<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1996
REGISTRATION NO. 33-74024
NO. 811-8286
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. 4 /X/
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 6 /X/
</TABLE>
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
(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, IL 60181
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------------
COPIES TO:
WAYNE W. WHALEN, ESQ.
THOMAS A. HALE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
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 April 29, 1996 pursuant to paragraph (b) of Rule 485
/ / 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 case 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 DECEMBER 31, 1996 ON OR ABOUT MARCH 1, 1997.
- --------------------------------------------------------------------------------
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<PAGE> 2
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM PROSPECTUS CAPTION
- ------------------------------------------------- -------------------------------------------
<S> <C> <C>
PART A
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 Fund; Investment Objectives and
Policies; Risk Factors; Investment
Practices; Description of Shares of the
Fund
5. Management of the Fund..................... The Fund; Investment Practices; Investment
Advisory Services; Inside Back Cover
6. Capital Stock and Other Securities......... The Fund; Alternative Sales Arrangements;
Shareholder Services; Distribution Plans;
Redemption of Shares; Description of
Shares of the Fund; Distributions from
the Fund; Tax Status; Inside Back Cover
7. Purchase of Securities Being Offered....... Alternative Sales Arrangements; Purchase of
Shares; Shareholder Services;
Distribution Plans
8. Redemption or Repurchase................... Shareholder Services; Redemption of Shares
9. Pending Legal Proceedings.................. Inapplicable
<CAPTION>
PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------------------------------------------------- -------------------------------------------
<S> <C> <C>
10. Cover Page................................. Cover Page
11. Table of Contents.......................... Table of Contents
12. General Information and History............ General Information
13. Investment Objective and Policies.......... Investment Policies and Techniques;
Options, Futures Contracts and Options on
Futures Contracts; Repurchase Agreements;
Loans of Portfolio Securities; Investment
Restrictions; Portfolio Turnover
14. Management of the Fund..................... Investment Advisory Agreements; General
Information; Trustees and Officers
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 Plans; Transfer Agent; Other
Information; Portfolio Transactions and
Brokerage
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; 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
</TABLE>
PART C
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 MANAGED ASSETS FUND
- --------------------------------------------------------------------------------
Van Kampen American Capital Global Managed Assets Fund (the "Fund") is a
mutual fund seeking total return through a managed balance of foreign and
domestic equity and debt securities. There can be no assurance that the Fund
will achieve its investment objective.
The Fund's investment adviser is Van Kampen American Capital Asset
Management, Inc. John Govett & Co. Limited provides advisory services to the
Adviser of the Fund with respect to foreign securities. 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 April 29, 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 APRIL 29, 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 Fund......................................................... 9
Investment Objective and Policies................................ 9
Risk Factors..................................................... 13
Investment Practices............................................. 14
Investment Advisory Services..................................... 22
Alternative Sales Arrangements................................... 24
Purchase of Shares............................................... 28
Shareholder Services............................................. 37
Redemption of Shares............................................. 42
Distribution Plans............................................... 45
Distributions from the Fund...................................... 47
Tax Status....................................................... 48
Fund Performance................................................. 50
Description of Shares of the Fund................................ 51
Additional Information........................................... 52
</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
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PROSPECTUS SUMMARY
- ------------------------------------------------------------------------------
THE FUND. Van Kampen American Capital Global Managed Assets Fund (the "Fund") is
a non-diversified, 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 Fund's investment objective is to seek total return
through a managed balance of foreign and domestic equity and debt securities.
There is, however, no assurance that the Fund will be successful in achieving
its objective. See "Investment Objective and Policies."
INVESTMENT POLICY. The Fund may, from time to time, be substantially invested in
foreign or domestic equity or debt securities based upon the investment
adviser's evaluation of economic and market trends and anticipated relative
return available from a particular type of security. The Fund will maintain at
least 25% of its total assets in debt securities.
The Fund may sell (write) and purchase call and put options. The Fund may
purchase and sell futures contracts and options on such contracts only for bona
fide hedging purposes. The Fund may purchase or sell debt securities and
currencies on a forward commitment basis and may lend portfolio securities. The
use of options, futures contracts and options on futures contracts may include
additional risks. See "Investment Practices -- Futures Contracts and Options on
Futures Contracts."
RISK FACTORS. Investments in foreign securities involve certain risks not
ordinarily associated 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. See "Risk Factors."
INVESTMENT RESULTS. The investment results of the Fund since its inception 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. See "Alternative
Sales Arrangements."
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), reduced on investments of $100,000 or more. Investments of
3
<PAGE> 6
$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 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
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 year and second 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 its average daily net assets attributable to such
class of shares. See "Purchase of Shares -- Class B Shares" and "Distribution
Plans." Class B shares convert automatically to Class A shares six 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 its average daily net assets attributable to such class of shares.
See "Purchase of Shares -- Class C Shares" and "Distribution 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 distributer of the Fund's shares.
DISTRIBUTIONS FROM THE FUND. Dividends from net investment income are
distributed annually. Net capital gains, if any, are distributed at least
annually. All dividends and distributions are automatically reinvested in shares
of the Fund at net asset value per share (without a sales charge) unless payment
in cash is requested. See "Distributions from the Fund."
The above 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)................. 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 certain 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 (net of reimbursement) (as a
percentage of average daily net
assets)(1).................................. 0.12% 0.12% 0.12%
12b-1 Fees (as a percentage of average daily
net assets)(2).............................. 0.09% 1.00% (3) 1.00% (3)
Other Expenses (as a percentage of average
daily net assets)........................... 2.58% 2.61% 2.67%
Total Fund Operating Expenses (net of
reimbursement) (as a percentage of average
daily net assets)(4)........................ 2.79% 3.73% 3.79%
</TABLE>
- ------------------------------------------------------------------------------
(1) In the absence of expense reimbursement, management fees would be 1.00% for
each class of shares.
(2) 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 Plans."
(3) 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.
(4) In the absence of expense reimbursement, total fund operating expenses would
be 3.68% for Class A shares, 4.61% for Class B shares and 4.67% for Class C
shares.
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 2.79% for
Class A shares, 3.73% for Class B
shares and 3.79% for Class C shares,
(ii) a 5% annual return and (iii)
redemption at the end of each time
period:
Class A............................. $ 74 $130 $188 $345
Class B............................. $ 78 $145 $209 $358*
Class C............................. $ 48 $116 $195 $403
You would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of each time
period:
Class A............................. $ 74 $130 $188 $345
Class B............................. $ 38 $114 $193 $358*
Class C............................. $ 38 $116 $195 $403
</TABLE>
- ------------------------------------------------------------------------------
* Based on conversion to Class A shares after six 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 "Distribution 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. 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(3) CLASS B(3)
---------------------------- ----------------------------
MAY 16, MAY 16,
YEAR 1994(1) YEAR 1994(1)
ENDED THROUGH ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994(4) 1995 1994(4)
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period................................ $9.19 $9.44 $9.17 $9.44
------------ ------------- ------------ -------------
Income from investment operations
Investment income................................................. .35 .28 .35 .26
Expenses.......................................................... (.27) (.18) (.36) (.25)
------------ ------------- ------------ -------------
Net investment income............................................... .08 .10 (.01) .01
Net realized and unrealized gain (loss) on securities............... 1.1375 (.2475) 1.1375 (.2065)
------------ ------------- ------------ -------------
Total from investment operations.................................... 1.2175 (.1475) 1.1275 (.1965)
------------ ------------- ------------ -------------
LESS DISTRIBUTIONS FROM
Net investment income............................................. (.0775) (.075) -- (.046)
Net realized gain on securities................................... (.1800) -- (.18) --
Excess of book-basis net investment income........................ -- -- (.0175) --
Excess of book-basis net realized gain on securities.............. -- (.0275) -- (.0275)
------------ ------------- ------------ -------------
Total distributions................................................. (.2575) (.1025) (.1975) (.0735)
------------ ------------- ------------ -------------
Net asset value, end of period...................................... $10.15 $9.19 $10.10 $9.17
============ ============= ============ =============
TOTAL RETURN(2)..................................................... 13.30% (1.57%) 12.31% (2.09%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)................................ $15.5 $11.5 $8.1 $7.4
Ratios to average net assets (annualized)
Expenses.......................................................... 2.79% 2.75% 3.73% 3.92%
Expenses, without expense reimbursement........................... 3.68% 2.76% 4.61% 3.93%
Net investment income (loss)...................................... .81% 1.54% (.09%) .13%
Net investment income (loss), without expense reimbursement....... (.07%) 1.53% (.97%) .12%
Portfolio turnover rate............................................. 135% 50% 135% 50%
<CAPTION>
CLASS C(3)
----------------------------
MAY 16,
YEAR 1994(1)
ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1995 1994(4)
------------ -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period................................ $9.20 $9.44
------------ -------------
Income from investment operations
Investment income................................................. .35 .27
Expenses.......................................................... (.37) (.22)
------------ -------------
Net investment income............................................... (.02) .05
Net realized and unrealized gain (loss) on securities............... 1.1375 (.2165)
------------ -------------
Total from investment operations.................................... 1.1175 (.1665)
------------ -------------
LESS DISTRIBUTIONS FROM
Net investment income............................................. -- (.046)
Net realized gain on securities................................... (.18) --
Excess of book-basis net investment income........................ (.0175) --
Excess of book-basis net realized gain on securities.............. -- (.0275)
------------ -------------
Total distributions................................................. (.1975) (.0735)
------------ -------------
Net asset value, end of period...................................... $10.12 $9.20
============ =============
TOTAL RETURN(2)..................................................... 12.16% (1.77%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)................................ $1.9 $1.3
Ratios to average net assets (annualized)
Expenses.......................................................... 3.79% 3.36%
Expenses, without expense reimbursement........................... 4.67% 3.38%
Net investment income (loss)...................................... (.18%) .80%
Net investment income (loss), without expense reimbursement....... (1.06%) .78%
Portfolio turnover rate............................................. 135% 50%
</TABLE>
- ---------------
(1) Commencement of operations.
(2) Total return for periods of less than one year are not annualized. Total
return does not consider the effect of sales charges.
(3) Based on average month-end shares outstanding.
(4) Since December 21, 1994, John Govett & Co., LTD has served as investment
subadviser to the Fund. Prior to December 21, 1994, Lombard Odier
International Portfolio Management, served as the Fund's subadviser.
8
<PAGE> 11
- ------------------------------------------------------------------------------
THE FUND
- ------------------------------------------------------------------------------
The Fund is a non-diversified, 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.
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
- ------------------------------------------------------------------------------
GENERAL. The investment objective of the Fund is to seek total return through
a managed balance of foreign and domestic equity and debt securities. Total
return consists of current income, including dividends, interest and discount
accruals, and capital appreciation. The Adviser, working in conjunction with the
Subadviser, may vary the composition of the Fund from time to time based upon an
evaluation of economic and market trends and the anticipated relative total
return available from a particular type of security. Accordingly, the Fund may,
at any given time, be substantially invested in equity or debt securities. At
least 65% of the Fund's total assets will be invested in securities of issuers
located in at least three countries including the United States and at least 25%
of the Fund's assets will be maintained in debt securities. Achieving the Fund's
investment objective depends on management's abilities to assess the effect of
economic and market trends on different sectors of the market. There can be no
assurances that the investment objective of the Fund will be achieved. Because
of the managed approach of the Fund, portfolio turnover of the Fund may be
greater than portfolio turnover of other mutual funds resulting in increased
brokerage charges to the Fund.
The Adviser, subject to the direction of the Fund's Trustees, provides the
Fund with an overall investment program consistent with the Fund's 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 Adviser and the Fund's Trustees, is responsible for recommending an
optimal geographic asset allocation and currency exposure and is responsible for
providing advice with respect to the Fund's investments in countries other than
the United
9
<PAGE> 12
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.
The investment objective and policies, the percentage limitations, and the
types of securities in which the Fund may invest generally are not fundamental
policies and may be changed by the Trustees, unless expressly governed by
certain limitations as described under "Investment Practices -- Investment
Restrictions" which can be changed only by action of the shareholders. If there
is a change in the objective of the Fund, shareholders should consider whether
the Fund remains an appropriate investment in light of their then current
financial position and needs. For additional information regarding the
investment practices of the Fund see "Investment Practices."
EQUITY SECURITIES. 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. Normally, the Fund invests primarily in equity securities of
companies located in some or all of the following countries: Argentina, Austria,
Australia, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Hong
Kong, Indonesia, Italy, Japan, Luxembourg, Malaysia, Mexico, New Zealand,
Netherlands, Norway, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan,
Thailand, Turkey and the United Kingdom. The list of countries in which the Fund
invests may change from time to time.
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 among 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
10
<PAGE> 13
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.
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. For further information on
ADRs and EDRs, investors should refer to the Statement of Additional
Information.
DEBT SECURITIES. The Fund invests in debt securities of issuers located in
various countries and denominated in various currencies. The Fund generally
invests in debt securities of issuers located in the United States, the
countries of Western Europe, Japan, Australia, New Zealand and Canada. The Fund
also may invest in debt securities of issuers located in other countries. Debt
securities in which the Fund may invest include government securities and high
quality debt securities of U.S. and foreign corporations. Government securities
include debt securities issued or guaranteed by the United States or foreign
governments or their agencies, authorities or instrumentalities. 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 invest in debt obligations of supranational lending entities
organized or supported by several national governments. Supranational entities
in which the Fund may invest include, without limitation, 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 in 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
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<PAGE> 14
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; 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 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, Inc. ("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.
CURRENCY EFFECTS. The Fund may invest in securities denominated in United
States dollars and one or more foreign currencies. The percentage of assets
invested in securities of a particular country or denominated in a particular
currency will vary in accordance with the Advisers' assessment of the relative
yield and appreciation potential of such securities and the 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
the Advisers 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 securities denominated in foreign currencies can be
adversely affected by changes in exchange rates. The Advisers believe that the
use of foreign currency hedging techniques, including "cross-hedges", 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.
The Adviser believes 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. A hedge or cross-hedge cannot
protect completely against exchange rate risks, and if the Advisers are
incorrect in their judgment of future exchange rate relationships, the Fund
could be in a less advantageous position than if such a hedge had not been
established.
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<PAGE> 15
TEMPORARY SHORT-TERM INVESTMENTS. The Fund's policy generally is to invest in
a globally diversified portfolio of equity and longer term debt securities. In
the interest of preserving shareholders' capital and consistent with the Fund's
investment objective, however, 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 any portion or all of its assets in high quality money
market instruments. It is impossible to predict 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 purchase commercial paper only 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 a time 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.
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RISK FACTORS
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FOREIGN SECURITIES AND CURRENCIES. Investing in securities issued by foreign
corporations and governments involves risks not typically associated with
investing in obligations issued by domestic corporations and 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 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 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. Furthermore, issuers of foreign common stocks are subject to different,
often less comprehensive, accounting, reporting and disclosure requirements than
domestic
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<PAGE> 16
issuers. Foreign custodial costs relating to the Fund's portfolio securities may
be higher than domestic custodial costs.
NON-DIVERSIFICATION. The Fund is a "non-diversified" investment company, 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 "Tax Status." To so qualify, among
other requirements, the Fund will limit its investments so that, at the close of
each calendar quarter, (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 5% of the market value
of the Fund's total assets and not more than 10% 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. The Fund will not
invest more than 15% of its net assets in securities subject to repurchase
agreements that do not mature within seven days and in any other illiquid
securities. In the event of the bankruptcy of the seller of a repurchase
agreement, the Fund could experience delays in liquidating the underlying
securities, and the Fund could incur a loss 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
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<PAGE> 17
access to income on the underlying security during this period; and (c) expenses
of enforcing its rights. See the Statement of Additional Information.
For the purpose of investing in repurchase agreements, the Adviser aggregates
the cash that substantially all of the 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 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 services rendered
on a continuing basis. The debt securities in the Fund's portfolio 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. 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 brokerage
firms. The Advisers are authorized to pay higher commissions to brokerage firms
that provide them with 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. The Fund may experience a high rate of portfolio turnover
which may vary from year to year with respect to both its equity and debt
securities.
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<PAGE> 18
The rate of portfolio turnover is not a limiting factor when the Advisers deem
it desirable to purchase or sell securities or to engage in transactions in
options, futures contracts and options on futures contracts. A 100% turnover
rate would occur, for example, if all the securities held by the Fund were
replaced in a period of one year. Higher portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs, which
are borne directly by the Fund, and may result in realization of short-term
capital gains if securities are held for one year or less, which may be subject
to applicable income taxes. See "Tax Status." Although no assurance can be given
with respect to future portfolio turnover rates, it is anticipated that the
Fund's rate of portfolio turnover with respect to either its debt or equity
securities will not generally exceed 400%, with the rate of portfolio turnover
tending to be higher with respect to debt securities.
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. The
Advisers believe the risk of loss on such transactions is slight, because, if a
borrower were to default for any reason, the collateral should satisfy the
obligation. See the Statement of Additional Information.
RESTRICTED SECURITIES. The Fund may invest up to 15% of its net assets in
restricted securities and other illiquid assets (but see below for information
regarding state restrictions). 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 Adviser pursuant to
Trustee-approved guidelines. The determination of liquidity is based on the
volume of reported trading in the institutional secondary market for each
security. The Trustees will carefully monitor the Fund's investment in Rule 144A
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> 19
Notwithstanding the foregoing, due to various state regulations, the Fund will
not invest more than 10% of its net assets in restricted securities. Restricted
securities eligible for resale pursuant to Rule 144A are not included within
this limitation. In the event that the Fund's shares cease to be qualified under
the laws of such states or if such regulations are amended or otherwise cease to
be operative, the Fund would not be subject to this 10% restriction.
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 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 to do 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. 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.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Fund may enter into
contracts for the purchase or sale for future delivery of securities or foreign
currencies, or contracts based on financial indices including any stock index or
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
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 market values or interest or exchange rates which otherwise
might either adversely affect the value of the Fund's portfolio securities or
adversely
17
<PAGE> 20
affect the price of securities which the Fund intends to purchase at a later
date. See the Statement of Additional Information for further discussion of the
use, risks and costs of futures contracts and options on futures contracts.
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 to cover its position by purchasing or selling
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. There is no fixed limit on the
percentage of the Fund's assets upon which options may be written.
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 or 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 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
18
<PAGE> 21
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. 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 a 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 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 to
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
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<PAGE> 22
to forecast the markets and interest rate and currency exchange rate movements
correctly. Should the markets or 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, movements in the prices of such
instruments and movements in the price of the securities and currencies hedged
or used for cover may not be closely correlated 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
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. 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 5% 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. The Fund's ability to engage in options and futures transactions may
be limited by tax considerations. See the Statement of Additional Information.
FORWARD COMMITMENTS. The Fund may purchase or sell debt 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. This 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 take 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 by taking delivery of the
securities or may either resell or repurchase a Forward Commitment on or before
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<PAGE> 23
the settlement date in which event the Fund may reinvest the proceeds in another
Forward Commitment. The Fund's use of Forward Commitments may increase its
overall investment exposure and thus its potential for gain or loss. 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.
The Fund maintains a segregated account (which is marked to market daily) of
cash, U.S. Government securities or the security covered by 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 or sell continues.
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 Fund's shares. 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 be invested in a single
industry except that, if the value of debt 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
debt securities issued by government or political subdivisions because such
issuers are not members of any industry, the Fund does not intend to invest
more that 25% of its total assets in debt securities issued or guaranteed
by any government (except U.S. Government, its agencies or
instrumentalities).
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 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.
3. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, banker's acceptances, certificates
of deposit and similar evidence 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
21
<PAGE> 24
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
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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 $50 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 7% of the common stock of
VK/AC Holding, Inc. and have the right to acquire, upon the exercise of options,
approximately an additional 13% of the common stock of VK/AC Holding, Inc.
Presently, and after giving effect to the exercise of such options, no officer
or trustee of the Fund owns or would own 5% or more of the common stock of VK/AC
Holding, Inc.
As of March 22, 1996, the Distributor owned beneficially and of record
approximately 41% of the outstanding shares of the Fund, and therefore, may be
deemed to control the Fund.
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
22
<PAGE> 25
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.
ADVISORY AGREEMENTS. The Fund retains the Adviser to manage the investment of
its assets and to place orders for the purchase and sale of its portfolio
securities. 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
markets. Under an investment advisory agreement between the Adviser and the Fund
(the "Advisory Agreement"), the Fund 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 its asset allocation features and it is not
necessarily higher than the fees charged by certain mutual funds with an
investment objective and investment policies similar to those of the Fund. Under
the Advisory Agreement, the Fund 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 fees, service
fees, 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) fees and total
operating expense ratios are shown under the caption "Annual Fund Operating
Expenses and Example" herein. 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 INVESTMENT POLICIES. The Fund, the Adviser and the Subadviser have
adopted Codes of Ethics designed to recognize the fiduciary relationship between
23
<PAGE> 26
the Fund, the Adviser, the Subadviser and their respective employees. The Codes
permit directors/trustees, officers and employees to buy and sell securities for
their personal account 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. Mr. John R. Reynoldson has been primarily responsible
for the day-to-day management of the Fund's investment portfolio with respect to
investments in debt securities in the United States since May 1994. Mr.
Reynoldson has been Senior Investment Vice President of the Adviser since July
1991 and has been Senior Investment Vice President of Van Kampen American
Capital Investment Advisory Corp. since June 1995. He was previously an
investment vice president with the Adviser. The Subadviser has employed Alan
Doyle since April 1994 as an international manager specializing in emerging
markets. He is primarily responsible for allocating the Fund's investments
between United States and non-United States debt securities and the day-to-day
management of the Fund's investments in debt securities in countries other than
the United States. Mr. Doyle was previously an economist in the fixed income
department of World Invest Ltd. in London. Mr. Jeff New has been primarily
responsible for the day-to-day management of the Fund's investment portfolio
with respect to investments in equity securities in the United States since May
1994. Mr. New has been Vice President of the Adviser since 1994 and Vice
President of Van Kampen American Capital Investment Advisory Corp. since 1995.
He has been an associate portfolio manager with the Adviser since April 1990.
The Subadviser has employed Peter Kysel as Director and Fund Manager since
September 1994. 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 equity securities in
countries other than the United States. In addition, Mr. Kysel is responsible
for allocating the Fund's investments among various debt and equity
international markets. Mr. Kysel was previously a managing director of the
investment banking division of Komercni Bank. Messrs. Reynoldson and New have
managed the Fund's investment portfolio since the Fund's inception. Messrs.
Doyle and Kysel have been managing the Fund's investment portfolio since
December 21, 1994.
- ------------------------------------------------------------------------------
ALTERNATIVE SALES ARRANGEMENTS
- ------------------------------------------------------------------------------
The Alternative Sales Arrangements permits 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
24
<PAGE> 27
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."
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 will automatically convert to Class A shares six 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 will 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 "Conversion Feature" below for discussion on applicability of
the conversion feature to Class C shares.
CONVERSION FEATURE. Class B shares and Class C shares will automatically
convert to Class A shares six 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
25
<PAGE> 28
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 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 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 six 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 in an amount 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,
26
<PAGE> 29
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 ongoing
distribution fees and, for a five-year and one-year period, respectively, being
subject to a contingent deferred sales charge. Ongoing distribution fees on
Class B shares and Class C shares will be 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 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 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 other
mutual funds distributed by the Distributor. See "Shareholder Services --
Exchange Privilege."
27
<PAGE> 30
- ------------------------------------------------------------------------------
PURCHASE OF SHARES
- ------------------------------------------------------------------------------
GENERAL
The Fund offers three classes of shares to the general 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 terms "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 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., a wholly-owned
subsidiary of Van Kampen American Capital ("ACCESS"). 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.
Equity securities listed or traded on a national securities exchange are
valued at the last sale price. Unlisted equity securities and listed equity
securities for which the last sales price is not available are valued at the
most recent bid price. The net asset value of debt securities 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
28
<PAGE> 31
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 such prices are not available, using the prices for securities of comparable
maturity, quality and type, and (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 on
futures contracts 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 of the Fund.
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 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, 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 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. See "Distribution Plans" and "Shareholder
Services -- Exchange Privilege." 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
29
<PAGE> 32
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 dealer 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.
30
<PAGE> 33
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 herein.
SALES CHARGE TABLE
<TABLE>
<CAPTION>
REALLOWED
AS % OF AS % OF TO DEALERS
SIZE OF OFFERING NET AMOUNT (AS A % OF
INVESTMENT PRICE INVESTED OFFERING 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% in the event of certain
redemptions within one year of the purchase. The contingent deferred
sales charge incurred upon redemption is paid to the Distributor in
reimbursement for distribution-related expenses. 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, plus 0.20% on the next $2 million and 0.08% on
the excess over $5 million.
In addition to the reallowances from the applicable public offering price
described herein, 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 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 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
31
<PAGE> 34
interpretation 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 dealers 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.
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.
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 preceding
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
32
<PAGE> 35
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 purchase amount of the
level selected. If trades not initially made under a Letter of Intent
subsequently qualify for a lower sales charge through the 90-day 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' 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
33
<PAGE> 36
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 in 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 which equals at least $1 million. The Distributor may pay
authorized dealers through which purchases are made of 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.
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<PAGE> 37
(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 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 authorized dealers as follows: 1.00% on sales up
to $5 million, plus 0.50% on the next $5 million, plus 0.25% on the excess
over $10 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 Plans" on
purchases made as described in (3) through (9) above. The Fund may terminate, or
amend the terms of, offering shares of the Fund at net asset value to such
groups at any time.
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 in the following table
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
35
<PAGE> 38
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.
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............................................ 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 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.
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<PAGE> 39
CLASS C SHARES
Class C shares are offered at the next determined 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.
In determining whether a contingent deferred sales charge is applicable to a
redemption, the calculation is determined in the manner that results in the
lowest possible rate being charged. Therefore, 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 is also 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
investments in its shares at little or no extra cost to the investor. Below is a
description of such services.
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<PAGE> 40
INVESTMENT ACCOUNT. Each shareholder has an investment account under which
shares are held by ACCESS. Except as described herein, 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 certain of the
Participating Funds may 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. As a rule, 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 per share (without sales
charge) on the record date. Unless the shareholder instructs ACCESS 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 predetermined 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)
38
<PAGE> 41
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 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
share, Class B share or Class C share account in the Fund invested into a
pre-existing Class A share, Class B share or Class C share account in any of the
Participating Funds, Tax Free Money Fund or Reserve Fund.
Both accounts must be of the same class and 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 only if shares of such selected
fund have been registered in the investor's state.
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
39
<PAGE> 42
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 that were not
acquired in exchange for Class B shares or Class C shares of a Participating
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. Additional funds may be
added from time to time as a Participating Fund.
Class B 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 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 or
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
for more 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
40
<PAGE> 43
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. See both
"Purchase of Shares" and "Redemption of Shares." 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
gain 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 Class B shares for a retirement
plan established on a form made available by the Fund. See "Shareholder
Services -- Retirement Plans."
Class B 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 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 the 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
41
<PAGE> 44
shareholder because of the duplication of sales charges. Any taxable gain or
loss generally will be recognized by the shareholder upon redemption of shares.
However, any loss realized on a sale or exchange (including a redemption) of
shares will be disallowed to the extent the shares disposed of are replaced
within a period of 61 days beginning 30 days before and ending 30 days after the
shares are disposed of, such as pursuant to the reinvestment in additional
shares of dividends and capital gain distributions.
- ------------------------------------------------------------------------------
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
or 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.
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<PAGE> 45
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
IRA 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 in proper form. 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 it confirms the purchase check has cleared, usually a
period of up to 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 herein. 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
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<PAGE> 46
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. ACCESS will record any calls.
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 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 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 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.
44
<PAGE> 47
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 or Class B shareholder who has redeemed
shares of the Fund may reinstate any portion or all of the net proceeds of such
redemption in Class A shares of the Fund. A Class C shareholder who has redeemed
shares of the Fund may reinstate any portion or all of the net proceeds of such
redemption in Class C shares of the Fund with credit given for any contingent
deferred sales charge paid upon such redemption. Such reinstatement is made at
the net asset value (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 PLANS
- ------------------------------------------------------------------------------
Rule 12b-1 adopted by the SEC under the 1940 Act permits an investment company
to directly or indirectly pay expenses associated with the distribution of its
shares ("distribution expenses") and servicing its shareholders in accordance
with a plan adopted by the investment company's Board of Trustees and approved
by its shareholders. Pursuant to Rule 12b-1, the Trustees of the Fund and the
share-holders of each class have adopted three distribution plans hereinafter
referred to as the "Class A Plan," the "Class B Plan" and the "Class C Plan."
Each distribution plan is in compliance with the Rules of Fair Practice of the
NASD ("NASD Rules") applicable to mutual fund sales charges. The NASD Rules
regulate the distribution and service charges that a mutual fund may impose on a
class of shares. The Distributor uses the Class A, Class B and Class C service
fees to compensate authorized dealers for personal service or the maintenance of
shareholder accounts.
Under the Class A Plan, the Fund pays a service fee to the Distributor at an
annual rate of up to 0.25% of the Fund's aggregate average daily net assets
attributable to the Class A shares.
45
<PAGE> 48
Under the Class B Plan and Class C Plan, the Fund pays a service fee to the
Distributor at an annual rate of up to 0.25% and also pays a 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 or Class C shares to reimburse the
Distributor for service fees paid by it to authorized dealers and for its
distribution costs. Under the Class B Plan, the Distributor receives additional
payments from the Fund in the form of a distribution fee at the annual rate of
up to 0.75% of the net assets of the Class B shares as reimbursement for upfront
commissions and transaction fees of up to 4.00% of the purchase price of Class B
shares purchased by the clients of authorized dealers and other distribution
expenses as described in the Statement of Additional Information. Under the
Class C Plan, the Distributor receives additional payments from the Fund in the
form of a distribution fee at the annual rate of up to 0.75% of the net assets
of the Class C shares as reimbursements for upfront commissions and transaction
fees of up to 0.75% of the purchase price of Class C shares purchased by the
clients of authorized dealers and ongoing commissions and transaction fees of up
to 0.75% of the average daily net assets of the Fund's Class C shares and other
distribution expenses as described in the Statement of Additional Information.
In adopting the Class A Plan, the Class B Plan and the Class C Plan, the
Trustees of the Fund determined that there was a reasonable likelihood that such
plans would benefit the Fund and its shareholders. Information with respect to
distribution and service revenues and expenses is presented to the Trustees
periodically for their consideration in connection with their deliberations as
to the continuance of such plans. In their review of the distribution plans, the
Trustees are asked to take into consideration expenses incurred in connection
with the distribution and servicing of each class of shares separately. The
sales charge and distribution fee, if any, of a particular class will not be
used to subsidize the sale of shares of the other classes.
Service expenses accrued by the Distributor in one fiscal year may not be paid
from the Class A service fee received from the Fund in subsequent fiscal years.
Thus, if the Class A Plan were terminated or not continued, no amounts (other
than current amounts accrued but not yet paid) would be owed by the Fund to the
Distributor.
The distribution fee attributable to Class B shares or Class C shares is
designed to permit an investor to purchase such shares without the assessment of
a front-end sales load and at the same time permit the Distributor to compensate
authorized dealers with respect to such shares. In this regard, the purpose and
function of the combined contingent deferred sales charge and distribution fee
are the same as those of the initial sales charge with respect to the Class A
shares of the Fund; in both cases such charges provide for the financing of the
distribution of the Fund's shares.
46
<PAGE> 49
Actual distribution expenses paid by the Distributor with respect to Class B
shares or Class C shares for any given year are expected to exceed the fees
received pursuant to the Class B Plan and Class C Plan and payments received
pursuant to contingent deferred sales charges. Such excess will be carried
forward and may be reimbursed by the Fund or its shareholders from payments
received through contingent deferred sales charges in future years and from
payments under the Class B Plan and Class C Plan so long as such plans are in
effect. For the year ended December 31, 1995, the unreimbursed expenses incurred
by the Distributor under the Class B Plan and carried forward were approximately
$456,000 or 5.77% of the Class B shares' net assets. For the year ended December
31, 1995, the unreimbursed expenses incurred by the Distributor under the Class
C Plan and carried forward were approximately $28,000 or 1.75% of the Class C
shares' net assets. If the Class B Plan or Class C Plan was terminated or not
continued, the Fund would not be contractually obligated to pay and has no
liability to the Distributor for any expenses not previously reimbursed by the
Fund or recovered through contingent deferred sales charges.
- ------------------------------------------------------------------------------
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. Dividends from net investment income (including stocks, interest
earned from other investments and net short-term capital gains, but not net
capital gains) are the Fund's main source of income. Substantially all of this
income, less expenses, is distributed annually as dividends to shareholders.
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 distribution
fees and higher 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 at least annually distributes to
shareholders its net capital gains, which are the excess of the Fund's net
long-term capital gains, if any on the sale of securities during the year over
its net short-term capital losses on the sale of securities, including capital
losses carried forward from prior years in accordance with tax laws ("capital
gain distributions"). As in the case of dividends, capital gains distributions
are automatically reinvested in additional shares of the Fund at net asset value
unless the shareholder elects otherwise. See "Shareholder
Services -- Reinvestment Plan."
47
<PAGE> 50
- ------------------------------------------------------------------------------
TAX STATUS
- ------------------------------------------------------------------------------
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of 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 and net capital gains. The
Fund's policy is to distribute to its Class A, Class B and Class C shareholders
substantially all of its net investment income annually. Dividends from net
investment income are taxable to shareholders as ordinary income. Capital gains
distributions constitute long-term capital gains to a shareholder 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 generally 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 tax on dividends,
distributions and redemption payments, certain shareholders must furnish the
Fund with their correct taxpayer identification number (in the case of
individuals, their social security number) and certain required certifications.
Some portion of the distributions made by the Fund generally will 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 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 may 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 upon receipt by a
shareholder as discussed above.
Some of the Fund's investment practices are subject to special provisions of
the Code that may, among other things, defer the use of losses of the Fund and
affect the holding period of 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 the cash with which to
make distributions in amounts necessary to satisfy the distribution requirements
for avoiding federal income 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.
48
<PAGE> 51
The Fund's ability to dispose of portfolio securities may be limited by the
requirement for qualification as a regulated investment company that less than
30% of the Fund's annual gross income be derived from the disposition of
securities held for less than three months.
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 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 fiscal
year consists of securities of foreign issuers, the Fund will be eligible, and
may file elections with the Internal Revenue Service pursuant to which
shareholders of the Fund will be required to (i) include their respective pro
rata portions of such taxes in their United States income tax returns as gross
income, and (ii) treat such respective pro rata portions as taxes paid by them.
Each shareholder will be entitled, subject to certain limitations, to either
deduct his respective pro rata portions of such foreign taxes in computing their
taxable incomes or use them as foreign tax credits against their United States
federal income taxes. No deduction for such foreign taxes may be claimed by a
shareholder who does not itemize deductions. Each shareholder will be notified
annually whether the foreign taxes paid by the Fund will "pass through" for that
year and, if so, such notification will designate (i) the shareholder's portion
of the foreign taxes paid to each such country and (ii) the portion of dividends
that represent income derived from sources with each such country. The amount of
foreign taxes for which a shareholder may claim a credit in any year will be
subject to an overall limitation such that the credit may not exceed the
shareholder's U.S. federal income tax attributable to the shareholder's foreign
source taxable income. This limitation generally applies separately to certain
specific categories of foreign source income including "passive incomes" which
includes, among other types of income, dividends and interest. The foregoing is
only a general description of the foreign tax credit under current law. Because
application of the depends on the particular circumstances of each shareholder,
shareholders are advised to consult their own tax advisers.
Under Code Section 988, certain realized gains or losses on the sale or
retirement of foreign 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 dividends declared by the Fund may be treated for federal income
tax purposes as a return of capital or, in some circumstances, as
49
<PAGE> 52
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 United States
persons (e.g. United States residents or United States corporations). Investors
should consult their tax advisers for more detailed tax advice including the
effects of state, local and foreign tax laws and any proposed tax law changes.
Foreign investors should consult their own counsel for information as to the
United States and their country of residence or citizenship tax consequences of
receipt of dividends and distributions from the Fund. Additional information
with respect to certain federal income tax considerations affecting the Fund and
its investors is set forth 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 a one year period or 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 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.
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
50
<PAGE> 53
gain dividends, if any, distributed for a specified period. It 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, with the Consumer Price Index, the Dow Jones
Industrial Average Index, Standard & Poor's, or NASDAQ, 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 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 of this
Prospectus.
- ------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- ------------------------------------------------------------------------------
The Fund was originally incorporated in Maryland on November 24, 1993. The
Fund was reorganized as a business trust under the laws of the State of Delaware
as of August 5, 1995. The Fund is authorized to issue an unlimited number of
shares of beneficial interest par value $0.01 per share. The Fund currently
offers three
51
<PAGE> 54
classes, designated Class A shares, Class B shares and Class C shares. Other
classes of shares may be established from time to time in accordance with
provisions of the Fund's Declaration of Trust. Shares issued by the Fund are
fully paid, non-assessable and have no preemptive or conversion rights.
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. See "Distribution Plans."
Each class of share 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 Fund'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.
- ------------------------------------------------------------------------------
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 Fund with
the SEC under the 1933 Act. 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.
52
<PAGE> 55
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 MANAGED ASSETS 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 Managed Assets 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 Managed Assets 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> 56
------------------------------------------------------------------------------
GLOBAL MANAGED
ASSETS FUND
------------------------------------------------------------------------------
P R O S P E C T U S
APRIL 29, 1996
------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 57
STATEMENT OF ADDITIONAL INFORMATION
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
This Statement of Additional Information is not a Prospectus but contains
information in addition to and more detailed than that set forth in the
Prospectus and should be read in conjunction with the Prospectus. The Statement
of Additional Information and the related Prospectus are both dated April 29,
1996. A Prospectus may be obtained without charge by calling or writing Van
Kampen American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook
Terrace, IL 60181 at (800) 421-5666.
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information................................................................... B-2
Investment Policies and Techniques.................................................... B-3
Options, Futures Contracts and Options on Futures Contracts........................... B-4
Repurchase Agreements................................................................. B-12
Loans of Portfolio Securities......................................................... B-13
Investment Restrictions............................................................... B-13
Trustees and Officers................................................................. B-15
Investment Advisory Agreements........................................................ B-23
Distributor........................................................................... B-25
Distribution Plans.................................................................... B-25
Transfer Agent........................................................................ B-27
Portfolio Turnover.................................................................... B-27
Portfolio Transactions and Brokerage.................................................. B-27
Determination of Net Asset Value...................................................... B-28
Purchase and Redemption of Shares..................................................... B-29
Exchange Privilege.................................................................... B-32
Dividends, Distributions and Federal Taxes............................................ B-33
Fund Performance...................................................................... B-35
Other Information..................................................................... B-36
Report of Independent Accountants..................................................... B-37
Financial Statements.................................................................. B-38
Notes to Financial Statements......................................................... B-53
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED APRIL 29, 1996.
B-1
<PAGE> 58
GENERAL INFORMATION
Van Kampen American Capital Global Managed Assets Fund, formerly American
Capital Global Managed Assets Fund, Inc. (the "Fund"), was originally
incorporated in Maryland on November 24, 1993. The Fund was reorganized as a
business trust under the laws of the State of Delaware and adopted its current
name as of August 5, 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 Associates L.P. are Joseph L. Rice, III, B. Charles Ames,
William A. Barbe, Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr.,
Hubbard C. Howe and Andrall E. Pearson, each of whom is a principal of Clayton,
Dubilier & Rice, Inc. In addition, certain officers, directors and employees of
VKAC own, in the aggregate, not more than 7% of the common stock of VK/AC
Holding, Inc. and have the right to acquire, upon the exercise of options,
approximately an additional 13% of the common stock of VK/AC Holding, Inc.
Presently, and after giving effect to the exercise of such options, no officer
or trustee of the Fund owns or would own 5% or more of the common stock of VK/AC
Holding, Inc.
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 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 $1.00 invested in 1926 was $15.81 at the end of 1995,
compared to $1,113.92 for $1.00 that was invested for the entire period (Source:
Micropal, Inc.). During the most recent 5 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.
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 net worth. At VKAC, our style is blended between growth and
value of a fund-specific basis. The results of our approval are constantly
evaluated and
B-2
<PAGE> 59
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 March 22, 1996, no person was known by the Fund to own beneficially
or to hold of record as much as 5% of the outstanding Class A shares, Class B
shares or Class C shares of the Fund, except as follows:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OWNERSHIP AT CLASS PERCENTAGE
OF HOLDER MARCH 22, 1996 OF SHARES OWNERSHIP
- ------------------------------- -------------- --------- ----------
<S> <C> <C> <C>
Van Kampen American Capital 999,864 A 63.76%
Distributors, Inc. 53,977 C 28.24%
One Parkview Plaza
Oakbrook Terrace, IL 60181
Van Kampen American Capital 207,114 A 13.21%
Trust Company 233,575 B 27.96%
2800 Post Oak Blvd. 16,154 C 8.45%
Houston, TX 77056
Merrill Lynch Pierce Fenner & 79,803 B 9.55%
Smith, Inc. 20,432 C 10.69%
Mutual Fund Operations
Attn: Book Entry
4800 Deer Lake Dr. E 3rd Fl.
Jacksonville, FL 32246-6484
</TABLE>
- ---------------
Because the Distributor, a Delaware corporation, owns in excess of 25% of
the outstanding shares of the Fund, the Distributor may be deemed to control the
Fund. The ownership of the Distributor does not affect the voting rights of
other shareholders except that it would be difficult to obtain shareholder
approval of proxy proposals without the affirmative vote of the Distributor. The
Distributor will vote its shares in favor of the management's proposals.
Van Kampen American Capital Trust Company acts as custodian for certain
employee benefit plans and independent retirement accounts.
INVESTMENT POLICIES AND TECHNIQUES
The Fund seeks total return through a managed balance of foreign and
domestic equity and debt securities. The following disclosures supplement
disclosures set forth in the Prospectus. Readers must refer also to the
Prospectus for a complete presentation.
DEPOSITARY RECEIPTS
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.
B-3
<PAGE> 60
DESCRIPTION OF BOND RATINGS
Moody's Investors Service, Inc. ("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 larger than in Aaa securities.
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".
OPTIONS, FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
The Fund may engage in transactions in options, futures contracts and
options on futures contracts. Set forth below is certain additional information
regarding options, futures contracts and options on futures contracts. See
Prospectus for further information.
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 can 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. Writing options on portfolio securities also is likely to
result in a higher portfolio turnover.
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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 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 would own or have
the right to acquire securities of the type that it would be obligated to
deliver if any outstanding option were exercised. An option is for cross-hedging
purposes if it is not covered by the security subject to the option, but is
designed to provide a hedge against another security which the Fund owns or has
the right to acquire. In such circumstance, 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 an amount of not less
than the exercise price of the option, or would hold a put on the same
underlying security at an equal or greater exercise price.
Closing Purchase Transactions and Offsetting Transactions. In order to
terminate its position as a writer of a call or put option, the Fund could enter
into a "closing purchase transaction," which is the purchase of a call (put) on
the same underlying security and having the same exercise price and expiration
date as the call (put) previously 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 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.
The exercise price of call options may be below ("in-the-money"), equal to
("at-the-money"), or above ("out-of-the-money") the current market value of the
underlying securities or futures contracts at the time the options are written.
The converse applies to put options.
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.
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. In
addition, the Fund may purchase call options 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.
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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. In addition, the Fund may purchase put
options 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.
The Fund will not purchase call or put options on securities if as a
result, more than 10% of its net assets would be invested in premiums on such
options.
The Fund may purchase either listed or over-the-counter options.
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 upon exercise of the option. Receipt of this
cash 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.
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 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.
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Mortgage-Related Securities. The following special considerations 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.
FOREIGN CURRENCY OPTIONS
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 the 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 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 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
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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 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.
FUTURES CONTRACTS
The Fund may engage in transactions involving futures contracts and related
options in accordance with 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 securities or foreign currencies, or contracts based on financial
indices including any stock index or 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-related 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.
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.
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
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commodity exchanges may develop futures and futures options on other indices of
foreign securities. Futures and options on United States devised indices of
foreign stocks are also being developed.
Initial and Variation Margin. In contrast to the purchase or sale of a
security, no price is paid or received upon the purchase or sale of a futures
contract. Initially, the Fund is required to deposit with its Custodian in an
account in the broker's name an amount of cash, cash equivalents or liquid high
grade debt securities equal to a percentage (which will normally range upwards
of 2%) of the contract amount. This amount is known as initial margin. The
nature of initial margin in futures transactions is different from that of
margin in securities transactions in that futures contract margin does not
involve the borrowing of funds by the customer to finance the transaction.
Rather, the initial margin is in the nature of a performance bond or good faith
deposit on the contract, which is returned to the Fund upon termination of the
futures contract and satisfaction of its contractual obligations. Subsequent
payments to and from the broker, called variation margin, are made on a daily
basis as the price of the underlying securities or index fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as marking to market.
For example, when the Fund purchases a futures contract and the price of
the underlying security or index rises, that position increases in value, and
the Fund receives from the broker a variation margin payment equal to that
increase in value. Conversely, where the Fund purchases a futures contract and
the value of the underlying security or index declines, the position is less
valuable, and the Fund is required to make a variation margin payment to the
broker.
At any time prior to expiration of the futures contract, the Fund may elect
to terminate the position by taking an opposite position. A final determination
of variation margin is then made, additional cash is required to be paid by or
released to the Fund and the Fund realizes a loss or a gain.
Futures Strategies. When the Fund anticipates a significant market or
market sector advance, the purchase of a futures contract affords a hedge
against not participating in the advance at a time when the Fund is 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. Ordinarily commissions on futures transactions
are lower than transaction costs incurred in the purchase and sale of
securities.
In the event of the bankruptcy of a broker through which the Fund engages
in transactions in options, futures or related options, the Fund could
experience delays or losses in liquidating open positions purchased or incur a
loss of all or part of its margin deposits with the broker. Transactions are
entered into by the Fund only with brokers or financial institutions deemed
creditworthy by the Adviser.
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 this imperfect correlation, the Fund could buy or sell futures
contracts in a greater dollar amount than the dollar amount of securities being
hedged if the historical volatility of the securities being hedged is greater
than the historical volatility of the securities, currency or index underlying
the futures contract. Conversely, the Fund could buy or sell futures contracts
in a lesser
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dollar amount than the dollar amount of the securities being hedged if the
historical volatility of the securities being hedged is less 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 be
closely correlated with movements in the securities, currency or index
underlying the futures contract due to certain market distortions. First, all
participants in the futures market are subject to margin depositary and
maintenance requirements. Rather than meet additional margin depositary
requirements, investors may close futures contracts through offsetting
transactions, which could distort the normal relationship between the futures
market and the securities or index underlying the futures contract. Second, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities markets. Therefore,
increased participation by speculators in the futures markets may cause
temporary price distortions. Due to the possibility of price distortion in the
futures markets and because of the imperfect correlation between movements in
futures contracts and movements in the securities underlying them, a correct
forecast of general market trends by the Advisers may still not result in a
successful hedging transaction judged over a very short time frame.
There is also the risk that futures markets may not be sufficiently liquid.
Futures contracts may be closed out only on an exchange or board of trade that
provides a market for such futures contracts. Although the Fund intends to
purchase or sell futures only on exchanges and boards of trade where there
appears to be an active secondary market, there can be no assurance that an
active secondary market will exist for any particular contract or at any
particular time. In the event of such illiquidity, it might not be possible to
close a futures position and, in the event of adverse price movement, the Fund
would continue to be required to make daily payments of variation margin. Since
the securities being hedged would not be sold until the related futures contract
is sold, an increase, if any, in the price of the securities may to some extent
offset losses on the related futures contract. In such event, the Fund would
lose the benefit of the appreciation in value of the securities.
Successful use of futures is also subject to the 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.
CFTC regulations require, among other things, (i) that futures and related
options be used solely for bona fide hedging purposes (or meet certain other
conditions 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 the Fund's assets. 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.
Additional Risks to Options and Futures Transactions. Each of the United
States exchanges has established limitations governing the maximum number of
call or put options on the same underlying security or futures contract (whether
or not covered) which may be written by a single investor, whether acting alone
or in concert with others (regardless of whether such options are written on the
same or different exchanges or are held or written on one or more accounts or
through one or more brokers). Option positions of all investment companies
advised by the Adviser are combined for purposes of these limits. An exchange
may order the liquidation of positions found to be in violation of these limits
and it may impose other sanctions or restrictions. These position limits may
restrict the number of listed options which the Fund may write.
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
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U.S. futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit. It is possible that futures contract prices would
move to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses. In such event, and in the
event of adverse price movements, the Fund would be required to make daily cash
payments of variation margin. In such circumstances, an increase in the value of
the portion of the portfolio being hedged, if any, may partially or completely
offset losses on the futures contract. However, 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. Options on futures contracts to be written or purchased by the
Fund will be traded on United States or foreign exchange or over-the-counter.
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 purchaser the right, in return for the premium paid,
to assume a position in a futures contract (a long position if the option is a
call and a short position if the option is a put), at a specified exercise price
at any time during the option period. As a writer of an option on a futures
contract, the Fund is subject to initial margin and maintenance requirements
similar to those applicable to futures contracts. In addition, net option
premiums received by the Fund are required to be included as initial margin
deposits. When an option on a futures contract is exercised, delivery of the
futures position is accompanied by cash representing the difference between the
current market price of the futures contract and the exercise price of the
option. The Fund could purchase put options on futures contracts in lieu of, and
for the same purposes as, the sale of a futures contract; at the same time, it
could write put options at a lower strike price (a "put bear spread") to offset
part of the cost of the strategy to the Fund. The purchase of call options on
futures contracts is intended to serve the same purpose as the actual purchase
of the futures contract.
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.
FORWARD COMMITMENTS
For each Forward Commitment purchased by the Fund, the Fund maintains a
segregated account (which is marked to market daily) of cash, cash equivalents,
liquid high grade debt securities or U.S. Government 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, cash equivalents, liquid high grade debt securities or U.S. Government
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
B-11
<PAGE> 68
continues. By entering into a Forward Commitment sale transaction, the Fund
foregoes or reduces the potential for both gain and loss in the security which
is being hedged by the Forward Commitment sale. See the Prospectus for further
information.
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.
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
B-12
<PAGE> 69
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 its
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 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 debt 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 debt 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
debt securities issued or guaranteed by any government (except U.S.
Government, its agencies or instrumentalities).
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
B-13
<PAGE> 70
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.
5. 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 (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, including real estate investment
trusts.
6. 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.
7. 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 Fund's Trustees and which apply at the time of
purchase of portfolio securities.
1. The Fund may not make investments for the purpose of exercising control
or management although the Fund retains the right to vote securities
held by it.
2. The Fund may not 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.
3. The Fund may not 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.
4. 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.
5. 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.
6. The Fund may not invest in securities of any company if any officer or
director of the Fund or of the Adviser owns more than 1/2 of 1% of the
outstanding securities of such company, and such officers and directors
who own more than 1/2 of 1% own in the aggregate more than 5% of the
outstanding securities of such issuer.
B-14
<PAGE> 71
7. 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.
8. 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.
9. The Fund may not purchase or otherwise acquire any security if, as a
result, more than 15% 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 which the
Trustees or the Adviser under Trustee-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 may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund.
In addition to the foregoing restrictions the Fund has made undertakings
with several states. The Fund has undertaken that:
1. It will provide written notification to shareholders of any change in
its investment objective at least 30 days prior to implementing such
change.
2. It will limit its investments in each of real estate investment trusts
and investment companies to 10% of its total assets.
3. It will not purchase the securities of any issuer if, as to 75% of its
total assets at the time of purchase, more than 10% of the voting
securities of any issuer would be held by the Fund.
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 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.
Age: 63
</TABLE>
B-15
<PAGE> 72
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
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
Age: 46 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.
Age: 76
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
Age: 44 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
Age: 53 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
Age: 76 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
Age: 60 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.
</TABLE>
B-16
<PAGE> 73
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Don G. Powell*..................... President, Chief Executive Officer and a Director of
2800 Post Oak Blvd. VK/AC Holding, Inc. and Van Kampen American Capital and
Houston, TX 77056 Chairman, Chief Executive Officer and a Director of the
Age: 56 Distributor, the Adviser, the VK Adviser, Van Kampen
American Capital Management, Inc. and Van Kampen American
Capital Advisors, Inc. Chairman, President and a Director
of Van Kampen American Capital Exchange Corporation,
American Capital Contractual Services, Inc. and American
Capital Shareholders Corporation. Chairman and a Director
of ACCESS Investor Services, Inc. ("ACCESS"), Van Kampen
Merritt Equity Advisors Corp., Van Kampen Merritt Equity
Holdings Corp., and VCJ Inc., McCarthy, Crisanti &
Maffei, Inc., McCarthy, Crisanti & Maffei Acquisition,
and Van Kampen American Capital Trust Company. Chairman,
President and a Director of Van Kampen American Capital
Services, Inc. President, Chief Executive Officer and a
Trustee of each of the Van Kampen American Capital Funds.
Director, Trustee or Managing General Partner of other
open-end investment companies and closed-end investment
companies advised by the Adviser or the VK Adviser.
Jerome L. Robinson................. President of Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director of Pacesetter Software, a
Age: 73 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
Age: 71 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
Age: 56 Capital Funds. He also is a Trustee of The Explorer Trust
and closed-end investment companies advised by the VK
Adviser.
</TABLE>
B-17
<PAGE> 74
<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
Age: 74 of paper products. Trustee, and former President of
Whitney Museum of American Art. Formerly, Chairman of
Institute for Educational Leadership, Inc., Board of
Visitors, Graduate School of The City University of New
York, Academy of Political Science. Trustee of Committee
for Economic Development. Director of Public Education
Fund Network, Fund for New York City Public Education.
Trustee of Barnard College. Member of Dean's Council,
Harvard School of Public Health. Member of Mental Health
Task Force, Carter Center. A Trustee of each of the Van
Kampen American Capital Funds.
</TABLE>
- ---------------
* Such Trustees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Messrs. Powell and McDonnell are interested persons of the
Adviser and the Fund by reason of their 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.
Messrs. Powell and McDonnell own, or have the opportunity to purchase, an
equity interest in VK/AC Holding, Inc., the parent company of VKAC and have
entered into employment contracts (for a term of five years) with VKAC.
The Fund's Officers other than Messrs. Hegel, Nyberg, Wood, Sullivan,
Dalmaso, Martin, Wetherell and Hill are located at 2800 Post Oak Blvd., Houston,
TX 77056. Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell and
Hill are located at One Parkview Plaza, Oakbrook Terrace, IL 60181.
OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
- ------------------------- -------------------------- -------------------------------------------
<S> <C> <C>
William N. Brown......... Vice President Executive Vice President of the VK Adviser,
Age: 42 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,
Age: 39 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
Age: 49 Accounting Officer of most of the investment companies advised
by the AC Adviser.
</TABLE>
B-18
<PAGE> 75
<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
Age: 42 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.
Age: 49 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.
Age: 54 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
Age: 51 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
Age: 40 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
Age: 40 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-19
<PAGE> 76
<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
Age: 36 companies advised by the Adviser, formerly
Tax Manager/Assistant Controller.
Nicholas Dalmaso......... Assistant Secretary Assistant Vice President and Senior
Age: 31 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
Age: 32 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
Age: 39 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-20
<PAGE> 77
<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
Age: 39 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
Age: 31 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
Age: 63 Kampen American Capital Funds.
</TABLE>
Each of the foregoing trustees and officers holds the same position with
each of 46 other Van Kampen American Capital mutual funds (the "Fund Complex").
Each trustee who is not an affiliated person of the Adviser, the Distributor or
VKAC (each a "Non-Affiliated Trustee") is compensated by an annual retainer and
meeting fees for services to the funds in the Fund Complex. Each fund in the
Fund Complex 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.
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 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
B-21
<PAGE> 78
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...................... $ 980 $-0- $ 2,000 $84,250
Dr. Richard E. Caruso.................. 740 -0- -0- 57,250
Philip P. Gaughan...................... 320 -0- -0- 76,500
Linda Hutton Heagy..................... 310 -0- 2,500 38,417
Dr. Roger Hilsman...................... 1,020 -0- -0- 91,250
R. Craig Kennedy....................... 400 -0- 2,500 92,625
Donald C. Miller....................... 360 -0- -0- 94,625
Jack E. Nelson......................... 400 -0- 2,500 93,625
David Rees............................. 980 -0- -0- 83,250
Jerome L. Robinson..................... 400 -0- -0- 89,375
Lawrence J. Sheehan.................... 1,020 -0- -0- 91,250
Dr. Fernando Sisto..................... 1,160 -0- 2,250 98,750
Wayne W. Whalen........................ 400 -0- 2,250 93,375
William S. Woodside.................... 940 -0- -0- 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 December
31, 1995 or the Fund Complex' last calendar year ended December 31, 1995.
(2) Messrs. Powell and McDonnell, trustees of the Fund, are affiliated persons
of the Adviser and are not eligible for compensation or retirement benefits
from the Registrant. 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. Gaughan retired from the Board of Trustees on January 26, 1996. Messrs.
Caruso, Rees, and Sheehan were removed from the Board of Trustees effective
September 7, 1995, January 29, 1996 and January 29, 1996, respectively.
(3) The amounts shown in this column are accumulated from the Aggregate
Compensation before Deferral of the Fund during its fiscal year ended
December 31, 1995. The following trustees deferred all or a portion of their
compensation from the Fund during the fiscal year ended December 31, 1995:
Dr. Caruso, $740; Mr. Gaughan, $160; Ms. Heagy, $200; Mr. Kennedy, $200; Mr.
Miller, $160; Mr. Nelson, $200; Mr. Robinson, $200; Dr. Sisto, $660; and Mr.
Whalen, $200. The cumulative deferred compensation (including interest)
accrued with respect to each trustee from the Fund as of December 31, 1995
is as follows: Dr. Caruso, $1,602; Mr. Gaughan, $160; Ms. Heagy, $200; Mr.
Kennedy, $200; Mr. Miller, $160;
(See notes on following page)
B-22
<PAGE> 79
Mr. Nelson, $200; Mr. Robinson, $200; Dr. Sisto, $693; and Mr. Whalen, $200.
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 shown in this column are zero because the Fund did not adopt its
retirement plan until after the end of its 1995 fiscal year. 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 be approximately
$4,500 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 before Deferral of each of the 46 mutual funds in the Fund
Complex as of December 31, 1995. 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 March 22, 1996, the trustees and officers of the Fund as a group
owned less than 1% of the shares of the Fund. As of March 22, 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.
INVESTMENT ADVISORY AGREEMENTS
The Fund and the Adviser are parties to an investment advisory agreement
(the "Advisory Agreement"). Under the Advisory Agreement, the Fund retains the
Adviser to manage the investment of its assets and to place orders for the
purchase and sale of its portfolio securities. The Adviser is responsible for
obtaining and evaluating economic, statistical, and financial data and for
formulating and implementing investment programs in furtherance of the Fund's
investment objectives. The Adviser also furnishes at no cost to the Fund (except
as noted herein) the services of sufficient executive and clerical personnel for
the Fund as are necessary to prepare registration statements, prospectuses,
shareholder reports, and notices and proxy solicitation materials. In addition,
the Adviser furnishes at no cost to the Fund the services of a President of the
Fund, one or more Vice Presidents as needed, and a Secretary.
B-23
<PAGE> 80
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
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,
the Distributor, the Sub-Adviser and certain of their affiliates have entered
into an agreement pursuant to which the Distributor distributes shares of
certain mutual funds (not including the Fund) managed by the Sub-Adviser and
such parties share distribution fees, service fees and expenses with respect
thereto.
Under the Advisory Agreement, the Fund bears the cost of its accounting
services, which includes maintaining its financial books and records and
calculating its daily net asset value. The costs of such accounting services
include the salaries and overhead expenses of a Treasurer or other principal
financial officer 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, office space, facilities and equipment costs attributable to the
provision of accounting services to the Fund. The services provided by the
Adviser are at cost. The Fund also pays shareholder service agency fees,
distribution fees, service fees, custodian fees, legal and auditing fees, the
costs of reports to shareholders and all other ordinary expenses not
specifically assumed by the Adviser. The Advisory Agreement also provides that
the Adviser shall not be liable to the company 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 Fund pays to the Adviser as compensation
for the services rendered, facilities furnished, and expenses paid by it a fee
payable monthly computed on average daily net assets of the Fund at an annual
rate of 1.00% of the average daily net assets of the Fund.
The average net asset value for purposes of computing the advisory fee is
determined by taking the average of all of the determinations of net asset value
for each business day 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 is reduced by any commissions, tender solicitation and
other fees, brokerage or similar payments received by the Adviser or any 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 such subsidiary of VK/AC Holding, Inc. in connection with
obtaining such payments. The Adviser agrees to use its best efforts to recapture
tender solicitation fees and exchange offer fees for the Fund's benefit, and to
advise the Trustees of the Fund of any other commissions, fees, brokerage or
similar payments which may be possible under applicable laws for the Adviser or
any 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 Fund for any fiscal year exceed the most restrictive
expense limitations applicable in the states where the Fund's shares are
qualified for sale, the compensation due the Adviser will be reduced by the
amount of such excess and that, if a reduction in and refund of the advisory fee
is insufficient, the Adviser will pay the Fund monthly an amount sufficient to
make up the deficiency, subject to readjustment during the year. Ordinary
business expenses include the investment advisory fee and other operating costs
paid by the Fund except (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.
Currently, the most restrictive applicable limitations are 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 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 Fund's Trustees or (ii) by vote of a majority of the Fund's outstanding
voting securities and (b) by the affirmative vote of a majority of the Trustees
who are not parties to the agreement or interested persons of any such party by
votes cast in person at a meeting called for
B-24
<PAGE> 81
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 not more than 60 days' nor less than 30 days' written notice.
Pursuant to the Advisory Agreement and the Sub-advisory Agreement, the Fund
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
Fund 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 Fund.
During the fiscal years ended December 31, 1994 and 1995, the Adviser
received $101,680 and $27,072, respectively, in advisory fees from the Fund. For
such periods the Fund paid $-0- and $29,687, respectively, for accounting
services. A substantial portion of these amounts was paid to the Adviser in
reimbursement of personnel, facilities and equipment costs attributable to the
provision of accounting services to the Fund.
DISTRIBUTOR
The Distributor acts as the principal underwriter of the Fund's shares
pursuant to a written agreement (the "Underwriting Agreement"). The Distributor
has the exclusive right to distribute shares of the Fund through affiliated and
unaffiliated 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 Fund as may be sold to the public. The Distributor is
not obligated to sell any stated number of shares. The Underwriting Agreement is
renewable from year to year if approved (a) by the Fund's 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 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.
For the fiscal years ending December 31, 1994 and 1995, total underwriting
commissions on the sale of shares of the Fund were $37,929 and $49,245,
respectively. Of such total, the amount retained by the Distributor was $6,209
and $15,161, respectively, and the remainder was reallowed to dealers. Of such
dealer reallowance, $5,860 and $6,383, respectively, was received by Advantage
Capital Corporation, a former affiliated dealer of the Fund.
DISTRIBUTION PLANS
The Fund adopted a Class A distribution plan, a Class B distribution plan
and a Class C distribution plan (the "Class A Plan," "Class B Plan" and "Class C
Plan," respectively) to permit the Fund directly or indirectly to pay expenses
associated with servicing shareholders and in the case of the Class B Plan and
Class C Plan the distribution of its shares (the Class A Plan, the Class B Plan
and the Class C Plan are sometimes referred to herein collectively as "Plans"
and individually as a "Plan").
The Trustees have authorized payments by the Fund under the Plans to
reimburse the Distributor for its payments to certain financial institutions
(which may include banks), securities dealers and other industry professionals
(collectively, "authorized dealers") for administration, servicing Fund
shareholders who are also their clients or distribution. Such payments are based
on an annual percentage of the value of Fund shares held in shareholder accounts
for which such authorized dealers are responsible. With respect to the Class A
Plan, the Distributor intends to make payments thereunder only to compensate
authorized dealers for personal service or the maintenance of shareholder
accounts. With respect to the Class B Plan and Class C Plan, authorized payments
by the Fund include payments at an annual rate of up to 0.25% of the net assets
of the shares of the respective class to reimburse the Distributor for payments
for personal service or the maintenance of shareholder accounts. With respect to
the Class B Plan, authorized payments by the Fund also include payments at an
annual rate of up to 0.75% of the net assets of the Class B shares to reimburse
the Distributor for (1) commissions and transaction fees of up to 4% of the
purchase price of Class B shares purchased by the clients of authorized dealers,
(2) out-of-pocket expenses of printing and distributing
B-25
<PAGE> 82
prospectuses and annual and semi-annual shareholder reports to other than
existing shareholders, (3) out-of-pocket and overhead expenses for preparing,
printing and distributing advertising material and sales literature, (4)
expenses for promotional incentives to authorized dealers, (5) advertising and
promotion expenses, including conducting and organizing sales seminars,
marketing support salaries and bonuses, and travel-related expenses, and (6)
interest expense computed at the three month LIBOR rate plus 1 1/2% compounded
quarterly on the unreimbursed distribution expenses. With respect to the Class C
Plan, authorized payments by the Fund also include payments at an annual rate of
up to 0.75% of the net assets of the Class C shares to reimburse the Distributor
for (1) upfront commissions and transaction fees of up to 0.75% of the purchase
price of Class C shares purchased by the clients of authorized dealers and
ongoing commissions and transaction fees paid to authorized dealers in an amount
up to 0.75% of the average daily net assets of the Fund's Class C shares, (2)
out-of-pocket expenses of printing and distributing prospectuses and annual and
semi-annual shareholder reports to other than existing shareholders, (3)
out-of-pocket and overhead expenses for preparing, printing and distributing
advertising material and sales literature, (4) expenses for promotional
incentives to authorized dealers, (5) advertising and promotion expenses,
including conducting and organizing sales seminars, marketing support salaries
and bonuses, and travel-related expenses, and (6) interest expense computed at
the three month LIBOR rate plus 1 1/2% compounded quarterly on the unreimbursed
distribution expenses. Such reimbursements are subject to the maximum sales
charge limits specified by the NASD for asset-based charges.
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. In addition,
state securities laws on this issue may differ from the interpretations of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law.
As required by Rule 12b-1 under the 1940 Act, each plan and the forms of
servicing agreement were approved by the Trustees, including a majority of the
Trustees who are not affiliated persons (as defined in the 1940 Act) of the Fund
and who have no direct or indirect financial interest in the operation of either
plan or in any agreements related to the plan ("Independent Trustees"). In
approving each plan in accordance with the requirements of Rule 12b-1, the
Trustees determined that there is a reasonable likelihood that each plan will
benefit the Fund and its shareholders.
Each plan requires the Distributor to provide the Trustees at least
quarterly with a written report of the amounts expended pursuant to each plan
and the purposes for which such expenditures were made. Unless sooner terminated
in accordance with their terms, the plans will continue in effect for a period
of one year and thereafter will continue in effect so long as such continuance
is specifically approved at least annually by the Trustees, including a majority
of Independent Trustees.
Each plan may be terminated by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting shares of the
respective class of the Fund. Any change in any of the plans that would
materially increase the distribution or service expenses borne by the Fund
requires shareholder approval voting separately by class; otherwise, it may be
amended by a majority of the Trustees, including a majority of the Independent
Trustees, by vote cast in person at a meeting called for the purpose of voting
upon such amendment. So long as the plans are in effect, the selection or
nomination of the Independent Trustees is committed to the discretion of the
Independent Trustees.
For the fiscal year ended December 31, 1995, aggregate expenses under the
Class A Plan were $11,884 or 0.09% of the Class A share's average daily net
assets. Such expenses were paid to reimburse the Distributor for payments made
to authorized dealers for servicing Fund shareholders and administering the
Class A Plan. For the fiscal year ended December 31, 1995, the Fund's aggregate
expenses under the Class B Plan were $78,577 or 1.00% of the Class B share's
average daily net assets. Such expenses were paid to reimburse the Distributor
for the following payments: $58,933 for commissions and transaction fees paid to
authorized dealers in respect of sales of Class B shares of the Fund, and
$19,644 for fees paid to authorized dealers for servicing Class B
B-26
<PAGE> 83
shareholders and administering the Class B Plan. For the fiscal year ended
December 31, 1995, the Fund's aggregate expenses under the Class C Plan were
$16,189 or 1.00% of the Class C share's average daily net assets. Such expenses
were paid to reimburse the Distributor for the following payments: $12,142 for
commissions and transaction fees paid to authorized dealers in respect of sales
of Class C shares of the Fund, and $4,047 for fees paid to authorized dealers
for servicing Class C shareholders and administering the Class C Plan.
TRANSFER AGENT
During the fiscal year ended December 31, 1995, ACCESS, shareholder service
agent and dividend disbursing agent for the Fund, received fees aggregating
$131,969, for these services. These services are provided at cost plus a profit.
PORTFOLIO TURNOVER
The portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for a fiscal year by the average
monthly value of the Fund's portfolio securities during such fiscal year.
Securities which mature in one year or less at the time of acquisition are not
included in this computation. The turnover rate may vary greatly from year to
year as well as within a year. The Fund's portfolio turnover rate for prior
years is shown under "Financial Highlights" in the Prospectus. The annual
turnover rate is expected to exceed 100%, which is higher than that of many
other investment companies. A 100% turnover rate would occur if all the Fund's
portfolio securities were replaced during one year.
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 Fund and of the
other Van Kampen American Capital mutual funds as a factor in the selection of
firms to execute portfolio transactions for the Fund.
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 or dealer who supplies brokerage and research services, a
commission for effecting a securities transaction in excess of the amount of
commission another broker or dealer 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 Fund's 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 dealers is essential to its provision of high quality portfolio
management services to the Fund. The Advisers undertake that such higher
B-27
<PAGE> 84
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 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 its 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.
During the period May 16, 1994 through December 31, 1994, the Fund paid
$66,428 in broker commissions on portfolio transactions. For the fiscal year
ended December 31, 1995, the Fund paid $93,048 in brokerage commissions on
portfolio transactions.
Prior to December 20, 1994, the Fund placed brokerage transactions with
brokers that were considered affiliated persons of the Adviser's former parent,
The Travelers Inc. Such affiliated persons included Smith Barney, Inc. Effective
December 20, 1994, Smith Barney, Inc. ceased to be an affiliate of the Adviser.
During the period May 16, 1994 through December 31, 1994, the Fund paid Smith
Barney, Inc. $192 in commissions representing 0.29% of transactions with
affiliates to total commissions and 0.28% of value of the brokerage transactions
with affiliates to total brokerage transactions. The Fund paid no commissions to
Smith Barney, Inc. during the fiscal year ended December 31, 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 net asset value of Fund shares
is computed by dividing the value of all securities plus other assets, less
liabilities, by the number of shares outstanding, and adjusting to the nearest
cent per share.
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 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.
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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.
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.
INVESTMENTS BY MAIL
A shareholder investment account may be opened by completing the
application accompanying this 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 the
shareholder service agent. 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.
CUMULATIVE PURCHASE DISCOUNT
The reduced sales charges reflected in the sales charge table as shown in
the Prospectus under "Purchase of Shares -- Sales Charge Table" 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
trustee 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
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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 Participating 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 will receive the reduced sales charge applicable to the
amount represented by the goal as if it were a single investment. Escrowed
shares totaling 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 escrowed
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 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.
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 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
1.00% of the net asset value of the shares at the time of purchase, or 1.00% 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 certain
Qualified Purchasers (e.g., 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
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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 "Purchase of Shares," redemption of
Class B shares and Class C shares may 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 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.
(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 Van Kampen 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) 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.
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(d) Redemption Pursuant to a Fund's Systematic Withdrawal Plan
A shareholder may elect to participate in a systematic withdrawal plan (the
"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.
(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 at net
asset value, with credit for any CDSC -- Class C paid on the redeemed shares,
any portion or all of his or her redemption proceeds (plus that amount necessary
to acquire a fractional share to round off his or her purchase to the nearest
full share) in Class C shares of the Fund, provided that the reinvestment is
effected within 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.
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
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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 (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 capital
losses) 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 similarly to distribute to
shareholders any net capital gains. Net capital gains are the excess, if any, of
the Fund's net long-term capital gains on the sale of securities during the year
over its net short-term capital losses on the sale of securities, including
capital losses carried forward from prior years in accordance with the tax laws.
Such capital gains distributions, if any, are distributed 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 the shareholder service agent in writing and
receive cash.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Sections 851-855 of the Code. This means the Fund must
pay all or substantially all its net investment 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 the diversification of its assets. 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
tax treatment afforded regulated investment companies, 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 the Fund's earnings and profits would be taxed to
shareholders as ordinary income.
The Fund is subject to a 4% excise tax to the extent it fails to distribute
to its shareholders during any calendar year at least 98% of its ordinary net
investment 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 intends to distribute sufficient amounts to avoid liability for the excise
tax.
Dividends from net investment income are taxable to shareholders as
ordinary income. A portion of dividends taxable as ordinary income may qualify
for the 70% 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 30th of any year and paid before February 1st 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. Such capital gains distributions and distributions from short-term
capital gains are not eligible for the dividends received deduction referred to
above. 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, 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
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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 for avoiding income and excise taxes. The Fund will monitor its
transactions and may make certain tax elections in order to mitigate the effect
of these rules and prevent disqualification of the Fund as a regulated
investment company.
Investments of the Fund in securities issued at a discount or providing for
deferred interest or payment of interest in kind are subject to special tax
rules that will affect the amount, timing and character of distributions to
shareholders. For example, with respect to securities issued at a discount, the
Fund will be required to accrue as income each year a portion of the discount
and to distribute such income each year in order to maintain its qualification
as a regulated investment company and to avoid income and excise taxes. In order
to generate sufficient cash to make distributions necessary to satisfy the
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 regulated investment company 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 regulated investment company
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 or disposition
of the stock (collectively "PFIC income"), plus interest thereon, even if the
regulated investment company distributes the PFIC income as a taxable dividend
to its stockholders. The balance of the PFIC income will be included in the
regulated investment company's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is distributed
to its shareholders. If the Fund invests in a PFIC and elects to treat the PFIC
as a "qualified electing fund," then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the qualified electing fund's annual ordinary earnings and net
capital gain, which most likely would have to be distributed 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, would be effective
for taxable years ending after their promulgation as final regulations.
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Dividends to shareholders who are Non-United States persons (including but
not limited to non-resident aliens) may be subject to a United States
withholding tax at a rate of up to 30% under existing provisions of the Code
applicable to foreign individuals and entities unless a reduced rate of
withholding or a withholding exemption is provided under applicable treaty laws.
Non-United States shareholders are urged to consult their own tax advisers
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 these 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 federal 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 back-up 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.
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 December 31, 1995 was 7.90%; and (ii) the one year and six and a half
month period ending December 31, 1995 was 3.78%, respectively. The Fund's
average annual total return (computed in the manner described in the Prospectus)
for Class B shares of the Fund for the (i) one year period ending December 31,
1995 was 8.31%; and (ii) the one year and six and a half month period ending
December 31, 1995 was 3.62%, respectively. The Fund's average annual total
return (computed in the manner described in the Prospectus) for Class C shares
for (i) the one year period ending December 31, 1995 was 11.16%; and (ii) the
one year and six and a half month period ending December 31, 1995 was 6.12%,
respectively. 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.
From time to time, in reports or other communications, or in advertising or
sales materials, the Adviser may announce the results of actual tests performed
by DALBAR Financial Securities, Inc., an independent research firm, as they
relate to the level of services for mutual fund investors, and may refer to the
Missouri Quality Award received by ACCESS, the Fund's transfer agent, in 1993.
In addition, the Adviser may also refer to the Houston Awards for Quality
received by Van Kampen American Capital in 1994.
The Fund may, from time to time: (1) illustrate the benefits of
tax-deferral by comparing taxable investments to investments made through
tax-deferred retirement plans; (2) illustrate in graph or chart form, or
otherwise, the benefits of dollar cost averaging by comparing investments made
pursuant to a systematic investment plan to investments made in a rising market;
(3) illustrate allocations among different types of mutual funds for investors
at different stages of their lives; and (4) in reports or other communications
to shareholders or in advertising material, illustrate the benefits of
compounding at various assumed rates of return. Such illustrations may be in the
form of charts or graphs and will not be based on historical returns experienced
by the Funds.
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From time to time marketing materials may provide a portfolio manager
update, an adviser update or discuss general economic conditions and outlooks.
The Fund's marketing materials may also show the Fund's asset class
diversification, top five 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 Fund. It is also
anticipated that foreign sub-custodians will be used for certain of the Fund's
investments in foreign securities. Any such sub-custodian shall be utilized
pursuant to an agreement between the Custodian and the foreign sub-custodian
that has been approved by the Trustees pursuant to Rule 17-5 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 annual audits of the
Fund's financial statements.
B-36
<PAGE> 93
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS 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 Managed Assets Fund (the "Fund") at December 31, 1995, 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 ac-
counting 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 fi-
nancial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assur-
ance 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 princi-
ples 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 December 31, 1995 by correspondence
with the custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a rea-
sonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Houston, Texas
February 15, 1996
B-37
<PAGE> 94
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK AND EQUIVALENTS 70.1%
AUSTRALIA 0.9%
20,000 Pioneer International, Ltd.......................... $ 51,583
13,000 Smith (Howard)...................................... 61,357
25,000 Tab Corp Holdings................................... 70,611
*37,000 TNT................................................. 48,952
-----------
232,503
-----------
AUSTRIA 0.2%
240 AMS Austria Mikros.................................. 38,934
-----------
BELGIUM 0.4%
2,100 GIB................................................. 92,192
-----------
BRAZIL 0.4%
5,300 Centrais Eletricas Brasileiras 72,213
*5,000 Usiminas Usi........................................ 40,625
-----------
112,838
-----------
CANADA 0.4%
2,000 Inco, Ltd........................................... 66,093
1,300 Seagram Co., Ltd.................................... 44,865
-----------
110,958
-----------
FINLAND 0.5%
1,000 Kymmene Corp........................................ 26,440
2,700 Nokia (AB) OY, Series A............................. 106,153
-----------
132,593
-----------
FRANCE 3.9%
*1,700 Axime............................................... 130,876
1,640 Christian Dior...................................... 176,827
244 Club Mediterranee................................... 19,482
1,120 Credit Local De France (includes 84 warrants)....... 89,655
1,008 Primagaz (Cie Gaz).................................. 74,120
1,000 Sanofi.............................................. 64,100
*2,000 SGS Thomson Micro................................... 76,577
290 Sidel............................................... 90,370
770 Societe Generale.................................... 95,130
8,000 Usindr Sacilor...................................... 105,779
600 Union Assurance Federales........................... 71,676
-----------
994,592
-----------
GERMANY 2.8%
*2,200 Adidas.............................................. 116,403
400 Bayer............................................... 105,542
2,000 Berliner Elektro Holdings........................... 65,249
110 Ckag Colonia Konzern................................ 71,314
1,200 Deutsche Bank....................................... 56,859
70 Mannesmann.......................................... 22,286
4,900 Prakticker.......................................... 149,955
130 Siemens............................................. 71,140
100 Wella............................................... 53,816
-----------
712,564
-----------
</TABLE>
See Notes to Financial Statements
B-38
<PAGE> 95
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
HONG KONG 2.7%
78,000 First Pacific Co.................................... $ 86,751
15,000 Hong Kong Electric.................................. 49,176
65,000 Hong Kong Land Holding.............................. 120,250
4,800 HSBC Holdings....................................... 72,628
16,000 Hutchison Whampoa................................... 97,459
*330,000 Jilin Chemical Industries, Class H.................. 68,283
11,000 Sun Hung Kai Properties............................. 89,977
13,000 Swire Pacific....................................... 100,873
-----------
685,397
-----------
INDONESIA 0.3%
3,000 Perusahaan Persero Telekom.......................... 75,750
-----------
ITALY 0.3%
2,000 Gucci Group......................................... 77,750
-----------
JAPAN 14.2%
5,000 Amada, Co........................................... 49,395
13,000 Bank of Tokyo....................................... 227,894
4,000 Dainei Telecom Engineering.......................... 34,479
*8,000 Dainippon Screen Manufacturing Co................... 70,199
19,000 Daiwa Securities.................................... 290,751
*26,000 Denki Kagaku Kogyo.................................. 94,431
12,000 Fujitsu............................................. 133,656
13,000 Hitachi............................................. 130,944
5,000 Honda Motor Co...................................... 103,148
*5,000 Japan Air Lines Co.................................. 33,172
4,000 Komatsu............................................. 32,930
10,000 Kumagai Gumi Co..................................... 40,194
2,000 Kyocera Corp........................................ 148,571
10,000 Marubeni Corp....................................... 54,140
2,000 Maruichi Steel Tube................................. 36,610
5,000 Matsushita Electric Industrial Co................... 81,356
4,000 Mitsubishi Estate................................... 49,976
17,000 Mitsubishi Heavy Industries......................... 135,506
20,000 Mitsukoshi.......................................... 187,893
3,000 Nippon Hodo Corp. .................................. 50,847
10 Nippon Telephone & Telegraph Corp................... 80,872
6,000 Nishimatsu Construction............................. 70,315
11,000 Nomura Securities................................... 239,709
7,000 Omron Corp. ........................................ 161,356
9,000 Onward Kashiyama Co. ............................... 146,441
11,000 Ricoh Co............................................ 120,387
2,000 Rohm Co. ........................................... 112,930
</TABLE>
See Notes to Financial Statements
B-39
<PAGE> 96
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
3,000 Sanwa Bank.......................................... $ 61,017
6,000 SXL Corp............................................ 62,179
9,000 Tadano.............................................. 75,835
1,000 TDK Corp............................................ 51,041
4,000 Tokio Marine & Fire Insurance Co.................... 52,300
3,000 Tokyo Electron...................................... 116,223
7,000 Tokyu Corp. ........................................ 49,424
10,000 Toshiba Corp........................................ 78,354
*2,000 Toyota Motor Corp. ................................. 42,421
5,000 Yamanouchi Pharmacy................................. 107,506
-----------
3,614,402
-----------
MALAYSIA 1.2%
10,000 Commerce Asset Holding.............................. 50,400
26,000 Malaysian Pacific Industries........................ 80,364
30,000 Resorts World....................................... 160,648
-----------
291,412
-----------
MEXICO 0.8%
8,000 Cemex............................................... 55,500
6,000 Empresas Ica Sociedad............................... 61,500
2,400 Telefonos de Mexico................................. 76,500
-----------
193,500
-----------
NETHERLANDS 2.5%
*2,000 BE Semiconductor Industries......................... 26,173
1,732 ING Group........................................... 115,704
2,000 Philips Electronics................................. 72,288
2,100 Philips Electronics, Inc. .......................... 75,338
200 Royal Dutch Petroleum Co. .......................... 28,225
3,900 Stork............................................... 96,729
540 Unilever............................................ 75,883
1,000 Ver Ned Uitgevers................................... 137,284
-----------
627,624
-----------
NORWAY 0.9%
1,600 Kvaerner............................................ 53,552
1,500 Orkla............................................... 71,518
*13,000 Uni Storebrand...................................... 71,833
2,000 Unitor.............................................. 27,470
-----------
224,373
-----------
PORTUGAL 0.3%
*3,000 Investec Consultant................................. 60,130
3,500 Portucel Industrial................................. 20,790
-----------
80,920
-----------
SINGAPORE 1.2%
9,000 Fraser & Neave...................................... 114,528
10,000 Overseas Union Bank................................. 68,929
20,000 Singapore Land...................................... 129,375
-----------
312,832
-----------
</TABLE>
See Notes to Financial Statements
B-40
<PAGE> 97
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SOUTH KOREA 0.6%
2,000 Samsung Electric Co. ............................... $ 120,000
411 Samsung Electronic.................................. 24,650
-----------
144,650
-----------
SPAIN 0.3%
1,900 Tabacalera, SA...................................... 72,053
-----------
SWEDEN 3.8%
2,000 Astra............................................... 79,220
13,000 Atlas Copco......................................... 199,708
9,000 Celsius............................................. 182,990
6,600 Ericsson (LM) Telephone............................. 129,223
2,000 Hoganas............................................. 58,436
35,000 Rottneros........................................... 36,899
15,000 Skandinavska Emskilda Banken........................ 124,253
4,000 Stora Kopparbergs................................... 47,894
4,100 Svedala Industrial.................................. 105,592
-----------
964,215
-----------
SWITZERLAND 2.9%
140 Alusisse Lonza Holdings............................. 110,932
200 Ciba Geigy.......................................... 175,986
875 CS Holdings......................................... 89,700
80 Nestle.............................................. 88,496
100 Schindler Holdings.................................. 103,598
90 SGS Holdings........................................ 178,673
-----------
747,385
-----------
THAILAND 0.6%
9,000 National Financial & Securities..................... 48,233
1,000 Siam Cement Co...................................... 55,419
*17,000 Telecomasia......................................... 51,628
-----------
155,280
-----------
UNITED KINGDOM 8.4%
50,000 Astec............................................... 88,523
22,000 BAA................................................. 166,392
5,500 BOC Group........................................... 76,961
12,000 British Telecom..................................... 65,787
25,000 Cable & Wireless.................................... 178,987
5,000 De La Rue........................................... 50,551
14,000 Dixons Group........................................ 96,537
18,000 Fairey Group........................................ 150,116
10,000 Farnell Electronic.................................. 111,586
20,000 Granada Group....................................... 200,342
294 Inchcape............................................ 1,137
8,200 London Electricity.................................. 73,035
</TABLE>
See Notes to Financial Statements
B-41
<PAGE> 98
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
8,000 Marks & Spencer...................................... $ 55,909
6,992 National Grid Group.................................. 21,609
10,000 National Westminster................................. 100,714
30,000 Next................................................. 212,455
20,000 Reuters Holdings..................................... 183,103
12,000 Sainsbury (J)........................................ 73,148
7,000 Severn Trent......................................... 74,740
3,000 Shell Transportation & Trading....................... 39,672
5,000 SmithKline Beecham................................... 55,133
15,000 Tesco................................................ 69,188
-----------
2,145,625
-----------
UNITED STATES 19.6%
*700 Adaptec, Inc......................................... 28,700
400 Aetna Lite & Casualty Co............................. 27,700
1,400 Allstate Corp........................................ 57,575
400 Aluminum Co. of America.............................. 21,150
*500 American Radio System Corp., Class A................. 14,000
*400 Amgen, Inc........................................... 23,750
500 Analog Devices, Inc.................................. 17,688
500 Applied Materials, Inc............................... 19,688
*100 Ascend Communications, Inc........................... 8,113
500 AT&T Corp............................................ 32,375
800 BankAmerica Corp..................................... 51,800
1,300 Bank of Boston Corp.................................. 60,125
400 Bank of New York, Inc................................ 19,500
200 BayBanks, Inc........................................ 19,650
*1,100 Bay Networks, Inc.................................... 45,238
7,000 BE Semiconductor Industries.......................... 91,000
500 Boeing Co............................................ 39,188
400 Bowater, Inc......................................... 14,200
500 Bristol Myers Squibb Co.............................. 42,938
*600 Buffets, Inc......................................... 8,250
100 Burlington Northern.................................. 7,800
*400 Cabletron Systems, Inc............................... 32,400
450 Cadence Design Systems, Inc.......................... 18,900
300 Case Corp............................................ 13,725
500 Cellular Communications, Inc......................... 24,875
900 Chemical Banking Corp................................ 52,875
400 Chrysler Corp........................................ 22,150
500 Circon Corp.......................................... 10,125
*500 Cisco Systems, Inc................................... 37,313
600 Citicasters, Inc..................................... 14,175
</TABLE>
See Notes to Financial Statements
B-42
<PAGE> 99
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
600 Citicorp.............................................. $ 40,350
*200 Coherent, Inc......................................... 8,100
*600 Community Health System, Inc.......................... 21,375
*800 Compaq Computer Corp.................................. 38,400
1,000 Computer Associates International, Inc................ 56,875
1,450 ConAgra, Inc.......................................... 59,812
400 Conrail, Inc.......................................... 28,000
300 Conseco, Inc.......................................... 18,787
700 Consolidated Stores Corp.............................. 15,225
*1,100 Cox Communications, Inc., Class A..................... 21,450
800 CPC International, Inc................................ 54,900
300 CSX Corp.............................................. 13,688
*600 Cytec Industries, Inc................................. 37,425
*500 Dell Computer Corp.................................... 17,312
500 Disney (Walt) Co...................................... 29,500
700 Dover Corp............................................ 25,812
*900 DST Systems, Inc...................................... 25,650
*1,500 Eckerd (Jack) Corp.................................... 66,937
*1,000 Emmis Broadcasting Corp., Class A..................... 31,000
*1,000 Evergreen Media Co.................................... 32,000
900 Exxon Corp............................................ 72,112
1,300 Federal National Mortgage Association................. 161,362
1,000 Federated Department Stores, Inc...................... 27,500
500 First Data Corp....................................... 33.438
*800 Foundation Health Corp................................ 34,400
700 Franklin Resources, Inc............................... 35,263
700 Frontier Corp......................................... 21,000
*400 FTP Software, Inc..................................... 11,600
500 Gap, Inc.............................................. 21,000
*700 Gateway 2000, Inc..................................... 17,150
2,300 General Nutrition Companies, Inc...................... 52,900
600 Genzyme Corp.......................................... 37,425
*1,050 Grand Casinos, Inc.................................... 24,413
20,000 Grandetel Technologies, Inc........................... 10,000
600 Greenfield Industries, Inc............................ 18,750
2,000 Green Tree Financial Corp............................. 52,750
600 Guidant Corp.......................................... 25,350
500 Halliburton Co........................................ 25,312
700 Harmischfeger Industries, Inc......................... 23,275
*850 Health Management Association, Inc., Class A.......... 22,207
300 Hercules, Inc......................................... 16,912
</TABLE>
See Notes to Financial Statements
B-43
<PAGE> 100
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
600 Illinois Central Corp.................................. $ 23,025
500 Illinois Tool Works, Inc............................... 29,500
200 IMC Global, Inc........................................ 8,175
*100 In Focus Systems, Inc.................................. 3,612
500 Intel Corp............................................. 28,375
*1,300 International Rectifier Corp........................... 32,500
400 James River Corp....................................... 9,650
200 Johnson Control, Inc................................... 13,750
750 Johnson & Johnson...................................... 64,219
468 Kimberly Clark Corp.................................... 38,727
*400 KLA Instruments Corp................................... 10,425
500 Komag, Inc............................................. 23,062
*1,900 Kroger Co.............................................. 71,250
*400 LAM Research Corp...................................... 18,300
1,800 LG Chemical, Ltd....................................... 37,710
*950 Lincare Holdings, Inc.................................. 23,750
600 Linear Technology Corp................................. 23,550
*300 Litton Industries, Inc................................. 13,350
*500 LSI Logic Corp......................................... 16,375
950 Marriot International, Inc............................. 36,337
*500 Maxicare Health Plans, Inc............................. 13,437
3,200 MCI Communications Corp................................ 83,600
*400 Medic Computer Systems, Inc............................ 24,200
*200 MediSense, Inc......................................... 6,325
400 Medtronic, Inc......................................... 22,350
300 Mentor Corp............................................ 6,900
700 Merck & Co., Inc....................................... 46,025
1,900 Mercury Financial Co................................... 25,175
4,000 Metalclad Corp......................................... 16,000
500 Microcom, Inc.......................................... 13,000
*700 Microsoft Corp......................................... 61,425
750 Mobil Corp............................................. 84,000
400 Monsanto Co............................................ 49,000
*400 MSC Industrial Direct, Inc., Class A................... 11,000
*500 Nautica Enterprises, Inc............................... 21,875
*500 Nellcor Puritan Bennett, Inc........................... 29,000
*200 Northwest Airlines Corp., Class A...................... 10,200
*700 Oak Technology, Inc.................................... 29,575
*1,700 Office Max. Inc........................................ 38,037
1,300 Omnicom Group, Inc..................................... 48,425
</TABLE>
See Notes to Financial Statements
B-44
<PAGE> 101
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
*400 Oracle System Corp.................................... $ 16,950
*400 Outback Steakhouse, Inc............................... 14,350
1,600 Panhandle Eastern Corp................................ 44,600
*300 Pairgain Technologies, Inc............................ 16,425
300 Parker Hennifin Corp.................................. 10,275
900 Penncorp Financial Group, Inc......................... 26,437
1,700 PepsiCo, Inc.......................................... 94,988
825 Pharmaceutical & Upjohn Co............................ 31,967
2,300 Phillip Morris Companies, Inc......................... 208,150
2,100 Praxair, Inc.......................................... 70,613
200 Ralston Purina Co..................................... 12,475
600 Reliastar Financial Corp.............................. 26,625
*500 Renal Treatment Centers, Inc.......................... 22,000
2,000 Richter Gedeon........................................ 38,400
*1,600 Safeway, Inc.......................................... 82,400
1,400 Schering-Plough Corp.................................. 76,650
*900 SCI Systems, Inc...................................... 27,900
*500 Seagate Technology, Inc............................... 23,750
1,200 Sears Roebuck & Co.................................... 46,800
1,500 Service Corp. International........................... 66,000
400 Sigma-Aldrich Corp.................................... 19,800
*1,200 Smith International, Inc.............................. 28,200
500 Snap-On, Inc.......................................... 22,625
1,500 Sprint Corp........................................... 59,813
*700 S3, Inc............................................... 12,338
850 Sun America, Inc...................................... 40,375
*200 Sun Microsystems, Inc................................. 9,125
*1,100 Symantec Corp......................................... 25,575
800 Terra Industries, Inc................................. 11,300
200 Texaco, Inc........................................... 15,700
200 Textron, Inc.......................................... 13,500
*400 3Com Corp............................................. 18,650
*1,300 Trump Hotels & Casino Resorts......................... 27,950
300 Union Carbide Corp.................................... 11,250
300 United Technologies Corp.............................. 28,463
1,300 United Waste Systems, Inc............................. 48,425
*300 US Robotics Corp...................................... 26,325
*450 Varity Corp........................................... 16,706
*700 Viacom, Inc., Class B................................. 33,163
</TABLE>
See Notes to Financial Statements
B-45
<PAGE> 102
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares Description Market Value
- -------------------------------------------------------------------------------
<S> <C> <C>
500 Vons Cosmetics, Inc,................................. $ 14,125
*600 Watson's Pharmaceuticals, Inc........................ 29,400
500 Williams Companies, Inc.............................. 21,937
*2,100 WorldCom, Inc........................................ 74,025
-----------
4,995,399
-----------
TOTAL COMMON STOCK AND EQUIVALENTS (Cost
$16,501,916)......................................... 17,835,741
-----------
<CAPTION>
Par
Amount
(000)
- ---------
<S> <C> <C>
UNITED STATES TREASURY NOTES 26.8%
$ **700 5.75%, 08/15/03...................................... 709,407
**2,500 6.75%, 02/28/97...................................... 2,544,150
**1,500 7.50%, 01/31/96...................................... 1,503,285
**560 7.50%, 02/15/05...................................... 635,606
**1,400 8.00%, 10/15/96...................................... 1,429,540
-----------
TOTAL UNITED STATES TREASURY NOTES (Cost $6,705,925). 6,821,988
-----------
CORPORATE OBLIGATIONS 0.6%
30 Acer, Inc. 4.00%, 06/10/01........................... 89,550
50 United Micro Electric, 1.25%, 06/08/04............... 63,000
-----------
TOTAL CORPORATE OBLIGATIONS (Cost $164,375).......... 152,550
-----------
REPURCHASE AGREEMENT 6.7%
1,710 Shearson Lehman Brothers, Inc., dated 12/29/95,
5.875%, due 01/02/96 (collateralized by U. S.
Government obligations in a pooled cash account)
repurchase proceeds $1,711,116 (Cost $1,710,000)..... 1,710,000
-----------
TOTAL INVESTMENTS (Cost $25,082,216) 104.2%..................... 26,520,279
OTHER ASSETS AND LIABILITIES, NET (4.2%)........................ (1,065,252)
-----------
NET ASSETS 100%................................................. $25,455,027
===========
</TABLE>
*Non-income producing security.
**Securities with a market value of $6.8 million were placed as collateral for
forward purchase commitments (see Note 2D).
See Notes to Financial Statements
B-46
<PAGE> 103
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<S> <C>
Investment, at market value (Cost $25,082,216)................... $26,520,279
Foreign currency, at market value (Cost $126,610)................ 125,636
Cash............................................................. 1,169
Receivable for offsetting forward bond commitments............... 1,009,049
Dividends and interest receivable................................ 204,820
Unrealized appreciation of forward commitments and currency
exchange contracts............................................... 151,122
Receivable for investments sold.................................. 143,936
Receivable for Fund shares sold.................................. 42,848
Other assets and receivables..................................... 17,293
-----------
Total Assets.................................................... 28,216,152
-----------
LIABILITIES
Payable for Fund shares purchased................................ 1,115,972
Payable for offsetting forward bond commitments.................. 987,012
Payable for investments purchased................................ 458,801
Unrealized depreciation of forward commitments and currency
exchange contracts............................................... 24,357
Distributions payable............................................ 21,357
Due to Adviser................................................... 18,558
Due to Distributor............................................... 17,063
Deferred Trustees' compensation.................................. 3,422
Accrued expenses and other liabilities........................... 114,583
-----------
Total Liabilities............................................... 2,761,125
-----------
NET ASSETS, equivalent to $10.15 per share for Class A, $10.10
per share for Class B, and
$10.12 per share for Class C shares............................. $25,455,027
===========
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par; 1,528,430 Class A, 802,255
Class B, and 181,833 Class C shares outstanding................. $ 25,125
Capital surplus.................................................. 23,701,323
Undistributed net realized gain on securities.................... 168,396
Unrealized appreciation (depreciation) of securities
Investments..................................................... 1,438,063
Forward commitments............................................. 96,897
Offsetting forward commitments.................................. 11,346
Foreign currency................................................ (974)
Forward currency exchange contracts............................. 29,868
Other foreign denominated assets and liabilities................ (383)
Accumulated net investment loss.................................. (14,634)
-----------
NET ASSETS....................................................... $25,455,027
===========
</TABLE>
See Notes to Financial Statements
B-47
<PAGE> 104
STATEMENT OF OPERATIONS
Year Ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest........................................................... $ 569,273
Dividends (net of $32,603 of foreign taxes withheld at source)..... 271,649
----------
Investment income................................................. 840,922
----------
EXPENSES
Management fees.................................................... 232,342
Shareholder service agent's fees and expenses...................... 148,428
Accounting services................................................ 29,687
Service fees--Class A.............................................. 11,884
Distribution and service fees--Class B............................. 78,577
Distribution and service fees--Class C............................. 16,189
Trustees' fees and expenses........................................ 18,890
Audit fees......................................................... 77,803
Custodian fees..................................................... 142,399
Legal fees......................................................... 9,465
Reports to shareholders............................................ 50,730
Registration and filing fees....................................... 123,495
Organization expenses.............................................. 3,289
Miscellaneous...................................................... 797
Expense reimbursement--see Note 3.................................. (205,270)
----------
Total expenses.................................................... 738,705
----------
NET INVESTMENT INCOME.............................................. 102,217
==========
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain (loss) on securities
Investments and forward commitments............................... 706,193
Futures contracts................................................. 6,433
Foreign currency.................................................. (56,323)
Forward currency exchange contracts............................... 91,299
Net unrealized appreciation (depreciation) of securities
Investments....................................................... 1,832,220
Forward commitments............................................... 121,340
Offsetting forward commitments.................................... 11,346
Foreign currency.................................................. 1,926
Forward currency exchange contracts............................... (6,176)
Futures contracts................................................. 36,930
Other foreign denominated assets and liabilities.................. (295)
----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES..................... 2,744,893
==========
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $2,847,110
==========
</TABLE>
See Notes to Financial Statements
B-48
<PAGE> 105
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended May 16, 1994*
December 31, through
1995 December 31, 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of period............... $20,151,878 $ 101,000
----------- -----------
OPERATIONS
Net investment income........................ 102,217 111,532
Net realized gain (loss) on securities....... 747,602 (69,995)
Net unrealized appreciation (depreciation) of
securities during the period................ 1,997,291 (422,474)
----------- -----------
Increase (decrease) in net assets resulting
from operations.............................. 2,847,110 (380,937)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM (see Note
2I)
Net investment income
Class A...................................... (109,529) (83,040)
Class B**.................................... (14,553) (18,953)
Class C**.................................... (2,914) (4,131)
----------- -----------
(126,996) (106,124)
----------- -----------
Net realized gain on securities
Class A...................................... (270,443) --
Class B...................................... (142,058) --
Class C...................................... (32,127) --
----------- -----------
(444.628) --
----------- -----------
Excess of book-basis net realized gain on
securities
Class A...................................... -- (34,466)
Class B...................................... -- (21,661)
Class C...................................... -- (3,719)
----------- -----------
-- (59,846)
----------- -----------
Total distributions.......................... (571,624) (165,970)
----------- -----------
CAPITAL TRANSACTIONS
Proceeds from shares sold
Class A...................................... 3,909,901 11,810,850
Class B...................................... 3,055,675 8,030,788
Class C...................................... 1,374,753 1,340,315
----------- -----------
8,340,329 21,181,953
----------- -----------
Proceeds from shares issued for distributions
reinvested
Class A...................................... 376,012 116,609
Class B...................................... 138,274 35,987
Class C...................................... 33,442 7,489
----------- -----------
547,728 160,085
----------- -----------
Cost of shares redeemed
Class A...................................... (1,662,569) (174,627)
Class B...................................... (3,228,108) (501,046)
Class C...................................... (969,717) (68,580)
----------- -----------
(5,860,394) (744,253)
----------- -----------
Increase in net assets resulting from capital
transactions................................. 3,027,663 20,597,785
----------- -----------
INCREASE IN NET ASSETS........................ 5,303,149 20,050,878
----------- -----------
NET ASSETS, end of period (including
accumulated net investment loss of $14,634
and undistributed net investment income of
$2,926, respectively)........................ $25,455,027 $20,151,878
=========== ===========
</TABLE>
*Commencement of operations.
**All of the distributions for December 31, 1995 are in excess of book-basis
net investment income.
See Notes to Financial Statements
B-49
<PAGE> 106
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A(3)
------------------------------------
Year May 16, 1994(1)
Ended through
December 31, 1995 December 31, 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period..... $9.19 $9.44
------ -------
INCOME FROM INVESTMENT OPERATIONS
Investment income....................... .35 .28
Expenses................................ (.27) (.18)
------ -------
Net investment income.................... .08 .10
Net realized and unrealized gain (loss)
on securities............................ 1.1375 (.2475)
------ -------
Total from investment operations......... 1.2175 (.1475)
------ -------
LESS DISTRIBUTIONS FROM (see Note 2I)
Net investment income................... (.0775) (.075)
Net realized gain on securities......... (.18) --
Excess of book-basis net realized gain
on securities........................... -- (.0275)
------ -------
Total distributions...................... (.2575) (.1025)
------ -------
Net asset value, end of period........... $10.15 $9.19
====== =======
TOTAL RETURN(2).......................... 13.30% (1.57%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)..... $15.5 $11.5
Average net assets (millions)............ $13.8 $10.1
Ratios to average net assets (annualized)
Expenses................................ 2.79% 2.75%
Expenses, without expense reimbursement. 3.68% 2.76%
Net investment income................... .81% 1.54%
Net investment income (loss), without
expense reimbursement................... (.07)% 1.53%
Portfolio turnover rate.................. 135% 50%
</TABLE>
(1)Commencement of operations.
(2)Total returns for periods of less than one full year are not annualized.
Total return does not consider the effect of sales charges.
(3)Based on average month-end shares outstanding.
See Notes to Financial Statements
B-50
<PAGE> 107
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B(3)
------------------------------------
Year May 16, 1994(1)
Ended through
December 31, 1995 December 31, 1994
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
<S> <C> <C>
Net asset value, beginning of period..... $9.17 $9.44
------ -------
INCOME FROM INVESTMENT OPERATIONS
Investment income....................... .35 .26
Expenses................................ (.36) (.25)
------ -------
Net investment income.................... (.01) .01
Net realized and unrealized gain (loss)
on securities............................ 1.1375 (.2065)
------ -------
Total from investment operations......... 1.1275 (.1965)
------ -------
LESS DISTRIBUTIONS FROM see (Note 2I)
Net investment income................... -- (.046)
Net realized gain on securities......... (.18) --
Excess of book-basis net investment
income.................................. (.0175) --
Excess of book-basis net realized gain
on securities........................... -- (.0275)
------ -------
Total distributions...................... (.1975) (.0735)
------ -------
Net asset value, end of period........... $10.10 $9.17
====== =======
TOTAL RETURN(2).......................... 12.31% (2.09%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)..... $8.1 $7.4
Average net assets (millions)............ $7.9 $4.6
Ratios to average net assets (annualized)
Expenses................................ 3.73% 3.92%
Expenses, without expense reimbursement. 4.61% 3.93%
Net investment income (loss)............ (.09%) .13%
Net investment income (loss), without
expense reimbursement................... (.97%) .12%
Portfolio turnover rate.................. 135% 50%
</TABLE>
(1)Commencement of operations.
(2) Total returns for periods of less than one full year are not annualized.
Total return does not consider the effect of sales charges.
(3)Based on average month-end shares outstanding.
See Notes to Financial Statements
B-51
<PAGE> 108
FINANCIAL HIGHLIGHTS (CONTINUED)
Selected data for a share of beneficial interest outstanding throughout the
periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C(3)
------------------------------------
Year May 16, 1994(1)
Ended through
December 31, 1995 December 31, 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period..... $9.20 $9.44
------ -------
INCOME FROM INVESTMENT OPERATIONS
Investment income....................... .35 .27
Expenses................................ (.37) (.22)
------ -------
Net investment income.................... (.02) .05
Net realized and unrealized gain (loss)
on securities............................ 1.1375 (.2165)
------ -------
Total from investment operations......... 1.1175 (.1665)
------ -------
LESS DISTRIBUTIONS FROM see (Note 2I)
Net investment income................... -- (.046)
Net realized gain on securities......... (.18) --
Excess of book-basis net investment
income.................................. (.0175) --
Excess of book-basis net realized gain
on securities........................... -- (.0275)
------ -------
Total distributions...................... (.1975) (.0735)
------ -------
Net asset value, end of period........... $10.12 $9.20
====== =======
------ -------
TOTAL RETURN(2).......................... 12.16% (1.77%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)..... $1.9 $1.3
Average net assets (millions)............ $1.6 $1.0
Ratios to average net assets (annualized)
Expenses................................ 3.79% 3.36%
Expenses, without expense reimbursement. 4.67% 3.38%
Net investment income (loss)............ (.18%) .80%
Net investment income (loss), without
expense reimbursement................... (1.06%) .78%
Portfolio turnover rate.................. 135% 50%
</TABLE>
(1)Commencement of operations.
(2) Total returns for periods of less than one full year are not annualized.
Total return does not consider the effect of sales charges.
(3)Based on average month-end shares outstanding.
See Notes to Financial Statements
B-52
<PAGE> 109
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1--ORGANIZATION
Van Kampen American Capital Global Managed Assets Fund (the "Fund," formerly
American Capital Global Managed Assets Fund, Inc.) Is registered under the In-
vestment Company Act of 1940, as amended and was organized as an open-end, di-
versified management investment company in Maryland on November 24, 1993. The
Fund's investment manager, Van Kampen American Capital Asset Management, Inc.,
(the "Adviser") contributed the initial capital of $101,000 on May 4, 1994.
The Fund began offering shares on May 16, 1994.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The Fund seeks total return through a managed balance of foreign and domestic
equity and debt securities. Investments in foreign securities involve certain
risks not ordinarily associated with investments in securities of domestic is-
suers, including fluctuations in foreign exchange rates, future political and
economical 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. Futures contracts are valued at the last sale price, or if
no sales are reported, at the mean between the bid and asked prices. United
States government obligations are valued at the mean between the last reported
bid and ask 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 invest-
ments with a maturity of more than 60 days when purchased are valued based on
market quotations until the remaining days to maturity becomes less than 61
days. From such time, until maturity, the investments are valued at amortized
cost.
B. 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
B-53
<PAGE> 110
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
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 exchange rates and amounts arising from
changes in the market prices of securities. 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 transac-
tions.
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 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.
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 unantici-
pated movements in the value of a foreign currency relative to the U.S. dol-
lar.
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 4--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 ac-
quiring 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 bro-
ker. 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
B-54
<PAGE> 111
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 recorded as a long-term purchase. For forward purchase commit-
ments for which security settlement is not intended by the Fund and for all
forward sales commitments, changes in the value of the commitment are recog-
nized by marking the commitment to market on a daily basis. During the commit-
ment, 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 occasionally 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 the Adviser, the daily aggregate of which is invested in repurchase agree-
ments. Repurchase agreements are collateralized by the underlying debt securi-
ty. 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 required 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.
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. 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 tax may be imposed on interest, div-
idends and realized gains generated from foreign investments. Such taxes are
generally reflected on the Statement of Operations as a reduction of the re-
lated income or gains.
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, origi-
nal issue discounts on debt securities purchased are amortized over the life of
the security. Premiums on debt
B-55
<PAGE> 112
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
securities are not amortized. Market discounts 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. ORGANIZATION COSTS-Organization expenses of approximately $15,000 were de-
ferred and are being amortized over a five year period ending May, 1999.
NOTE 3--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 1.00%. The Adviser pays 50% of its management fee to the Subadviser.
Under the terms of the advisory agreement, if the total ordinary business
expenses of the Fund, exclusive of taxes, interest and distribution plans, ex-
ceed the most restrictive expense 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.
ACCESS Investor Services, Inc., an affiliate of the Adviser, serves as
shareholder service agent of the Fund. These services are provided at cost
plus a profit. For the period, the fees for such services aggregated $131,969.
The Fund was advised that Van Kampen American Capital Distributors, Inc.
(the "Distributor"), and Advantage Capital Corporation (the "Retail Dealer"),
both affiliates of the Adviser, received $15,161 and $6,383, respectively, as
their portion of the commissions charged on sales of Fund shares during the
period.
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 serv-
ices 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
B-56
<PAGE> 113
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
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 $456,000 and $28,000, 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 re-
newal 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, the Retail Dealer and the shareholder service agent.
NOTE 4--INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments and forward commitments, were
$35,349,576 and $29,891,636, respectively.
For federal income tax purposes, the identified cost of investments and for-
eign currency at the end of the period was $25,232,696. Net unrealized appre-
ciation aggregated $1,413,219, gross unrealized appreciation aggregated
$2,126,304 and gross unrealized depreciation aggregated $713,085.
At the end of the period, the Fund held the following forward purchase com-
mitments for which settlement is not intended, offsetting forward commitments,
and forward currency exchange contracts:
FORWARD PURCHASE COMMITMENTS
<TABLE>
<CAPTION>
Par Amount
(000) Unrealized
(local currency) Description Coupon Maturity Appreciation
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUSTRIA (Government of)
4,000 settlement 1/22/96........... 6.875% 6/20/05 $ 41
NETHERLANDS (Government of)
600 settlement 3/14/96........... 7.000 6/15/05 11,422
FRANCE (Government of)
2,350 settlement 1/19/96........... 7.750 10/25/05 20,892
GERMANY (Treuhandanstalt)
300 settlement 2/20/96........... 6.750 5/13/04 7,070
1,000 settlement 2/23/96........... 6.750 5/13/04 26,747
ITALY (Republic of)
1,000,000 settlement 4/12/96........... 12.000 1/1/03 10,621
UNITED STATES
208 FHLMC, settlement 1/16/96.... 7.500 1/1/99 2,991
208 GNMA, settlement 1/22/96..... 8.000 1/1/99 3,512
US Treasury Notes, settlement
750 3/13/96.................... 7.500 3/13/96 4,224
US Treasury Notes, settlement
500 3/6/96..................... 5.750 8/15/03 9,377
-------
Total Forward Purchase
Commitments
(obligation $4,632,695).... $96,897
=======
</TABLE>
B-57
<PAGE> 114
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
OFFSETTING FORWARD COMMITMENTS
<TABLE>
<CAPTION>
Unrealized
Par Amount U.S. Dollar Value Currency
(000) Settlement ------------------- Appreciation
(Local Currency) Security Date Payable Receivable (Depreciation)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUSTRALIA
Commonwealth, 10.00%,
800 10/15/07................ 03/08/96 $676,004 $ 687,031 $12,623
NEW ZEALAND
460 8.00%, 4/15/04.......... 01/15/96 311,008 322,018 (1,277)
-------- ---------- -------
$987,012 $1,009,049 $11,346
======== ==========
</TABLE>
FORWARD CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
U.S. Unrealized
Settlement Dollar Appreciation
Currency Date Value (Depreciation)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
AUSTRALIAN DOLLAR
31,818 (payable)......................... 03/08/96 $ 23,572 $ (106)
FRENCH FRANC
2,001,400 (payable)...................... 04/11/96 408,699 (100)
GERMAN DEUTSCHE MARK
840,000 (receivable)..................... 02/16/96 587,028 (20,787)
SWEDISH KRONA
2,060,400 (payable)...................... 11/13/96 303,364 (3,364)
---------- --------
1,322,663 (24,357)
---------- --------
JAPANESE YEN
29,676,000 (payable)..................... 09/24/96 297,767 2,233
48,145,000 (payable)..................... 11/13/96 486,034 13,966
47,870,000 (payable)..................... 11/13/96 483,258 16,742
47,430,000 (payable)..................... 11/13/96 478,816 21,284
---------- --------
1,745,875 54,225
---------- --------
Total.................................. $3,068,538 $ 29,868
========== ========
</TABLE>
NOTE 5--TRUSTEE COMPENSATION
Fund trustees who are not affiliated with the Adviser are compensated by the
Fund at the annual rate of $635 plus a fee of $18 per day for Board and Com-
mittee meetings attended. During the period, such fees aggregated $11,678.
The trustees may participate in a voluntary Deferred Compensation Plan (the
"Plan"). The Plan is not funded, and obligations under the Plan will be paid
solely out of the Fund's general accounts. The Fund will not reserve or set
aside funds for the payment of its obligations under the Plan by any form of
trust or escrow. Each trustee covered by the Plan elects to be credited with
an earnings component on amounts deferred equal to the income earned by the
Fund on its short-term investments or equal to the total return of the fund.
B-58
<PAGE> 115
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
NOTE 6--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
(the Class A shares) or at the time of redemption on a contingent deferred ba-
sis (the Class B and C shares). All classes of shares have the same rights,
except that Class B and C shares bear the cost of distribution fees and cer-
tain other class specific expenses. Class B and C shares automatically convert
to Class A shares six years and ten years after purchase, respectively, sub-
ject to certain conditions. Realized and unrealized gains or losses, invest-
ment 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 in-
terest authorized. Transactions in shares of beneficial interest for the pe-
riod were as follows:
<TABLE>
<CAPTION>
Year Ended
December 31
-------------------
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Shares sold
Class A................................................... 400,789 1,262,355
Class B................................................... 315,134 852,544
Class C................................................... 138,887 142,266
-------- ---------
854,810 2,257,165
-------- ---------
Shares issued for distributions reinvested
Class A................................................... 37,488 12,547
Class B................................................... 13,757 3,886
Class C................................................... 3,320 807
-------- ---------
54,565 17,240
-------- ---------
Shares redeemed
Class A................................................... (166,010) (18,739)
Class B................................................... (329,324) (53,742)
Class C................................................... (96,043) (7,404)
-------- ---------
(591,377) (79,885)
-------- ---------
Increase in shares outstanding............................. 317,998 2,194,520
======== =========
</TABLE>
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 additional trustees. On August
5, 1995, the reorganization became effective.
B-59
<PAGE> 116
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.
2 -- Amended and Restated Bylaws.
3 -- Inapplicable.
4.1 -- Specimen Class A Share Certificate.
4.2 -- Specimen Class B Share Certificate.
4.3 -- Specimen Class C Share Certificate.
5.1 -- Investment Advisory Agreement.
5.2 -- Investment Sub-advisory Agreement.
6.1 -- Underwriting Agreement.
6.2 -- Form of Selling Group Agreement incorporated herein by reference
(Exhibit 6.2 to Registrant's Registration No. 33-74024, Pre-Effective
Amendment No. 1, filed March 28, 1994).
6.3 -- Form of Selling Agreement for bank affiliated broker/dealers and
banks incorporated herein by reference (Exhibit 6.3 to Form N-1A of
Registrant's Registration No. 33-74024, Pre-Effective Amendment No.
1, filed March 28, 1994).
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
Utilities Income Fund, Registration No. 33-68452, Post-Effective
Amendment No. 1, filed on May 19, 1994).
8.2 -- Transfer Agency and Service 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 -- Inapplicable for this filing.
11.1 -- Consent of Independent Accountants.
11.2 -- Consent of Trustees incorporated herein by reference (Exhibit 11.2 to
Form N-1A of Registrant's Registration No. 33-74024, Post-Effective
Amendment No. 3, filed July 19, 1995).
12 -- Inapplicable.
</TABLE>
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<TABLE>
<C> <S>
13 -- Investment Letter incorporated herein by reference (Exhibit 13 to
Form N-1A of Registrant's Registration No. 33-74024, Pre-Effective
Amendment No. 2, filed on May 6, 1994).
14.1 -- Individual Retirement Account Brochure with Application 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. 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 14.4 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 26, 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 26, 1991).
14.7 -- Salary Reduction Simplified Employee Pension Plan incorporated herein
by reference (Exhibit 14.7 to Form N-1A of Van Kampen American
Capital World Portfolio Series Trust, Registration No. 33-37879,
Post-Effective Amendment No. 9, filed on September 24, 1993).
14.8 -- Simplified Employee Pension Plan Brochure with Application
incorporated herein by reference (Exhibit 14.8 to Form N-1A of
Registrant's Registration No. 2-21657, Post-Effective Amendment No.
69, filed March 24, 1994).
15.1 -- Class A Distribution Plan.
15.2 -- Class B Distribution Plan.
15.3 -- Class C Distribution Plan.
15.4 -- Form of Servicing Agreement incorporated herein by reference (Exhibit
15.4 to Form N-1A of Registrant's Registration No. 33-74024,
Post-Effective Amendment No. 3, filed July 19, 1995).
15.5 -- Form of Servicing Agreement for banks and bank affiliated
broker/dealers incorporated herein by reference (Exhibit 15.5 to Form
N-1A of Registrant's Registration No. 33-74024, Post-Effective
Amendment No. 3, filed July 19, 1995).
16 -- Computation Measure for 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).
</TABLE>
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<PAGE> 118
<TABLE>
<C> <S>
18 -- Multiple Class Plan.
19 -- Powers of Attorney (Exhibit 19 to Form N-1A of Registrant's
Registration No. 33-74024, Post-Effective Amendment No. 3, filed July
19, 1995).
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 MARCH 22, 1996
<TABLE>
<CAPTION>
(2)
(1) NUMBER OF RECORD
TITLE OF CLASS HOLDERS
- ----------------------------------------------- ----------------
<S> <C>
Shares of Beneficial Interest, $0.01 par value 1,598 (Class A)
1,003 (Class B)
849 (Class C)
</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.
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
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<PAGE> 119
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
or Part B.
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 at
least 10% of the 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.
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<PAGE> 120
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, VAN KAMPEN AMERICAN CAPITAL
GLOBAL MANAGED ASSETS FUND, 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, thereunto duly
authorized in the City of Oakbrook Terrace and the State of Illinois, on the
19th day of April, 1996.
VAN KAMPEN AMERICAN CAPITAL GLOBAL
MANAGED ASSETS FUND
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 April 19, 1996 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
Principal Executive Officer:
/s/ DON G. POWELL* President and Trustee
- ---------------------------------------------
Don G. Powell
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
Trustee
- ---------------------------------------------
Linda Hutton Heagy
/s/ ROGER HILSMAN* Trustee
- ---------------------------------------------
Roger Hilsman
/s/ R. CRAIG KENNEDY* Trustee
- ---------------------------------------------
R. Craig Kennedy
/s/ DENNIS J. MCDONNELL* Trustee
- ---------------------------------------------
Dennis J. McDonnell
/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
- ------------
* Signed by Ronald A. Nyberg pursuant to a power of attorney.
/s/ RONALD A. NYBERG April 19, 1996
- ---------------------------------------------
Ronald A. Nyberg
Attorney-in-Fact
</TABLE>
<PAGE> 121
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
INDEX TO EXHIBITS TO AMENDMENT NO. 4 TO FORM N-1A
AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION
ON APRIL 22, 1996
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ---------------------------------------------------------------------------------------------
<C> <S>
1.1 -- First Amended and Restated Agreement and Declaration of Trust.
1.2 -- Certificate of Amendment.
1.3 -- Certificate of Designation.
2 -- Amended and Restated Bylaws.
4.1 -- Specimen Class A Share Certificate.
4.2 -- Specimen Class B Share Certificate.
4.3 -- Specimen Class C Share Certificate.
5.1 -- Investment Advisory Agreement.
5.2 -- Investment Sub-advisory Agreement.
6.1 -- Underwriting Agreement.
8.2 -- Transfer Agency and Service Agreement.
11.1 -- Consent of Independent Accountants.
15.1 -- Class A Distribution Plan.
15.2 -- Class B Distribution Plan.
15.3 -- Class C Distribution Plan.
16 -- Computation Measure for 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(a).
18 -- Multiple Class Plan.
27 -- Financial Data Schedules.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
FIRST AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
VAN KAMPEN
AMERICAN CAPITAL
GLOBAL MANAGED ASSETS FUND
Dated: June 21, 1995
<PAGE> 2
FIRST AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
Index
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
(I) 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
i
<PAGE> 3
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 Business; Authority of Trustees to Permit Others to Do
Likewise ................................................... 14
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. 0wnership of the Trust Property ............................ 16
ii
<PAGE> 4
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
(I) 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
iii
<PAGE> 5
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
iv
<PAGE> 6
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
v
<PAGE> 7
AGREEMENT AND DECLARATION OF TRUST
OF
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
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:
W I T N E S S E T H T H A T:
WHEREAS, the AGREEMENT AND DECLARATION OF TRUST of Van Kampen American
Capital Global Managed Assets Fund, 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:
1
<PAGE> 8
ARTICLE I
THE TRUST
SECTION 1.1 Name. The name of the Trust shall be
"VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND"
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
2
<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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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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"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.
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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
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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;
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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;
(I) 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;
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(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 Trust or a particular Series will
be recorded on the Share transfer records of the Trust
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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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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
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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
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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,
29
<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.
31
<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 Global Managed Assets Fund, as of
the day and year first above written.
/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
32
<PAGE> 39
A C K N O W L E D G M E N T
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 Global Managed
Assets Fund, 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)
<PAGE> 2
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 GLOBAL MANAGED ASSETS FUND
Certificate of Designation
of
Van Kampen American Capital Global Managed Assets Fund
The undersigned, being the Secretary of Van Kampen American Capital Global
Managed Assets Fund, 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 Related Agreement and Declaration of Trust
("Declaration"), and by the affirmative vote of a Majority of the Trustees does
hereby establish and designate the following classes of Shares of the Trust
with following the rights, preferences and characteristics:
1. Classes of Shares. The Shares of the Trust 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
Trust.
2. 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 Trust's prospectus.
3. Conversion. Each Class B and Class C Share of the Trust shall be converted
automatically, and without any action or choice on the part of the Shareholder
thereof, into Class A Shares of the Trust at such times and pursuant to such
terms, conditions and restrictions as may be established by the Trustees and as
set forth in the Trust's Prospectus.
4. 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.
5. Special Meetings. A special meeting of Shareholders of a Class of the
Trust may be called with respect to the Rule 12b-1 distribution plan applicable
to such Class or with respect to any other proper purpose affecting only
holders of shares of such Class at any time by a Majority of the Trustees.
6. 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
1
<PAGE> 2
Shares of the Trust unless otherwise specified in this Certificate of
Designation, in which case this Certificate of Designation shall govern.
7. 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 Trust outstanding and entitled
to vote or, if such amendment affects the Shares of one or more but not all of
the Classes of the Trust, the holders of a majority of all the Shares of the
affected Classes outstanding and entitled to vote.
8. 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 2
VAN KAMPEN AMERICAN CAPITAL
GLOBAL MANAGED ASSETS FUND
AMENDED AND RESTATED BYLAWS
(AS AMENDED NOVEMBER 17, 1995)
<PAGE> 2
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
Amended and Restated Bylaws
(As Amended November 17, 1995)
Index
<TABLE>
<S> <C> <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>
<S> <C> <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>
<S> <C> <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 GLOBAL MANAGED ASSETS FUND
AMENDED AND RESTATED BYLAWS
(AS AMENDED NOVEMBER 17, 1995)
These are the Bylaws of Van Kampen American Capital Global Managed
Assets Fund, 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
1
<PAGE> 6
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
2
<PAGE> 7
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.
3
<PAGE> 8
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
4
<PAGE> 9
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.
5
<PAGE> 10
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.
6
<PAGE> 11
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
7
<PAGE> 12
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
8
<PAGE> 13
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.
9
<PAGE> 1
EXHIBIT 4.1
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS 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 024904 30 2
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Managed Assets 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 MANAGED ASSETS FUND
DELAWARE SEAL]
NORI L. GABERT DON G. POWELL
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 MANAGED ASSETS 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
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS 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 024904 30 2
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Managed Assets 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 MANAGED ASSETS FUND
DELAWARE SEAL]
NORI L. GABERT DON G. POWELL
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 MANAGED ASSETS 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 4.3
NUMBER SHARES
__________ __________
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS 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 024904 30 2
_________________
fully paid and nonassessable shares of beneficial interest of the par value of
$0.01 per share of Van Kampen American Capital Global Managed Assets 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 MANAGED ASSETS FUND
DELAWARE SEAL]
NORI L. GABERT DON G. POWELL
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 MANAGED ASSETS 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 (herein so called) made this 5th day of August, 1995, by and
between VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, 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. Services Rendered and Expenses Paid by ADVISER
The ADVISER, subject to the control, direction and supervision of the FUND's
Trustees and in conformity with applicable laws, the FUND's Agreement and
Declaration of Trust ("Declaration of Trust"), By-laws, registration
statements, prospectus and stated investment objectives, policies and
restrictions, shall:
a. manage the investment and reinvestment of the FUND's assets 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 portfolio, and formulation and implementation of
investment programs;
b. maintain a trading desk and place all orders for the purchase and sale of
portfolio investments for the FUND's account 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, prospectuses,
reports, proxy solicitation materials and amendments thereto, the furnishing of
routine legal services except for services provided by outside counsel to the
FUND selected by the Trustees, and the supervision of the FUND's Treasurer and
the personnel working under his direction; and
d. furnish to the FUND office space, facilities, equipment and personnel
adequate to provide the services described in paragraphs a., b., and c. above
and 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 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
<PAGE> 2
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. In the event of such authorization
and 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 statement, 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,
registrar and shareholder service agent fees and expense; (vii) expenses
related to the repurchase or redemption of its shares including expenses
related to a program of periodic repurchases or redemptions; (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
2
<PAGE> 3
methods approved by the Trustees.
2. 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 (the "1940
Act"), any of the shareholders, trustees, officers and employees of the FUND
may be a shareholder, trustee, 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.
3. Compensation Payable to ADVISER
The FUND shall pay to the ADVISER, as compensation for the services rendered,
facilities furnished and expenses paid by the ADVISER, a monthly fee at the
annual rate of 1.00% of the FUND's average daily net assets.
Average daily net assets 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 3 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 such person, 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
3
<PAGE> 4
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 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 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
shall include the investment advisory fee and other operating expenses paid by
the FUND except (i) for interest and taxes; (ii) 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 Directors 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.
4. Duration of Agreement
This Agreement shall have an initial term of 2 years from the date hereof, and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved at least annually by the vote of a majority of the
FUND's Trustees who are not parties to this Agreement or interested persons of
any such parties, cast in person at a meeting called for the purpose of voting
on such approval, and by a vote of a majority of the FUND's Trustees or a
majority of the FUND's outstanding voting securities.
This Agreement shall terminate automatically in the event of its assignment.
The Agreement may be terminated at any time by the FUND's Trustees, by vote of
a majority of the FUND's outstanding voting securities, or by the ADVISER, on
60 days' written notice, or upon such shorter notice as may be mutually agreed
upon. Such termination shall be without payment of any penalty.
4
<PAGE> 5
5. Miscellaneous Provisions
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 1940 Act 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 (the "Commission"), or such interpretive positions as may be taken
by the Commission or its staff, under the 1940 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.
The execution of this Agreement has been authorized by the FUND's 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 on the above date.
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
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
--------------------------
5
<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 29th day of December, 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 Global Managed Assets 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.
<PAGE> 2
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 retain 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
2
<PAGE> 3
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 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
3
<PAGE> 4
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) Subject to paragraph (c) below, 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.
(c) During an interim period of not more than 120 days beginning on December
29, 1995 and continuing through the date of this Agreement is approved by the
shareholders of the Fund (the "Interim Period") the portion of the fee
received by VKAC from the Fund and otherwise payable to John Govett for
services rendered during this Interim Period will be maintained in a
interest-bearing escrow account. Amounts in the account will be paid to John
Govett only upon approval of this Agreement by vote of a majority of the
non-interested Trustees at in-person meetings and by the shareholders and upon
receipt of the requested exemptive relief from the Securities and Exchange
Commission. The amount in the escrow account will be returned to the Fund if
the required approvals are not obtained or if the requested exemptive relief is
not granted.
3. Miscellaneous
3.1 Activities of JOHN GOVETT
4
<PAGE> 5
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
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.
5
<PAGE> 6
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 or
Section 2.2(c), shall continue in effect through April 30, 1997, 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
6
<PAGE> 7
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
4 Battle Bridge Lane
London SE1 2HR
England
attn: The Hon. Kevin Pakenham
7
<PAGE> 8
with a copy to:
Shackleton House
4 Battle Bridge Lane
London SE1 2HR
England
attn: Colin Kreidelwolf
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
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<PAGE> 9
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 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 Fund's 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.
IN WITNESS WHEREOF, the Agreement has been executed as of the date first above
given.
JOHN GOVETT & CO. LIMITED
By: /s/ BRIAN LEE
---------------------------------
Name: Brian Lee
-------------------------------
Its: Managing Director: Operations
-------------------------------
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
By: /s/ NORI L. GABERT
---------------------------------
Name: Nori L. Gabert
-------------------------------
Its: Vice President
-------------------------------
9
<PAGE> 1
EXHIBIT 6.1
UNDERWRITING AGREEMENT
between
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
and
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
THIS AGREEMENT made this 5th day of August, 1995 by and between VAN KAMPEN
AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND, a Delaware business trust,
hereinafter referred to as the "Fund", and VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC., a Delaware corporation, hereinafter referred to as the
"Underwriter".
WHEREAS, the Fund proposes to issue its shares in three classes: Class A,
Class B and Class C, all as described in the Fund's current prospectus at the
time of sale;
W I T N E S S E T H:
In consideration of the mutual covenants herein contained and other good and
valuable consideration, the receipt whereof is hereby acknowledged, the parties
hereto agree as follows:
FIRST: The Fund hereby appoints the Underwriter as its exclusive agent for the
sale of shares of the Fund to the public through investment dealers in the
United States and throughout the world.
SECOND: The Fund shall not sell any of its shares except through the
Underwriter and under the terms and conditions set forth in paragraph FOURTH
below. Notwithstanding the provisions of the foregoing sentence, however,
(A) the Fund may issue its shares to any other investment company or personal
holding company, or to the shareholders thereof, in exchange for all or a
majority of the shares or assets of any such company;
(B) the Fund may issue its shares at net asset value to any shareholder of the
Fund purchasing such shares with dividends or other cash distributions received
from the Fund pursuant to an offer made to all shareholders; and
(C) the Fund may issue its shares at net asset value to its Trustees.
THIRD: The Underwriter hereby accepts appointment as exclusive agent for the
sale of all classes of shares of the Fund and agrees that it will use its best
efforts to sell such shares; provided, however, that:
(A) the Underwriter may, and when requested by the Fund shall, suspend its
efforts to effectuate sales for any or all classes of
1
<PAGE> 2
shares of the Fund or limit such sales efforts to existing shareholders of the
Fund at any time when, in the opinion of the Underwriter, after consultation
with the investment adviser to the Fund, or in the opinion of the Fund, sales
efforts should be limited or suspended because of market or other economic
considerations (including a determination by the Fund's investment adviser that
it would be in the best interests of existing shareholders of the Fund to
suspend sales of shares of the Fund or limit such sales to existing
shareholders of the Fund) or abnormal circumstances of any kind;
(B) upon the limiting or suspension of sales efforts by the Underwriter
pursuant to clause (A) above, the Fund may in its discretion suspend the sale
of shares through the Underwriter or limit such sales to existing shareholders
of the Fund; and
(C) the Fund may withdraw the offering of its shares (i) at any time with the
consent of the Underwriter, or (ii) without such consent when so required by
the provisions of any statute or of any order, rule or regulation of any
governmental body having jurisdiction. It is mutually understood and agreed
that the Underwriter does not undertake to sell any specific amount of shares
of the Fund. The Fund shall have the right to specify minimum amounts for
initial and subsequent orders for the purchase of shares.
FOURTH: The offering price of shares of the Fund (the "offering price") shall
be the net asset value per share plus, in the case of Class A shares, any
applicable initial sales charge. Net asset value per share shall be determined
in the manner provided in the then current prospectus of the Fund. The sales
charge for shares shall be established by the Underwriter. The Underwriter may
designate a scale of reducing sales charges on the basis of the value of shares
purchased or owned in accordance with Rule 22d-1 under the Investment Company
Act of 1940 (the "Act"). Included in the scale of reducing sales charges may
be a level at which no sales charges are added to the net asset value in
computing the public offering price. The Underwriter may also designate
eliminations of sales charges to particular classes of investors or
transactions in accordance with Rule 22d-1, provided such eliminations are
approved by the Fund and described in the prospectus. The Fund shall allow,
directly to investment dealers through whom shares of the Fund are sold, such
portion of the sales charge as may be payable to them and specified by the
Underwriter up to, but not exceeding, the amount of the total sales charge.
The difference between any portion of the sales charge so payable to investment
dealers and the total sales charges included in the offering price shall be
paid to the Underwriter.
The offering price of Class B and Class C shares of the Fund shall be the net
asset value per share without an initial sales charge. However, the Fund
agrees that the Underwriter shall impose certain
2
<PAGE> 3
contingent deferred sales charges in connection with the redemption of Class B
and Class C shares of the Fund, not to exceed a specified percentage of the
original purchase price of the shares as from time to time set forth in the
prospectus of the Fund. The Underwriter may retain (or receive from the Fund,
as the case may be) all of such contingent deferred sales charges. Net asset
value per share shall be determined in the manner provided in the then current
prospectus of the Fund. The Underwriter may designate eliminations of
contingent deferred sales charges to particular classes of investors or
transactions in accordance with Rule 22d-1 provided such eliminations are
approved by the Fund and described in the prospectus. The Underwriter proposes
to pay to investment dealers through whom Class B and Class C shares of the
Fund are sold a dealer commission of a specified percentage of the purchase
price of Class B and Class C shares purchased through them and as from time to
time set forth in the prospectus of the Fund.
The Underwriter shall act as agent of the Fund in connection with the sale and
repurchase of shares of the Fund. Except with respect to such sales and
repurchases, the Underwriter shall act as principal in all matters relating to
the promotion of the sale of shares of the Fund and shall enter into all of its
own engagements, agreements and contracts as principal on its own account. The
Underwriter shall enter into selling group agreements with investment dealers
selected by the Underwriter, authorizing such investment dealers to offer and
sell shares of the Fund to the public upon the terms and conditions set forth
therein, which shall not be inconsistent with the provisions of this Agreement.
Each selling group agreement shall provide that the investment dealer shall act
as a principal, and not as an agent of the Fund.
FIFTH: The Underwriter shall bear
(A) the expenses of printing from the final proof and distributing
registration statements and prospectuses relating to public offerings made by
the Underwriter pursuant to this Agreement and annual and semi-annual
shareowner reports used as sales literature (not, however, including
typesetting costs), as well as all printing and distribution costs of any other
sales literature used by the Underwriter or furnished by the Underwriter to
dealers in connection with such public offerings except as otherwise agreed by
the Trustees;
(B) expenses of advertising in connection with such public offerings except as
otherwise agreed by the Trustees; and
(C) all legal expenses in connection with the foregoing.
SIXTH: The Underwriter will accept orders for shares of the Fund only to the
extent of purchase orders actually received and not in excess of such orders,
and it will not avail itself of any opportunity of making a profit by
expediting or withholding orders.
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<PAGE> 4
SEVENTH:
(A) The Fund and the Underwriter shall each comply with all applicable
provisions of the Act, the Securities Act of 1933 (the "Securities Act") and of
all other federal and state laws, rules and regulations governing the issuance
and sale of shares of the Fund.
(B) The Fund agrees to indemnify the Underwriter against any and all claims,
demands, liabilities and expenses which the Underwriter may incur under the
Securities Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in any registration
statement or prospectus of the Fund, or any omission to state a material fact
therein, the omission of which makes any statement contained therein
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, information furnished to the Fund in connection therewith by
or on behalf of the Underwriter.
(C) The Underwriter agrees to indemnify the Fund against any and all claims,
demands, liabilities and expenses which the Fund may incur arising out of or
based upon any act or deed of the Underwriter or its sales representatives
which has not been authorized by the Fund in its prospectus or in this
Agreement. The Underwriter agrees to indemnify the Fund against any and all
claims, demands, liabilities and expenses which the Fund may incur under the
Securities Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in any registration
statement or prospectus of the Fund, or any omission to state a material fact
therein if such statement or omission was made in reliance upon, and in
conformity with, information furnished to the Fund in connection therewith by
or on behalf of the Underwriter.
(D) The Underwriter agrees to indemnify the Fund against any and all
claims, demands, liabilities and expenses which the Fund may incur under the
Securities Act, or common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in any prospectus of the
Fund prepared for use under Rule 482 of the Securities Act, or any omission to
state a material fact therein.
EIGHTH: Nothing herein contained shall require the Fund to take any action
contrary to any provision of its Articles of Incorporation or to any applicable
statute or regulation.
NINTH: This Agreement shall become effective on the date hereof, shall have an
initial term of two years from the date hereof, and shall continue in force and
effect from year to year thereafter, provided, that such continuance is
specifically approved at least annually (a)(i) by the Trustees of the Fund, or
(ii) by vote of a majority of the Fund's outstanding voting securities (as
defined in
4
<PAGE> 5
Section 2(a)(42) of the Act); and (b) by vote of a majority of the Fund's
Trustees who are not parties to this Agreement or interested persons (as
defined in Section 2(a)(19) of the Act) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on such approval.
TENTH:
(A) This Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Trustees of the Fund or by vote of a majority of the
outstanding voting securities of the Fund, or by the Underwriter, on sixty days
written notice to the other party.
(B) This Agreement shall automatically terminate in the event of its
assignment (as defined in Section 2(a)(4) of the Act).
ELEVENTH: Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed, postage paid, to the other party at such address as such
other party may designate for the receipt of such notices. Until further
notice to the other party, it is agreed that the address of the Fund shall be
2800 Post Oak Boulevard, Houston, Texas 77056 and the address of the
Underwriter shall be One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
TWELFTH: 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 the State of Delaware.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
duplicate on the day and year first above written.
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
By: /s/ DON G. POWELL
------------------------------------------
Name: Don G. Powell
----------------------------------------
Its: Chief Executive Officer
-----------------------------------------
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
By: /s/ NORI L. GABERT
-----------------------------------------
Name: Nori L. Gabert
----------------------------------------
Its: Vice President
-----------------------------------------
5
<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.
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<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
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<PAGE> 4
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 or state set forth in Schedule "A" hereto.
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.
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<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
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<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
Funds, 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 by 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.
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<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
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. 4, Amendment No. 6 to the
Registration Statement on Form N-1A (the "Registration Statement") of our report
dated February 15, 1996, relating to the financial statements and financial
highlights of Van Kampen American Capital Global Managed Assets Fund, 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 the Prospectus
and under the heading "Independent Accountants" in the Statement of Additional
Information.
/s/ PRICE WATERHOUSE LLP
Houston, Texas
April 19, 1996
<PAGE> 1
EXHIBIT 15.1
CLASS A
DISTRIBUTION PLAN
OF
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
Section 1. Van Kampen American Capital Global Managed Assets Fund (the "Fund")
may act as a distributor of any shares of any series of any Portfolio ((herein
called) into which the Fund's assets have been divided that are designated as
"Class A shares", pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "Act"), according to the terms of this Distribution Plan (the
"Plan"). (The term "Shares" shall be used to refer to Class A shares of any
series of any Portfolio of the Fund).
Section 2. The Fund may incur as a distributor of Shares, expenses of up to
twenty-five one-hundredths of one percent (0.25%) per annum of the average
daily net assets of the Portfolio to which those Shares relate.
Section 3. Amounts set forth in Section 2 may be expended when and if
authorized in advance by the Fund's Directors. Such amounts may be used to
finance any activity which is primarily intended to result in the sale of the
Fund's Shares or the retention of Shares by investors, including but not
limited to, expenses of organizing and conducting sales seminars, printing of
prospectuses and reports for other than existing shareholders, preparation and
distribution of advertising material and sales literature, supplemental
payments to dealers under a dealer incentive program to be established by Van
Kampen American Capital Distributors, Inc. ("VKAC") as the Fund's Distributor
in accordance with Section 4, and the costs of administering such a program.
All amounts expended pursuant to the Plan shall be paid to VKAC. VKAC shall be
required to use such amounts exclusively to finance those activities set forth
in Sections 3 and 4 of the Plan.
Section 4. (a) Amounts expended by the Fund under the Plan shall be used
primarily for the implementation by VKAC of a dealer incentive program and to
pay the cost of administering the calculation of payments under such program.
(b) Pursuant to this program, VKAC may enter into agreements ("Servicing
Agreements") with such broker/dealers ("Dealers") as may be selected from time
to time by VKAC for the provision of distribution assistance in connection with
the sale of Shares to the Dealers' clients and customers ("Customers") and for
the provision of administrative support services to Customers who may from time
to time directly or beneficially own Shares. The distribution assistance and
administrative support services to be rendered by Dealers under the Servicing
Agreements may include, but shall not be limited to, the following:
distributing sales
<PAGE> 2
literature; answering routine Customer inquiries concerning the Fund; assisting
Customers in changing dividend options, account designations and addresses, and
in enrolling into the pre-authorized check plan, systematic withdrawal plan or
any of several tax sheltered retirement plans offered in connection with the
purchase of Shares; assisting in the establishment and maintenance of Customer
accounts and records and in the processing of purchase and redemption
transactions; investing dividends and capital gains distributions automatically
in Shares and providing such other information and services as the Fund or the
Customer may reasonably request.
Section 5. This Plan shall not take effect with respect to any Portfolio until
it has been approved by a vote of at least a majority (as defined in the Act)
of the outstanding Shares of that Portfolio.
Section 6. This Plan shall not take effect until it has been approved,
together with any related agreements, by votes of the majority of both (a) the
Trustees of the Fund and (b) those Trustees of the Fund who are not "interested
persons" of the Fund (as defined in the Act) and have no direct or indirect
financial interest in the operation of this Plan or any agreements related to
it (the "Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan or such agreements.
Section 7. Unless sooner terminated pursuant to Section 9, this Plan shall
continue in effect for a period of one year from the date it takes effect and
thereafter shall continue in effect so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 6.
Section 8. VKAC shall provide to the Fund's Trustees and the Trustees shall
review, at least quarterly, a written report of the amounts expended under the
Plan and the purposes for which such expenditures were made.
Section 9. This Plan may be terminated with respect to any Portfolio at any
time by vote of a majority of the Disinterested Trustees, or by vote of a
majority of the outstanding Shares of that Portfolio.
Section 10. Any agreement related to this Plan shall be in writing, and shall
provide:
(a) That such agreement may be terminated with respect to any Portfolio at any
time on not more than sixty days' written notice to any other party to the
agreement, without payment of any penalty, by vote of a majority of the
Disinterested Trustees, or by a vote of the outstanding Shares of that
Portfolio; and
2
<PAGE> 3
(b) That such agreement shall terminate automatically in the event of its
assignment.
Section 11. This Plan may not be amended to increase materially the amount of
distribution expenses provided for in Section 2 hereof unless such amendment is
approved in the manner provided in Section 5 hereof, and no material amendment
to the Plan shall be made unless approved in the manner provided for in Section
6 hereof.
Section 12. The execution of this Plan has been authorized by the Fund's
Trustees and by the sole shareholder of the Class A shares of the Fund. This
Plan is executed on behalf of the Fund or the Trustees of the Fund as Trustees
and not individually and that the obligations of this Plan 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 the State of Delaware.
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
By: /s/ NORI L. GABERT
-------------------
Name: Nori L. Gabert
Its: Vice President
Plan effective as of: August 5, 1995
3
<PAGE> 1
EXHIBIT 15.2
CLASS B
DISTRIBUTION PLAN
OF
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
WHEREAS, Van Kampen American Capital Global Managed Assets FUND (the "Fund"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Fund proposes to offer shares of the Portfolio(s) (herein so
called) into which the Fund's assets have been divided that are designated as
"Class B shares" at net asset value without initial sales charge but with a
contingent deferred sales charge ("CDSC") (the term "Shares" shall be used to
refer to Class B shares of any series of any Portfolio of the Fund);
WHEREAS, the Fund proposes to engage in activities which are primarily intended
to result in the distribution and sale of Shares, to make payments in
connection with the distribution of Shares and to engage Van Kampen American
Capital Distributing, Inc. ("VKAC") to act as principal underwriter (as defined
in the Act) of Shares, and desires to adopt a Class B Shares Distribution Plan
pursuant to Rule 12b-1 under the Act;
WHEREAS, VKAC proposes to compensate broker-dealers or other persons for
providing distribution assistance in the offering of Shares and to compensate
financial and other industry professionals that provide services to facilitate
transactions in Shares for their clients (such broker-dealers, other persons,
financial institutions and other industry professionals being collectively
referred to as "Service Organizations");
WHEREAS, such compensation includes commissions to dealers and transaction fees
to other Service Organizations (such commissions and transaction fees being
collectively referred to as "Transactional Compensation"), plus supplemental
payments to Service Organizations ("Service Fees") pursuant to Servicing
Agreements proposed to be offered by VKAC to such Service Organizations;
WHEREAS, VKAC may provide additional promotional incentives to certain or all
Service Organizations and proposes to incur substantial additional expenses in
rendering distribution services for Shares, including but not limited to,
printing prospectuses and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature,
expenses of organizing and conducting sales seminars, and other operating
expenses;
<PAGE> 2
WHEREAS, the Trustees of the Fund have determined that there is a reasonable
likelihood that adoption of this Class B Distribution Plan will benefit the
Fund, each Portfolio and holders of Shares;
NOW, THEREFORE, each Portfolio hereby adopts this Class B Distribution Plan
(the "Plan") in accordance with Rule 12b-1 under the Act and containing the
following terms and conditions:
1. Subject to the supervision of the Trustees of the Fund, VKAC will provide
the Fund with such distribution services and facilities as the Fund may from
time to time consider necessary to enhance the sale of Shares.
2. In consideration of the Transactional Compensation and Service Fees paid
and the other distribution services for Shares rendered by VKAC, the Fund shall
pay VKAC out of the assets attributable to the Shares an annual distribution
fee and service fee ("Distribution Fee and Service Fee") calculated daily and
payable weekly. The combined Distribution Fee and Service Fee shall equal on
an annual basis up to 1.00% of the average daily net assets of the Portfolio to
which the Shares relate. Only distribution expenditures of a type and amount
authorized in advance by the Fund's Trustees and properly attributable to the
sale of Shares will be used to justify any fee paid pursuant to this Plan.
3. This Plan shall not take effect with respect to any Portfolio until it has
been approved by a vote of at least a majority (as defined in the Act) of the
outstanding Shares of that Portfolio.
4. This Plan shall not take effect until it has been approved, together with
any related agreements, by votes of the majority of both (a) the Trustees of
the Fund and (b) those Trustees of the Fund who are not "interested persons" of
the Fund (as defined in the Act) and have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Disinterested Trustees"), cast in person at a meeting called for the purpose
of voting on this Plan or such agreements.
5. So long as the Plan remains in effect, the selection and nomination of
persons to serve as directors of the Fund who are not "interested persons" of
the Fund shall be committed to the discretion of the Trustees then in office
who are not "interested persons" of the Fund.
6. Unless sooner terminated pursuant to Section 8, this Plan shall continue in
effect for a period of one year from the date it takes effect (which shall be
the date of the commencement of the public offering of Shares, provided that
the conditions of Sections 3 and 4 above have been met).
7. VKAC shall provide to the Fund's Trustees and the Trustees shall review, at
least quarterly, a written report of the expenses
2
<PAGE> 3
incurred hereunder and the purposes for which such expenditures were made.
8. The Plan may be terminated with respect to any Portfolio, without payment
of any penalty, at any time by vote of a majority of the Disinterested
Trustees, or by vote of a majority of the outstanding Shares of that Portfolio.
9. Any agreement related to this Plan shall be in writing, and shall provide:
(a) That such agreement may be terminated with respect to any Portfolio at any
time on not more than sixty days' written notice to any other party to this
agreement, without payment of any penalty, by vote of a majority of the
Disinterested Trustees or by a vote of the outstanding Class B Shares of that
Portfolio; and
(b) That such agreement shall terminate automatically in the event of its
assignment.
10. This Plan may not be amended to increase materially the amount of
distribution expenses provided for in Section 2 hereof unless such amendment is
approved in the manner provided in Section 3 hereof, and no material amendment
to the Plan shall be made unless approved in the manner provided for in Section
4 hereof.
11. The Fund will preserve copies of the Plan, any agreement relating to the
Plan and any report made pursuant to Section 7 above, for a period of not less
than six years (the first two years in an easily accessible place) from the
date of the Plan, agreement or report.
12. The execution of this Plan has been authorized by the Fund's Trustees and
by the sole shareholder of the Class B shares of the Fund. This Plan is
executed on behalf of the Fund or the Trustees of the Fund as Trustees and not
individually and that the obligations of this Plan 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 the State of Delaware.
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
By: /s/ NORI L. GABERT
-------------------
Name: Nori L. Gabert
Its: Vice President
Plan effective as of: August 5, 1995
3
<PAGE> 1
EXHIBIT 15.3
CLASS C
DISTRIBUTION PLAN
OF
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
WHEREAS, Van Kampen American Capital Global Managed Assets Fund (the "Fund"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Fund proposes to offer shares of the Portfolio(s) (herein so
called) into which the Fund's assets have been divided that are designated as
"Class C shares" at net asset value without initial sales charge but with a
contingent deferred sales charge ("CDSC");
WHEREAS, the Fund proposes to engage in activities which are primarily intended
to result in the distribution and sale of its Class C shares, to make payments
in connection with the distribution of its Class C shares and to engage Van
Kampen American Capital Distributors, Inc. ("VKAC") to act as principal
underwriter (as defined in the Act) of its Class C shares, and desires to adopt
a Class C Shares Distribution Plan pursuant to Rule 12b-1 under the Act;
WHEREAS, VKAC proposes to compensate broker-dealers or other persons for
providing distribution assistance in the offering of Class C shares and to
compensate financial and other industry professionals that provide services to
facilitate transactions in Class C shares for their clients (such
broker-dealers, other persons, financial institutions and other industry
professionals being collectively referred to as "Service Organizations");
WHEREAS, such compensation includes commissions to dealers and transaction fees
to other Service Organizations (such commissions and transaction fees being
collectively referred to as "Transactional Compensation"), plus supplemental
payments to Service Organizations ("Service Fees") pursuant to Servicing
Agreements proposed to be offered by VKAC to such Service Organizations;
WHEREAS, VKAC may provide additional promotional incentives to certain or all
Service Organizations and proposes to incur substantial additional expenses in
rendering distribution services for Class C shares, including but not limited
to, printing prospectuses and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature,
expenses of organizing and conducting sales seminars, and other operating
expenses;
WHEREAS, the Trustees of the Fund have determined that there is a reasonable
likelihood that adoption of this Class C Distribution Plan will benefit the
Fund, each Portfolio and its Class C
<PAGE> 2
shareholders;
NOW, THEREFORE, each Portfolio hereby adopts this Class C Distribution Plan
(the "Plan") in accordance with Rule 12b-1 under the Act and containing the
following terms and conditions:
1. Subject to the supervision of the Trustees of the Fund, VKAC will provide
the Fund with such distribution services and facilities as the Fund may from
time to time consider necessary to enhance the sale of its Class C shares.
2. In consideration of the Transactional Compensation and Service Fees paid
and the other distribution services for Class C shares rendered by VKAC, the
Fund shall pay VKAC out of the assets attributable to the Class C shares an
annual distribution fee and service fee ("Distribution Fee and Service Fee")
calculated daily and payable weekly. The combined Distribution Fee and Service
Fee shall equal on an annual basis up to 1.00% of the average daily net assets
of the Portfolio to which the Class C shares relate. Only distribution
expenditures of a type and amount authorized in advance by the Fund's Trustees
and properly attributable to the sale of Class C shares will be used to justify
any fee paid pursuant to this Plan.
3. This Plan shall not take effect with respect to any Portfolio until it has
been approved by a vote of at least a majority (as defined in the Act) of the
outstanding Class C shares of that Portfolio.
4. This Plan shall not take effect until it has been approved, together with
any related agreements, by votes of the majority of both (a) the Trustees of
the Fund and (b) those Trustees of the Fund who are not "interested persons" of
the Fund (as defined in the Act) and have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Disinterested Trustees"), cast in person at a meeting called for the purpose
of voting on this Plan or such agreements.
5. So long as the Plan remains in effect, the selection and nomination of
persons to serve as directors of the Fund who are not "interested persons" of
the Fund shall be committed to the discretion of the Trustees then in office
who are not "interested persons" of the Fund.
6. Unless sooner terminated pursuant to Section 8, this Plan shall continue in
effect for a period of one year from the date it takes effect (which shall be
the date of the commencement of the public offering of Class C shares, provided
that the conditions of Sections 3 and 4 above have been met).
7. VKAC shall provide to the Fund's Trustees and the Trustees shall review, at
least quarterly, a written report of the expenses incurred hereunder and the
purposes for which such expenditures were made.
2
<PAGE> 3
8. The Plan may be terminated with respect to any Portfolio, without payment
of any penalty, at any time by vote of a majority of the Disinterested
Trustees, or by vote of a majority of the outstanding voting securities of that
Portfolio.
9. Any agreement related to this Plan shall be in writing, and shall provide:
(a) That such agreement may be terminated with respect to any Portfolio at any
time, without payment of any penalty, by vote of a majority of the
Disinterested Trustees or by a vote of the outstanding voting securities of
that Portfolio, on not more than sixty days' written notice to any other party
to this agreement; and
(b) That such agreement shall terminate automatically in the event of its
assignment.
10. This Plan may not be amended to increase materially the amount of
distribution expenses provided for in Section 2 hereof unless such amendment is
approved in the manner provided in Section 3 hereof, and no material amendment
to the Plan shall be made unless approved in the manner provided for in Section
4 hereof.
11. The Fund will preserve copies of the Plan, any agreement relating to the
Plan and any report made pursuant to Section 7 above, for a period of not less
than six years (the first two years in an easily accessible place) from the
date of the Plan, agreement or report.
12. The execution of this Plan has been authorized by the Fund's Trustees and
by the sole shareholder of the Class C shares of the Fund. This Plan is
executed on behalf of the Fund or the Trustees of the Fund as Trustees and not
individually and that the obligations of this Plan 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 the State of Delaware.
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
By: /s/ NORI L. GABERT
------------------------
Name: Nori L. Gabert
Its: Vice President
Plan effective as of: August 5, 1995
3
<PAGE> 1
EXHIBIT 16
COMPUTATION MEASURE FOR PERFORMANCE INFORMATION
CALCULATION OF TOTAL RETURN -- CLASS A SHARES
The Fund calculates its average annual total return quotations for Class A
shares for the period ended December 31, 1995, 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:
P(1+T)n=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 period, at the end of the period, 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 1, 5, or 10 year periods and the deduction of all nonrecurring
charges, if any, deducted at the end of each period.
<PAGE> 2
CALCULATION OF TOTAL RETURN -- CLASS B SHARES
The Fund calculates its average annual total return quotations for Class B
shares for the period ended December 31, 1995, 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:
P(1+T)n=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 period, at the end of the period, or fractional portion
thereof
</TABLE>
These calculations incorporate the following assumptions:
1. Assumes an initial $1,000 payment with the maximum contingent
deferred sales charge incurred.
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 period 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
The Fund calculates its average annual total return quotations for Class C
shares for the period ended December 31, 1995, 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:
P(1+T)n=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 period, at the end of the period, or fractional portion
thereof
</TABLE>
These calculations incorporate the following assumptions:
1. Assumes an initial $1,000 payment with a 1.00% contingent deferred
sales charge incurred.
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 period and the deduction of all nonrecurring charges, if any,
deducted at the end of such period or periods.
<PAGE> 1
EXHIBIT 17.1
INVESTMENT COMPANIES FOR WHICH
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS INC.
ACTS AS PRINCIPAL UNDERWRITER OR DEPOSITOR
MARCH 21, 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
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
Principal Trust Princor Emerging Growth and Treasury
International Assets Advisory Corporation Global Blue Chip Trust
<PAGE> 3
<TABLE>
<S> <C>
Emerging Markets Municipal Income Trust . . . . . . . . . . . . . . . . . . . Series 1
Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 368
Insured Municipals Income Trust (Discount) . . . . . . . . . . . . . . . . . Series 5 through 13
Insured Municipals Income Trust (Short Intermediate Term) . . . . . . . . . . Series 1 through 103
1000 Insured Municipals Income Trust (Intermediate Term) . . . . . . . . . . Series 5 through 86
Insured Municipals Income Trust (Limited Term) . . . . . . . . . . . . . . . Series 9 through 83
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 18
Arizona Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 15
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 150
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 79
Colorado Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 18
Connecticut Insured Municipals Income Trust . . . . . . . . . . . . . . . . . Series 1 through 29
Connecticut Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . Series 1
Delaware Investors' 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 101
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 78
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 57
Louisiana Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 13
Maine Investor's Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . Series 1
Maryland Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 75
Massachusetts Insured Municipals Income Trust . . . . . . . . . . . . . . . . Series 1 through 31
Massachusetts Insured Municipals Income Trust (Premium Bond Series) . . . . . Series 1
Michigan Financial Institutions Trust . . . . . . . . . . . . . . . . . . . . Series 1
Michigan Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 135
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
Minnesota Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 57
Minnesota Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 21
Missouri Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . Series 1 through 94
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
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . Series 1
Nebraska Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . Series 1 through 9
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
New Mexico Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 18
New Jersey Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1 through 109
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 131
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 85
Ohio Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . Series 1 through 101
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 215
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 81
Stepstone Growth Equity and Treasury Securities Trust . . . . . . . . . . . . . Series 1
Tennessee Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . Series 1-3 and 5-34
Texas Insured Municipal Income Trust . . . . . . . . . . . . . . . . . . . . . Series 1 through 40
Texas Insured Municipals Income Trust (Intermediate Ladder) . . . . . . . . . . Series 1
Virginia Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . Series 1 through 69
Van Kampen American Capital Equity Opportunity Trust . . . . . . . . . . . . . . Series 1 through 28
Van Kampen Merritt Utility Income Trust . . . . . . . . . . . . . . . . . . . . Series 1 through 6
Van Kampen American Capital Insured Income Trust . . . . . . . . . . . . . . . . Series 1 through 53
Van Kampen Merritt Insured Income Trust (Intermediate Term) . . . . . . . . . . Series 1 through 44
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 6
Principal Financial Institutions Trust . . . . . . . . . . . . . . . . . . . . . Series 1
Internet Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Michigan Real Estate Income and Growth Trust . . . . . . . . . . . . . . . . . . Series 1
Strategic Ten Trust, United States . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 7
Strategic Ten Trust, United Kingdom . . . . . . . . . . . . . . . . . . . . . . Series 1 through 7
Strategic Ten Trust, Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 7
Strategic Five Trust, United States . . . . . . . . . . . . . . . . . . . . . . Series 1
Equity Opportunity Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 29
Emerging Growth and Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Global Blue Chip Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
</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
Colette Saucedo Sr. Vice President Houston, TX
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
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
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 & Assistant Secretary Oakbrook Terrace, IL
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
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
David B. Dibo Vice President Oakbrook Terrace, IL
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
Howard A. Doss Vice President Tampa, FL
Jonathan Eckhard Vice President Boulder, CO
Charles Edward Fisher Vice President Oakbrook Terrace, IL
William J. Fow Vice President Redding, CT
Nicholas Joseph Foxhoven 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
James C. Taylor Vice President Oakbrook Terrace, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Jeff Warland Vice President Oakbrook Terrace, IL
Sandra A. Waterworth Vice President and Assistant Oakbrook Terrace, IL
Secretary
Steven T. West Vice President Wayne, PA
Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
James R. Yount Vice President Seattle, WA
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
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
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
Rocco Fiordelisi III Asst. Vice President St. Louis, MO
Robert D. Gorski Asst. Vice President Oakbrook Terrace, IL
Walter C. Gray Asst. Vice President Oakbrook Terrace, IL
Joseph Hays Asst. Vice President Philadelphia, PA
Hunter Knapp Asst. Vice President Laguna, CA
Natalie N. Hurdle Asst. Vice President New York, NY
Laurie L. Jones Asst. Vice President Houston, TX
Jeffrey Scott Kinney Asst. Vice President Oakbrook Terrace, IL
Patricia D. Lathrop Asst. Vice President Tampa, FL
Tony E. Leal Asst. Vice President Houston, TX
Linda S. MacAyeal Asst. Vice President Oakbrook Terrace, IL
Ann Therese McGrath Asst. Vice President Oakbrook Terrace, IL
Peggy E. Moro Asst. Vice President Oakbrook Terrace, IL
David R. Niemi Asst. Vice President Oakbrook Terrace, IL
Daniel J. O'Keefe Asst. Vice President Oakbrook Terrace, IL
Allison Okun Asst. Vice President Oakbrook Terrace, IL
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
Jeffrey C. Shirk Asst. Vice President Philadelphia, PA
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
Melinda K. Yeager Asst. Vice President Houston, TX
David C. Goodwin Asst. Secretary Oakbrook Terrace, IL
Gina M. Scumaci Asst. Secretary Oakbrook Terrace, IL
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> 4
DIRECTORS
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ---- ------ --------
<S> <C> <C>
Don G. Powell Chairman & CEO 2800 Post Oak Blvd.
Houston, TX 77056
William R. Molinari President & COO One Parkview Plaza
Oakbrook Terrace, IL 60181
Ronald A. Nyberg Executive Vice President One Parkview Plaza
& General Counsel Oakbrook Terrace, IL 60181
William R. Rybak Executive Vice President One Parkview Plaza
& CFO Oakbrook Terrace, IL 60181
</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.
<PAGE> 2
12. Money Market Fund - Van Kampen American Capital Reserve
Fund or Van Kampen American Capital Tax Free Money
Market Fund.
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
2
<PAGE> 3
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.
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 to a 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
3
<PAGE> 4
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
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
4
<PAGE> 5
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.
4. Determination of nature of expenses. The Trustees shall
determine in their sole discretion whether any expense
other than those listed herein is properly treated as
attributed to a particular 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.
5
<PAGE> 6
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
a. 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.
b. 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
6
<PAGE> 7
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.
7
<PAGE> 8
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
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000917547
<NAME> VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
<SERIES>
<NUMBER> 001
<NAME> CLASS A SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 25,082,216
<INVESTMENTS-AT-VALUE> 26,520,279
<RECEIVABLES> 1,551,775
<ASSETS-OTHER> 17,293
<OTHER-ITEMS-ASSETS> 126,805
<TOTAL-ASSETS> 28,216,152
<PAYABLE-FOR-SECURITIES> 1,445,813
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,315,312
<TOTAL-LIABILITIES> 2,761,125
<SENIOR-EQUITY> 25,125
<PAID-IN-CAPITAL-COMMON> 23,701,323
<SHARES-COMMON-STOCK> 1,528,430
<SHARES-COMMON-PRIOR> 1,256,163
<ACCUMULATED-NII-CURRENT> (14,634)
<OVERDISTRIBUTION-NII> (17,467)
<ACCUMULATED-NET-GAINS> 168,396
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,574,817
<NET-ASSETS> 25,455,027
<DIVIDEND-INCOME> 271,649
<INTEREST-INCOME> 569,273
<OTHER-INCOME> 0
<EXPENSES-NET> (738,705)
<NET-INVESTMENT-INCOME> 102,217
<REALIZED-GAINS-CURRENT> 747,602
<APPREC-INCREASE-CURRENT> 1,997,291
<NET-CHANGE-FROM-OPS> 2,847,110
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (109,529)
<DISTRIBUTIONS-OF-GAINS> (270,443)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 400,789
<NUMBER-OF-SHARES-REDEEMED> (166,010)
<SHARES-REINVESTED> 37,488
<NET-CHANGE-IN-ASSETS> 5,303,149
<ACCUMULATED-NII-PRIOR> 2,926
<ACCUMULATED-GAINS-PRIOR> (127,359)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (34,466)
<GROSS-ADVISORY-FEES> 232,342
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 943,975
<AVERAGE-NET-ASSETS> 13,757,683
<PER-SHARE-NAV-BEGIN> 9.19
<PER-SHARE-NII> .08
<PER-SHARE-GAIN-APPREC> 1.138
<PER-SHARE-DIVIDEND> (.078)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> 2.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000917547
<NAME> VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
<SERIES>
<NUMBER> 002
<NAME> CLASS B SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<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> 802,255
<SHARES-COMMON-PRIOR> 802,688
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (14,553)
<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> (142,058)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 315,134
<NUMBER-OF-SHARES-REDEEMED> (329,324)
<SHARES-REINVESTED> 13,757
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (21,661)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 7,857,656
<PER-SHARE-NAV-BEGIN> 9.17
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> 1.138
<PER-SHARE-DIVIDEND> (.018)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.10
<EXPENSE-RATIO> 3.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000917547
<NAME> VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
<SERIES>
<NUMBER> 003
<NAME> CLASS C SHARES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<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> 181,833
<SHARES-COMMON-PRIOR> 135,669
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (2,914)
<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> (32,127)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 138,887
<NUMBER-OF-SHARES-REDEEMED> (96,043)
<SHARES-REINVESTED> 3,320
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3,719)
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1,618,875
<PER-SHARE-NAV-BEGIN> 9.20
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 1.138
<PER-SHARE-DIVIDEND> (.018)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.12
<EXPENSE-RATIO> 3.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
