such phrase is defined in the 1940 Act) of such class of
Shares voting separately as a class.
This Distribution Plan and any agreement contemplated hereby shall
continue in effect beyond the first anniversary of its adoption by the Board of
Trustees of the Fund only so long as (a) its continuation is approved at least
annually in the manner set forth in clause (a) of paragraph 9 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.
This Distribution Plan may be terminated with respect to a class of
Shares without penalty at any time by a majority of the Disinterested Trustees
or by a "majority of the outstanding voting securities" of the respective
class of Shares of the Fund.
This Distribution Plan may not be amended to increase materially the
maximum amounts permitted to be expended hereunder except with the approval of
a "majority of the outstanding voting securities" of the respective class of
Shares of the Fund and may not be amended in any other material
3
<PAGE> 4
respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform this Distribution Plan to changes in the Rule or
to other changes in the 1940 Act or the rules and regulations thereunder shall
not be deemed to be material amendments.
To the extent any service fees paid by the Fund pursuant to the
Service Plan are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Shares issued by the Fund within
the meaning of the Rule, the terms and provisions of such plan and any payments
made pursuant to such plan hereby are authorized pursuant to this Distribution
Plan in the amounts and for the purposes authorized in the Service Plan without
any further action by the Board of Trustees or the shareholders of the Fund.
To the extent the terms and provisions of the Service Plan conflict with the
terms and provisions of this Distribution Plan, the terms and provisions of the
Service Plan shall prevail with respect to amounts payable pursuant thereto.
This paragraph 13 is adopted solely due to the uncertainty that may exist with
respect to whether payments to be made by the Fund pursuant to the Service Plan
constitute payments primarily intended to result in the sale of Shares issued
by the Fund within the meaning of the Rule.
The Trustees of the Trust have adopted this Distribution Plan as
trustees under the Declaration of Trust of the Trust and the policies of the
Trust adopted hereby are not binding upon any of the Trustees or shareholders
of the Trust individually, but bind only the trust estate.
4
<PAGE> 1
Exhibit 15.2
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
The plan set forth below (the "Distribution Plan") is the written plan
contemplated by Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), for the VAN KAMPEN AMERICAN CAPITAL GLOBAL
GOVERNMENT SECURITIES FUND (the "Fund"), a series of the Van Kampen American
Capital World Portfolio Series Trust (the "Trust"). This Distribution Plan
describes the material terms and conditions under which assets of the Fund may
be used in connection with financing distribution related activities with
respect to each of its classes of shares of beneficial interest (the "Shares"),
each of which is offered and sold subject to a different combination of
front-end sales charges, distribution fees, service fees and contingent
deferred sales charges.1 Classes of shares, if any, subject to a front-end
sales charge and a distribution and/or service fee are referred to herein as
"Front-End Classes" and the Shares of such classes are referred to herein as
"Front-End Shares." Classes of shares, if any, subject to a contingent-deferred
sales charge and a distribution and/or a service fee are referred to herein as
"CDSC Classes" and Shares of such classes are referred to herein as "CDSC
Shares." Classes of shares, if any, subject to a front-end sales charge, a
contingent-deferred sales charge and a distribution and/or service fee are
referred to herein as "Combination Classes" and Shares of such class are
referred to herein as "Combination Shares."
The Fund has adopted a service plan (the "Service Plan") pursuant to
which the Fund is authorized to expend on an annual basis a portion of its
average net assets attributable to any or each class of Shares in connection
with the provision by the principal underwriter (within the meaning of the 1940
Act) of the Shares and by brokers, dealers and other financial intermediaries
(collectively, "Financial Intermediaries") of personal services to holders of
Shares and/or the maintenance of shareholder accounts. The Fund also has
entered into a distribution and services agreement (the "Distribution and
Services Agreement") with Van Kampen American Capital Inc. (the "Distributor"),
pursuant to which the Distributor acts as the principal underwriter with
respect to each class of Shares and provides services to the Fund and acts as
agent on behalf of the Fund in connection with the implementation of the
Service Plan. The Distributor may enter into selling agreements (the "Selling
Agreements") with Financial Intermediaries in order to implement the
Distribution and Services Agreement, the Service Plan and this Distribution
Plan.
The Fund hereby is authorized to pay the Distributor a distribution
fee with respect to each class of its Shares to compensate the Distributor for
activities which are primarily intended to result in the sale of such Shares
("distribution related activities") performed by the Distributor with respect
to the respective class of Shares of the Fund. Such distribution related
activities include without limitation: (a) printing and distributing copies of
any prospectuses and annual and interim reports of the Fund (after the Fund has
prepared and set in type such materials) that are used by such Distributor in
connection with the offering of Shares; (b) preparing, printing or otherwise
manufacturing and distributing any other literature or materials of any nature
used by such Distributor in connection with promoting, distributing or offering
the Shares; (c) advertising, promoting and selling Shares to broker-dealers,
banks and the public; (d) distribution related overhead and the provision of
information programs and shareholder services intended to enhance the
attractiveness of investing in the Fund; (e) incurring initial outlay expenses
in connection with compensating Financial Intermediaries for (i) selling CDSC
Shares and Combination Shares and (ii) providing personal services to
shareholders and the maintenance of
____________________
1 The Fund is authorized to offer multiple classes of shares pursuant to a
Rule 18f-3 Plan adopted under the 1940 Act.
1
<PAGE> 2
shareholder accounts of all classes of Shares, including paying interest on and
incurring other carrying costs on funds borrowed to pay such initial outlays;
and (f) acting as agent for the Fund in connection with implementing this
Distribution Plan pursuant to the Selling Agreements.
The amount of the distribution fee hereby authorized with respect to
each class of Shares of the Fund shall be as follows:
With respect to Class A Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 0.25% of the Fund's average daily net
assets attributable to Class A Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to Class A Shares. The
Fund may pay a distribution fee as determined from time to time by its Board of
Trustees in an annual amount not to exceed the lesser of (i) (A) 0.25% of the
Fund's average daily net asset value during such year attributable to Class A
Shares sold on or after the date on which this Distribution Plan was first
implemented with respect to Class A Shares minus (B) the amount of the service
fee with respect to the Class A Shares actually expended during such year by
the Fund pursuant to the Service Plan and (ii) the actual amount of
distribution related expenses incurred by the Distributor with respect to Class
A Shares.
With respect to Class B Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class B Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class B Shares. The
Fund may pay a distribution fee with respect to the Class B Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class B Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class B
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class B Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class B Shares.
With respect to Class C Shares, the distribution fee authorized hereby
and the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class C Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class C Shares. The
Fund may pay a distribution fee with respect to the Class C Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class C Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class C
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class C Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class C Shares.
Payments pursuant to this Distribution Plan shall not be made more
often than monthly upon receipt by the Fund of a separate written expense
report with respect to each class of Shares setting forth the expenses
qualifying for such reimbursement allocated to each class of Shares and the
purposes thereof.
In the event that amounts payable hereunder with respect to shares of
a Front-End Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of such class, there
is no carryforward of reimbursement obligations to succeeding years. In the
event the amounts payable hereunder with respect to shares of a CDSC Class or a
Combination Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of the respective
class, such unreimbursed distribution expenses will be carried forward and paid
by the Fund hereunder in future years so long as this Distribution Plan remains
in effect, subject to applicable laws
2
<PAGE> 3
and regulations. Reimbursements for distribution related expenses payable
hereunder with respect to a particular class of Shares may not be used to
subsidize the sale of Shares of any other class of Shares.
The Fund shall not compensate the Distributor, and neither the Fund
nor the Distributor shall compensate any Financial Intermediary, for any
distribution related expenses incurred with respect to a class of Shares prior
to the later of (a) the implementation of this Distribution Plan with respect
to such class of Shares or (b) the date that such Financial Intermediary enters
into a Selling Agreement with the Distributor.
The Fund hereby authorizes the Distributor to enter into Selling
Agreements with certain Financial Intermediaries to provide compensation to
such Financial Intermediaries for activities and services of the type referred
to in Paragraph 1 hereof. Prior to the implementation of a Selling Agreement,
such agreement shall be approved by a majority of the Board of Trustees of the
Trust and a majority of the Disinterested Trustees (within the meaning of the
1940 Act) by a vote cast in person at a meeting called for the purpose of
voting on such Selling Agreements. The Distributor may reallocate all or a
portion of its distribution fee to such Financial Intermediaries as
compensation for the above-mentioned activities and services. Such
reallocation shall be in an amount as set forth from time to time in the Fund's
prospectus. Such Selling Agreements shall provide that the Financial
Intermediaries shall provide the Distributor with such information as is
reasonably necessary to permit the Distributor to comply with the reporting
requirements set forth in Paragraphs 3 and 8 hereof.
Subject to the provisions of this Distribution Agreement, the Fund is
hereby authorized to pay a distribution fee to any person that is not an
"affiliated person" or "interested person" of the Fund or its "investment
adviser" or "principal underwriter" (as such terms are defined in the 1940 Act)
who provides any of the foregoing services for the Fund. Such fee shall be
paid only pursuant to written agreements between the Fund and such other person
the terms of which permit payments to such person only in accordance with the
provisions of this Distribution Agreement and which have the approval of a
majority of the Disinterested Trustees by vote cast separately with respect to
each class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.
The Fund and the Distributor shall prepare separate written reports
for each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Distribution Plan, the Service
Plan and the agreements contemplated hereby, the purposes for which such
payments were made and such other information as the Board of Trustees or the
Disinterested Trustees may reasonably request from time to time, and the Board
of Trustees shall review such reports and other information.
This Distribution Plan shall become effective upon its approval by (a)
a majority of the Board of Trustees and a majority of the Disinterested
Trustees by vote cast separately with respect to each class of Shares cast in
person at a meeting called for the purpose of voting on this Distribution Plan,
and (b) with respect to each class of Shares, a "majority of the outstanding
voting securities" (as such phrase is defined in the 1940 Act) of such class of
Shares voting separately as a class.
This Distribution Plan and any agreement contemplated hereby shall
continue in effect beyond the first anniversary of its adoption by the Board of
Trustees of the Fund only so long as (a) its continuation is approved at least
annually in the manner set forth in clause (a) of paragraph 9 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.
This Distribution Plan may be terminated with respect to a class of
Shares without penalty at any time by a majority of the Disinterested Trustees
or by a "majority of the outstanding voting securities" of the respective
class of Shares of the Fund.
This Distribution Plan may not be amended to increase materially the
maximum amounts permitted to be expended hereunder except with the approval of
a "majority of the outstanding voting securities" of the respective class of
Shares of the Fund and may not be amended in any other material
3
<PAGE> 4
respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform this Distribution Plan to changes in the Rule or
to other changes in the 1940 Act or the rules and regulations thereunder shall
not be deemed to be material amendments.
To the extent any service fees paid by the Fund pursuant to the
Service Plan are deemed to be payments for the financing of any activity
primarily intended to result in the sale of Shares issued by the Fund within
the meaning of the Rule, the terms and provisions of such plan and any payments
made pursuant to such plan hereby are authorized pursuant to this Distribution
Plan in the amounts and for the purposes authorized in the Service Plan without
any further action by the Board of Trustees or the shareholders of the Fund.
To the extent the terms and provisions of the Service Plan conflict with the
terms and provisions of this Distribution Plan, the terms and provisions of the
Service Plan shall prevail with respect to amounts payable pursuant thereto.
This paragraph 13 is adopted solely due to the uncertainty that may exist with
respect to whether payments to be made by the Fund pursuant to the Service Plan
constitute payments primarily intended to result in the sale of Shares issued
by the Fund within the meaning of the Rule.
The Trustees of the Trust have adopted this Distribution Plan as
trustees under the Declaration of Trust of the Trust and the policies of the
Trust adopted hereby are not binding upon any of the Trustees or shareholders
of the Trust individually, but bind only the trust estate.
4
<PAGE> 1
Exhibit 15.3
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
SERVICE PLAN
The plan set forth below (the "Service Plan") for the VAN KAMPEN
AMERICAN CAPITAL GLOBAL EQUITY FUND (the "Fund"), a series of the Van Kampen
American Capital World Portfolio Series Trust (the "Trust") describes the
material terms and conditions under which assets of the Fund may be used to
compensate the Fund's principal underwriter, within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), brokers, dealers
and other financial intermediaries (collectively "Financial Intermediaries")
for providing personal services to shareholders and/or the maintenance of
shareholder accounts with respect to each of its Class A Shares of beneficial
interest (the "Class A Shares"), its Class B Shares of beneficial interest (the
"Class B Shares"), and its Class C Shares of beneficial interest (the "Class C
Shares") The Class A Shares, Class B Shares and Class C Shares sometimes are
referred to herein collectively as the "Shares." Each class of Shares is
offered and sold subject to a different combination of front-end sales charges,
distribution fees, service fees and contingent deferred sales charges.
Classes of shares, if any, subject to a front-end sales charge and a
distribution and/or service fee are referred to herein as "Front-End Classes"
and the Shares of such classes are referred to herein as "Front-End Shares."
Classes of shares, if any, subject to a contingent-deferred sales charge and a
distribution and or a service fee are referred to herein as "CDSC Classes" and
Shares of such classes are referred to herein as "CDSC Shares." Classes of
shares, if any, subject to a front-end sales charge, a contingent-deferred
sales charge and a distribution and/or service fee are referred to herein as
"Combination Classes" and Shares of such class are referred to herein as
"Combination Shares."
The Fund has adopted a distribution plan (the "Distribution Plan")
pursuant to which the Fund is authorized to expend on an annual basis a portion
of its average net assets attributable to each class of Shares in connection
with financing distribution related activities. The Fund also has entered into
a distribution and services agreement (the "Distribution and Services
Agreement") with Van Kampen American Capital Distributors, Inc. (the
"Distributor"), pursuant to which the Distributor acts as agent on behalf of
the Fund in connection with the implementation of the Service Plan and acts as
the principal underwriter with respect to each class of Shares. The
Distributor may enter into selling agreements (the "Selling Agreements") with
brokers, dealers and other financial intermediaries ("Financial
Intermediaries") in order to implement the Distribution Agreement, the
Distribution Plan and this Service Plan.
The Fund hereby is authorized to pay a service fee with respect to its
Class A Shares, Class B Shares and Class C Shares to any person who sells such
Shares and provides personal services to shareholders and/or maintains
shareholder accounts in an annual amount not to exceed 0.25% of the average
annual net asset value of the Shares maintained in the Fund by such person that
were sold on or after the date on which this Service Plan was first
implemented. The aggregate annual amount of all such payments with respect to
each such class of Shares may not exceed 0.25% of the Fund's average annual net
assets attributable to the respective class of Shares sold on or after the date
on which this Service Plan was first implemented and maintained in the Fund
more than one year.
Payments pursuant to this Service Plan may be paid or prepaid on
behalf of the Fund by the Distributor acting as the Fund's agent.
____________________
1 The Fund is authorized to offer multiple classes of shares pursuant to a
Rule 18f-3 Plan adopted under the 1940 Act.
1
<PAGE> 2
Payments by the Fund to the Distributor pursuant to this Service Plan
shall not be made more often than monthly upon receipt by the Fund of a
separate written expense report with respect to each class of Shares setting
forth the expenses qualifying for such reimbursement allocated to each class of
Shares and the purposes thereof.
In the event that amounts payable hereunder with respect to a class of
Shares do not fully reimburse the Distributor for pre-paid service fees, such
unreimbursed service fee expenses will be carried forward and paid by the Fund
hereunder in future years so long as this Service Plan remains in effect,
subject to applicable laws and regulations. Reimbursements for service fee
related expenses payable hereunder with respect to a particular class of Shares
may not be used to subsidize services provided with respect to any other class
of Shares.
The Fund shall not compensate the Distributor, and neither the Fund
nor the Distributor shall compensate any Financial Intermediary, for any
service related expenses incurred with respect to a class of Shares prior to
the later of (a) the implementation of this Service Plan with respect to such
class of Shares or (b) the date that such Financial Intermediary enters into a
Selling Agreement with the Distributor.
The Fund hereby authorizes the Distributor to enter into Selling
Agreements with certain Financial Intermediaries to provide compensation to
such Financial Intermediaries for activities and services of the type referred
to in Paragraph 1 hereof. Prior to the implementation of a Selling Agreement,
such agreement shall be approved by a majority of the Board of Trustees of the
Trust and a majority of the Disinterested Trustees (within the meaning of the
1940 Act) by a vote cast in person at a meeting called for the purpose of
voting on such Selling Agreements. Such Selling Agreements shall provide that
the Financial Intermediaries shall provide the Distributor with such
information as is reasonably necessary to permit the Distributor to comply with
the reporting requirements set forth in Paragraphs 3 and 8 hereof.
Subject to the provisions of this Service Agreement, the Fund is
hereby authorized to pay a service fee to any person that is not an "affiliated
person" or "interested person" of the Fund or its "investment adviser" or
"principal underwriter" (as such terms are defined in the 1940 Act) who
provides any of the foregoing services for the Fund. Such fee shall be paid
only pursuant to written agreements between the Fund and such other person the
terms of which permit payments to such person only in accordance with the
provisions of this Service Agreement and which have the approval of a majority
of the Disinterested Trustees by vote cast separately with respect to each
class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.
The Fund and the Distributor shall prepare separate written reports
for each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Service Plan and the
agreements contemplated hereby, the purposes for which such payments were made
and such other information as the Board of Trustees or the Disinterested
Trustees may reasonably request from time to time, and the Board of Trustees
shall review such reports and other information.
This Service Plan may be terminated with respect to a class of Shares
without penalty at any time by a majority of the Disinterested Trustees or by a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund.
This Service Plan shall become effective upon its approval by (a) a
majority of the Board of Trustees and a majority of the Disinterested Trustees
by vote cast separately with respect to each class of Shares cast in person at
a meeting called for the purpose of voting on this Distribution Plan, and (b)
with respect to each class of Shares, a "majority of the outstanding voting
securities" (as such phrase is defined in the 1940 Act) of such class of Shares
voting separately as a class.
2
<PAGE> 3
This Service Plan and any agreement contemplated hereby shall continue
in effect beyond the first anniversary of its adoption by the Board of Trustees
of the Fund only so long as (a) its continuation is approved at least annually
in the manner set forth in clause (a) of paragraph 10 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.
This Service Plan may not be amended to increase materially the
maximum amounts permitted to be expended hereunder except with the approval of
a "majority of the outstanding voting securities" of the respective class of
Shares of the Fund. This Service Plan may not be amended in any material
respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform this Service Plan to changes in Rule 12b-1 under
the 1940 Act, the rules and regulations thereunder or the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. shall not be
deemed to be material amendments.
The Trustees of the Trust have adopted this Service Plan as trustees
under the Declaration of Trust of the Trust and the policies of the Trust
adopted hereby are not binding upon any of the Trustees or shareholders of the
Trust individually, but bind only the trust estate.
3
<PAGE> 1
Exhibit 15.4
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
SERVICE PLAN
The plan set forth below (the "Service Plan") for the VAN KAMPEN
AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND (the "Fund"), a series of the
Van Kampen American Capital World Portfolio Series Trust (the "Trust") describes
the material terms and conditions under which assets of the Fund may be used to
compensate the Fund's principal underwriter, within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), brokers, dealers
and other financial intermediaries (collectively "Financial Intermediaries") for
providing personal services to shareholders and/or the maintenance of
shareholder accounts with respect to each of its Class A Shares of beneficial
interest (the "Class A Shares"), its Class B Shares of beneficial interest (the
"Class B Shares"), and its Class C Shares of beneficial interest (the "Class C
Shares") The Class A Shares, Class B Shares and Class C Shares sometimes are
referred to herein collectively as the "Shares." Each class of Shares is
offered and sold subject to a different combination of front-end sales charges,
distribution fees, service fees and contingent deferred sales charges.1 Classes
of shares, if any, subject to a front-end sales charge and a distribution and/or
service fee are referred to herein as "Front-End Classes" and the Shares of such
classes are referred to herein as "Front-End Shares." Classes of shares, if any,
subject to a contingent-deferred sales charge and a distribution and or a
service fee are referred to herein as "CDSC Classes" and Shares of such classes
are referred to herein as "CDSC Shares." Classes of shares, if any, subject to
a front-end sales charge, a contingent-deferred sales charge and a distribution
and/or service fee are referred to herein as "Combination Classes" and Shares of
such class are referred to herein as "Combination Shares."
The Fund has adopted a distribution plan (the "Distribution Plan")
pursuant to which the Fund is authorized to expend on an annual basis a portion
of its average net assets attributable to each class of Shares in connection
with financing distribution related activities. The Fund also has entered into
a distribution and services agreement (the "Distribution and Services
Agreement") with Van Kampen American Capital Distributors, Inc. (the
"Distributor"), pursuant to which the Distributor acts as agent on behalf of
the Fund in connection with the implementation of the Service Plan and acts as
the principal underwriter with respect to each class of Shares. The
Distributor may enter into selling agreements (the "Selling Agreements") with
brokers, dealers and other financial intermediaries ("Financial
Intermediaries") in order to implement the Distribution Agreement, the
Distribution Plan and this Service Plan.
The Fund hereby is authorized to pay a service fee with respect to its
Class A Shares, Class B Shares and Class C Shares to any person who sells such
Shares and provides personal services to shareholders and/or maintains
shareholder accounts in an annual amount not to exceed 0.25% of the average
annual net asset value of the Shares maintained in the Fund by such person that
were sold on or after the date on which this Service Plan was first
implemented. The aggregate annual amount of all such payments with respect to
each such class of Shares may not exceed 0.25% of the Fund's average annual net
assets attributable to the respective class of Shares sold on or after the date
on which this Service Plan was first implemented and maintained in the Fund
more than one year.
Payments pursuant to this Service Plan may be paid or prepaid on
behalf of the Fund by the Distributor acting as the Fund's agent.
____________________
1 The Fund is authorized to offer multiple classes of shares pursuant to a
Rule 18f-3 Plan adopted under the 1940 Act.
1
<PAGE> 2
Payments by the Fund to the Distributor pursuant to this Service Plan
shall not be made more often than monthly upon receipt by the Fund of a
separate written expense report with respect to each class of Shares setting
forth the expenses qualifying for such reimbursement allocated to each class of
Shares and the purposes thereof.
In the event that amounts payable hereunder with respect to a class of
Shares do not fully reimburse the Distributor for pre-paid service fees, such
unreimbursed service fee expenses will be carried forward and paid by the Fund
hereunder in future years so long as this Service Plan remains in effect,
subject to applicable laws and regulations. Reimbursements for service fee
related expenses payable hereunder with respect to a particular class of Shares
may not be used to subsidize services provided with respect to any other class
of Shares.
The Fund shall not compensate the Distributor, and neither the Fund
nor the Distributor shall compensate any Financial Intermediary, for any
service related expenses incurred with respect to a class of Shares prior to
the later of (a) the implementation of this Service Plan with respect to such
class of Shares or (b) the date that such Financial Intermediary enters into a
Selling Agreement with the Distributor.
The Fund hereby authorizes the Distributor to enter into Selling
Agreements with certain Financial Intermediaries to provide compensation to
such Financial Intermediaries for activities and services of the type referred
to in Paragraph 1 hereof. Prior to the implementation of a Selling Agreement,
such agreement shall be approved by a majority of the Board of Trustees of the
Trust and a majority of the Disinterested Trustees (within the meaning of the
1940 Act) by a vote cast in person at a meeting called for the purpose of
voting on such Selling Agreements. Such Selling Agreements shall provide that
the Financial Intermediaries shall provide the Distributor with such
information as is reasonably necessary to permit the Distributor to comply with
the reporting requirements set forth in Paragraphs 3 and 8 hereof.
Subject to the provisions of this Service Agreement, the Fund is
hereby authorized to pay a service fee to any person that is not an "affiliated
person" or "interested person" of the Fund or its "investment adviser" or
"principal underwriter" (as such terms are defined in the 1940 Act) who
provides any of the foregoing services for the Fund. Such fee shall be paid
only pursuant to written agreements between the Fund and such other person the
terms of which permit payments to such person only in accordance with the
provisions of this Service Agreement and which have the approval of a majority
of the Disinterested Trustees by vote cast separately with respect to each
class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.
The Fund and the Distributor shall prepare separate written reports
for each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Service Plan and the
agreements contemplated hereby, the purposes for which such payments were made
and such other information as the Board of Trustees or the Disinterested
Trustees may reasonably request from time to time, and the Board of Trustees
shall review such reports and other information.
This Service Plan may be terminated with respect to a class of Shares
without penalty at any time by a majority of the Disinterested Trustees or by a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund.
This Service Plan shall become effective upon its approval by (a) a
majority of the Board of Trustees and a majority of the Disinterested Trustees
by vote cast separately with respect to each class of Shares cast in person at
a meeting called for the purpose of voting on this Distribution Plan, and (b)
with respect to each class of Shares, a "majority of the outstanding voting
securities" (as such phrase is defined in the 1940 Act) of such class of Shares
voting separately as a class.
2
<PAGE> 3
This Service Plan and any agreement contemplated hereby shall continue
in effect beyond the first anniversary of its adoption by the Board of Trustees
of the Fund only so long as (a) its continuation is approved at least annually
in the manner set forth in clause (a) of paragraph 10 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.
This Service Plan may not be amended to increase materially the
maximum amounts permitted to be expended hereunder except with the approval of
a "majority of the outstanding voting securities" of the respective class of
Shares of the Fund. This Service Plan may not be amended in any material
respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform this Service Plan to changes in Rule 12b-1 under
the 1940 Act, the rules and regulations thereunder or the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. shall not be
deemed to be material amendments.
The Trustees of the Trust have adopted this Service Plan as trustees
under the Declaration of Trust of the Trust and the policies of the Trust
adopted hereby are not binding upon any of the Trustees or shareholders of the
Trust individually, but bind only the trust estate.
3
<PAGE> 1
EXHIBIT 16
COMPUTATION MEASURE FOR PERFORMANCE INFORMATION
CALCULATION OF TOTAL RETURN -- CLASS A SHARES
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
Van Kampen American Capital Global Equity Fund calculates its average
annual total return quotation for the 1, 5 and 10 year periods ended May 31,
1996, the date of the most recent balance sheet included in the registration
statement, by finding the average annual compounded rates of return over the
designated period or periods that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
n
P(1+T) =ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the designated period or periods at the end of the designated
period or periods (or fractional portion thereof)
</TABLE>
These calculations incorporate the following assumptions:
1. The maximum sales load (or other charges deducted from payments) is
deducted from the initial $1,000 payment.
2. All dividends and distributions by the Fund are reinvested at the
price stated in the prospectus on the reinvestment dates during the period,
i.e., any sales load charged upon reinvestment of dividends would be
reflected.
3. All recurring fees, if any, charged to all shareholder accounts are
included.
4. The ending redeemable value assumes a complete redemption at the
end of the designated period or periods and the deduction of all
nonrecurring charges, if any, deducted at the end of such period or
periods.
<PAGE> 2
CALCULATION OF TOTAL RETURN -- CLASS B SHARES
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
Van Kampen American Capital Global Equity Fund calculates its average
annual total return quotations for the 1, 5 and 10 year periods ended May 31,
1996, the date of the most recent balance sheet included in the registration
statement, by finding the average annual compounded rates of return over the
designated period or periods that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
n
P(1+T) =ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the designated period or periods at the end of the designated
period or periods (or fractional portion thereof)
</TABLE>
These calculations incorporate the following assumptions:
1. Assumes an initial $1,000 payment with the applicable contingent
deferred sales charge imposed upon redemption.
2. All dividends and distributions by the Fund are reinvested at the
price stated in the prospectus on the reinvestment dates during the period.
3. All recurring fees, if any, charged to all shareholder accounts are
included.
4. The ending redeemable value assumes a complete redemption at the
end of the designated period or periods and the deduction of all
nonrecurring charges, if any, deducted at the end of such period or
periods.
<PAGE> 3
CALCULATION OF TOTAL RETURN -- CLASS C SHARES
VAN KAMPEN AMERICAN CAPITAL GLOBAL EQUITY FUND
Van Kampen American Capital Global Equity Fund calculates its average
annual total return quotations for the 1, 5 and 10 year periods ended May 31,
1996, the date of the most recent balance sheet included in the registration
statement, by finding the average annual compounded rates of return over the
designated period or periods that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
n
P(1+T) =ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the designated period or periods at the end of the designated
period or periods (or fractional portion thereof)
</TABLE>
These calculations incorporate the following assumptions:
1. Assumes an initial $1,000 payment with a 1% contingent deferred
sale charge imposed if redeemed during the first year.
2. All dividends and distributions by the Fund are reinvested at the
price stated in the prospectus on the reinvestment dates during the period.
3. All recurring fees, if any, charged to all shareholder accounts are
included.
4. The ending redeemable value assumes a complete redemption at the
end of the designated period or periods and the deduction of all
nonrecurring charges, if any, deducted at the end of such period or
periods.
<PAGE> 4
CALCULATION OF TOTAL RETURN -- CLASS A SHARES
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
Van Kampen American Capital Global Government Securities Fund calculates
its average annual total return quotation for the 1, 5 and 10 year periods ended
May 31, 1996, the date of the most recent balance sheet included in the
registration statement, by finding the average annual compounded rates of return
over the designated period or periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
n
P(1+T) =ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the designated period or periods at the end of the designated
period or periods (or fractional portion thereof)
</TABLE>
These calculations incorporate the following assumptions:
1. The maximum sales load (or other charges deducted from payments) is
deducted from the initial $1,000 payment.
2. All dividends and distributions by the Fund are reinvested at the
price stated in the prospectus on the reinvestment dates during the period,
i.e., any sales load charged upon reinvestment of dividends would be
reflected.
3. All recurring fees, if any, charged to all shareholder accounts are
included.
4. The ending redeemable value assumes a complete redemption at the
end of the designated period or periods and the deduction of all
nonrecurring charges, if any, deducted at the end of such period or
periods.
<PAGE> 5
CALCULATION OF TOTAL RETURN -- CLASS B SHARES
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
Van Kampen American Capital Global Government Securities Fund calculate its
average annual total return quotations for the 1, 5 and 10 year periods ended
May 31, 1996, the date of the most recent balance sheet included in the
registration statement, by finding the average annual compounded rates of return
over the designated period or periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
n
P(1+T) =ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the designated period or periods at the end of the designated
period or periods (or fractional portion thereof)
</TABLE>
These calculations incorporate the following assumptions:
1. Assumes an initial $1,000 payment with the applicable contingent
deferred sales charge imposed upon redemption.
2. All dividends and distributions by the Fund are reinvested at the
price stated in the prospectus on the reinvestment dates during the period.
3. All recurring fees, if any, charged to all shareholder accounts are
included.
4. The ending redeemable value assumes a complete redemption at the
end of the designated period or periods and the deduction of all
nonrecurring charges, if any, deducted at the end of such period or
periods.
<PAGE> 6
CALCULATION OF TOTAL RETURN -- CLASS C SHARES
VAN KAMPEN AMERICAN CAPITAL GLOBAL GOVERNMENT SECURITIES FUND
Van Kampen American Capital Global Government Securities Fund calculates
its average annual total return quotations for the 1, 5 and 10 year periods
ended May 31, 1996, the date of the most recent balance sheet included in the
registration statement, by finding the average annual compounded rates of return
over the designated period or periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
n
P(1+T) =ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the designated period or periods at the end of the designated
period or periods (or fractional portion thereof)
</TABLE>
These calculations incorporate the following assumptions:
1. Assumes an initial $1,000 payment with a 1% contingent deferred
sale charge imposed if redeemed during the first year.
2. All dividends and distributions by the Fund are reinvested at the
price stated in the prospectus on the reinvestment dates during the period.
3. All recurring fees, if any, charged to all shareholder accounts are
included.
4. The ending redeemable value assumes a complete redemption at the
end of the designated period or periods and the deduction of all
nonrecurring charges, if any, deducted at the end of such period or
periods.
<PAGE> 7
CALCULATION OF YIELD
Van Kampen American Capital Global Government Securities Fund calculates
its yield quotations based on a 30-day period ended on the date of the most
recent balance sheet included in the registration statement, by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period, according to the following
formula:
a-b
YIELD = 2[( ____ + 1)6 - 1]
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share on the last day of the period
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ------------ -------------- ------------
<S> <C> <C>
a = $ 180,485 a = $ 471,876 a = $ 47,601
b = $ 38,777 b = $ 161,875 b = $ 16,399
c = 4,622,865 c = 12,030,839 c = 1,222,166
d = $ 8.31 d = $ 7.96 d = $ 7.91
y = 4.47% y = 3.92% y = 3.90%
</TABLE>
<PAGE> 1
EXHIBIT 17.1
INVESTMENT COMPANIES FOR WHICH
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS INC.
ACTS AS PRINCIPAL UNDERWRITER OR DEPOSITOR
SEPTEMBER 23, 1996
Van Kampen American Capital U.S. Government Trust
Van Kampen American Capital U.S. Government Fund
Van Kampen American Capital Tax Free Trust
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 Limited Term Municipal Income Fund
Van Kampen American Capital Florida Insured Tax Free Income Fund
Van Kampen American Capital New Jersey Tax Free Income Fund
Van Kampen American Capital New York Tax Free Income Fund
Van Kampen American Capital Trust
Van Kampen American Capital High Yield Fund
Van Kampen American Capital Short-Term Global Income Fund
Van Kampen American Capital Strategic Income Fund
Van Kampen American Capital Emerging Markets Income Fund
Van Kampen American Capital Equity Trust
Van Kampen American Capital Utility Fund
Van Kampen American Capital Balanced Fund
Van Kampen American Capital Pennsylvania Tax Free Income Fund
Van Kampen American Capital Tax Free Money Fund
Van Kampen American Capital Prime Rate Income Trust
Van Kampen Merritt Series Trust
Van Kampen American Capital Quality Income Portfolio
Van Kampen American Capital High Yield Portfolio
Van Kampen American Capital Growth and Income Portfolio
Van Kampen American Capital Money Market Portfolio
Van Kampen American Capital Stock Index Portfolio
Van Kampen American Capital Comstock Fund
Van Kampen American Capital Corporate Bond Fund
Van Kampen American Capital Emerging Growth Fund
Van Kampen American Capital Enterprise Fund
Van Kampen American Capital Equity Income Fund
Van Kampen American Capital Limited Maturity Government Fund
Van Kampen American Capital Global Managed Assets Fund
Van Kampen American Capital Government Securities Fund
Van Kampen American Capital Government Target Fund
Van Kampen American Capital Growth and Income Fund
Van Kampen American Capital Harbor Fund
Van Kampen American Capital High Income Corporate Bond Fund
Van Kampen American Capital Life Investment Trust
Van Kampen American Capital Common Stock Fund
Van Kampen American Capital Domestic Strategic Income Fund
Van Kampen American Capital Emerging Growth Fund
Van Kampen American Capital Global Equity Fund
Van Kampen American Capital Government Fund
Van Kampen American Capital Money Market Fund
Van Kampen American Capital Multiple Strategy Fund
Van Kampen American Capital Real Estate Securities Fund
<PAGE> 2
Van Kampen American Capital Pace Fund
Van Kampen American Capital Real Estate Securities Fund
Van Kampen American Capital Reserve Fund
Van Kampen American Capital Tax -Exempt Trust
Van Kampen American Capital High Yield Municipal Fund
Van Kampen American Capital Texas Tax Free Income Fund
Van Kampen American Capital U.S. Government Trust for Income
Van Kampen American Capital World Portfolio Series Trust
Van Kampen American Capital Global Equity Fund
Van Kampen American Capital Global Government Securities Fund
Internet Trust
Michigan Real Estate Income and Growth Trust
Van Kampen American Capital Insured Income Trust
Van Kampen American Capital Insured Income Trust (Intermediate)
Strategic Ten Trust, United States
Strategic Ten Trust, United Kingdom
Strategic Ten Trust, Hong Kong
Strategic Five Trust, United States
Van Kampen American Capital Equity Opportunity Trust
Great International Firms Trust
Gruntal & Co. Incorporated Undervalued Growth Opportunities Trust
Principal Trust Princor Emerging Growth and Treasury
International Assets Advisory Corporation Global Blue Chip Trust
Renaissance Trust
Mississippi Insured Municipal Trust
Blue Chip Opportunity and Treasury Trust
Wheat First Butcher Singer Wheat First Strategic Opportunity Unit Trust
Baby Boomer Opportunity Trust
Van Kampen American Capital Utility Income Trust
Global Energy Trust
Michigan Select Trust
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Emerging Markets Municipal Income Trust................................................................. Series 1
Insured Municipals Income Trust......................................................................... Series 1 through 378
Insured Municipals Income Trust (Discount).............................................................. Series 5 through 13
Insured Municipals Income Trust (Short Intermediate Term)............................................... Series 1 through 104
1009 Insured Municipals Income Trust (Intermediate Term)................................................ Series 5 through 88
Insured Municipals Income Trust (Limited Term).......................................................... Series 9 through 85
Insured Municipals Income Trust (Premium Bond Series)................................................... Series 1 through 3
Insured Municipals Income Trust (Intermediate Laddered Maturity)........................................ Series 1 and 2
Insured Tax Free Bond Trust............................................................................. Series 1 through 6
Insured Tax Free Bond Trust (Limited Term).............................................................. Series 1
Investors' Quality Tax-Exempt Trust..................................................................... Series 1 through 93
Investors' Quality Tax-Exempt Trust-Intermediate........................................................ Series 1
Investors' Corporate Income Trust....................................................................... Series 1 through 12
Investors' Governmental Securities Income Trust......................................................... Series 1 through 7
Van Kampen Merritt International Bond Income Trust...................................................... Series 1 through 21
Alabama Investors' Quality Tax-Exempt Trust............................................................. Series 1
Alabama Insured Municipals Income Trust................................................................. Series 1 through 9
Arizona Investors' Quality Tax-Exempt Trust............................................................. Series 1 through 16
Arizona Insured Municipals Income Trust................................................................. Series 1 through 17
Arkansas Insured Municipals Income Trust................................................................ Series 1 through 2
Arkansas Investors' Quality Tax-Exempt Trust............................................................ Series 1
California Insured Municipals Income Trust.............................................................. Series 1 through 158
California Insured Municipals Income Trust (Premium Bond Series)........................................ Series 1
California Insured Municipals Income Trust (1st Intermediate Series).................................... Series 1 through 3
California Investors' Quality Tax-Exempt Trust.......................................................... Series 1 through 21
California Insured Municipals Income Trust (Intermediate Laddered)...................................... Series 1 through 22
Colorado Insured Municipals Income Trust................................................................ Series 1 through 81
Colorado Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 18
Connecticut Insured Municipals Income Trust ............................................................ Series 1 through 31
Connecticut Investors' Quality Tax-Exempt Trust......................................................... Series 1
Delaware Investor's Quality Tax-Exempt Trust............................................................ Series 1 and 2
Florida Insured Municipal Income Trust - Intermediate................................................... Series 1 and 2
Florida Insured Municipals Income Trust................................................................. Series 1 through 107
Florida Investors' Quality Tax-Exempt Trust............................................................. Series 1 and 2
Florida Insured Municipals Income Trust (Intermediate Laddered)......................................... Series 1 through 13
Georgia Insured Municipals Income Trust................................................................. Series 1 through 80
Georgia Investors' Quality Tax-Exempt Trust............................................................. Series 1 through 16
Hawaii Investors' Quality Tax-Exempt Trust.............................................................. Series 1
Investors' Quality Municipals Trust (AMT)............................................................... Series 1 through 9
Kansas Investors'Quality Tax-Exempt Trust .............................................................. Series 1 through 11
Kentucky Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 58
Louisiana Insured Municipals Income Trust............................................................... Series 1 through 17
Maine Investor's Quality Tax-Exempt Trust............................................................... Series 1
Maryland Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 79
Massachusetts Insured Municipals Income Trust........................................................... Series 1 through 34
Massachusetts Insured Municipals Income Trust (Premium Bond Series)..................................... Series 1
Michigan Financial Institutions Trust................................................................... Series 1
Michigan Insured Municipals Income Trust................................................................ Series 1 through 140
Michigan Insured Municipals Income Trust (Premium Bond Series).......................................... Series 1
Michigan Insured Municipals Income Trust (1st Intermediate Series)...................................... Series 1 through 3
Michigan Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 30
Michigan Select Trust................................................................................... Series 1
Minnesota Insured Municipals Income Trust............................................................... Series 1 through 59
Minnesota Investors' Quality Tax-Exempt Trust........................................................... Series 1 through 21
Mississippi Insured Municipals Income Trust............................................................. Series 1
Missouri Insured Municipals Income Trust................................................................ Series 1 through 98
Missouri Insured Municipals Income Trust (Premium Bond Series).......................................... Series 1
Missouri Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 15
Missouri Insured Municipals Income Trust
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
(Intermediate Laddered Maturity)....................................................................... Series 1
Nebraska Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 9
New Mexico Insured Municipals Income Trust.............................................................. Series 1 through 18
New Jersey Insured Municipals Income Trust.............................................................. Series 1 through 114
New Jersey Investors' Quality Tax-Exempt Trust.......................................................... Series 1 through 22
New Jersey Insured Municipals Income Trust
(Intermediate Laddered Maturity)....................................................................... Series 1 and 4
New York Insured Municipals Income Trust-Intermediate................................................... Series 1 through 6
New York Insured Municipals Income Trust (Limited Term)................................................. Series 1
New York Insured Municipals Income Trust................................................................ Series 1 through 136
New York Insured Tax-Free Bond Trust.................................................................... Series 1
New York Insured Municipals Income Trust
(Intermediate Laddered Maturity)....................................................................... Series 1 through 17
New York Investors' Quality Tax-Exempt Trust............................................................ Series 1
North Carolina Investors' Quality Tax-Exempt Trust...................................................... Series 1 through 88
Ohio Insured Municipals Income Trust.................................................................... Series 1 through 104
Ohio Insured Municipals Income Trust (Premium Bond Series).............................................. Series 1 and 2
Ohio Insured Municipals Income Trust (Intermediate Term)................................................ Series 1
Ohio Insured Municipals Income Trust
(Intermediate Laddered Maturity)....................................................................... Series 3 through 6
Ohio Investors' Quality Tax-Exempt Trust................................................................ Series 1 through 16
Oklahoma Insured Municipal Income Trust................................................................. Series 1 through 17
Oregon Investors' Quality Tax-Exempt Trust.............................................................. Series 1 through 53
Pennsylvania Insured Municipals Income Trust - Intermediate............................................. Series 1 through 6
Pennsylvania Insured Municipals Income Trust............................................................ Series 1 through 223
Pennsylvania Insured Municipals Income Trust (Premium Bond Series)...................................... Series 1
Pennsylvania Investors' Quality Tax-Exempt Trust........................................................ Series 1 through 14
South Carolina Investors' Quality Tax-Exempt Trust...................................................... Series 1 through 84
Stepstone Growth Equity and Treasury Securities Trust................................................... Series 1
Tennessee Insured Municipals Income Trust............................................................... Series 1-3 and 5-37
Texas Insured Municipals Income Trust................................................................... Series 1 through 40
Texas Insured Municipal Income Trust (Intermediate Ladder).............................................. Series 1
Virginia Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 73
Van Kampen American Capital Equity Opportunity Trust.................................................... Series 1 through 41
Van Kampen American Capital Utility Income Trust........................................................ Series 1 through 8
Van Kampen American Capital Insured Income Trust........................................................ Series 1 through 61
Van Kampen American Capital Insured Income Trust (Intermediate Term).................................... Series 1 through 60
Van Kampen Merritt Select Equity Trust.................................................................. Series 1
Van Kampen Merritt Select Equity and Treasury Trust..................................................... Series 1
Washington Insured Municipals Income Trust.............................................................. Series 1
West Virginia Insured Municipals Income Trust........................................................... Series 1 through 7
Principal Financial Institutions Trust.................................................................. Series 1
Internet Trust.......................................................................................... Series 1 through 3
Michigan Real Estate Income and Growth Trust............................................................ Series 1
Strategic Ten Trust, United States...................................................................... Series 1 through 10
Strategic Ten Trust, United Kingdom..................................................................... Series 1 through 10
Strategic Ten Trust, Hong Kong ......................................................................... Series 1 through 10
Strategic Five Trust, United States..................................................................... Series 1 through 4
Equity Opportunity Trust................................................................................ Series 1 through 42
Great International Firms Trust......................................................................... Series 1
Undervalued Growth Opportunities Trust.................................................................. Series 1
Emerging Growth and Treasury............................................................................ Series 1
Global Blue Chip Trust.................................................................................. Series 1
Renaissance Trust....................................................................................... Series 1
Blue Chip Opportunity and Treasury Trust................................................................ Series 1 through 4
Wheat First Strategic Opportunity Unit Trust............................................................ Series 1
Baby Boomer Opportunity Trust........................................................................... Series 1
Global Energy Trust..................................................................................... Series 1 through 2
</TABLE>
<PAGE> 1
EXHIBIT 17.2
OFFICERS
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ----------------------- ---------------------------------- --------------------
<S> <C> <C>
Don G. Powell Chairman & Chief Executive Officer Houston, TX
William R. Molinari President & Chief Operating Oakbrook Terrace, IL
Officer
Ronald A. Nyberg Executive Vice President & General Oakbrook Terrace, IL
Counsel
William R. Rybak Executive Vice President & Chief Oakbrook Terrace, IL
Financial Officer
Paul R. Wolkenberg Executive Vice President Houston, TX
Robert A. Broman Sr. Vice President Oakbrook Terrace, IL
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
Keith K. Furlong Sr. Vice President Oakbrook Terrace, IL
Douglas B. Gehrman Sr. Vice President Houston, TX
Richard D. Humphrey Sr. Vice President Houston, TX
Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Secretary
Debra A. Nichols Sr. Vice President Houston, TX
Charles G. Millington Sr. Vice President & Treasurer Oakbrook Terrace, IL
Robert S. West Sr. Vice President Oakbrook Terrace, IL
John H. Zimmermann, III Sr. Vice President Oakbrook Terrace, IL
Timothy K. Brown 1st Vice President Laguna Niguel, CA
James S. Fosdick 1st Vice President Oakbrook Terrace, IL
Edward F. Lynch 1st Vice President Oakbrook Terrace, IL
Dominic C. Martellaro 1st Vice President San Francisco, CA
Mark R. McClure 1st Vice President Oakbrook Terrace, IL
Mark T. McGannon 1st Vice President Oakbrook Terrace, IL
James J. Ryan 1st Vice President Oakbrook Terrace, IL
Michael L. Stallard 1st Vice President Oakbrook Terrace, IL
David M. Swanson 1st Vice President Oakbrook Terrace, IL
Patrick J. Woelfel 1st Vice President Oakbrook Terrace, IL
Laurence J. Althoff Vice President & Controller Oakbrook Terrace, IL
James K. Ambrosio Vice President Massapequa, NY
Patricia A. Bettlach Vice President St. Louis, MO
Carol S. Biegel Vice President Oakbrook Terrace, IL
James J. Boyne Vice President and Assistant Oakbrook Terrace, IL
Secretary
Linda Mae Brown Vice President Oakbrook Terrace, IL
William F. Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Thomas M. Byron Vice President Oakbrook Terrace, IL
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
Glenn M. Cackovic Vice President Laguna Niguel, CA
Joseph N. Caggiano Vice President New York, NY
Richard J. Charlino Vice President Oakbrook Terrace, IL
Eleanor M. Cloud Vice President Oakbrook Terrace, IL
Dominick Cogliandro Vice President & Asst. Treasurer New York, NY
Michael Colston Vice President Louisville, KY
Suzanne Cummings Vice President Houston, TX
Tracey M. DeLusant Vice President Lynbrook, NY
David B. Dibo Vice President Oakbrook Terrace, IL
Howard A. Doss Vice President Tampa, FL
Charles Edward Fisher Vice President Oakbrook Terrace, IL
William J. Fow Vice President Redding, CT
Nicholas J. Foxhaven Vice President Denver, CO
Charles Friday Vice President Gibsonia, PA
Nori L. Gabert Vice President, Assoc. General Houston, TX
Counsel & Asst. Secretary
Erich P. Gerth Vice President Dallas, TX
Daniel Hamilton Vice President Houston, TX
John A. Hanhauser Vice President Philadelphia, PA
Eric J. Hargens Vice President Orlando, FL
Susan J. Hill Vice President Oakbrook Terrace, IL
J. Christopher Jackson Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
Lowell Jackson Vice President Norcross, GA
Dana R. Klein Vice President Oakbrook Terrace, IL
Ann Marie Klingenhagen Vice President Oakbrook Terrace, IL
Frederick Kohly Vice President Miami, FL
David R. Kowalski Vice President & Director Oakbrook Terrace, IL
of Compliance
S. William Lehew III Vice President Charlotte, NC
Robert C. Lodge Vice President Philadelphia, PA
Walter Lynn Vice President Flower Mound, TX
Michele L. Manley Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Carl Mayfield Vice President Lakewood, CO
Ruth L. McKeel Vice President Oakbrook Terrace, IL
John Mills Vice President Kenner, LA
Robert Muller, Jr. Vice President Houston, TX
Ronald E. Pratt Vice President Marietta, GA
Craig S. Prichard Vice President Oakbrook Terrace, IL
Walter E. Rein Vice President Oakbrook Terrace, IL
Michael W. Rohr Vice President Oakbrook Terrace, IL
James B. Ross Vice President Oakbrook Terrace, IL
Heather R. Sabo Vice President Richmond, VA
Stephanie Scarlata Vice President Lynbrook, NY
Lisa A. Schomer Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Jeffrey C. Shirk Vice President Boston, MA
Kimberly M. Spangler Vice President Atlanta, GA
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
William C. Strafford Vice President Granger, IN
David A. Tabone Vice President Phoenix, AZ
James C. Taylor Vice President Oakbrook Terrace, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Jeff Warland Vice President Oakbrook Terrace, IL
Sandra A. Waterworth Vice President and Assistant Oakbrook Terrace, IL
Secretary
Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
James R. Yount Vice President Seattle, WA
Patrick M. Zacchea Vice President New York, NY
Richard P. Zgonina Vice President Oakbrook Terrace, IL
Brian P. Arcara Asst. Vice President Philadelphia, PA
Christopher M. Bisaillon Asst. Vice President Oakbrook Terrace, IL
Eric J. Bridges Asst. Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Robert C. Brooks Asst. Vice President Manchester, MA
Richard B. Callaghan Asst. Vice President Oakbrook Terrace, IL
Stephen M. Cutka Asst. Vice President Oakbrook Terrace, IL
Nicholas Dalmaso Asst. Vice President & Asst. Oakbrook Terrace, IL
Secretary
Gerald A. Davis Asst. Vice President Oakbrook Terrace, IL
Daniel R. DeJong Asst. Vice President Oakbrook Terrace, IL
Jerome M. Dybzinski Asst. Vice President Oakbrook Terrace, IL
Melissa B. Epstein Asst. Vice President Houston, TX
Huey P. Falgout, Jr. Asst. Vice President & Asst. Secretary Houston, TX
Walter C. Gray Asst. Vice President Oakbrook Terrace, IL
Joseph Hays Asst. Vice President Philadelphia, PA
Scott F. Heyer Asst. Vice President Tampa, FL
Jeffrey S. Kinney Asst. Vice President Oakbrook Terrace, IL
Hunter Knapp Asst. Vice President Laguna, CA
Michael B. Kollins Asst. Vice President Oakbrook Terrace, IL
Natalie N. Hurdle Asst. Vice President New York, NY
Laurie L. Jones Asst. Vice President Houston, TX
Patricia D. Lathrop Asst. Vice President Tampa, FL
Tony E. Leal Asst. Vice President Houston, TX
Ivan R. Lowe Asst. Vice President Houston, TX
Linda S. MacAyeal Asst. Vice President Oakbrook Terrace, IL
Ann Therese McGrath Asst. Vice President Laguna, CA
Stuart R. Moehlman Asst. Vice President Houston, TX
Peggy E. Moro Asst. Vice President Oakbrook Terrace, IL
Gregory S. Parker Asst. Vice President Houston, TX
David B. Partain Asst. Vice President Oakbrook Terrace, IL
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Michael Quinn Asst. Vice President Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
Jeffrey S. Rourke Asst. Vice President Oakbrook Terrace, IL
Thomas J. Sauerborn Asst. Vice President New York, NY
Bruce Saxon Asst. Vice President Oakbrook Terrace, IL
Andrew J. Scherer Asst. Vice President Oakbrook Terrace, IL
Traci T. Sorensen Asst. Vice President Oakbrook Terrace, IL
Gary Steele Asst. Vice President Philadelphia, PA
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Robert A. Watson Asst. Vice President Oakbrook Terrace, IL
Kathleen M. Wennerstrum Asst. Vice President Oakbrook Terrace, IL
Barbara A. Withers Asst. Vice President Oakbrook Terrace, IL
David C. Goodwin Asst. Secretary Oakbrook Terrace, IL
Gina M. Scumaci Asst. Secretary Oakbrook Terrace, IL
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Elizabeth M. Brown Officer Houston, TX
John Browning Officer Oakbrook Terrace, IL
Leticia George Officer Houston, TX
Gina Grippo Officer Houston, TX
Sarah Kessler Officer Oakbrook Terrace, IL
Francis McGarvey Officer Houston, TX
William D. McLaughlin Officer Houston, TX
Becky Newman Officer Houston, TX
Rosemary Pretty Officer Houston, TX
Colette Saucedo Officer Houston, TX
Frederick Shepherd Officer Houston, TX
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX
</TABLE>
<PAGE> 1
EXHIBIT 18
MULTI-CLASS PLAN
FOR
VAN KAMPEN AMERICAN CAPITAL FAMILY OF FUNDS
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 each of the
Funds in accordance with the terms, procedures and conditions set forth below.
A majority of the Trustees of the Funds, including a majority of the Trustees
who are not interested persons of the Funds within the meaning of the Act,
found this Multi-Class Plan, including the expense allocations, to be in the
best interest of each Fund and each Class of Shares of each Fund and adopted
this Plan on January 26, 1996.
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 acquisition during
which Shares are assessed a CDSC upon redemption.
4. Class - a class of Shares of a 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. 1.
7. Class C Shares - shall have the meaning ascribed in Section B. 1.
8. Distribution Expenses - expenses incurred in activities which are
primarily intended to result in the distribution and sale of
Shares as defined in a Plan of Distribution and/or board
resolutions.
9. Distribution Fee - a fee paid by a Fund to the Distributor in
reimbursement of Distribution Expenses.
10. Distributor - Van Kampen American Capital Distributors, Inc.
11. Fund - an investment company listed on Exhibit A hereto and each
series thereof.
12. Money Market Fund - Van Kampen American Capital Reserve Fund or
Van Kampen American Capital Tax Free Money Market Fund.
<PAGE> 2
13. Plan of Distribution - Any plan adopted under Rule 12b-1 under the
Act with respect to payment of a Distribution Fee.
14. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders and/or
the maintenance of shareholder accounts.
15. Share - a share of beneficial interest in a Fund.
16. Trustees - the trustees of a Fund.
B. Classes. Each Fund may offer three Classes as follows:
1. Class A Shares. Class A Shares shall be 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 Funds' prospectus,
which may be reduced or eliminated for Money Market Funds,
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 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. Class A Shares shall be subject to ongoing Service
Fees approved from time to time by the Trustees and set forth in
the Funds' prospectus. Although shares of Van Kampen American
Capital Tax Free Money Market Fund are not designated as "Class A"
they are substantially similar to Class A Shares as defined herein
and shall be treated as Class A shares for the purposes of this
Plan.
2. Class B Shares. Class B Shares shall be (1) offered at net asset
value, (2) subject to a CDSC for the CDSC Period set forth in
Section D. 1, (3) subject to ongoing Service Fees and
Distribution Fees approved from time to time by the Trustees and
set forth in the Funds' prospectus and (4) converted to Class A
Shares three to ten years after the calendar month in which the
shareholder's order to purchase was accepted, which number of
years shall be as approved from time to time by the Trustees and
set forth in the respective Fund's prospectus.
3. Class C Shares. Class C Shares shall be (1) offered at net
asset value, (2) subject to a CDSC for the CDSC Period set forth
in Section D. 1. , (3) subject to ongoing Service Fees and
Distribution Fees approved from time to time by the Trustees and
set forth in the Funds' prospectus and (4) converted to Class A
Shares eight to fifteen years after the calendar month in which
the shareholder's order to purchase was accepted, which number of
years shall be as approved from time to time by the Trustees and
set forth in the respective Fund's prospectus.
<PAGE> 3
C. Rights and Privileges of Classes. Each Class of each Fund will
represent an interest in the same portfolio of investments of that
Fund and will have identical voting, dividend, liquidation and other
rights, preferences, powers, restrictions, limitations,
qualifications, designations and terms and conditions except as
described otherwise 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 for 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 approved 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 (a) the CDSC rate is less in the last year of the
CDSC Period than in the first and (b) 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 a 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 toa CDSC shall be as determined by the Distributor in
accordance with the provisions of Rule 6c-10 under 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 under 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
a 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
Distribution Expenses to the extent of such commissions and
Distribution Expenses eligible for reimbursement and approved by
the Trustees.
E. Service and Distribution Fees. Class A Shares shall be subject to a
Service Fee and Class B and Class C Shares shall be subject to a
Service Fee and a Distribution Fee. The Service Fee applicable to any
class shall not exceed 0.25% per annum of the average daily net assets
of the Class and the Distribution Fee shall not exceed 0.75% per annum
of the average daily net assets of the Class. All other terms and
conditions with respect to Service Fees and Distribution Fees shall be
governed by the plans adopted by the Fund with respect to such fees
and Rule 12b-1 of the Act.
F. Conversion. Shares purchased through the reinvestment of dividends
and distributions paid on Shares subject to conversion shall be
treated as if held in a separate sub-account . Each time any Shares
in a Shareholder's account (other than Shares held in the sub-
account) convert to Class A Shares, a proportionate number of Shares
held in the sub-account shall also convert to Class A Shares. All
conversions shall be effected on the basis of the relative net asset
values of the two Classes without the imposition of any sales load or
other charge. So long as any Class of Shares converts into Class A
Shares, the Distributor shall waive or reimburse each 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 a Plan of Distribution, applicable to the Class A
Shares are not higher than the expenses, including payments authorized
under the Plan of Distribution, applicable to the class of 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 each
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 between
Classes in different amounts if they are actually incurred in
different amounts by the Classes or the Classes receive services
of a different kind or to a different degree than other Classes.
2. Distribution Expenses. Distribution Expenses actually
attributable to the sale of all Classes shall be allocated to each
Class based upon the ratio which sales of each Class bears to the
sales of all Shares of the Fund. For this purpose, Shares issued
upon reinvestment of dividends or distributions, upon conversion
from Class B Shares or Class C Shares to Class A Shares or upon
stock splits will not be considered sales.
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 on the basis of the net
asset value of that Class in relation to the net asset value of
the Fund.
<PAGE> 5
30. 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
Class or all Classes.
H. Exchange Privilege. Exchanges of Shares shall be permitted between
Funds as follows.
1. General. Shares of one Fund may be exchanged for Shares of the
same Class of another Fund at net asset value and without sales
charge, provided that
a. The Distributor may specify that certain Funds may not be
exchanged within a designated period, which shall not exceed
90 days, after acquisition without prior Distributor approval.
b. Class A Shares of a Money Market Fund that were not acquired
in exchange for Class B or Class C Shares of a Fund may be
exchanged for Class A Shares of another Fund only upon payment
of the excess, if any, of the sales charge rate applicable to
the Shares being acquired over the sales charge rate
previously paid.
c. Shares of a Money Market Fund acquired through an exchange of
Class B Shares or Class C Shares may be exchanged only for the
same Class of another Fund as the Class they were acquired in
exchange for or any Class into which those shares were
converted.
2. Target Fund. Shares of Van Kampen American Capital Government
Target Fund may be exchanged for Class A Shares of a Fund.
3. CDSC Computation. The acquired Shares will remain subject to the
CDSC rate schedule and CDSC Period for the original Fund upon the
redemption of the Shares from the Van Kampen American Capital
complex of funds. For purposes of computing the CDSC payable on a
disposition of the new Shares, the holding period for the
original Shares shall be added to the holding period of the new
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
d. If any amendment is proposed to the plan under which Service
Fees are paid with respect to Class A Shares of a Fund that
would increase materially the amount to be borne by Class A
Shares under that plan, then no Class B Shares or Class C
Shares shall convert into Class A Shares of that Fund until
the holders of Class B Shares and Class C Shares of that Fund
have also approved the proposed amendment.
<PAGE> 6
e. If the holders of either the Class B Shares and/or Class C
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 voting against the amendment shall convert into
another Class identical in all material respects to Class A
Shares of the Fund as constituted prior to the 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 a Fund with respect to each Class, to
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
the same amount, except 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 to the Trustees of
each Fund quarterly and annual statements concerning distribution and
Shareholder servicing expenditures complying 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 such information as the
Trustees may from time to time deem to be reasonably necessary to
evaluate this Plan.
L. Amendment. Any material amendment to this Plan shall be approved by
the affirmative vote of a majority of the Trustees of a Fund,
including the affirmative vote of the trustees of the Fund
who are not interested persons of the Fund, except that any amendment
that increases the CDSC rate schedule or CDSC Period must also be
approved by the affirmative vote of a majority of the Shares of the
affected Class. The Distributor shall provide the Trustees such
information as may be reasonably necessary to evaluate any amendment
to this Plan.
<PAGE> 7
EXHIBIT A
VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
VAN KAMPEN AMERICAN CAPITAL EMERGING GROWTH FUND
VAN KAMPEN AMERICAN CAPITAL ENTERPRISE FUND
VAN KAMPEN AMERICAN CAPITAL EQUITY INCOME FUND
VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
VAN KAMPEN AMERICAN CAPITAL GOVERNMENT SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL GROWTH AND INCOME FUND
VAN KAMPEN AMERICAN CAPITAL HARBOR FUND
VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND
VAN KAMPEN AMERICAN CAPITAL LIMITED MATURITY GOVERNMENT FUND
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
VAN KAMPEN AMERICAN CAPITAL PACE FUND
VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL RESERVE FUND
VAN KAMPEN AMERICAN CAPITAL TAX-EXEMPT TRUST
VAN KAMPEN AMERICAN CAPITAL TEXAS TAX FREE INCOME FUND
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST
VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST
VAN KAMPEN AMERICAN CAPITAL TRUST
<PAGE> 1
POWER OF ATTORNEY EXHIBIT 19
The undersigned, being officers and trustees of each of the Van Kampen
American Capital Open-End Trusts, as indicated on Schedule 1 attached hereto
and incorporated by reference, each a Delaware business trust, except for the
Van Kampen American Capital Pennsylvania Tax Free Income Fund, being a
Pennsylvania business trust (individually, a "Trust"), do hereby, in the
capacities shown below, individually appoint Dennis J. McDonnell and Ronald A.
Nyberg, each of Oakbrook Terrace, Illinois, and each of them, as the 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 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: March 1, 1996
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/ s / Fernando Sisto, Sc.D Trustee
- ----------------------------------------------
Fernando Sisto, Sc.D.
/ s / Donald C. Miller Trustee
- ----------------------------------------------
Donald C. Miller
/ s / Don G. Powell Trustee
- ----------------------------------------------
Don G. Powell
/ s / Dennis J. McDonnell Trustee
- ----------------------------------------------
Dennis J. McDonnell
/ s / J. Miles Branagan Trustee
- ----------------------------------------------
J. Miles Branagan
/ s / Linda Hutton Heagy Trustee
- ----------------------------------------------
Linda Hutton Heagy
/ s / Roger Hilsman, Ph.D. Trustee
- ----------------------------------------------
Roger Hilsman, Ph.D.
/ s / William Stewart Woodside Trustee
- ----------------------------------------------
William Stewart Woodside
/ s / R. Craig Kennedy Trustee
- ----------------------------------------------
R. Craig Kennedy
/ s / Jack E. Nelson Trustee
- ----------------------------------------------
Jack E. Nelson
/ s / Wayne W. Whalen Trustee
- ----------------------------------------------
Wayne W. Whalen
/ s / Jerome L. Robinson Trustee
- ----------------------------------------------
Jerome L. Robinson
/ s / Edward C. Wood III Vice President and
- ----------------------------------------------
Edward C. Wood III Chief Financial Officer
</TABLE>
<PAGE> 2
SCHEDULE 1
1. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST
2. VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST
3. VAN KAMPEN AMERICAN CAPITAL TRUST
4. VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST
5. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
6. VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
7. VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
8. VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
9. VAN KAMPEN AMERICAN CAPITAL EMERGING GROWTH FUND
10. VAN KAMPEN AMERICAN CAPITAL ENTERPRISE FUND
11. VAN KAMPEN AMERICAN CAPITAL EQUITY INCOME FUND
12. VAN KAMPEN AMERICAN CAPITAL LIMITED MATURITY GOVERNMENT FUND
13. VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
14. VAN KAMPEN AMERICAN CAPITAL GOVERNMENT SECURITIES FUND
15. VAN KAMPEN AMERICAN CAPITAL GOVERNMENT TARGET FUND
16. VAN KAMPEN AMERICAN CAPITAL GROWTH AND INCOME FUND
17. VAN KAMPEN AMERICAN CAPITAL HARBOR FUND
18. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND
19. VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST
20. VAN KAMPEN AMERICAN CAPITAL PACE FUND
21. VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND
22. VAN KAMPEN AMERICAN CAPITAL RESERVE FUND
23. VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
24. VAN KAMPEN AMERICAN CAPITAL TAX-EXEMPT TRUST
25. VAN KAMPEN AMERICAN CAPITAL TEXAS TAX FREE INCOME FUND
26. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
27. VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 011
<NAME> GLOBAL EQUITY CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 180,003,626
<INVESTMENTS-AT-VALUE> 206,146,954
<RECEIVABLES> 4,137,114
<ASSETS-OTHER> 1,808,230
<OTHER-ITEMS-ASSETS> 944,017
<TOTAL-ASSETS> 213,036,315
<PAYABLE-FOR-SECURITIES> 3,282,645
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,071,804
<TOTAL-LIABILITIES> 4,354,449
<SENIOR-EQUITY> 151,612
<PAID-IN-CAPITAL-COMMON> 175,275,338
<SHARES-COMMON-STOCK> 7,632,191
<SHARES-COMMON-PRIOR> 5,094,280
<ACCUMULATED-NII-CURRENT> (297,886)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,810,832
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,741,970
<NET-ASSETS> 208,681,866
<DIVIDEND-INCOME> 2,642,255
<INTEREST-INCOME> 411,302
<OTHER-INCOME> 0
<EXPENSES-NET> (4,205,615)
<NET-INVESTMENT-INCOME> (1,152,058)
<REALIZED-GAINS-CURRENT> 14,354,171
<APPREC-INCREASE-CURRENT> 18,388,865
<NET-CHANGE-FROM-OPS> 31,590,978
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,775,643)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,966,925
<NUMBER-OF-SHARES-REDEEMED> (2,565,199)
<SHARES-REINVESTED> 136,185
<NET-CHANGE-IN-ASSETS> 77,316,853
<ACCUMULATED-NII-PRIOR> (69,365)
<ACCUMULATED-GAINS-PRIOR> (3,732,923)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,311,980)
<GROSS-ADVISORY-FEES> 1,605,816
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,210,815
<AVERAGE-NET-ASSETS> 77,558,810
<PER-SHARE-NAV-BEGIN> 11.79
<PER-SHARE-NII> (.040)
<PER-SHARE-GAIN-APPREC> 2.561
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.331)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.98
<EXPENSE-RATIO> 2.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 012
<NAME> GLOBAL EQUITY CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6,857,163
<SHARES-COMMON-PRIOR> 5,624,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,920,148)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,370,872
<NUMBER-OF-SHARES-REDEEMED> (1,288,844)
<SHARES-REINVESTED> 150,464
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,438,472)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 75,619,492
<PER-SHARE-NAV-BEGIN> 11.50
<PER-SHARE-NII> (.140)
<PER-SHARE-GAIN-APPREC> 2.501
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.331)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.53
<EXPENSE-RATIO> 2.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 013
<NAME> GLOBAL EQUITY CLASS C
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 671,872
<SHARES-COMMON-PRIOR> 571,734
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (187,369)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 268,622
<NUMBER-OF-SHARES-REDEEMED> (181,673)
<SHARES-REINVESTED> 13,189
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (155,182)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 7,403,301
<PER-SHARE-NAV-BEGIN> 11.61
<PER-SHARE-NII> (.140)
<PER-SHARE-GAIN-APPREC> 2.521
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.331)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.66
<EXPENSE-RATIO> 3.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 021
<NAME> GLOBAL GOVERNMENT CLASS A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 146,840,525
<INVESTMENTS-AT-VALUE> 145,144,964
<RECEIVABLES> 26,909,787
<ASSETS-OTHER> 2,945,234
<OTHER-ITEMS-ASSETS> 56,385
<TOTAL-ASSETS> 175,056,370
<PAYABLE-FOR-SECURITIES> 25,510,859
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,972,772
<TOTAL-LIABILITIES> 31,483,631
<SENIOR-EQUITY> 180,588
<PAID-IN-CAPITAL-COMMON> 176,425,841
<SHARES-COMMON-STOCK> 4,595,368
<SHARES-COMMON-PRIOR> 5,806,674
<ACCUMULATED-NII-CURRENT> (355,254)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (29,171,823)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,506,613)
<NET-ASSETS> 143,572,739
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,679,934
<OTHER-INCOME> 0
<EXPENSES-NET> (3,472,820)
<NET-INVESTMENT-INCOME> 10,207,114
<REALIZED-GAINS-CURRENT> 543,929
<APPREC-INCREASE-CURRENT> (6,367,840)
<NET-CHANGE-FROM-OPS> 4,383,203
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,860,078)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 863,668
<NUMBER-OF-SHARES-REDEEMED> (2,290,621)
<SHARES-REINVESTED> 215,647
<NET-CHANGE-IN-ASSETS> (46,206,877)
<ACCUMULATED-NII-PRIOR> 186,959
<ACCUMULATED-GAINS-PRIOR> (30,285,888)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,254,494
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,478,020
<AVERAGE-NET-ASSETS> 43,068,161
<PER-SHARE-NAV-BEGIN> 8.24
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> (.328)
<PER-SHARE-DIVIDEND> (.552)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.92
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 022
<NAME> GLOBAL GOVERNMENT SECURITIES - CLASS B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 12,261,711
<SHARES-COMMON-PRIOR> 14,898,886
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,497,549)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,568,183
<NUMBER-OF-SHARES-REDEEMED> (4,655,689)
<SHARES-REINVESTED> 450,331
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 110,055,837
<PER-SHARE-NAV-BEGIN> 8.28
<PER-SHARE-NII> .49
<PER-SHARE-GAIN-APPREC> (.318)
<PER-SHARE-DIVIDEND> (.492)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.96
<EXPENSE-RATIO> 2.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000869760
<NAME> VKAC WORLD PORTFOLIO SERIES
<SERIES>
<NUMBER> 023
<NAME> GLOBAL GOVERNMENT SECURITIES - CLASS C
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,201,697
<SHARES-COMMON-PRIOR> 2,254,823
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (822,565)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 271,697
<NUMBER-OF-SHARES-REDEEMED> (1,382,547)
<SHARES-REINVESTED> 57,724
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 14,141,913
<PER-SHARE-NAV-BEGIN> 8.22
<PER-SHARE-NII> .46
<PER-SHARE-GAIN-APPREC> (.278)
<PER-SHARE-DIVIDEND> (.492)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.91
<EXPENSE-RATIO> 2.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
