<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1997
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. 5 [X]
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 7 [X]
</TABLE>
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN THE DECLARATION OF TRUST)
ONE PARKVIEW PLAZA, OAKBROOK TERRACE, ILLINOIS 60181
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
(630) 684-6000
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
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 (ILLINOIS)
333 WEST WACKER DRIVE
CHICAGO, ILLINOIS 60606
(312) 407-0700
Approximate Date of Proposed Public Offering: As soon as practicable following
effectiveness of this Registration Statement.
It is proposed that this filing will become effective:
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b) 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, 1997 ON OR ABOUT MARCH 30, 1998.
================================================================================
<PAGE> 2
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-1A ITEM PROSPECTUS CAPTION
-------------- ------------------
<C> <S> <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..................... Annual Fund Operating Expenses and Example;
The Fund; Investment Practices;
Investment Advisory Services; Inside Back
Cover
6. Capital Stock and Other Securities......... The Fund; Alternative Sales Arrangements;
Purchase of Shares; Shareholder Services;
Distribution and Service Plans;
Redemption of Shares; Distributions from
the Fund; Tax Status; Description of
Shares of the Fund; Additional
Information; Inside Back Cover
7. Purchase of Securities Being Offered....... Alternative Sales Arrangements; Purchase of
Shares; Shareholder Services;
Distribution and Service Plans
8. Redemption or Repurchase................... Shareholder Services; Redemption of Shares
9. Pending Legal Proceedings.................. Inapplicable
</TABLE>
<TABLE>
<CAPTION>
PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
------ -------------------------------------------
<C> <S> <C>
10. Cover Page................................. Cover Page
11. Table of Contents.......................... Table of Contents
12. General Information and History............ General Information
13. Investment Objectives and Policies......... Investment Policies and Techniques;
Options, Futures Contracts and Related
Options; Repurchase Agreements; Loans of
Portfolio Securities; Investment
Restrictions; Portfolio Turnover
14. Management of the Fund..................... General Information; Trustees and Officers;
Investment Advisory Agreements
15. Control Persons and Principal Holders of
Securities............................... General Information; Trustees and Officers;
Investment Advisory Agreements
16. Investment Advisory and Other Services..... General Information; Trustees and Officers;
Investment Advisory Agreement;
Distributor; Distribution and Service
Plans; Transfer Agent; Portfolio
Transactions and Brokerage; Other
Information
17. Brokerage Allocation and Other Practices... Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities......... Purchase and Redemption of Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered................. Determination of Net Asset Value; Purchase
and Redemption of Shares; Exchange
Privilege
20. Tax Status................................. Tax Status of the Fund
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
non-diversified, management investment company, commonly known as a mutual fund.
The Fund's investment objective is to seek to provide total return through a
managed balance of foreign and domestic equity and debt securities. There is no
assurance that the Fund will achieve its investment objective.
The Fund's investment adviser is Van Kampen American Capital Asset
Management, Inc. Morgan Stanley Asset Management Inc. provides sub-advisory
services to the Adviser of the Fund. 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 ANY STATE REGULATORS NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY 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 30, 1997, containing
additional information about the Fund is hereby incorporated 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) 421-2833. The Statement of Additional Information
has been filed with the Securities and Exchange Commission (the "SEC") and is
available along with other related materials at the SEC's internet web site
(http://www.sec.gov).
------------------
VAN KAMPEN AMERICAN CAPITAL SM
------------------
THIS PROSPECTUS IS DATED APRIL 30, 1997.
<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.............................. 26
Purchase of Shares.......................................... 29
Shareholder Services........................................ 39
Redemption of Shares........................................ 44
Distribution and Service Plans.............................. 47
Distributions from the Fund................................. 49
Tax Status.................................................. 49
Fund Performance............................................ 54
Description of Shares of the Fund........................... 56
Additional Information...................................... 57
</TABLE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND, THE ADVISER OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND OR BY THE DISTRIBUTOR TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUND TO MAKE
SUCH AN OFFER IN SUCH JURISDICTION.
2
<PAGE> 5
- ------------------------------------------------------------------------------
PROSPECTUS SUMMARY
- ------------------------------------------------------------------------------
THE FUND. Van Kampen American Capital Global 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 for each subsequent investment for each class of shares (or less as
described under "Purchase of Shares").
INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek to provide
total return through a managed balance of foreign and domestic equity and debt
securities. There can be no assurance the Fund will achieve its investment
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 Adviser's and
Subadviser'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 use of options, futures contracts and options on
futures contracts may include additional risks. The Fund may purchase or sell
debt securities and currencies on a forward commitment basis and may lend
portfolio securities. See "Investment Practices."
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 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 ("CDSC") 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 and Service Plans."
Class B Shares. Class B shares are offered at net asset value per share and are
subject to a maximum CDSC of 4.00% 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 the Fund's average
daily net assets attributable to such class of shares. See "Purchase of
Shares -- Class B Shares" and "Distribution and Service Plans." Class B shares
convert automatically to Class A shares eight years after the end of the
calendar month in which the shareholder's order to purchase was accepted. See
"Alternative Sales Arrangements -- Conversion Feature."
Class C Shares. Class C shares are offered at net asset value per share and are
subject to a CDSC of 1.00% on redemptions made within one year of purchase. See
"Redemption of Shares." Class C shares are subject to a combined annual
distribution fee and service fee of up to 1.00% of the Fund's average daily net
assets attributable to such class of shares. See "Purchase of Shares -- Class C
Shares" and "Distribution and Service Plans."
INVESTMENT ADVISERS. Van Kampen American Capital Asset Management, Inc. (the
"Adviser") is the Fund's investment adviser. Morgan Stanley Asset Management
Inc. (the "Subadviser") provides sub-advisory services to the Adviser.
DISTRIBUTOR. Van Kampen American Capital Distributors, Inc. (the "Distributor")
distributes 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 foregoing is qualified in its entirety by reference to the more detailed
information appearing elsewhere in this Prospectus.
4
<PAGE> 7
- ------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
Maximum sales charge imposed on
purchases (as a percentage of
offering price)................. 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 Year
redemption proceeds)............ None(2) Year 1--4.00% 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 CDSC 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).................................. 0.70% 0.70% 0.70%
12b-1 Fees (as a percentage of average daily
net assets)(2).............................. 0.15% 1.00% (3) 1.00% (3)
Other Expenses (as a percentage of average
daily net assets)........................... 2.02% 2.06% 2.08%
Total Fund Operating Expenses (net of
reimbursement) (as a percentage of average
daily net assets)(5)........................ 2.87% 3.76% 3.78%
</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 and Service 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 3.17% for Class A shares, 4.06% for Class B shares and 4.07% for Class C
shares.
6
<PAGE> 9
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
EXAMPLE: ---- ----- ----- -----
<S> <C> <C> <C> <C>
You would pay the following expenses on
a $1,000 investment assuming (i) an
operating expense ratio of 2.87% for
Class A shares, 3.76% for Class B
shares and 3.78% for Class C shares,
(ii) a 5.00% annual return and (iii)
redemption at the end of each time
period:
Class A............................. $75 $132 $192 $352
Class B............................. $78 $145 $209 $381*
Class C............................. $48 $115 $195 $402
You would pay the following expenses on
the same $1,000 investment assuming no
redemption at the end of each time
period:
Class A............................. $75 $132 $192 $352
Class B............................. $38 $115 $194 $381*
Class C............................. $38 $115 $195 $402
</TABLE>
- ------------------------------------------------------------------------------
* Based on conversion to Class A shares after eight years.
The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The "Example" reflects expenses based on the "Annual Fund
Operating Expenses" table as shown above carried out to future years and is
included to provide a means for the investor to compare expense levels of funds
with different fee structures over varying investment periods. To facilitate
such comparison, all funds are required by the SEC to utilize a 5.00% 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 CDSC. THE INFORMATION CONTAINED IN THE ABOVE TABLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. For a more complete description of such
costs and expenses, see "Purchase of Shares," "Investment Advisory Services,"
"Redemption of Shares" and "Distribution and Service Plans."
7
<PAGE> 10
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (Selected data for a share of beneficial interest
outstanding throughout each of the periods indicated)
- --------------------------------------------------------------------------------
The following financial highlights have been audited by Price Waterhouse LLP,
independent accountants, whose report thereon was unqualified. This information
should be read in conjunction with the financial statements and notes thereto
included in the Statement of Additional Information.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------------------------------------- --------------------------------------------
MAY 16, 1994 MAY 16, 1994
(COMMENCEMENT (COMMENCEMENT
YEAR YEAR OF INVESTMENT YEAR YEAR OF INVESTMENT
ENDED ENDED OPERATIONS) TO ENDED ENDED OPERATIONS) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996(c) 1995 1994 1996(c) 1995 1994
------------ ------------ -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of the
Period.......................... $ 10.15 $ 9.19 $ 9.44 $ 10.10 $ 9.17 $ 9.44
------- ------- ------- -------- ------- -------
Net Investment Income........... -0- .08 .10 (.106) (.01) .01
Net Realized and Unrealized
Gain/Loss on Securities......... 1.242 1.1375 (.2475) 1.247 1.1375 (.2065)
------- ------- ------- -------- ------- -------
Total from Investment
Operations...................... 1.242 1.2175 (.1475) 1.141 1.1275 (.1965)
------- ------- ------- -------- ------- -------
Less:
Distributions from and in Excess
of Net Investment Income...... -0- .0775 .075 -0- .0175 .046
Distributions from and in Excess
of Net Realized Gain on
Securities.................... .862 .1800 .0275 .862 .1800 .0275
------- ------- ------- -------- ------- -------
Total Distributions.............. .862 .2575 .1025 .862 .1975 .0735
------- ------- ------- -------- ------- -------
Net Asset Value, End of the
Period.......................... $10.530 $ 10.15 $ 9.19 $ 10.379 $ 10.10 $ 9.17
======= ======= ======= ======== ======= =======
Total Return*(a)................. 12.44% 13.30% (1.57%)** 11.51% 12.31% (2.09%)**
Net Assets at End of the Period
(In millions)................... $ 8.5 $ 15.5 $ 11.5 $ 9.9 $ 8.1 $ 7.4
Ratio of Expenses to Average Net
Assets*......................... 2.87% 2.79% 2.75% 3.76% 3.73% 3.92%
Ratio of Net Investment
Income/Loss to Average Net
Assets*......................... .00% .81% 1.54% (1.01%) (.09%) .13%
Portfolio Turnover............... 91% 135% 50%** 91% 135% 50%**
Average Commission Paid Per
Equity Share Traded(b).......... $ .0214 -- -- $ .0214 -- --
<CAPTION>
CLASS C SHARES
--------------------------------------------
MAY 16, 1994
(COMMENCEMENT
YEAR YEAR OF INVESTMENT
ENDED ENDED OPERATIONS) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996(c) 1995 1994
------------ ------------ --------------
<S> <C> <C> <C>
Net Asset Value, Beginning of the
Period.......................... $ 10.12 $ 9.20 $ 9.44
-------- ------- -------
Net Investment Income........... (.104) (.02) .05
Net Realized and Unrealized
Gain/Loss on Securities......... 1.241 1.1375 (.2165)
-------- ------- -------
Total from Investment
Operations...................... 1.137 1.1175 (.1665)
-------- ------- -------
Less:
Distributions from and in Excess
of Net Investment Income...... -0- .0175 .046
Distributions from and in Excess
of Net Realized Gain on
Securities.................... .862 .1800 .0275
-------- ------- -------
Total Distributions.............. .862 .1975 .0735
-------- ------- -------
Net Asset Value, End of the
Period.......................... $ 10.395 $ 10.12 $ 9.20
======== ======= =======
Total Return*(a)................. 11.49% 12.16% (1.77%)**
Net Assets at End of the Period
(In millions)................... $ 1.7 $ 1.9 $ 1.3
Ratio of Expenses to Average Net
Assets*......................... 3.78% 3.79% 3.36%
Ratio of Net Investment
Income/Loss to Average Net
Assets*......................... (.99%) (.18%) .80%
Portfolio Turnover............... 91% 135% 50%**
Average Commission Paid Per
Equity Share Traded(b).......... $ .0214 -- --
</TABLE>
*If certain expenses had not been assumed by the Adviser, total return would
have been lower and the ratios would have been as follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio of Expenses to Average Net Assets.... 3.17% 3.68% 2.76% 4.06% 4.61%
Ratio of Net Investment Income/Loss to
Average Net Assets........................ (.30%) (.07%) 1.53% (1.30%) (.97%)
Ratio of Expenses to Average Net Assets.... 3.93% 4.07% 4.67% 3.38%
Ratio of Net Investment Income/Loss to
Average Net Assets........................ .12% (1.28%) (1.06%) .78%
</TABLE>
- ---------------
** Non-Annualized
(a) Total return is based upon net asset value which does not include payment of
the maximum sales charge or contingent deferred sales charge.
(b) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This
disclosure was not required in fiscal years prior to 1996.
(c) Based on average month-end shares outstanding.
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 to provide 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 and 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. 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."
9
<PAGE> 12
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."
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.
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
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geographical trends to evaluate and compare equity investment opportunities
among various countries and among securities within each country with the
objective of identifying and investing in those securities which can best meet
the Fund's investment objective. Of course, there is no assurance that the
Advisers will be successful in this endeavor.
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
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<PAGE> 14
are to foster the transition toward open market economies and to promote private
and entrepreneurial initiative in countries of central and eastern Europe;
Inter-American Development Bank, established to further the development of its
Latin American member countries; African Development Bank, established to
contribute to the economic development and social progress of its African member
countries; 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 Ratings Group ("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 Advisers believe 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 Advisers 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 Advisers 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. Repurchase agreements
involve certain risks in the event of default by the other party. 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) possible decline in
the value of the underlying security during the period while the Fund seeks to
enforce its rights thereto; (b) possible lack of access
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<PAGE> 17
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 certain funds advised or subadvised by the Adviser or certain of
its affiliates would otherwise invest separately into a joint account. The cash
in the joint account is then invested in repurchase agreements and the funds
that contributed to the joint account share pro rata in the net revenue
generated. The Adviser believes that the joint account produces efficiencies and
economies of scale that may contribute to reduced transaction costs, higher
returns, higher quality investments and greater diversity of investments for the
Fund than would be available to the Fund investing separately. The manner in
which the joint account is managed is subject to conditions set forth in an SEC
exemptive order authorizing this practice, which conditions are designed to
ensure the fair administration of the joint account and to protect the amounts
in that account.
PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES. The Advisers are responsible
for the placement of orders for the purchase and sale of portfolio securities
for the Fund and the negotiation of brokerage commissions on such transactions.
Brokerage firms are selected on the basis of their professional capability for
the type of transaction and the value and quality of execution 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, to the extent permitted by law, with
brokerage firms affiliated with the Fund and 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.
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<PAGE> 18
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. 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. As used herein, restricted
securities are those that have been sold in the United States without
registration under the Securities Act of 1933, as amended ("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. Also excluded from this limitation on restricted securities are
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<PAGE> 19
securities purchased by the Fund issued by other investment companies to the
extent permitted by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of the
1940 Act.
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 affect the price of securities which the Fund intends to purchase at a
later date. See
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<PAGE> 20
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 over-the-counter 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 15% 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
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<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 liquid 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 liquid 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.
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<PAGE> 22
POTENTIAL RISKS OF OPTIONS, FUTURES AND FORWARD CONTRACTS. The successful use
of the foregoing investment techniques depends on the ability of the Fund's
Advisers to forecast 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 or liquid securities equal to the market value of the
obligation under the futures contracts (less any related margin deposits) will
be maintained in a segregated account with the Custodian. 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.
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<PAGE> 23
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
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, liquid securities or the security covered by the Forward Commitment (in
the case of a Forward Commitment sale) 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 fundamental
investment restrictions that may not be changed without approval by a vote of a
majority of the outstanding voting securities of the Fund (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act")). 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
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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 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 $57 billion under management or supervision. Van Kampen American Capital's
more than 40 open-end and 38 closed-end funds and more than 2,500 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 a wholly-owned subsidiary of MSAM Holdings II, Inc.
which, in turn, is a wholly-owned subsidiary of Morgan Stanley Group Inc. The
Adviser's principal office is located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181.
Morgan Stanley Group Inc. and various of its directly or indirectly owned
subsidiaries, including Morgan Stanley Asset Management Inc., an investment
adviser (the "Subadviser"), Morgan Stanley & Co. Incorporated, a registered
broker-dealer and investment adviser, and Morgan Stanley International are
engaged in a wide range of financial services. Their principal businesses
include securities underwriting, distribution and trading; merger, acquisition,
restructuring and other corporate finance advisory activities; merchant banking;
stock brokerage and research services; asset management; trading of futures,
options, foreign exchange, commodities and swaps (involving foreign exchange,
commodities, indices and interest rates); real estate advice, financing and
investing; and global custody, securities clearance services and securities
lending.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form a
new company to be named Morgan Stanley, Dean Witter, Discover & Co. Subsequent
to certain conditions being met, it is currently anticipated that the
transaction will close in mid-1997. Thereafter, Van Kampen American Capital
Asset Management, Inc. will be an indirect subsidiary of Morgan Stanley, Dean
Witter, Discover & Co.
22
<PAGE> 25
Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management of more
than $100 billion in customer accounts.
THE SUBADVISER. The Subadviser is a wholly-owned subsidiary of Morgan Stanley
Group, Inc. and is an affiliate of the Adviser. The Subadviser provides
portfolio management and named fiduciary services to various closed-end and
open-end investment companies, taxable and nontaxable institutions,
international organizations and individuals investing in United States and
international equities and fixed income securities. At December 31, 1996, the
Subadviser had, together with its affiliated investment management companies,
assets under management (including assets under fiduciary advisory control)
totaling approximately $162 billion. The Subadviser emphasizes a global
investment strategy and benefits from research coverage of a broad spectrum of
investment opportunities worldwide and draws upon the capabilities of its asset
management specialists located in various offices throughout the world,
including New York, London, Tokyo, Singapore, Bombay, Hong Kong, Milan and
Sydney. The Subadviser also draws upon the research capabilities of Morgan
Stanley Group Inc. and its other affiliates as well as the research and
investment ideas of other companies whose brokerage services the Subadviser
utilizes. The address of the Subadviser is 1221 Avenue of the Americas, New
York, New York 10020.
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, service fees, distribution
fees, custodian fees, legal and accounting fees, the costs of reports and
proxies to shareholders, trustees' fees (other than those who are affiliated
persons as defined in the 1940 Act of the Adviser, Distributor or Van Kampen
American
23
<PAGE> 26
Capital), 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
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. Effective April 1, 1997, Barton M. Biggs, Madhav Dhar,
Francine J. Bovich and Ann D. Thivierge assumed the primary responsibility for
the day-to-day management of equity portion the Fund's portfolio.
Since 1980, Mr. Biggs has been Chairman and a director of the Subadviser, and
a Managing Director of the Subadviser and Morgan Stanley & Co. Incorporated
since 1975. Mr. Biggs is a director of Morgan Stanley Group, Inc. and a director
and chairman of other investment companies of the Subadviser. Mr. Biggs holds a
B.A. from Yale University and an M.B.A. from New York University.
Mr. Dhar is Managing Director of the Subadviser and Morgan Stanley & Co.
Incorporated. He has been with the Subadviser since 1984. Mr. Dhar is a co-head
of the Subadviser's emerging markets group, and has been involved in the
launching of the Subadviser's country funds. Mr. Dhar holds a B.S. from St.
Stephens College in Delhi University (India) and an M.B.A. from Carnegie-Mellon
University.
Ms. Bovich has been with the Subadviser since 1993. She is responsible for
portfolio management and communication of the Subadviser's asset allocation
strategy to institutional investor clients. Prior to 1993, Ms. Bovich was a
Principal and Executive Vice President of Westwood Management Corp. Prior to
that, Ms. Bovich was a Managing Director of Citicorp Investment Management, Inc.
where she was responsible for the Institutional Investment Management group. Ms.
Bovich holds a B.A. in Economics from Connecticut College and an M.B.A. in
Finance from New York University.
24
<PAGE> 27
Ms. Thivierge is a Principal of the Subadviser. She is a member of MSAM asset
allocation committee, primarily representing the Total Fund Management team
since its inception in 1991. Ms. Thivierge has been with the Subadviser since
1986. Prior to 1986, Ms. Thivierge was with Edgewood Management Company. Ms.
Thivierge holds a B.A. in International Relations from James Madison College,
Michigan State University, and an M.B.A. in Finance from New York University.
The Subadviser has employed J. David Germany, Michael B. Kushma, Paul E.
O'Brien and Robert M. Smith to manage the fixed income portion of the Fund's
portfolio.
J. David Germany joined the Subadviser in 1996 and has been a portfolio
manager with the Adviser's affiliate, Miller Anderson & Sherrerd, LLP ("MAS")
since 1991. He was Vice President & Senior Economist for Morgan Stanley & Co.
Incorporated from 1989 to 1991. He assumed responsibility for the Global Fixed
Income and International Fixed Income Portfolios of the MAS-advised MAS Funds in
1993 and the MAS Funds' Multi-Asset-Class Portfolio in 1994. Mr. Germany was
Senior Staff Economist (International Finance and Macroeconomics) to the Council
of Economic Advisors -- Executive Office of the President from 1986 through 1987
and an Economist with the Board of Governors of the Federal Reserve System --
Division of International Finance from 1983 through 1987. He holds a A.B. degree
(Valedictorian) from Princeton University and a Ph.D. in Economics from the
Massachusetts Institute of Technology.
Michael B. Kushma, a Principal at Morgan Stanley & Co. Incorporated, joined
the firm in 1987. He was a member of Morgan Stanley & Co. Incorporated's global
fixed income strategy group in the fixed income division from 1987-1995 where he
became the division's senior government bond strategist. He joined the
Subadviser in 1995 where he took responsibility for the global fixed income
portfolio. Mr. Kushma received an A.B. in economics from Princeton University in
1979, an M. Sc. in economics from the London School of Economics in 1981 and an
M.Phil. in economics from Columbia University in 1983.
Paul F. O'Brien joined the Subadviser and MAS in 1996. He was head of European
Economics from 1993 through 1995 for JP Morgan and as Principal Administrator
from 1991 through 1992 for the Organization for Economic Cooperation and
Development. He assumed responsibility for the MAS-advised MAS Funds' Global
Fixed Income and International Fixed Income Portfolios in 1996. Mr. O'Brien
holds a B.S. degree from the Massachusetts Institute of Technology and a Ph.D.
in Economics from the University of Minnesota.
Robert Smith, a Principal of Morgan Stanley & Co. Incorporated, joined the
Subadviser in June 1994 and has had or shared primary responsibility for
managing the Morgan Stanley Global Fixed Income Fund's assets since July 1994.
Prior to joining the Subadviser he spent eight years as Senior Portfolio Manager
- -- Fixed
25
<PAGE> 28
Income at the State of Florida Pension Fund. Mr. Smith's responsibilities
included active total-rate-of-return management of long term portfolios and
supervision of other fixed income managers. A graduate of Florida State
University with a B.S. in Business, Mr. Smith also received an M.B.A. -- Finance
from Florida State and holds a Chartered Financial Analyst (CFA) designation.
- ------------------------------------------------------------------------------
ALTERNATIVE SALES ARRANGEMENTS
- ------------------------------------------------------------------------------
The Alternative Sales Arrangements permits an investor to choose the method of
purchasing shares of the Fund that is most beneficial given the amount of the
purchase and the length of time the investor expects to hold the shares.
CLASS A SHARES. Class A shares are sold at net asset value plus an initial
maximum sales charge of up to 4.75% of the offering price (4.99% of the net
amount invested), reduced on investments of $100,000 or more. Investments of $1
million or more are not subject to any sales charge at the time of purchase, but
a CDSC 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. Class B shares convert
automatically to Class A shares eight years after the end of the calendar month
in which the shareholder's order to purchase was accepted. See "Purchase of
Shares -- 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
26
<PAGE> 29
have a higher expense ratio and to pay lower dividends than those related to
Class A shares. See "Purchase of Shares -- Class C Shares."
CONVERSION FEATURE. Class B shares purchased on or after June 1, 1996, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares eight years after the end of the calendar month in which the
shares were purchased. Class B shares purchased before June 1, 1996, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares six years after the end of the calendar month in which the shares
were purchased. Class C shares purchased before January 1, 1997, and any
dividend reinvestment plan shares received thereon, automatically convert to
Class A shares ten years after the end of the calendar month in which such
shares were purchased. Such conversion will be on the basis of the relative net
asset values per share, without the imposition of any sales load, fee or other
charge. The conversion of such shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution fee and transfer agency costs with respect
to such shares does not result in the Fund's dividends or distributions
constituting "preferential dividends" under the Code, and (ii) the conversion of
shares does not constitute a taxable event under federal income tax law. The
conversion may be suspended if such an opinion is no longer available and such
shares might continue to be subject to the higher aggregate fees applicable to
such shares for an indefinite period.
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 higher aggregate fees and CDSC on Class B shares and Class C shares 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. It is presently the
policy of the Distributor not to accept any order of $500,000 or more for Class
B shares or any order of $1 million or more for Class C shares as it ordinarily
would be more beneficial for such an investor to purchase Class A shares.
Class A shares are not subject to an ongoing distribution fee and,
accordingly, receive correspondingly higher dividends per share. However,
because initial sales charges are deducted at the time of purchase for accounts
under $1 million, investors in Class A shares do not have all their funds
invested initially and, therefore, initially own fewer shares. Other investors
might determine that it is more
27
<PAGE> 30
advantageous to purchase either Class B shares or Class C shares and have all
their funds invested initially, although remaining subject to a CDSC. Ongoing
distribution fees on Class B shares and Class C shares may 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
CDSC 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 CDSC
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 CDSC AND ONGOING DISTRIBUTION
FEE WITH RESPECT TO THE CLASS B SHARES AND CLASS C SHARES ARE THE SAME AS THOSE
OF THE INITIAL SALES CHARGE WITH RESPECT TO CLASS A SHARES. See "Distribution
and Service Plans."
GENERAL. Dividends paid by the Fund with respect to Class A shares, Class B
shares and Class C shares will be calculated in the same manner at the same time
on the same day except that the higher distribution fees and transfer agency
costs relating to Class B shares or Class C shares will be borne by the
respective class. See "Distributions from the Fund." Shares of the Fund may be
exchanged, subject to certain limitations, for shares of the same class of
certain other mutual funds advised by the Adviser and its affiliates and
distributed by the Distributor. See "Shareholder Services -- Exchange
Privilege."
28
<PAGE> 31
- ------------------------------------------------------------------------------
PURCHASE OF SHARES
- ------------------------------------------------------------------------------
GENERAL
The Fund offers three classes of shares to the public on a continuous basis
through the Distributor as principal underwriter, which is located at One
Parkview Plaza, Oakbrook Terrace, Illinois 60181. Shares also are 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 also may be purchased by completing the application accompanying
this Prospectus and forwarding the application, through the authorized dealer,
to the shareholder service agent, ACCESS Investor Services, Inc. ("ACCESS"), a
wholly-owned subsidiary of Van Kampen American Capital. When purchasing shares
of the Fund, investors must specify whether the purchase is for Class A shares,
Class B shares or Class C shares.
Shares are offered at the next determined net asset value per share, plus a
front-end or 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
29
<PAGE> 32
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 higher distribution fee and
transfer agency costs 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 higher distribution fee and 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,
(iii) each class has different exchange privileges, (iv) certain shares are
subject to a conversion feature and (v) certain shares have different
shareholder service options available. The net income attributable to Class B
shares and Class C shares and the dividends payable on Class B shares and Class
C shares will be reduced by the amount of the distribution fee and other
expenses associated with such shares. Sales personnel of authorized dealers
distributing the Fund's shares and other persons entitled to receive
compensation
30
<PAGE> 33
for selling such shares may receive differing compensation for selling Class A
shares, Class B shares or Class C shares.
Agreements are in place which provide, among other things and subject to
certain conditions, for certain favorable distribution arrangements for shares
of the Fund with subsidiaries of The Travelers Inc.
The Distributor may from time to time implement programs under which an
authorized dealer's sales force may be eligible to win nominal awards for
certain sales efforts or under which the Distributor will reallow to any
authorized dealer that sponsors sales contests or recognition programs
conforming to criteria established by the Distributor, or participates in sales
programs sponsored by the Distributor, an amount not exceeding the total
applicable sales charges on the sales generated by the authorized dealer at the
public offering price during such programs. Other programs provide, among other
things and subject to certain conditions, for certain favorable distribution
arrangements for shares of the Fund. Also, the Distributor in its discretion may
from time to time, pursuant to objective criteria established by the
Distributor, pay fees to, and sponsor business seminars for, qualifying
authorized dealers for certain services or activities which are primarily
intended to result in sales of shares of the Fund. Fees may include payment for
travel expenses, including lodging, incurred in connection with trips taken by
invited registered representatives and members of their families to locations
within or outside of the United States for meetings or seminars of a business
nature. In some instances additional compensation or promotional incentives may
be offered to brokers, dealers or financial intermediaries that have sold or may
sell significant amounts of shares during specified periods of time. The
Distributor may provide additional compensation to Edward D. Jones & Co. or an
affiliate thereof based on a combination of its sales of shares and increases in
assets under management. All of the foregoing payments are made by the
Distributor out of its own assets. Such fees paid for such services and
activities with respect to the Fund will not exceed in the aggregate 1.25% of
the average total daily net assets of the Fund on an annual basis. These
programs will not change the price an investor will pay for shares or the amount
that a Fund will receive from such sale.
31
<PAGE> 34
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 CDSC of
1.00% on redemptions made within one year of the purchase. A commission
will be paid to authorized dealers who initiate and are responsible for
purchases of $1 million or more as follows: 1.00% on sales to $2 million,
plus 0.80% on the next $1 million and 0.50% on the excess over $3
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
interpretation of federal law expressed herein and banks and other financial
institutions may be required to register as dealers pursuant to certain state
laws.
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<PAGE> 35
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 children under 21 years of age and any corporation, partnership or
sole proprietorship which is 100% owned, either alone or in combination, by any
of the foregoing; a trustee or other fiduciary purchasing of a single trust or
single fiduciary account, or a "company" as defined in Section 2(a)(8) of the
1940 Act.
As used herein, "Participating Funds" refers to certain open-end investment
companies advised by the Adviser or Van Kampen American Capital Investment
Advisory Corp. and distributed by the Distributor as determined from time to
time by the Fund's Board of Trustees.
VOLUME DISCOUNTS. The size of investment shown in the preceding sales charge
table applies to the total dollar amount being invested by any person in shares
of the Fund, or in any combination of shares of the Fund and shares of other
Participating Funds, although other Participating Funds may have different sales
charges.
CUMULATIVE PURCHASE DISCOUNT. The size of investment shown in the preceding
sales charge table may also be determined by combining the amount being invested
in shares of the Participating Funds plus the current offering price of all
shares of the Participating Funds which have been previously purchased and are
still owned.
LETTER OF INTENT. A Letter of Intent provides an opportunity for an investor
to obtain a reduced sales charge by aggregating the investments over a
thirteen-month period to determine the sales charge as outlined in the preceding
sales charge table. The size of investment shown in the preceding sales charge
table also includes purchases of shares of the Participating Funds over a
thirteen-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 thirteen-month period starting up to
90 days before the date of execution of a Letter of Intent. Each investment made
during the period receives the reduced sales charge applicable to the total
amount of the investment goal. If the goal is not achieved within the period,
the investor must pay the difference between the sales charges applicable to the
purchases made and the sales charges previously paid. The initial purchase must
be for an amount equal to at least 5% of
33
<PAGE> 36
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 investment 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 their investments are made more frequently. The Fund reserves the right to
modify or terminate this program at any time.
34
<PAGE> 37
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 or directors of funds advised by the Adviser
or Van Kampen American Capital Investment Advisory Corp. and such persons'
families and their beneficial accounts.
(2) Current or retired directors, officers and employees of Morgan Stanley
Group Inc. and any of its subsidiaries, 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 children under 21 years of age when purchasing for any
accounts they beneficially own, or, in the case of any such financial
institution, when purchasing for retirement plans for such institution's
employees.
(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 thirteen 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 twelve month period following such
transaction.
(5) Trustees and other fiduciaries purchasing shares for retirement plans of
organizations with retirement plan assets of $3 million or more and which
invest in multiple fund families through national wirehouse alliance
programs.
(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.
35
<PAGE> 38
(8) Trusts created under pension, profit sharing or other employee benefit
plans qualified under Section 401(a) of the Code, or custodial accounts
held by a bank created pursuant to Section 403(b) of the Code and
sponsored by non-profit organizations defined under Section 501(c)(3) of
the Code and assets held by an employer or trustee in connection with an
eligible deferred compensation plan under Section 457 of the Code. Such
plans will qualify for purchases at net asset value provided, for plans
initially establishing accounts with the Distributor in the Participating
Funds after February 1, 1997, that (1) the initial amount invested in the
Participating Funds is at least $500,000 or (2) such shares are purchased
by an employer sponsored plan with more than 100 eligible employees. Such
plans that have been established with a Participating Fund or have
received proposals from the Distributor prior to February 1, 1997 based on
net asset value purchase privileges previously in effect will be qualified
to purchase shares of the Participating Funds at net asset value for
accounts established on or before May 1, 1997. Section 403(b) and similar
accounts for which Van Kampen American Capital Trust Company served as
custodian will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees,
except under certain uniform criteria established by the Distributor from
time to time. Prior to February 1, 1997, a commission will be paid to
authorized dealers who initiate and are responsible for such purchases
within a rolling twelve-month period as follows: 1.00% on sales to $5
million, plus 0.50% on the next $5 million and 0.25% on the excess over
$10 million. For purchases on February 1, 1997 and thereafter, a
commission will be paid as follows: 1.00% on sales to $2 million, plus
0.80% on the next $1 million, plus 0.50% on the next $47 million and 0.25%
on the excess over $50 million.
(9) Individuals who are members of a "qualified group". For this purpose, a
qualified group is one which (i) has been in existence for more than six
months, (ii) has a purpose other than to acquire shares of the Fund or
similar investments, (iii) has given and continues to give its endorsement
or authorization, on behalf of the group, for purchase of shares of the
Fund and other Participating Funds, (iv) has a membership that the
authorized dealer can certify as to the group's members and (v) satisfies
other uniform criteria established by the Distributor for the purpose of
realizing economies of scale in distributing such shares. A qualified
group does not include one whose sole organizational nexus, for example,
is that its participants are credit card holders of the same institution,
policy holders of an insurance company, customers of a bank or
broker-dealer, clients of an investment adviser or other similar groups.
Shares purchased in each group's participants account in connection with
this privilege will be subject to a CDSC of 1.00% in the event of
redemption within one year of purchase, and a commission will be
36
<PAGE> 39
paid to authorized dealers who initiate and are responsible for such sales
to each individual as follows: 1.00% on sales to $2 million, plus 0.80% on
the next $1 million and 0.50% on the excess over $3 million.
The term "families" includes a person's spouse, children under 21 years of age
and grandchildren, parents, and a person's spouse's parents.
Purchase orders made pursuant to clause (4) may be placed either through
authorized dealers as described above or directly with ACCESS by the investment
adviser, trust company or bank trust department, provided that ACCESS receives
federal funds for the purchase by the close of business on the next business day
following acceptance of the order. An authorized dealer may charge a transaction
fee for placing an order to purchase shares pursuant to this provision or for
placing a redemption order with respect to such shares. Authorized dealers will
be paid a service fee as described herein under "Distribution and Service Plans"
on purchases made as described in (3) through (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 net asset value. Class B shares which are
redeemed within five years of purchase are subject to a CDSC 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 being redeemed. Accordingly,
no sales charge is imposed on increases in net asset value above the initial
purchase price. In addition, no charge is assessed on shares derived from
reinvestment of dividends or capital gains distributions. It is presently the
policy of the Distributor not to accept any order for Class B shares in an
amount of $500,000 or more because it ordinarily will be more advantageous for
an investor making such an investment to purchase Class A shares.
The amount of the CDSC, 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
37
<PAGE> 40
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 CDSC 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 CDSC, 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.
CLASS C SHARES
Class C shares are offered at net asset value. Class C shares which are
redeemed within the first year of purchase are subject to a CDSC of 1.00%. The
charge is assessed on an amount equal to the lesser of the then current market
value or the cost of the shares being redeemed. Accordingly, no sales charge is
imposed on increases in net asset value above the initial purchase price. In
addition, no charge is assessed on shares derived from reinvestment of dividends
or capital gains distributions. It is presently the policy of the Distributor
not to accept any order for Class C
38
<PAGE> 41
shares in an amount of $1 million or more because it ordinarily will be more
advantageous for an investor making such an investment to buy Class A shares.
In determining whether a CDSC 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 CDSC 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 annually commencing in the second
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 CDSC 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 required minimum 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 CDSC also is waived on
redemptions of Class C shares as it relates to the reinvestment of redemption
proceeds in shares of the same class of the Fund within 120 days after
redemption. See the Statement of Additional Information for further discussion
of waiver provisions.
- ------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
The Fund offers a number of shareholder services designed to facilitate
investments in its shares at little or no extra cost to the investor. Below is a
description of such services.
INVESTMENT ACCOUNT. Each shareholder has an investment account under which
shares are held by ACCESS, the Fund's transfer agent. ACCESS performs
bookkeeping, data processing and administration services relative to the
maintenance of shareholder accounts. Except as described in this Prospectus,
after each share transaction in an account, the shareholder receives a statement
showing the activity in the account. Each shareholder who has an account in
certain of the Participating Funds will receive statements quarterly from ACCESS
showing any reinvestments of dividends and capital gains distributions and any
other activity in the account since the preceding statement. Such shareholders
also will receive
39
<PAGE> 42
separate confirmations for each purchase or sale transaction other than
reinvestment of dividends and capital gains distributions and systematic
purchases or redemptions. Additions to an investment account may be made at any
time by purchasing shares through authorized dealers or by mailing a check
directly to ACCESS.
SHARE CERTIFICATES. Generally, the Fund will not issue share certificates.
However, upon written or telephone request to the Fund, a share certificate will
be issued representing shares (with the exception of fractional shares) of the
Fund. A shareholder will be required to surrender such certificates upon
redemption thereof. In addition, if such certificates are lost the shareholder
must write to Van Kampen American Capital Funds, c/o ACCESS, P.O. Box 418256,
Kansas City, MO 64141-9256, requesting an "affidavit of loss" and obtain a
Surety Bond in a form acceptable to ACCESS. On the date the letter is received
ACCESS will calculate a fee for replacing the lost certificates equal to 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) 421-2833 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) 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
40
<PAGE> 43
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) 421-2833 for the hearing
impaired), elect to have all dividends and other distributions paid on a class
of shares of the Fund invested into shares of the same class of any
Participating Fund so long as the investor has a pre-existing account for such
class of shares of the other fund. Both accounts must be of the same type,
either non-retirement or retirement. If the accounts are retirement accounts,
they must both be for the same class and of the same type of retirement plan
(e.g. IRA, 403(b)(7), 401(k), Keogh) and for the benefit of the same individual.
If a qualified, pre-existing account does not exist, the shareholder must
establish a new account subject to minimum investment and other requirements of
the fund into which distributions would be invested. Distributions are invested
into the selected fund at its net asset value as of the payable date of the
distribution.
EXCHANGE PRIVILEGE. Shares of the Fund or of any Participating Fund, other
than Van Kampen American Capital Government Target Fund ("Government Target"),
Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund") or Van
Kampen American Capital Reserve Fund ("Reserve Fund"), may be exchanged for
shares of the same class of any other fund without sales charge, provided that
shares of certain Van Kampen American Capital fixed-income funds are subject to
a 30-day holding period requirement before exchange. Shares of Government Target
may be exchanged for Class A shares of the Fund without sales charge. Class A
shares of Tax Free Money Fund or Reserve Fund that were not acquired in exchange
for Class B shares or Class C shares of a Participating Fund, may be exchanged
for Class A shares of the Fund upon payment of the excess, if any, of the sales
charge rate applicable to the shares being acquired over the sales charge rate
previously paid. Shares of Tax Free Money Fund or Reserve Fund acquired through
an exchange of Class B shares or Class C shares may be exchanged only for the
same class of shares of a Participating Fund without incurring a CDSC. Shares of
any Participating Fund may be exchanged for shares of any other Participating
Fund only if shares of that Participating Fund are available for sale; however,
during periods of suspension of sales, shares of a
41
<PAGE> 44
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
determined by the Fund's Board of Trustees as Participating Funds.
Class B shareholders and Class C shareholders of the Fund have the ability to
exchange their shares ("original shares") for the same class of shares of any
other Participating 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
CDSC otherwise due upon redemption of the original shares. For purposes of
computing the CDSC payable upon a disposition of the new shares, the holding
period for the original shares is added to the holding period of the new shares.
Class B shareholders or Class C shareholders would remain subject to the CDSC
schedule imposed by the original fund upon their redemption from the Van Kampen
American Capital complex of funds.
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.
A shareholder wishing to make an exchange may do so by sending a written
request to ACCESS or by contacting the telephone transaction line at (800)
421-5684. A shareholder automatically has telephone exchange privileges unless
otherwise designated in the application form accompanying this Prospectus. Van
Kampen American Capital and its subsidiaries, including ACCESS (collectively
"VKAC"), and the Fund employ procedures considered by them to be reasonable to
confirm that instructions communicated by telephone are genuine. Such procedures
include requiring certain personal identification information prior to acting
upon telephone instructions, tape recording telephone communications, and
providing written confirmation of instructions communicated by telephone. If
reasonable procedures are employed, neither VKAC nor the Fund will be liable for
following telephone instructions which it reasonably believes to be genuine.
VKAC and the Fund may be liable for any losses due to unauthorized or fraudulent
instructions if reasonable procedures are not followed. Exchanges are effected
at the net asset value per share next calculated after the request is received
in good order with adjustment for any additional sales charge. If the exchanging
shareholder does not have an account in the fund whose shares are being
acquired, a new account will be established with the same registration, dividend
and capital 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
42
<PAGE> 45
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. Any investor whose shares is a single account total $5,000 or
more at the offering price next computed after receipt of instructions may
establish a 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 shareholders and Class C shareholders who establish a withdrawal plan
may redeem up to 12% annually of the shareholder's initial account balance
without incurring a CDSC. Initial account balance means the amount of the
shareholder's investment at the time election to participate in the plan is
made.
Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. Dividends and capital gains
distributions on shares held under the plan are reinvested in additional shares
at the next determined net asset value. If periodic withdrawals continuously
exceed reinvested dividends and capital gains distributions, the shareholder's
original investment will be correspondingly reduced and ultimately exhausted.
Withdrawals made concurrently with the purchase of additional shares ordinarily
will be disadvantageous to the shareholder because of the duplication of sales
charges. Any taxable gain or loss 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.
43
<PAGE> 46
- ------------------------------------------------------------------------------
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 CDSC. In addition, a CDSC 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. The CDSC incurred upon
redemption is paid to the Distributor in reimbursement for distribution-related
expenses. A custodian of a retirement plan account may charge fees based on the
custodian's fee schedule.
The request for redemption must be signed by all persons in whose names the
shares are registered. Signatures must conform exactly to the account
registration. If the proceeds of the redemption exceed $50,000, or if the
proceeds are not to be paid to the record owner at the record address, or if the
record address has changed within the previous 30 days, signature(s) must be
guaranteed by one of the following: a bank or trust company; a broker-dealer; a
credit union; a national securities exchange, registered securities association
or clearing agency; a savings and loan association; or a federal savings bank.
Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption. In some cases, however,
other documents may be necessary. For example, although the Fund normally does
not issue certificates for shares, it will do so if a special request has been
made to ACCESS. In the case of shareholders holding certificates, the
certificates for the shares being redeemed must accompany the redemption
request. In the event the redemption is requested by a corporation, partnership,
trust, fiduciary, executor or administrator, and the name and title of the
individual(s) authorizing such redemption is not shown in the account
registration, a copy of the corporate resolution or other legal documentation
appointing the authorized signer and certified within the prior 60 days must
accompany the redemption request. IRA redemption requests should be sent to the
IRA custodian to be forwarded to ACCESS. Where Van Kampen American Capital Trust
Company serves as IRA custodian, special IRA,
44
<PAGE> 47
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 fifteen days. A taxable gain or loss will be recognized by the
shareholder upon redemption of shares.
The Fund may redeem any shareholder account with a net asset value on the date
of the notice of redemption less than the minimum initial investment as
specified in this Prospectus 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 CDSC will be
deducted from the proceeds of this redemption. Any involuntary redemption may
only occur if the shareholder account is less than the minimum initial
investment due to shareholder redemptions.
TELEPHONE REDEMPTIONS. In addition to the regular redemption procedures set
forth above, the Fund permits redemption of shares by telephone and for
redemption proceeds to be sent to the address of record for the account or to
the bank account of record as described below. To establish such privilege a
shareholder must complete the appropriate section of the application
accompanying this Prospectus or call the Fund at (800) 421-5666 to request that
a copy of the Telephone Redemption Authorization form be sent to them for
completion. To redeem shares, contact the telephone transaction line at (800)
421-5684. VKAC and the Fund employ procedures considered by them to be
reasonable to confirm that instructions communicated by telephone are genuine.
Such procedures include requiring certain personal identification information
prior to acting upon telephone instructions, tape recording telephone
communications and providing written confirmation of instructions communicated
by telephone. If reasonable procedures are employed, neither VKAC nor the Fund
will be liable for following telephone instructions which it reasonably believes
to be genuine. VKAC and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed. 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
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<PAGE> 48
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 CDSC on redemptions
following the disability of a Class B shareholder or Class C shareholder. An
individual will be considered disabled for this purpose if he or she meets the
definition thereof in Section 72(m)(7) of the Code, which in pertinent part
defines a person as disabled if such person "is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or to be of
long-continued and indefinite duration." While the Fund does not specifically
adopt the balance of the Code's definition which pertains to furnishing the
Secretary of Treasury with such proof as he or she may require, the Distributor
will require satisfactory proof of disability before it determines to waive the
CDSC on Class B shares and Class C shares.
In cases of disability, the CDSC 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 CDSC on
Class B shares and Class C shares applies to a total or partial redemption, but
only to redemptions of shares held at the time of the initial determination of
disability.
REINSTATEMENT PRIVILEGE. A Class A shareholder or Class B shareholder who has
redeemed shares of the Fund may reinstate any portion or all of the net proceeds
of such redemption in Class A shares of the Fund. A Class C shareholder who has
redeemed shares of the Fund may reinstate any portion or all of the net proceeds
of
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<PAGE> 49
such redemption in Class C shares of the Fund with credit given for any CDSC
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 180 days after the date of the redemption. Reinstatement at
net asset value is also offered to participants in those eligible retirement
plans held or administered by Van Kampen American Capital Trust Company for
repayment of principal (and interest) on their borrowings on such plans.
- ------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS
- ------------------------------------------------------------------------------
The Fund has adopted a distribution plan (the "Distribution Plan") with
respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act.
The Fund also has adopted a service plan (the "Service Plan") with respect to
each class of its shares. The Distribution Plan and the Service Plan provide
that the Fund may spend a portion of the Fund's average daily net assets
attributable to each class of shares in connection with distribution of the
respective class of shares and in connection with the provision of ongoing
services to shareholders of each class. The Distribution Plan and the Service
Plan are being implemented through an agreement with the Distributor and
sub-agreements between the Distributor and brokers, dealers or financial
intermediaries (collectively, "Selling Agreements") that may provide for their
customers or clients certain services or assistance.
CLASS A SHARES. The Fund may spend an aggregate amount up to 0.25% per year of
the average daily net assets attributable to the Class A shares of the Fund
pursuant to the Distribution Plan and Service Plan. From such amount, the Fund
may spend up to 0.25% per year of the Fund's average daily net assets
attributable to the Class A shares pursuant to the Service Plan in connection
with the ongoing provision of services to holders of such shares by the
Distributor and by brokers, dealers or financial intermediaries and in
connection with the maintenance of such shareholders' accounts. The Fund pays
the Distributor the lesser of the balance of the 0.25% not paid to such brokers,
dealers or financial intermediaries or the amount of the Distributor's actual
distribution-related expense.
CLASS B SHARES. The Fund may spend up to 0.75% per year of the average daily
net assets attributable to the Class B shares of the Fund pursuant to the
Distribution Plan. In addition, the Fund may spend up to 0.25% per year of the
Fund's average daily net assets attributable to the Class B shares pursuant to
the Service Plan in connection with the ongoing provision of services to holders
of such shares by the Distributor and by brokers, dealers or financial
intermediaries and in connection with the maintenance of such shareholders'
accounts.
CLASS C SHARES. The Fund may spend up to 0.75% per year of the average daily
net assets attributable to the Class C shares of the Fund pursuant to the
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<PAGE> 50
Distribution Plan. From such amount, the Fund, or the Distributor as agent for
the Fund, pays brokers, dealers or financial intermediaries in connection with
the distribution of the Class C shares up to 0.75% of the Fund's average daily
net assets attributable to Class C shares maintained in the Fund more than one
year by such broker's, dealer's or financial intermediary's customers. The Fund
pays the Distributor the lesser of the balance of 0.75% not paid to such
brokers, dealers or financial intermediaries or the amount of the Distributor's
actual distribution-related expense attributable to the Class C shares. In
addition, the Fund may spend up to 0.25% per year of the Fund's average daily
net assets attributable to the Class C shares pursuant to the Service Plan in
connection with the ongoing provision of services to holders of such shares by
the Distributor and by brokers, dealers or financial intermediaries and in
connection with the maintenance of such shareholders' accounts.
OTHER INFORMATION. Amounts payable to the Distributor with respect to the
Class A shares under the Distribution Plan in a given year may not fully
reimburse the Distributor for its actual distribution-related expenses during
such year. In such event, with respect to the Class A shares, there is no
carryover of such reimbursement obligations to succeeding years.
The Distributor's actual expenses with respect to Class B shares or Class C
shares for any given year may exceed the amounts payable to the Distributor with
respect to such class of shares under the Distribution Plan, the Service Plan
and payments received pursuant to the CDSC. In such event, with respect to any
such class of shares, any unreimbursed expenses will be carried forward and paid
by the Fund (up to the amount of the actual expenses incurred) in future years
so long as such Distribution Plan is in effect. Except as mandated by applicable
law, the Fund does not impose any limit with respect to the number of years into
the future that such unreimbursed expenses may be carried forward (on a Fund
level basis). Because such expenses are accounted on a Fund level basis, in
periods of extreme net asset value fluctuation such amounts with respect to a
particular Class B share or Class C share may be greater or less than the amount
of the initial commission (including carrying cost) paid by the Distributor
with respect to such share. In such circumstances, a shareholder of a share may
be deemed to incur expenses attributable to other shareholders of such class. As
of December 31, 1996, there were $498,285 million and $24,555 of unreimbursed
distribution-related expenses with respect to Class B shares and Class C shares,
respectively, representing 5.03% and 1.46% of the Fund's net assets attributable
to Class B shares and Class C shares, respectively. If the Distribution Plan was
terminated or not continued, the Fund would not be contractually obligated to
pay the Distributor for any expenses not previously reimbursed by the Fund or
recovered through CDSCs.
The Distributor will not use the proceeds from the CDSC applicable to a
particular class of shares to defray distribution-related expenses attributable
to any
48
<PAGE> 51
other class of shares. Various federal and state laws prohibit national banks
and some state-chartered commercial banks from underwriting or dealing in the
Fund's shares. In addition, state securities laws on this issue may differ from
the interpretations of federal law, and banks and financial institutions may be
required to register as dealers pursuant to state law. In the unlikely event
that a court were to find that these laws prevent such banks from providing such
services described above, the Fund would seek alternate providers and expects
that shareholders would not experience any disadvantage.
- ------------------------------------------------------------------------------
DISTRIBUTIONS FROM THE FUND
- ------------------------------------------------------------------------------
In addition to any increase in the value of shares which the Fund may achieve,
shareholders may receive two kinds of return from the Fund: dividends and
capital gains distributions.
DIVIDENDS. 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 may be lower than
the per share dividends on Class A shares as a result of the higher distribution
fees and transfer agency costs applicable to such classes of shares.
CAPITAL GAINS. The Fund may realize capital gains or losses when it sells
securities, depending on whether the sales prices for the securities are higher
or lower than 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."
- ------------------------------------------------------------------------------
TAX STATUS
- ------------------------------------------------------------------------------
FEDERAL INCOME TAXATION. The Fund has qualified and intends to continue to
qualify each year and to elect to be treated as a regulated investment company
under Subchapter M of the Code. To qualify as a regulated investment company,
49
<PAGE> 52
the Fund must comply with certain requirements of the Code relating to, among
other things, the source of its income and diversification of its assets.
If the Fund so qualifies and distributes each year to its shareholders at
least 90% of its net investment income (including tax-exempt interest, taxable
income and net short-term capital gain, but not net capital gains, which are the
excess of net long-term capital gains over net short-term capital losses), it
will not be required to pay federal income taxes on any income distributed to
shareholders. The Fund intends to distribute at least the minimum amount of net
investment income necessary to satisfy the 90% distribution requirement. The
Fund will not be subject to federal income tax on any net capital gains
distributed to shareholders.
In order to avoid a 4% excise tax, the Fund will be required to distribute, by
December 31 of each year, at least 98% of its ordinary income (not including
tax-exempt income) for such year and at least 98% of its capital gain net income
(the latter of which generally is computed on the basis of the one-year period
ending on October 31 of such year), plus any amounts that were not distributed
in previous taxable years. For purposes of the excise tax, any ordinary income
or capital gain net income retained by, and subject to federal income tax in the
hands of, the Fund will be treated as having been distributed.
If the Fund failed to qualify as a regulated investment company or failed to
satisfy the 90% distribution requirement in any taxable year, the Fund would be
taxed as an ordinary corporation on its taxable income (even if such income were
distributed to its shareholders) and all distributions out of earnings and
profits would be taxed to shareholders as ordinary income. To qualify again as a
regulated investment company in a subsequent year, the Fund may be required to
pay an interest charge on 50% of its earnings and profits attributable to
non-regulated investment company years and would be required to distribute such
earnings and profits to shareholders (less any interest charge). In addition, if
the Fund failed to qualify as a regulated investment company for its first
taxable year or, if immediately after qualifying as a regulated investment
company for any taxable year, it failed to qualify for a period greater than one
taxable year, the Fund would be required to recognize any net built-in gains
(the excess of aggregate gains, including items of income, over aggregate losses
that would have been realized if it had been liquidated) in order to qualify as
a regulated investment company in a subsequent year.
Some of the Fund's investment practices are subject to special provisions of
the Code that, among other things, may defer the use of certain losses of the
Fund and affect the holding period of the securities held by the Fund and the
character of the gains or losses realized by the Fund. These provisions may also
require the Fund to mark-to-market some of the positions in its portfolio (i.e.,
treat them as if they were sold for fair market value at the end of the
tax-year), which may cause the Fund to recognize income without receiving cash
with which to make distributions in
50
<PAGE> 53
amounts necessary to satisfy the 90% distribution requirement and the
distribution requirements for avoiding income and excise taxes. The Fund will
monitor its transactions and may make certain tax elections in order to mitigate
the effect of these rules and prevent disqualification of the Fund as a
regulated investment company.
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.
Investments of the Fund in securities issued at a discount or providing for
deferred interest or payment of interest in kind are subject to special tax
rules that will affect the amount, timing and character of distributions to
shareholders. For example, with respect to securities issued at a discount, the
Fund will be required to accrue as income each year a portion of the discount
and to distribute such income each year in order to maintain its qualification
as a regulated investment company and to avoid income and excise taxes. In order
to generate sufficient cash to make distributions necessary to satisfy the 90%
distribution requirement and to avoid income and excise taxes, the Fund may have
to dispose of securities that it would otherwise have continued to hold.
DISTRIBUTIONS. Distributions of the Fund's net investment income are taxable
to shareholders as ordinary income to the extent of the Fund's earnings and
profits, whether paid in cash or reinvested in additional shares. Distributions
of the Fund's net capital gains ("capital gains dividends"), if any, are taxable
to shareholders as long-term capital gains regardless of the length of time
shares of the Fund have been held by such shareholders. Distributions in excess
of the Fund's earnings and profits will first reduce the adjusted tax basis of a
holder's shares and, after such adjusted tax basis is reduced to zero, will
constitute capital gains to such holder (assuming such shares are held as a
capital asset). Tax-exempt shareholders not subject to federal income tax on
their income generally will not be taxed on distributions from the Fund.
Shareholders receiving distributions in the form of additional shares issued
by the Fund will be treated for federal income tax purposes as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the distribution date. The basis of such shares will equal the
fair market value on the distribution date.
The Fund will inform shareholders of the source and tax status of all
distributions promptly after the close of each calendar year. Fund distributions
will not qualify for the dividends received deduction for corporations, except
to the extent the Fund receives dividends from domestic corporations.
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<PAGE> 54
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in such month and paid during January of the
following year will be treated as having been distributed by the Fund and
received by the shareholders on the December 31 prior to the date of payment. In
addition, certain other distributions made after the close of a taxable year of
the Fund may be "spilled back" and treated as paid by the Fund (except for
purposes of the 4% excise tax) during such taxable year. In such case,
shareholders will be treated as having received such dividends in the taxable
year in which the distribution was actually made.
Income from investments in foreign securities received by the Fund may be
subject to income, withholding and other taxes imposed by foreign countries and
U.S. possessions.
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.
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<PAGE> 55
Under Code Section 988, foreign currency gains or losses from certain forward
contracts not traded in the interbank market as well as certain other gains or
losses attributable to currency exchange rate fluctuations are typically treated
as ordinary income or loss. Such income or loss may increase or decrease (or
possibly eliminate) the Fund's income available for distribution. If, under the
rules governing the tax treatment of foreign currency gains and losses, the
Fund's income available for distribution is decreased or eliminated, all or a
portion of the dividends declared by the Fund may be treated for federal income
tax purposes as a return of capital or, in some circumstances, as capital gain.
Generally, a shareholder's tax basis in Fund shares will be reduced to the
extent that an amount distributed to such shareholder is treated as a return of
capital.
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 produce, or are held for the production of
passive income. Under certain circumstances, a regulated investment company that
holds stock of a PFIC will be subject to federal income tax (i) on a portion of
any "excess distribution" received on the stock or (ii) on any gain from a sale
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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<PAGE> 56
The Fund is required, in certain circumstances, to withhold 31% of dividends
and certain other payments, including redemptions, paid to shareholders who do
not furnish to the Fund their correct taxpayer identification number (in the
case of individuals, their social security number) and certain required
certifications or who are otherwise subject to backup withholding.
SALE OF SHARES. The sale of shares (including transfers in connection with a
redemption or repurchase of shares) will be a taxable transaction for federal
income tax purposes. Selling shareholders will generally recognize gain or loss
in an amount equal to the difference between their adjusted tax basis in the
shares and the amount received. If such shares are held as a capital asset, the
gain or loss will be a capital gain or loss and will be long-term if such shares
have been held for more than one year. Any loss realized upon a taxable
disposition of shares held for six months or less will be treated as a long-term
capital loss to the extent of any capital gains dividends received with respect
to such shares. For purposes of determining whether shares have been held for
six months or less, the holding period is suspended for any periods during which
the shareholder's risk of loss is diminished as a result of holding one or more
other positions in substantially similar or related property or through certain
options or short sales.
GENERAL. The federal, state and local income tax discussion set forth above
is for general information only. Prospective investors should consult their
advisors regarding the specific federal tax consequences of holding and
disposing of shares, as well as the effects of state, local and foreign tax law
and any proposed tax law changes.
- ------------------------------------------------------------------------------
FUND PERFORMANCE
- ------------------------------------------------------------------------------
From time to time, the Fund may advertise its total return for prior periods.
Any such advertisement would include at least average annual total return
quotations for 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 CDSC 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
54
<PAGE> 57
is not intended to indicate future performance. No adjustments are made to
reflect any income taxes payable by shareholders on dividends and distributions
paid by the Fund.
Average annual total return quotations for periods of two or more years are
computed by finding the average annual compounded rate of return over the period
that would equate the initial amount invested to the ending redeemable value.
Total return is calculated separately for Class A shares, Class B shares and
Class C shares of the Fund. Class A shares total return figures include the
maximum sales charge of 5.75%; Class B shares and Class C shares total return
figures include any applicable CDSC. Because of the differences in sales charges
and distribution fees, the total returns for each of the classes will differ.
From time to time, the Fund may include in its sales literature and
shareholder reports a quotation of the current "distribution rate" for each
class of shares of the Fund. Distribution rate is a measure of the level of
income and short-term capital gain dividends, if any, distributed for a
specified period. Distribution rate differs from yield which is a measure of the
income actually earned by the Fund's investments, and from total return which is
a measure of the income actually earned by the Fund's investments plus the
effect of any realized and unrealized appreciation or depreciation of such
investments during a stated period. Distribution rate is, therefore, not
intended to be a complete measure of the Fund's performance. Distribution rate
may sometimes be greater than yield since, for instance, it may not include the
effect of amortization of bond premiums, and may include non-recurring
short-term capital gains and premiums from futures transactions engaged in by
the Fund. Distribution rates will be computed separately for each class of the
Fund's shares.
In reports or other communications to shareholders or in advertising material,
the Fund may compare its performance with that of other mutual funds as listed
in the ratings or rankings prepared by Lipper Analytical Services, Inc., CDA,
Morningstar Mutual Funds or similar independent services which monitor the
performance of mutual funds, 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
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<PAGE> 58
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.
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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 and adopted its current name as of that time. The
authorized capitalization of the Fund consists of an unlimited number of shares
of beneficial interest, par value $0.01 per share, divided into classes. The
Fund currently offers three classes of shares, designated Class A shares, Class
B shares and Class C shares. Other classes may be established from time to time
in accordance with provisions of the Fund's Declaration of Trust. Shares issued
by the Fund are fully paid, non-assessable and, except as described herein, 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. There are no conversion, preemptive or other subscription
rights, except with respect to the conversion of certain shares into Class A
shares as described herein. 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 fees and transfer agency costs, 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. However, the holders of 10% or more of the
outstanding shares may by written request require a meeting to consider the
removal of Trustees by a vote of two-thirds of the shares then outstanding cast
in person or by proxy at such meeting. The Fund will assist such holders in
communicating with other shareholders of the Fund to the extent required by the
1940 Act. More detailed information concerning the Fund is set forth in the
Statement of Additional Information.
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<PAGE> 59
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.
The fiscal year end of the Fund is December 31. The Fund sends to its
shareholders at least semi-annually reports showing the Fund's portfolio and
other information. An annual report, containing financial statements audited by
the Fund's independent accountants, is sent to shareholders each year. After the
end of each year, shareholders will receive federal income tax information
regarding dividends and capital gains distributions.
Shareholder inquiries should be directed to the Van Kampen American Capital
Global Managed Assets Fund, One Parkview Plaza, Oakbrook Terrace, Illinois
60181, Attn: Correspondence.
For Automated Telephone Service which provides 24-hour direct dial access to
Fund facts and shareholder account information, dial (800) 847-2424. For
inquiries through Telecommunications Device for the Deaf (TDD) dial (800)
421-2833.
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EXISTING SHAREHOLDERS--
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE CALL
THE FUND'S TOLL-FREE
NUMBER--(800) 341-2911
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) 421-2833
FOR AUTOMATED TELEPHONE
SERVICES DIAL (800) 847-2424
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
MORGAN STANLEY ASSET
MANAGEMENT INC.
1221 Avenue of the Americas
New York, New York 10020
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 (ILLINOIS)
333 West Wacker Drive
Chicago, IL 60606
Independent Accountants
PRICE WATERHOUSE LLP
1201 Louisiana
Suite 2900
Houston, TX 77002
<PAGE> 61
------------------------------------------------------------------------------
GLOBAL MANAGED
ASSETS FUND
------------------------------------------------------------------------------
P R O S P E C T U S
APRIL 30, 1997
------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 62
STATEMENT OF ADDITIONAL INFORMATION
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
Van Kampen American Capital Global Managed Assets Fund (the "Fund") is a
non-diversified, open-end management investment company. This Statement of
Additional Information is not a prospectus. This Statement of Additional
Information should be read in conjunction with the Fund's prospectus (the
"Prospectus") dated as of the same date as this Statement of Additional
Information. This Statement of Additional Information does not include all the
information a prospective investor should consider before purchasing shares of
the Fund. Investors should obtain and read the Prospectus prior to purchasing
shares of the Fund. A Prospectus may be obtained without charge by writing or
calling Van Kampen 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 Related Options.............. B-4
Repurchase Agreements....................................... B-12
Loans of Portfolio Securities............................... B-13
Investment Restrictions..................................... B-13
Trustees and Officers....................................... B-15
Legal Counsel............................................... B-23
Investment Advisory Agreements.............................. B-23
Distributor................................................. B-24
Distribution and Service Plans.............................. B-24
Transfer Agent.............................................. B-25
Portfolio Turnover.......................................... B-25
Portfolio Transactions and Brokerage........................ B-25
Determination of Net Asset Value............................ B-27
Purchase and Redemption of Shares........................... B-27
Exchange Privilege.......................................... B-31
Tax Status of the Fund...................................... B-31
Fund Performance............................................ B-31
Other Information........................................... B-32
Report of Independent Accountants........................... B-33
Financial Statements........................................ B-34
Notes to Financial Statements............................... B-48
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED APRIL 30, 1997.
B-1
<PAGE> 63
GENERAL INFORMATION
The Fund was originally incorporated in Maryland on November 24, 1993 under
the name American Capital Global Managed Assets Fund, Inc. As of August 5, 1995,
the Fund was reorganized as a series of Van Kampen American Capital Global
Managed Assets Fund (the "Trust"), a Delaware business trust, and adopted its
current name.
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 a wholly-owned subsidiary of MSAM Holdings
II, Inc. which, in turn, is a wholly-owned subsidiary of Morgan Stanley Group
Inc. The principal office of the Fund, the Adviser, the Distributor and VKAC is
located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
Morgan Stanley Group Inc. and various of its directly or indirectly owned
subsidiaries, including Morgan Stanley Asset Management Inc., an investment
adviser (the "Subadviser"), Morgan Stanley & Co. Incorporated, a registered
broker-dealer and investment adviser, and Morgan Stanley International, are
engaged in a wide range of financial services. Their principal businesses
include securities underwriting, distribution and trading; merger, acquisition,
restructuring and other corporate finance advisory activities; merchant banking;
stock brokerage and research services; asset management; trading of futures,
options, foreign exchange, commodities and swaps (involving foreign exchange,
commodities, indices and interest rates); real estate advice, financing and
investing; and global custody, securities clearance services and securities
lending.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover &
Co. announced that they had entered into an Agreement and Plan of Merger to form
a new company to be named Morgan Stanley, Dean Witter, Discover & Co. Subsequent
to certain conditions being met, it is currently anticipated that the
transaction will close in mid-1997. Thereafter, Van Kampen American Capital
Asset Management, Inc. will be an indirect subsidiary of Morgan Stanley, Dean
Witter, Discover & Co.
Dean Witter, Discover & Co. is a financial services company with three
major businesses: full service brokerage, credit services and asset management
of more than $100 billion in customer accounts.
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
$57 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 an 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 the 30 best months during the past 69 years,
the value of $1.00 invested in 1926 was $19.48 at the end of 1996, compared to
$1,370.95 for $1.00 that was invested for the entire period (Source: Micropal,
Inc.). Of course, past performance is no guarantee of future results.
Broadly Diversified: A broadly diversified portfolio usually reduces risk
and increases relative stability. Since VKAC's goal is consistency, a broadly
diversified 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.
B-2
<PAGE> 64
Clearly Defined: The basic characteristics of VKAC funds are determined by
a pre-defined profile which remains constant over time.
As of April 4, 1997, no person was known by the Fund to own beneficially or
to hold of record 5% or more of the outstanding Class A shares, Class B shares
or Class C shares of the Fund, except as follows:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS OWNERSHIP AT CLASS PERCENTAGE
OF HOLDER APRIL 4, 1997 OF SHARES OWNERSHIP
---------------- ------------- --------- ----------
<S> <C> <C> <C>
Van Kampen American Capital 222,188 A 23.76%
Trust Company 265,669 B 27.28%
2800 Post Oak Blvd. 13,239 C 8.60%
Houston, TX 77056
Merrill Lynch Pierce Fenner & 88,361 B 9.07%
Smith, Inc. 22,648 C 14.70%
Attn: Fund Administration
4800 Deer Lake Dr. E, 3rd
Fl.
Jacksonville, FL 32246-6484
</TABLE>
Van Kampen American Capital Trust Company acts as custodian for certain
employee benefit plans and independent retirement accounts.
INVESTMENT POLICIES AND TECHNIQUES
The Fund's investment objective is to seek to provide 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.
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
B-3
<PAGE> 65
amplitude, or there may be other elements present which make the long-term
risks appear somewhat larger than in Aaa securities.
Standard & Poor's Ratings Group ("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 RELATED OPTIONS
The Fund may engage in transactions in options, futures contracts and
related options on futures contracts. Set forth below is certain additional
information regarding options, futures contracts and related options. 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.
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 or liquid
securities in an amount not less than the market value of the underlying
security, marked to market daily, while the option is outstanding.
B-4
<PAGE> 66
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 or liquid
securities in an amount of not less than the exercise price of the option, or
would hold a put on the same underlying security at an equal or greater exercise
price.
Closing Purchase Transactions and Offsetting Transactions. In order to
terminate its position as a writer of a call or put option, the Fund could enter
into a "closing purchase transaction," which is the purchase of a call (put) on
the same underlying security and having the same exercise price and expiration
date as the call (put) previously 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.
Put options may be purchased to protect (i.e., hedge) against anticipated
declines in the market value of either specific portfolio securities or of the
Fund's assets generally. Alternatively, put options may be purchased for capital
appreciation in anticipation of a price decline in the underlying security and a
corresponding increase in the value of the put option. The purchase of put
options for capital appreciation involves the same significant risk of loss as
described above for call options.
In any case, the purchase of options for capital appreciation would
increase the Fund's volatility by increasing the impact of changes in the market
price of the underlying securities on the Fund's net asset value.
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.
B-5
<PAGE> 67
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.
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
B-6
<PAGE> 68
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 or liquid 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 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,
B-7
<PAGE> 69
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 liquid 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 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 or liquid 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
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<PAGE> 70
daily basis as the price of the underlying securities or index fluctuates,
making the long and short positions in the futures contract more or less
valuable, a process known as marking to market.
For example, when the Fund purchases a futures contract and the price of
the underlying security or index rises, that position increases in value, and
the Fund receives from the broker a variation margin payment equal to that
increase in value. Conversely, where the Fund purchases a futures contract and
the value of the underlying security or index declines, the position is less
valuable, and the Fund is required to make a variation margin payment to the
broker.
At any time prior to expiration of the futures contract, the Fund may elect
to terminate the position by taking an opposite position. A final determination
of variation margin is then made, additional cash is required to be paid by or
released to the Fund and the Fund realizes a loss or a gain.
Futures Strategies. When the Fund anticipates a significant market or
market sector advance, the purchase of a futures contract affords a hedge
against not participating in the advance at a time when the Fund is otherwise
fully invested ("anticipatory hedge"). Such purchase of a futures contract
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 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
B-9
<PAGE> 71
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 or liquid securities equal to the market value of the obligation
under the futures contracts (less any related margin deposits) will be
maintained in a segregated account with the Custodian.
Additional Risks of 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 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.
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<PAGE> 72
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 or liquid
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 or liquid securities (which may have maturities which are longer than
the term of the Forward Commitment) with the Fund's custodian in an aggregate
amount equal to the amount of its commitment as long as the obligation to sell
continues. By entering into a Forward Commitment sale transaction, the Fund
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
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<PAGE> 73
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
The Fund may enter into repurchase agreements with domestic or foreign
banks or broker-dealers. A repurchase agreement is a short-term investment in
which the purchaser (i.e., the Fund) acquires ownership of a debt security and
the seller agrees to repurchase the obligation at a future time and set price,
usually not more than seven days from the date of purchase, thereby determining
the yield during the purchaser's holding period. Repurchase agreements are fully
collateralized by the underlying debt securities and are considered to be loans
under the Investment Company Act of 1940, as amended ("1940 Act"). The Fund pays
for such securities only upon physical delivery or evidence of book entry
transfer to the account of a custodian or bank acting as agent. The seller under
a repurchase agreement will be required to maintain the value of the underlying
securities marked to market daily at not less than the repurchase price. The
underlying securities (normally securities of the U.S. Government, or its
agencies and instrumentalities), may have maturity dates exceeding one year. The
Fund does not bear the risk of a decline in value of the underlying securities
unless the seller defaults under its repurchase obligation. In the event of a
bankruptcy or other default of a seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying securities and loss
including: (a) possible decline in the value of the underlying security during
the period while the Fund seeks to enforce its rights thereto, (b) possible lack
of access to income on the underlying security during this
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period, and (c) expenses of enforcing its rights. 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 liquid 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 may not be changed
without approval by the vote of a majority of its outstanding voting shares,
which is defined by the 1940 Act 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 are present or represented by proxy; or (ii) more
than 50% of the 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 exceeds 5% of its net assets. Margin deposits or payments in
connection with the writing of options, or in connection with the
purchase or sale of forward contracts, futures, foreign currency futures
and related options, are not deemed to be a pledge or other encumbrance.
4. Lend money except through the purchase of (i) United States and foreign
government securities, commercial paper, bankers' acceptances,
certificates of deposit and similar evidences of indebtedness, both
foreign and domestic, and (ii) repurchase agreements; or lend securities
in an amount exceeding 15% of the total assets of the Fund. The purchase
of a portion of an issue of securities described under (i) above
distributed publicly, whether or not the purchase is made on the
original issuance, is not considered the making of a loan.
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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, except that the Fund may purchase securities of other
investment companies to the extent permitted by (i) the 1940 Act, as
amended from time to time, (ii) the rules and regulations promulgated
by the SEC under the 1940 Act, as amended from time to time, or (iii)
an exemption or other relief from the provisions of the 1940 Act.
2. 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 securities of other investment companies
except as part of a merger, reorganization or other acquisition and
except that the Fund may purchase securities of other investment
companies to the extent permitted by (i) the 1940 Act, as amended from
time to time, (ii) the rules and regulations promulgated by the SEC
under the 1940 Act, as amended from time to time, or (iii) an exemption
or other relief from the provisions of the 1940 Act.
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.
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, except that the fund
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<PAGE> 76
may purchase securities of other investment companies to the extent
permitted by (i) the 1940 Act, as amended from time to time, (ii) the
rules and regulations promulgated by the SEC under the 1940 Act, as
amended from time to time, or (iii) an exemption or other relief from
the provisions of the 1940 Act.
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. Excluded from this limitation are securities purchased
by the Fund of other investment companies to the extent permitted by
(i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) on exemption or other relief from the provisions
of the 1940 Act.
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.
TRUSTEES AND OFFICERS
The tables below list the trustees and officers of the Trust (of which the
Fund is a separate series) and other executive officers of the Fund's investment
adviser and their principal occupations for the last five years and their
affiliations, if any, with VK/AC Holding, Inc. ("VKAC Holding"), Van Kampen
American Capital, Inc. ("Van Kampen American Capital" or "VKAC"), Van Kampen
American Capital Investment Advisory Corp. ("Advisory Corp."), Van Kampen
American Capital Asset Management, Inc. ("Asset Management"), Van Kampen
American Capital Distributors, Inc., the distributor of the Fund's shares (the
"Distributor") and ACCESS Investors Services Inc., the Fund's transfer agent
("ACCESS"). Advisory Corp. and Asset Management sometimes are referred to herein
collectively as the "Advisers". For purposes hereof, the term "Fund Complex"
includes each of the open-end investment companies advised by the Advisers
(excluding the American Capital Exchange Fund and the Common Sense Trust).
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TRUSTEES
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Co-founder, and prior to August 1996,
1632 Morning Mountain Road Chairman, Chief Executive Officer and President, MDT
Raleigh, NC 27614 Corporation (now known as Getinge/Castle, Inc., a
Date of Birth: 07/14/32 subsidiary of Getinge Industrier AB), a company which
develops, manufactures, markets and services medical and
scientific equipment. Trustee of each of the funds in the
Fund Complex.
Linda Hutton Heagy........................ Partner, Ray & Berndtson, Inc. An executive recruiting
Sears Tower and management consulting firm. Formerly, Executive Vice
233 South Wacker Drive President of ABN AMRO, N.A., a Dutch bank holding
Suite 4020 company. Prior to 1992, Executive Vice President of La
Chicago, IL 60606 Salle National Bank. Trustee of each of the funds in the
Date of Birth: 06/03/48 Fund Complex.
R. Craig Kennedy.......................... President and Director, German Marshall Fund of the
11 DuPont Circle, N.W. United States. Formerly, advisor to the Dennis Trading
Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive
Date of Birth: 02/29/52 Officer, Director and Member of the Investment Committee
of the Joyce Foundation, a private foundation. Trustee of
each of the funds in the Fund Complex.
Dennis J. McDonnell*...................... President and a Director of VKAC. President, Chief
One Parkview Plaza Operating Officer and a Director of the Advisers.
Oakbrook Terrace, IL 60181 Director or officer of certain other subsidiaries of
Date of Birth: 05/20/42 VKAC. Prior to November 1996, Executive Vice President
and a Director of VKAC Holding. President and Trustee of
each of the funds in the Fund Complex. President,
Chairman of the Board and Trustee of other investment
companies advised by the Advisers or their affiliates.
Jack E. Nelson............................ President, Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President, Nelson Ivest Brokerage Services Inc.,
Date of Birth: 02/13/36 a member of the National Association of Securities
Dealers, Inc. ("NASD") and Securities Investors
Protection Corp. ("SIPC"). Trustee of each of the funds
in the Fund Complex.
Jerome L. Robinson........................ President, Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director, Pacesetter Software, a software
Date of Birth: 10/10/22 programming company specializing in white collar
productivity. Director, Panasia Bank. Trustee of each of
the funds in the Fund Complex.
Phillip B. Rooney......................... Private investor. Director, Illinois Tool Works, Inc., a
348 East Third Street manufacturing company; Director, The Servicemaster
Hinsdale, IL 60521 Company, a business and consumer services company;
Date of Birth: 07/08/44 Director, Urban Shopping Centers Inc., a retail mall
management company; Director, Stone Container Corp., a
paper manufacturing company. Trustee, University of Notre
Dame. Formerly, President and Chief Executive Officer,
WMX Technologies Inc., an environmental services company,
and prior to that President and Chief Operating Officer,
WMX Technologies Inc. Trustee of each of the funds in the
Fund Complex.
</TABLE>
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<PAGE> 78
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Fernando Sisto............................ Professor Emeritus and, prior to 1995, Dean of the
155 Hickory Lane Graduate School, Stevens Institute of Technology.
Closter, NJ 07624 Director, Dynalysis of Princeton, a firm engaged in
Date of Birth: 08/02/24 engineering research. Trustee of each of the funds in the
Fund Complex.
Wayne W. Whalen*.......................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom (Illinois), legal counsel to the funds in the Fund
Chicago, IL 60606 Complex, open-end funds advised by Van Kampen American
Date of Birth: 08/22/39 Capital Management, Inc. and closed-end funds advised by
Advisory Corp. Trustee of each of the funds in the Fund
Complex, open-end funds advised by Van Kampen American
Capital Management, Inc. and closed-end funds advised by
Advisory Corp.
</TABLE>
- ---------------
* Such trustees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. McDonnell is an interested person of the Advisers and
the Fund by reason of his positions with VKAC and its affiliates. Mr. Whalen
is an interested person of the Fund by reason of his firm currently acting as
legal counsel to the Fund and is an interested person of Asset Management with
respect to certain funds advised by Asset Management by reason of his firm in
the past acting as legal counsel to Asset Management.
OFFICERS
Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell and Hill
are located at One Parkview Plaza, Oakbrook Terrace, IL 60181. The Fund's other
officers are located at 2800 Post Oak Blvd., Houston, TX 77056.
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
------------ ----------------- ---------------------
<S> <C> <C>
Peter W. Hegel.............. Vice President Executive Vice President of the Advisers.
Date of Birth: 06/25/56 Director of Asset Management. Officer of
certain other subsidiaries of VKAC. Vice
President of each of the funds in the Fund
Complex and certain other investment
companies advised by the Advisers or their
affiliates.
Curtis W. Morell............ Vice President and Chief Senior Vice President of the Advisers, Vice
Date of Birth: 08/04/46 Accounting Officer President and Chief Accounting Officer of
each of the funds in the Fund Complex and
certain other investment companies advised
by the Advisers or their affiliates.
</TABLE>
B-17
<PAGE> 79
<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 Secretary Executive Vice President, General Counsel
Date of Birth: 07/29/53 and Secretary of VKAC. Executive Vice
President, General Counsel, Assistant
Secretary and a Director of the Advisers
and the Distributor. Executive Vice
President, General Counsel and Assistant
Secretary of ACCESS. Director or officer of
certain other subsidiaries of VKAC.
Director of ICI Mutual Insurance Co., a
provider of insurance to members of the
Investment Company Institute. Prior to
November 1996, Executive Vice President,
General Counsel and Secretary of VKAC
Holding. Vice President and Secretary of
each of the funds in the Fund Complex and
certain other investment companies advised
by the Advisers or their affiliates.
Don G. Powell Chairman, President, Chief Executive
2800 Post Oak Blvd. Officer and a Director of VKAC. Chairman,
Houston, TX 77056 Chief Executive Officer and a Director of
Date of Birth: 10/19/39 the Advisers and the Distributor. Chairman
and a Director of ACCESS. Director or
officer of certain other subsidiaries of
VKAC. Chairman of the Board of Governors
and the Executive Committee of the
Investment Company Institute. Prior to
November, 1996, President, Chief Executive
Officer and a Director of VKAC Holding.
President, Chief Executive Officer and a
Trustee/Director of certain investment
companies advised by Asset Management and
prior to July 1996, President, Chief
Executive Officer and a Trustee of the
funds in the Fund Complex and closed-end
investment companies advised by Advisory
Corp.
Alan T. Sachtleben.......... Vice President Executive Vice President of the Advisers.
Date of Birth: 04/20/42 Director of Asset Management. Director or
officer of certain other subsidiaries of
VKAC. Vice President of each of the funds
in the Fund Complex and certain other
investment companies advised by the
Advisers or their affiliates.
Paul R. Wolkenberg.......... Vice President Executive Vice President of the VKAC, the
Date of Birth: 11/10/44 Advisers and the Distributor. President,
Chief Executive Officer and a Director of
ACCESS. Director or officer of certain
other subsidiaries of VKAC. Vice President
of each of the funds in the Fund Complex
and certain other investment companies
advised by the Advisers or their
affiliates.
</TABLE>
B-18
<PAGE> 80
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
------------ ----------------- ---------------------
<S> <C> <C>
Edward C. Wood III.......... Vice President and Chief Senior Vice President of the Advisers. Vice
Date of Birth: 01/11/56 Financial Officer President and Chief Financial Officer of
each of the funds in the Fund Complex and
certain other investment companies advised
by the Advisers or their affiliates.
John L. Sullivan............ Treasurer First Vice President of the Advisers.
Date of Birth: 08/20/55 Treasurer of each of the funds in the Fund
Complex and certain other investment
companies advised by the Advisers or their
affiliates.
Tanya M. Loden.............. Controller Vice President of the Advisers. Controller
Date of Birth: 11/19/59 of each of the funds in the Fund Complex
and other investment companies advised by
the Advisers or the affiliates.
Nicholas Dalmaso............ Assistant Secretary Assistant Vice President and Senior
Date of Birth: 03/01/65 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Advisers and
the Distributor. Officer of certain other
subsidiaries of VKAC. Assistant Secretary
of each of the funds in the Fund Complex
and other investment companies advised by
the Advisers or the affiliates.
Huey P. Falgout, Jr......... Assistant Secretary Assistant Vice President and Senior
Date of Birth: 11/15/63 Attorney of VKAC. Assistant Vice President
and Assistant Secretary of the Advisers,
the Distributor and ACCESS. Officer of
certain other subsidiaries of VKAC.
Assistant Secretary of each of the funds in
the Fund Complex and other investment
companies advised by the Advisers or the
affiliates.
Scott E. Martin............. Assistant Secretary Senior Vice President, Deputy General
Date of Birth: 08/20/56 Counsel and Assistant Secretary of VKAC.
Senior Vice President, Deputy General
Counsel and Secretary of the Advisers, the
Distributor and ACCESS. Officer of certain
other subsidiaries of VKAC. Prior to
November 1996, Senior Vice President,
Deputy General Counsel and Assistant
Secretary of VKAC Holding. Assistant
Secretary of each of the funds in the Fund
Complex and other investment companies
advised by the Advisers or the affiliates.
Weston B. Wetherell......... Assistant Secretary Vice President, Associate General Counsel
Date of Birth: 06/15/56 and Assistant Secretary of VKAC, the
Advisers and the Distributor. Officer of
certain other subsidiaries of VKAC.
Assistant Secretary of each of the funds in
the Fund Complex and other investment
companies advised by the Advisers or the
affiliates.
Steven M. Hill.............. Assistant Treasurer Assistant Vice President of the Advisers.
Date of Birth: 10/16/64 Assistant Treasurer of each of the funds in
the Fund Complex and other investment
companies advised by the Advisers or the
affiliates.
</TABLE>
B-19
<PAGE> 81
<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS
------------ ----------------- ---------------------
<S> <C> <C>
M. Robert Sullivan.......... Assistant Controller Assistant Vice President of the Advisers.
Date of Birth: 03/30/33 Assistant Controller of each of the funds
in the Fund Complex and other investment
companies advised by the Advisers or the
affiliates.
</TABLE>
Each of the trustees holds the same position with each of the funds in the
Fund Complex. As of December 31, 1996, there were 51 funds in the Fund Complex.
Each trustee who is not an affiliated person of VKAC, the Advisers, the
Distributor, ACCESS or Morgan Stanley (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
their compensation and earn a return on such deferred amounts based upon the
return of the common shares of the funds in the Fund Complex as more fully
described below. Each fund in the Fund Complex also provides a retirement plan
to its Non-Affiliated Trustees that provides Non-Affiliated Trustees with
compensation after retirement, provided that certain eligibility requirements
are met as more fully described below.
The compensation of each Non-Affiliated Trustee from each fund in the Fund
Complex advised by Advisory Corp. (each a "VK Fund" and collectively the "VK
Funds") includes an annual retainer in an amount equal to $2,500 per calendar
year, due in four quarterly installments on the first business day of each
calendar quarter. Each Non-Affiliated Trustee receives a per meeting fee from
each VK Fund in the amount of $125 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. Each Non-Affiliated Trustee receives a per meeting fee
from each VK Fund 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 compensation of each Non-Affiliated Trustee from the funds in the Fund
Complex advised by Asset Management (each an "AC Fund" or collectively the "AC
Funds") includes an annual retainer 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 which is the subject of a 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 approved an aggregate compensation cap with respect to funds
in 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 funds in the Fund Complex as of July
21, 1995 and certain other exceptions. For the calendar year ended December 31,
1996, certain trustees received aggregate compensation from the funds in the
Fund Complex over $84,000 due to compensation received but not subject to the
cap, including compensation from new funds added to the Fund Complex after July
22, 1995 and certain special meetings in 1996. In addition, each of Advisory
Corp. or Asset Management, as the case may be, 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.
B-20
<PAGE> 82
Each Non-Affiliated Trustee generally can elect to defer receipt of all or
a portion of the compensation earned by such Non-Affiliated Trustee until
retirement. Amounts deferred are retained by the Fund and earn a rate of return
determined by reference to the return on the common shares of such Fund or other
funds in the Fund Complex as selected by the respective Non-Affiliated Trustee,
with the same economic effect as if such Non-Affiliated Trustee had invested in
one or more funds in the Fund Complex. To the extent permitted by the 1940 Act,
the Fund may invest in securities of those funds selected by the Non-Affiliated
Trustees in order to match the deferred compensation obligation. The deferred
compensation plan is not funded and obligations thereunder represent general
unsecured claims against the general assets of the Fund.
Each fund in the Fund Complex has adopted a retirement plan. Under the
Fund's retirement plan, a Non-Affiliated Trustee who is receiving trustee's
compensation from the Fund prior to such Non-Affiliated Trustee's retirement,
has at least 10 years of service (including years of service prior to adoption
of the retirement plan) and retires at or after attaining the age of 60, is
eligible to receive a retirement benefit equal to $2,500 per year for each of
the ten years following such trustee's retirement from the Fund. Trustees
retiring prior to the age of 60 or with fewer than 10 years but more than 5
years of service may receive reduced retirement benefits from the Fund. Each
trustee has served as a member of the Board of Trustees since he or she was
first appointed or elected in the year set forth below. The retirement plan
contains a Fund Complex retirement benefit cap of $60,000 per year. Asset
Management has reimbursed each AC Fund for the expenses related to the
retirement plan through December 31, 1996.
Additional information regarding compensation and benefits for trustees is
set forth below. As indicated in the notes accompanying the table, the amounts
relate to either the Fund's most recently completed fiscal year or the Fund
Complex' most recently completed calendar year ended December 31, 1996.
1996 COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
YEAR FIRST PENSION OR ESTIMATED MAXIMUM BEFORE DEFERRAL
APPOINTED OR AGGREGATE COMPENSATION RETIREMENT BENEFITS ANNUAL BENEFITS FROM FUND
ELECTED TO THE BEFORE DEFERRAL FROM THE ACCRUED AS PART OF FROM THE FUND UPON COMPLEX PAID
NAME(1) BOARD FUND(2) EXPENSES(3) RETIREMENT(4) TO TRUSTEE(5)
------- -------------- ------------------------ ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
J. Miles Branagan* 1993 $1,202 $ 583 $2,500 $104,875
Philip P. Gaughan 160 -0- -0- 16,875
Linda Hutton Heagy* 1995 870 70 2,500 104,875
Dr. Roger Hilsman 870 -0- -0- 103,750
R. Craig Kennedy* 1995 870 46 2,500 104,875
Donald C. Miller 1,202 -0- -0- 104,875
Jack E. Nelson* 1995 1,202 292 2,500 97,875
David Rees 200 -0- -0- 22,000
Jerome L. Robinson* 1995 870 -0- -0- 101,625
Lawrence J. Sheehan 200 -0- -0- 22,000
Dr. Fernando Sisto* 1993 870 1,018 2,000 104,875
Wayne W. Whalen* 1995 1,202 198 2,500 104,875
William S. Woodside 870 -0- -0- 104,875
</TABLE>
- ---------------
* Currently a member of the Board of Trustees. Mr. Phillip B. Rooney also is a
current member of the Board of Trustees but is not included in the
compensation table because he did not serve on the Board of Trustees or
receive any compensation from the Fund prior to April 14, 1997. Messrs.
McDonnell and Powell, also trustees of the Fund during all or a portion of
the Fund's last fiscal year, are not included in the compensation table
because they are affiliated persons of the Advisers and are not eligible for
compensation or retirement benefits from the Fund.
B-21
<PAGE> 83
(1) Persons not designated by an asterisk are not currently members of the Board
of Trustees, but were members of the Board of Trustees during the Fund's
most recently completed fiscal year. Messrs. Gaughan and Rees retired from
the Board of Trustees on January 26, 1996 and January 29, 1996,
respectively. Mr. Sheehan was removed from the Board of Trustees effective
January 29, 1996. Messrs. Hilsman, Miller and Woodside retired from the
Board of Trustees on December 31, 1996.
(2) The amounts shown in this column represent the Aggregate Compensation before
Deferral with respect to the Fund's fiscal year ended December 31, 1996. The
following trustees deferred compensation from the Fund during the fiscal
year ended December 31, 1996: Mr. Branagan, $602; Mr. Gaughan, $160; Ms.
Heagy, $710; Mr. Kennedy, $400; Mr. Miller, $1,202; Mr. Nelson, $1,202; Mr.
Rees, $200; Mr. Robinson, $870; and Mr. Whalen, $1,202. 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 funds in the
Fund Complex as selected by the respective Non-Affiliated Trustee, with the
same economic effect as if such Non-Affiliated Trustee had invested in one
or more funds in the Fund Complex. To the extent permitted by the 1940 Act,
each Fund may invest in securities of those funds selected by the Non-
Affiliated Trustees in order to match the deferred compensation obligation.
The cumulative deferred compensation (including interest) accrued with
respect to each trustee from the Trust as of December 31, 1996 is as
follows: Mr. Branagan, $328; Mr. Gaughan, $327; Ms. Heagy, $879; Mr.
Kennedy, $668; Mr. Miller, $1,186; Mr. Nelson, $1,221; Mr. Rees, $208; Mr.
Robinson, $1,133; Mr. Sisto, $7,907; and Mr. Whalen, $1,233. The deferred
compensation plan is described above the Compensation Table.
(3) The amounts shown in this column represent the Retirement Benefits accrued
by the Fund during its fiscal year ended December 31, 1996. The retirement
plan is described above the Compensation Table.
(4) This is the estimated maximum annual benefits payable by the Fund in each
year of the 10-year period commencing in the year of such trustee's
retirement from the Fund assuming: the trustee has 10 or more years of
service on the Board of Trustees (including years of service prior to the
adoption of the retirement plan) and retires at or after attaining the age
of 60. Trustees retiring prior to the age of 60 or with fewer than 10 years
of service for the Fund may receive reduced retirement benefits from the
Fund. The actual annual benefit may be less if the trustee is subject to the
Fund Complex retirement benefit cap or if the trustee is not fully vested at
the time of retirement. Each incumbent nominee to the Board of Trustees has
served as a member of the Board of Trustees since he or she was first
appointed or elected in the year set forth in the Compensation Table.
(5) The amounts shown in this column represent the aggregate compensation paid
by all 51 of the investment companies in the Fund Complex as of December 31,
1996 before deferral by the trustees under the deferred compensation plan.
Certain trustees deferred all or a portion of their aggregate compensation
from the Fund Complex during the calendar year ended December 31, 1996. The
deferred compensation earns a rate of return determined by reference to the
return on the shares of the funds in the Fund Complex as selected by the
respective Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, the Fund may invest in
securities of those investment companies selected by the Non-Affiliated
Trustees in order to match the deferred compensation obligation. The
trustees' Fund Complex compensation cap covered the period July 22, 1995
through December 31, 1996. For the calendar year ended December 31, 1996,
certain trustees received compensation over $84,000 in the aggregate due to
compensation received but not subject to the cap, including compensation
from new funds added to the Fund Complex after July 22, 1995 and certain
special meetings in 1996. The Advisers and their affiliates also serve as
investment adviser for other investment companies; however, with the
exception of Messrs. McDonnell, Powell and Whalen, the trustees were not
trustees of such investment companies. Combining the Fund Complex with other
investment companies advised by the Advisers and their affiliates, Mr.
Whalen received Total Compensation of $243,375 during the calendar year
ended December 31, 1996.
As of April 4, 1997, the trustees and officers of the Fund as a group owned
less than 1% of the shares of the Fund.
B-22
<PAGE> 84
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom (Illinois).
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.
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. The Adviser and Subadviser are hereinafter sometimes referred to as the
"Advisers."
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 the annual
rate of 1.00% of the average daily net assets of the Fund. 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 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
B-23
<PAGE> 85
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 its distribution plans.
The Advisory Agreement may be continued from year to year if specifically
approved at least annually (a)(i) by the Fund's Trustees or (ii) by vote of a
majority of the Fund's outstanding voting securities and (b) by the affirmative
vote of a majority of the Trustees who are not parties to the agreement or
interested persons of any such party by votes cast in person at a meeting called
for such purpose. The Advisory Agreement provides that it shall terminate
automatically if assigned and that it may be terminated without penalty by
either party on not more than 60 days' nor less than 30 days' written notice.
During the fiscal years ended December 31, 1994, 1995 and 1996, the Adviser
received $101,680, $27,072 and $176,886, respectively, in advisory fees from the
Fund. For such periods the Fund paid $-0-, $29,687 and $29,574, 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 "Distribution and Service Agreement"). The
Distributor has the exclusive right to distribute shares of the Fund through
authorized 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 Distributor bears the cost of
printing (but not typesetting) prospectuses used in connection with this
offering and certain other costs, including the cost of supplemental sales
literature and advertising. The Distribution and Service Agreement is renewable
from year to year if approved (a) 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 Distribution and
Service Agreement or interested persons of any party, by votes cast in person at
a meeting called for such purpose. The Distribution and Service Agreement
provides that it will terminate if assigned, and that it may be terminated
without penalty by either party on 60 days' written notice.
For the fiscal years ending December 31, 1994, 1995 and 1996, total
underwriting commissions on the sale of shares of the Fund were $37,929, $49,245
and $51,459, respectively. Of such total, the amount retained by the Distributor
was $6,209, $15,161 and $3,550, respectively, and the remainder was reallowed to
dealers.
DISTRIBUTION AND SERVICE PLANS
The Fund has adopted a distribution plan (the "Distribution Plan") with
respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act.
The Fund also has adopted a service plan (the "Service Plan") with respect to
each class of its shares. The Distribution Plan and the Service Plan sometimes
are referred to herein as the "Plans". The Plans provide that the Fund may spend
a portion of the Fund's average daily net assets attributable to each class of
shares in connection with distribution of the respective class of shares and in
connection with the provision of ongoing services to shareholders of such class,
respectively. The Distribution Plan and the Service Plan are being implemented
through an agreement (the "Distribution and Service Agreement") with the
Distributor of each class of the Fund's shares, sub-agreements between the
Distributor and members of the NASD who are acting as securities dealers and
NASD members or eligible non-members who are acting as brokers or agents and
similar agreements between the Fund and financial intermediaries who are acting
as brokers (collectively, "Selling Agreements") that may provide for their
customers or clients certain services or assistance, which may include, but not
be limited to, processing purchase and redemption transactions, establishing and
maintaining shareholder accounts regarding the Fund, and such other services as
may be agreed to from time to time and as may be permitted by applicable
statute,
B-24
<PAGE> 86
rule or regulation. Brokers, dealers and financial intermediaries that have
entered into sub-agreements with the Distributor and sell shares of the Fund are
referred to herein as "financial intermediaries."
The Distributor must submit quarterly reports to the Board of Trustees of
the Trust, of which the Fund is a series, setting forth separately by class of
shares all amounts paid under the Distribution Plan and the purposes for which
such expenditures were made, together with such other information as from time
to time is reasonably requested by the Trustees. The Plans provide that they
will continue in full force and effect from year to year so long as such
continuance is specifically approved by a vote of the Trustees, and also by a
vote of the disinterested Trustees, cast in person at a meeting called for the
purpose of voting on the Plans. Each of the Plans may not be amended to increase
materially the amount to be spent for the services described therein with
respect to any class of shares without approval by a vote of a majority of the
outstanding voting shares of such class, and all material amendments to either
of the Plans must be approved by the Trustees and also by the disinterested
Trustees. Each of the Plans may be terminated with respect to any class of
shares at any time by a vote of a majority of the disinterested Trustees or by a
vote of a majority of the outstanding voting shares of such class.
For the fiscal year ended December 31, 1996, the Fund's aggregate expenses
under the Plans for Class A shares were $21,146 or 0.15%, of the Class A shares'
average daily net assets. Such expenses were paid to reimburse the Distributor
for payments made to financial intermediaries for servicing Fund shareholders
and for administering the Plans. For the fiscal year ended December 31, 1996,
the Fund's aggregate expenses under the Class B Plan were $92,615 or 1.00% of
the Class B shares' average net assets. Such expenses were paid to reimburse the
Distributor for the following payments: 71,308 for commissions and transaction
fees paid to financial intermediaries in respect of sales of Class B shares of
the Fund and $21,307 for fees paid to financial intermediaries for servicing
Class B shareholders and administering the Plans. For the fiscal year ended
December 31, 1996, the Fund's aggregate expenses under the Plans for Class C
shares were $19,102 or 1.00% of the Class C shares' average net assets. Such
expenses were paid to reimburse the Distributor for the following payments:
$9,720 for commissions and transaction fees paid to financial intermediaries in
respect of sales of Class C shares of the Fund and $9,382 for fees paid to
financial intermediaries for servicing Class C shareholders and administering
the Class C Plan.
TRANSFER AGENT
During the fiscal years ended December 31, 1994, 1995 and 1996, ACCESS,
shareholder service agent and dividend disbursing agent for the Fund, received
fees aggregating $0, $131,969 and $106,078, respectively, 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
B-25
<PAGE> 87
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
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 years
ended December 31, 1995 and 1996, the Fund paid $93,048 and $94,286,
respectively, in brokerage commissions on portfolio transactions.
B-26
<PAGE> 88
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. ("Smith
Barney") and Robinson Humphrey, Inc. ("Robinson Humphrey"). Effective December
20, 1994, Smith Barney and Robinson Humphrey ceased to be affiliates 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. No commissions were paid to
Robinson Humphrey during this same fiscal period. Effective October 31, 1996,
Morgan Stanley Group Inc. became as affiliate of the Adviser. For the fiscal
year ended December 31, 1996, the Fund paid Morgan Stanley Group Inc. or its
affiliates $3,141 in brokerage commission representing 3.33% of transactions
with affiliates to total commissions.
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.
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
Class A shares, Class B shares and Class C 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)
B-27
<PAGE> 89
resulting from such sales arrangements, and except that each class has exclusive
voting rights with respect to the Rule 12b-1 distribution plan pursuant to which
its distribution fees are 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 -- Class A Shares" 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 children under 21 years of age are treated as a single purchaser, as is a
trustee or other fiduciary of a single trust estate or a single fiduciary
account. An aggregate investment includes all shares of the Fund and all shares
of certain other participating Van Kampen American Capital mutual funds
described in the Prospectus (the "Participating Funds") which have been
previously purchased and are still owned, plus the shares being purchased. The
current offering price is used to determine the value of all such shares. The
same reduction is applicable to purchases under a Letter of Intent as described
in the next paragraph. THE DEALER MUST NOTIFY THE DISTRIBUTOR AT THE TIME AN
ORDER IS PLACED FOR A PURCHASE WHICH WOULD QUALIFY FOR THE REDUCED CHARGE ON THE
BASIS OF PREVIOUS PURCHASES. SIMILAR NOTIFICATION MUST BE MADE IN WRITING WHEN
SUCH AN ORDER IS PLACED BY MAIL. The reduced sales charge will not be applied if
such notification is not furnished at the time of the order. The reduced sales
charge will also not be applied should a review of the records of the
Distributor or ACCESS fail to confirm the representations concerning the
investor's holdings.
LETTER OF INTENT
Purchases of Class A shares of the Participating Funds described above
under "Cumulative Purchase Discount," made pursuant to the Letter of Intent and
still owned are also included in determining the applicable quantity discount. A
Letter of Intent permits an investor to establish a total investment goal to be
achieved by any number of investments over a thirteen-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 thirteen-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 thirteen-month period.
B-28
<PAGE> 90
REDEMPTION OF SHARES
Redemptions are not made on days during which the Exchange is closed. The
right of redemption may be suspended and the payment therefor may be postponed
for more than seven days during any period when (a) the Exchange is closed for
other than customary weekends or holidays; (b) trading on the Exchange is
restricted; (c) an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund to fairly determine the value of its net assets; or (d)
the SEC, by order, so permits.
CONTINGENT DEFERRED SALES CHARGE -- CLASS A
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 be imposed only 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. No
CDSC -- Class A will be imposed on exchanges between funds. For purposes of the
CDSC -- Class A, when shares of one fund are exchanged for shares of another
fund, the purchase date for the shares of the fund exchanged into will be
assumed to be the date on which shares were purchased in the fund from which the
exchange was made. If the exchanged shares themselves are acquired through an
exchange, the purchase date is assumed to carry over from the date of the
original election to purchase shares subject to a CDSC -- Class A rather than a
front-end load sales charge. In determining whether a CDSC -- Class A is
payable, it is assumed that shares held the longest are the first to be
redeemed.
Cumulative Purchase Discounts and Letters of Intent will apply to the net
asset value privilege. Also, in order to establish an amount of $1,000,000 or
more, a Qualified Purchaser may aggregate shares of the Participating Funds
described 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 CDSC. 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 shareholder 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-29
<PAGE> 91
(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) 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.
(d) Involuntary Redemptions of Shares in Accounts that Do Not Have the
Required Minimum Balance
The Fund reserves the right to redeem shareholder accounts with balances of
less than a specified dollar amount as set forth in the Prospectus. Prior to
such redemptions, shareholders will be notified in writing and allowed a
specified period of time to purchase additional shares to bring the account up
to the required minimum balance. The Fund will waive the CDSC -- Class B and C
upon such involuntary redemption.
(e) Reinvestment of Redemption Proceeds in Shares of the Same Fund Within
120 Days After Redemption
A shareholder who has redeemed Class C shares of a Fund may reinvest 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.
B-30
<PAGE> 92
EXCHANGE PRIVILEGE
The following supplements the discussion of "Shareholder
Services -- Exchange Privilege" in the Prospectus:
By use of the exchange privilege, the investor authorizes ACCESS to act on
telephonic, telegraphic or written exchange instructions from any person
representing himself to be the investor or the agent of the investor and
believed by ACCESS to be genuine. Van Kampen American Capital and its
subsidiaries, including ACCESS, and the Fund employ procedures considered by
them to be reasonable to confirm that instructions communicated by telephone are
genuine. Such procedures include requiring certain personal identification
information prior to acting upon telephone instructions, tape recording
telephone communications, and providing written confirmation of instructions
communicated by telephone. If reasonable procedures are employed, neither Van
Kampen American Capital, ACCESS nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. Van Kampen
American Capital, ACCESS and the Fund may be liable for any losses due to
unauthorized or fraudulent instructions if reasonable procedures are not
followed.
For purposes of determining the sales charge rate previously paid on Class
A shares, all sales charges paid on the exchanged security and on any security
previously exchanged for such security or for any of its predecessors shall be
included. If the exchanged security was acquired through reinvestment, that
security is deemed to have been sold with a sales charge rate equal to the rate
previously paid on the security on which the dividend or distribution was paid.
If a shareholder exchanges less than all of his securities, the security upon
which the highest sales charge rate was previously paid is deemed exchanged
first.
Exchange requests received on a business day prior to the time shares of
the funds involved in the request are priced will be processed on the date of
receipt. "Processing" a request means that shares in the fund from which the
shareholder is withdrawing an investment will be redeemed at the net asset value
per share next determined on the date of receipt. Shares of the new fund into
which the shareholder is investing will also normally be purchased at the net
asset value per share, plus any applicable sales charge, next determined on the
date of receipt. Exchange requests received on a business day after the time
shares of the funds involved in the request are priced will be processed on the
next business day in the manner described herein.
A prospectus of any of these mutual funds may be obtained from any
authorized dealer or the Distributor. An investor considering an exchange to one
of such funds should refer to the prospectus for additional information
regarding such fund.
TAX STATUS OF THE FUND
The Trust and any of its series, including the Fund, will be treated as
separate corporations for federal income tax purposes. The Fund intends to
qualify each year and to elect to be treated as a regulated investment company
under the Code. If the Fund so qualifies and distributes each year to its
shareholders at least 90% of its net investment income (including tax-exempt
interest, taxable income and net short-term capital gain, but not net capital
gains, which are the excess of net long-term capital gains over net short-term
capital losses) in each year, it will not be required to pay federal income
taxes on any income distributed to shareholders. The Fund intends to distribute
at least the minimum amount of net investment income necessary to satisfy the
90% distribution requirement. The Fund will not be subject to federal income tax
on any net capital gains distributed to shareholders.
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 ended
December 31, 1996 was 7.06% and (ii) the two year and six and a half month
period ended December 31, 1996 was 6.99%. 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 ended December 31, 1996 was 7.51% and (ii) the
two year and six and a half month period ended December 31, 1996 was 7.05%. The
Fund's average annual total return (computed in the manner described in
B-31
<PAGE> 93
the Prospectus) for Class C shares for (i) the one year period ended December
31, 1996 was 10.49% and (ii) the two year and six and a half month period ended
December 31, 1996 was 8.13%. 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.
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.
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, Suite 2900,
Houston, Texas 77002, the independent accountants for the Fund, performs annual
audits of the Fund's financial statements.
B-32
<PAGE> 94
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, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all mate-
rial respects, the financial position of Van Kampen American Capital Global
Managed Assets Fund (the "Fund") at December 31, 1996 and the results of its
operations, the changes in its net assets and the financial highlights for each
of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter re-
ferred to as "financial statements") are the responsibility of the Fund's man-
agement; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which re-
quire that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and dis-
closures in the financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall finan-
cial statement presentation. We believe that our audits, which included confir-
mation of securities at December 31, 1996 by correspondence with the custodian
and brokers and the application of alternative auditing procedures for unset-
tled security transactions, provide a reasonable basis for the opinion ex-
pressed above.
PRICE WATERHOUSE LLP
Houston, Texas
February 7, 1997
B-33
<PAGE> 95
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCKS AND EQUIVALENTS 73.5%
ARGENTINA 0.2%
Perez Companc, SA, Class B (ADR)........................ 3,500 $ 49,000
-----------
AUSTRALIA 0.2%
TABCORP Holdings, Ltd................................... 10,000 47,691
-----------
AUSTRIA 1.2%
Scala ECE, Ltd. (b)..................................... 800 111,188
Wolford, AG............................................. 1,000 120,977
-----------
232,165
-----------
BRAZIL 0.6%
Centrais Eletricas Brasileiras, Class B (ADR)........... 3,300 60,637
Usinas Siderurgicas de Minas Gerais, SA (ADR)........... 5,000 51,150
-----------
111,787
-----------
CANADA 0.0%
Grandetel Technologies, Inc. (b)........................ 20,000 6,875
-----------
CROATIA 0.8%
Pliva DD (GDR) (b)...................................... 3,000 157,500
-----------
CZECH REPUBLIC 1.5%
Ceske Radiokomunikace (b)............................... 1,200 165,055
IPS Praha (b)........................................... 12,100 129,022
-----------
294,077
-----------
DENMARK 0.5%
Bang & Olufsen Holding, Class B......................... 2,000 97,101
-----------
FINLAND 0.3%
Oy Nokia AB Ser A--Preferred Shares..................... 1,000 58,000
-----------
FRANCE 2.4%
Cap Gemini, SA (b)...................................... 2,000 96,714
Christian Dior.......................................... 1,000 161,318
Primagaz (Cie Gaz)...................................... 924 108,811
Primagaz (Cie Gaz), Warrants, Expiring 07/01/98 (b)..... 84 2,088
Roussel Uclaf........................................... 400 117,722
-----------
486,653
-----------
GERMANY 3.2%
Adidas, AG.............................................. 3,300 285,222
Bayer, AG............................................... 2,000 81,622
Deutsche Telekom, AG (b)................................ 4,000 84,351
SAP, AG--Preferred Shares............................... 1,000 139,719
Siemens, AG............................................. 1,300 61,249
-----------
652,163
-----------
HONG KONG 2.3%
Henderson Land Development.............................. 10,000 100,847
Hong Kong Land Holding (ADR)............................ 40,000 111,200
HSBC Holdings........................................... 2,800 59,913
Sun Hung Kai Properties................................. 8,000 98,002
Swire Pacific, Ltd., Class A............................ 10,000 95,352
-----------
465,314
-----------
</TABLE>
B-34
See Notes to Financial Statements
<PAGE> 96
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
HUNGARY 0.6%
Tiszai Vegyi Kombinat Rt (GDR) (b)...................... 10,000 $ 112,000
-----------
INDONESIA 0.6%
BK Bira................................................. 100,000 118,544
-----------
ITALY 2.7%
Bulgari SpA............................................. 8,000 162,426
Gucci Group NV.......................................... 4,125 263,484
Parmalat Finanziaria SpA................................ 80,000 122,347
-----------
548,257
-----------
IRELAND 1.4%
Adare Printing Group PLC................................ 10,000 95,940
Bank of Ireland......................................... 20,000 182,628
-----------
278,568
-----------
JAPAN 10.2%
Bank of Tokyo--Mitsubishi............................... 3,400 63,121
Daifuku Co., Ltd........................................ 15,000 189,103
Daiichi Corp............................................ 4,000 80,822
Dainippon Screen Manufacturing Co., Ltd................. 8,000 59,062
DDI Corp................................................ 6 39,686
Fuji International Co.--Preferred Shares................ 21,000,000 181,331
Honda Motor Co.......................................... 3,000 85,744
Japan Radio Co.......................................... 5,000 53,536
JGC Corp................................................ 4,000 30,015
Kawasaki Heavy Industries............................... 15,000 62,041
Koito Manufacturing Co., Ltd............................ 4,000 26,768
Komori Corp............................................. 2,000 42,483
Kyocera Corp............................................ 1,000 62,343
Marubeni Corp........................................... 10,000 43,001
Matsushita Electric Industrial Co....................... 5,000 81,599
Mitsubishi Chemical..................................... 14,000 45,333
Mitsubishi Estate....................................... 4,000 41,102
Nichiei Construction.................................... 6,000 41,551
Nippon Hodo Co.......................................... 3,000 34,712
NKK Corp................................................ 24,000 54,089
Nomura Securities Co., Ltd.............................. 6,000 90,148
NTT Data Communications Systems Corp.................... 4 117,088
Omron Corp.............................................. 4,000 75,296
Rohm Co................................................. 2,000 131,249
Secom Co................................................ 1,000 60,530
Sumitomo Electric Industries............................ 3,000 41,965
Takashimaya Co.......................................... 6,000 72,015
Tokio Marine & Fire Insurance Co........................ 4,000 37,648
Tokyu Corp.............................................. 7,000 39,772
Toshiba Corp............................................ 10,000 62,862
-----------
2,046,015
-----------
</TABLE>
B-35
See Notes to Financial Statements
<PAGE> 97
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
MALAYSIA 1.0%
Jaya Tiasa Holdings..................................... 10,000 $ 53,059
Malaysian Pacific Industries............................ 20,000 77,608
Resort Worlds BHD....................................... 15,000 68,303
-----------
198,970
-----------
MEXICO 0.7%
Cemex, SA, Class B (ADR)................................ 8,000 61,500
Empresas ICA Sociedad Controladora, SA (ADR)............ 6,000 87,750
-----------
149,250
-----------
NETHERLANDS 5.8%
Ahold (Koninklijke) NV.................................. 4,000 250,217
ASM Lithography Holding (b)............................. 3,200 159,954
Cap Genmini NV.......................................... 7,000 203,533
Frans Maas Group........................................ 1,000 41,124
ING Groep NV............................................ 4,330 155,995
Polygram................................................ 2,000 101,940
Royal Dutch Petroleum Co................................ 200 34,150
Ver Ned Uitgevers....................................... 10,000 209,094
-----------
1,156,007
-----------
NORWAY 1.2%
Storebrand ASA.......................................... 13,000 74,654
Tandberg ASA............................................ 2,000 61,772
Visual Management Application ASA....................... 20,000 102,435
-----------
238,861
-----------
POLAND 0.2%
Stalexport, SA, Class A (b)............................. 4,000 39,199
-----------
PORTUGAL 0.7%
Portugal Telecommunications, SA (b)..................... 5,000 142,535
-----------
RUSSIA 2.2%
Mosenergo (ADR)......................................... 7,000 216,125
Torgovy Dom GUM (ADR) (b)............................... 4,000 216,000
-----------
432,125
-----------
SINGAPORE 0.7%
Overseas Union Bank..................................... 7,000 54,027
Sembawang Corp., Ltd.................................... 10,000 52,884
Singapore Land.......................................... 7,000 38,769
-----------
145,680
-----------
SOUTH KOREA 0.2%
LG Chemical, Ltd. 144A (GDR) (c)........................ 1,800 17,064
Samsung Electronics, Ltd. 144A (GDS) (c)................ 1,395 25,250
-----------
42,314
-----------
SWEDEN 2.0%
Astra AB, Class B....................................... 4,000 192,965
Autoliv AB.............................................. 2,800 122,758
Enator AB (b)........................................... 3,600 91,893
-----------
407,616
-----------
</TABLE>
B-36
See Notes to Financial Statements
<PAGE> 98
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SWITZERLAND 4.2%
Adecco, SA.............................................. 911 $ 229,521
Ascom Holding, AG (b)................................... 50 50,915
Danzas Holding, AG...................................... 150 166,418
Novartis, AG............................................ 160 183,238
SGS Holdings............................................ 90 221,218
-----------
851,310
-----------
TAIWAN 0.5%
Acer, Inc. (GDR) (b).................................... 11,654 108,615
-----------
THAILAND 0.3%
Siam Public Cement Co., Ltd............................. 1,000 31,350
Thailand Military Bank PLC.............................. 14,600 28,749
-----------
60,099
-----------
TURKEY 0.2%
Bati Cimento, AS........................................ 625,000 47,257
-----------
UNITED KINGDOM 6.1%
Astec (BSR)............................................. 25,000 67,209
BAA..................................................... 11,000 91,211
BOC Group............................................... 5,500 82,354
Boots Co................................................ 8,000 82,508
Dixons Group............................................ 14,000 130,238
Harvey Nichols PLC (b).................................. 8,000 47,696
Marks & Spencer......................................... 8,000 67,432
National Westminster.................................... 10,000 117,526
Next.................................................... 15,000 146,222
Reuters Holdings........................................ 20,000 257,153
Sainsbury, J............................................ 12,000 79,561
Shell Transportation & Trading.......................... 3,000 52,013
-----------
1,221,123
-----------
UNITED STATES 18.8%
Aames Financial Corp.................................... 920 33,005
AccuStaff, Inc. (b)..................................... 810 17,111
ADC Telecommunications, Inc. (b)........................ 860 26,767
Air Products & Chemicals, Inc........................... 400 27,650
Alex Brown, Inc......................................... 310 22,475
Allied Signal, Inc...................................... 300 20,100
Altera Corp. (b)........................................ 200 14,538
Amgen, Inc. (b)......................................... 560 30,450
Analog Devices, Inc. (b)................................ 400 13,550
Apache Corp............................................. 610 21,579
Ascend Communications, Inc. (b)......................... 380 23,608
Aspect Telecommunications Corp. (b)..................... 470 29,845
Atmel Corp. (b)......................................... 500 16,563
Baker Hughes, Inc....................................... 310 10,695
</TABLE>
B-37
See Notes to Financial Statements
<PAGE> 99
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
See Notes to Financial Statements
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Bank of Boston Corp..................................... 590 $ 37,907
BankAmerica Corp........................................ 470 46,882
Bed Bath & Beyond, Inc. (b)............................. 500 12,125
BMC Industries Inc.-- MN................................ 370 11,655
BMC Software, Inc. (b).................................. 1,720 71,165
Boeing Co............................................... 370 39,359
Boston Chicken, Inc. (b)................................ 560 20,090
Bristol Myers Squibb Co................................. 490 53,287
Cadence Design Systems, Inc. (b)........................ 685 27,229
Chase Manhattan Corp.................................... 610 54,442
Chrysler Corp........................................... 720 23,760
Cisco Systems, Inc. (b)................................. 910 57,899
Citicorp................................................ 220 22,660
CMAC Investment Corp.................................... 820 30,135
Columbia/HCA Healthcare Corp............................ 700 28,525
Compaq Computer Corp. (b)............................... 600 44,550
CompUSA, Inc. (b)....................................... 960 19,800
Computer Associates International, Inc.................. 1,120 55,720
Compuware Corp. (b)..................................... 150 7,519
Conseco, Inc............................................ 850 54,187
Cytec Industries, Inc. (b).............................. 550 22,344
Deere & Co.............................................. 630 25,594
Dover Corp.............................................. 430 21,608
DST Systems, Inc. (b)................................... 550 17,256
Equifax Inc............................................. 740 22,663
Evergreen Media Corp. (b)............................... 1,010 25,250
Exxon Corp.............................................. 300 29,874
Federal National Mortgage Association................... 3,300 122,925
First Bank Systems, Inc................................. 250 17,063
Gap, Inc................................................ 440 13,255
General Nutrition Companies, Inc. (b)................... 610 10,294
Green Tree Financial Corp............................... 1,160 44,805
Harley Davidson, Inc.................................... 370 17,390
Health Management Association, Inc., Class A (b)........ 775 17,438
Healthsouth Corp. (b)................................... 840 32,445
Hilton Hotels Corp...................................... 680 17,765
Illinois Tool Works, Inc................................ 250 19,969
Input/Output, Inc. (b).................................. 430 7,955
Intel Corp.............................................. 610 79,872
International Business Machines Corp.................... 200 30,200
Johnson & Johnson....................................... 1,200 59,700
</TABLE>
B-38
<PAGE> 100
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Knight Ridder, Inc...................................... 100 $ 3,933
Kroger Co. (b).......................................... 770 35,805
Lear Corp. (b).......................................... 310 10,579
Lincare Holdings, Inc. (b).............................. 580 23,780
Linear Technology Corp.................................. 400 17,550
Liz Claiborne, Inc...................................... 590 22,789
Lowe's Companies, Inc................................... 400 14,200
Lucent Technologies, Inc................................ 310 14,338
Marriot International, Inc.............................. 580 32,045
Medtronic, Inc.......................................... 410 27,880
Merck & Co., Inc........................................ 830 65,777
Merrill Lynch & Co., Inc................................ 740 60,310
Metalclad Corp. (b)..................................... 4,000 7,250
MGIC Investment Corp.................................... 350 26,600
Microsoft Corp. (b)..................................... 880 72,710
Money Store, Inc........................................ 670 18,509
Nautica Enterprises, Inc. (b)........................... 670 16,918
Nike, Inc., Class B..................................... 200 11,950
Omnicom Group, Inc...................................... 800 36,600
Pairgain Technologies, Inc. (b)......................... 400 12,175
Penncorp Financial Group, Inc........................... 550 19,800
Pfizer, Inc............................................. 570 47,239
Philip Morris Companies, Inc............................ 1,790 201,599
Phillips Petroleum Co................................... 670 29,647
Physician Reliance Network (b).......................... 610 4,728
Praxair, Inc............................................ 1,160 53,505
Procter & Gamble Co..................................... 200 21,500
Promus Hotel Corp. (b).................................. 490 14,516
RAC Financial Group, Inc. (b)........................... 1,020 21,548
Raychem Corp............................................ 380 30,447
Renal Treatment Centers, Inc. (b)....................... 670 17,085
RJR Nabisco Holdings Corp............................... 900 30,600
Ross Stores, Inc........................................ 310 15,500
Safeway, Inc. (b)....................................... 1,770 75,667
Sanmina Corp. (b)....................................... 370 20,905
Schering-Plough Corp.................................... 550 35,612
Schwab (Charles) Corp................................... 400 12,800
SCI Systems, Inc. (b)................................... 420 18,743
Scripps (E.W.) Co., Class A............................. 250 8,760
Service Corp. International............................. 1,340 37,520
Smith International, Inc. (b)........................... 860 38,592
</TABLE>
B-39
See Notes to Financial Statements
<PAGE> 101
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Shares Market Value
- ---------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (CONTINUED)
Student Loan Marketing Association................. 370 $ 34,456
SunAmerica, Inc.................................... 1,660 73,662
Sun Microsystems, Inc. (b)......................... 2,220 57,026
Tellabs, Inc. (b).................................. 1,160 43,645
Texaco, Inc........................................ 310 30,419
Textron, Inc....................................... 210 19,793
3Com Corp. (b)..................................... 730 53,564
Tiffany & Co....................................... 490 17,946
TJX Companies, Inc................................. 650 30,794
Tommy Hilfiger Corp. (b)........................... 310 14,880
Transocean Offshore, Inc........................... 280 17,535
Travelers Group, Inc............................... 1,200 54,450
Tyco International, Inc............................ 500 26,437
Union Carbide Corp................................. 370 15,124
United Technologies Corp........................... 360 23,760
United Waste System, Inc. (b)...................... 1,220 41,937
Universal Health Services, Inc., Class B (b)....... 590 16,889
US Office Products Co. (b)......................... 670 22,864
USA Waste Services, Inc. (b)....................... 670 21,356
Vons Cos., Inc. (b)................................ 830 49,696
Warner-Lambert Co.................................. 300 22,500
Watson Pharmaceuticals, Inc. (b)................... 370 16,627
Williams Companies, Inc............................ 1,335 50,062
Wind River System, Inc. (b)........................ 340 16,108
WorldCom, Inc. (b)................................. 1,070 27,971
-----------
3,770,009
-----------
TOTAL COMMON AND PREFERRED STOCKS AND EQUIVALENTS............ 14,772,680
-----------
CONVERTIBLE SECURITIES 0.3%
United Micro Electric ($50,000 par, 1.250% coupon, 06/08/04
maturity, convertible to 53,640 common shares)............... 70,187
-----------
UNITED STATES GOVERNMENT/AGENCY OBLIGATIONS 9.7%
GNMA Note ($180,884 par, 8.000% coupon, 04/15/22 maturity).... 184,616
US Treasury Note ($1,075,000 par, 6.750% coupon, 02/28/97
maturity)..................................................... 1,077,860
US Treasury Note ($125,000 par, 5.750% coupon, 08/15/03
maturity)..................................................... 121,406
US Treasury Note ($525,000 par, 7.500% coupon, 02/15/05
maturity)..................................................... 562,322
-----------
TOTAL UNITED STATES GOVERNMENT/AGENCY OBLIGATIONS............ 1,946,204
-----------
TOTAL LONG-TERM INVESTMENTS 83.5%
(Cost $14,241,640) (a)....................................... 16,789,071
REPURCHASE AGREEMENT 14.9%
BA Securities ($3,005,000 par, collateralized by U.S.
Government obligations in a pooled cash account, 6.930%
coupon, dated 12/31/96, to be sold on 01/02/97 at $3,006,157)
(d).......................................................... 3,005,000
FOREIGN CURRENCY 1.7% (Various denominations, Cost $330,832)
(a)........................................................... 334,685
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1%).................. (27,094)
-----------
NET ASSETS 100.0%............................................. $20,101,662
-----------
</TABLE>
B-40
See Notes to Financial Statements
<PAGE> 102
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
(a) At December 31, 1996, for federal income tax purposes cost is $16,897,111;
the aggregate gross unrealized appreciation is $3,263,204 and the aggre-
gate gross unrealized depreciation is $709,988, resulting in net
unrealized appreciation on investments, foreign currency translation of
other assets and liabilities and forward commitments of $2,553,216.
(b) Non-income producing security as this stock currently does not declare
dividends.
(c) 144A securities are those which are exempt from registration under rule
144A of the Securities Act of 1933. These securities may be resold only in
transactions exempt from registration, which are normally those transac-
tions with qualified institutional buyers.
(d) Assets segregated as collateral for forward purchase commitments.
ADR--American Depository Receipt
GDR--Global Depository Receipt
GDS--Global Depository Shares
B-41
See Notes to Financial Statements
<PAGE> 103
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Long-Term Investments, at Market Value (Cost $14,241,640) (Note
1)................................................................ $16,789,071
Repurchase Agreement (Note 1)..................................... 3,005,000
Foreign Currency, at Market Value (Cost $330,832)................. 334,685
Receivables:
Securities Sold.................................................. 89,201
Fund Shares Sold................................................. 69,869
Interest......................................................... 41,372
Dividends........................................................ 34,010
Forward Commitments and Foreign Currency Contracts................ 27,450
Other............................................................. 13,918
-----------
Total Assets..................................................... 20,404,576
-----------
LIABILITIES:
Payables:
Securities Purchased............................................. 86,537
Fund Shares Repurchased.......................................... 86,882
Distributor and Affiliates (Notes 2 and 6)....................... 32,731
Capital Gain Distributions....................................... 7,433
Investment Advisory Fee (Note 2)................................. 1,750
Custodian Bank................................................... 174
Accrued Expenses.................................................. 75,757
Deferred Compensation and Retirement Plans (Note 2)............... 11,650
-----------
Total Liabilities................................................ 302,914
-----------
NET ASSETS........................................................ $20,101,662
-----------
NET ASSETS CONSIST OF:
Capital (Note 3).................................................. $17,371,546
Net Unrealized Appreciation on Securities......................... 2,579,885
Accumulated Net Realized Gain on Securities....................... 157,379
Accumulated Distributions in Excess of Net Investment Income (Note
1)................................................................ (7,148)
-----------
NET ASSETS........................................................ $20,101,662
-----------
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on net
assets of $8,513,467 and 808,511 shares of beneficial interest
issued and outstanding).......................................... $ 10.53
Maximum sales charge (4.75%* of offering price).................. .53
-----------
Maximum offering price to public................................. $ 11.06
-----------
Class B Shares:
Net asset value and offering price per share (Based on net assets
of $9,904,714 and 954,327 shares of beneficial interest issued
and outstanding)................................................. $ 10.38
-----------
Class C Shares:
Net asset value and offering price per share (Based on net assets
of $1,683,481 and 161,951 shares of beneficial interest issued
and outstanding)................................................. $ 10.40
-----------
</TABLE>
*On sales of $100,000 or more, the sales charge will be reduced.
B-42
See Notes to Financial Statements
<PAGE> 104
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................... $ 399,022
Dividends (Net of foreign withholding taxes of $32,913)............ 307,364
----------
Total Income...................................................... 706,386
----------
EXPENSES:
Investment Advisory Fee (Note 2)................................... 250,405
Custody............................................................ 143,399
Distribution (12b-1) and Service Fees (Attributed to Classes A, B
and C of $21,146, $92,614 and $19,102, respectively) (Note 6)..... 132,862
Shareholder Services (Note 2)...................................... 131,690
Registration and Filing Fees....................................... 59,159
Printing........................................................... 57,974
Audit.............................................................. 48,495
Trustees Fees and Expenses (Note 2)................................ 10,879
Amortization of Organizational Expenses (Note 1)................... 3,298
Legal (Note 2)..................................................... 2,138
Other.............................................................. 52,398
----------
Total Expenses.................................................... 892,697
Less Fees Waived (Note 2)......................................... 73,519
----------
Net Expenses...................................................... 819,178
----------
NET INVESTMENT LOSS................................................ $ (112,792)
----------
REALIZED AND UNREALIZED GAIN/LOSS ON SECURITIES:
Realized Gain/Loss on Securities:
Investments....................................................... $1,521,968
Forward Commitments............................................... 201,802
Foreign Currency Transactions..................................... (22,569)
----------
Net Realized Gain on Securities.................................... 1,701,201
----------
Unrealized Appreciation/Depreciation on Securities:
Beginning of the Period........................................... 1,574,817
----------
End of the Period:
Investments....................................................... 2,547,431
Forward Commitments............................................... 8,905
Forward Currency Contracts........................................ 18,545
Foreign Currency Translation...................................... 5,004
----------
2,579,885
----------
Net Unrealized Appreciation on Securities During the Period........ 1,005,068
----------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES..................... $2,706,269
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS......................... $2,593,477
----------
</TABLE>
B-43
See Notes to Financial Statements
<PAGE> 105
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1996
and December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income/Loss........................ $ (112,792) $ 102,217
Net Realized Gain on Securities................... 1,701,201 747,602
Net Unrealized Appreciation on Securities During
the Period....................................... 1,005,068 1,997,291
----------- -----------
Change in Net Assets from Operations.............. 2,593,477 2,847,110
----------- -----------
Distributions from Net Investment Income.......... -0- (105,143)
Distributions in Excess of Net Investment Income
(Note 1).......................................... -0- (21,853)
----------- -----------
Distributions from and in Excess of Net Investment
Income*........................................... -0- (126,996)
Distribution from Net Realized Gain on Securities
(Note 1)*......................................... (1,608,530) (444,628)
----------- -----------
Total Distributions............................... (1,608,530) (571,624)
----------- -----------
NET CHANGE IN NET ASSETS FROM INVESTMENT
ACTIVITIES........................................ 984,947 2,275,486
----------- -----------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold......................... 7,742,285 8,340,329
Net Asset Value of Shares Issued Through Dividend
Reinvestment...................................... 1,377,670 547,728
Cost of Shares Repurchased........................ (15,458,267) (5,860,394)
----------- -----------
NET CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS...................................... (6,338,312) 3,027,663
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... (5,353,365) 5,303,149
NET ASSETS:
Beginning of the Period........................... 25,455,027 20,151,878
----------- -----------
End of the Period (Including accumulated
distributions in excess of net investment income
of $7,148 and $14,634, respectively)............. $20,101,662 $25,455,027
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended
*Distributions by Class December 31, 1996 December 31, 1995
---------------------------------------------------------------------------
<S> <C> <C>
Distributions from and in Excess of
Net Investment Income (Note 1):
Class A Shares.................... $ -0- $(109,529)
Class B Shares.................... -0- (14,553)
Class C Shares.................... -0- (2,914)
----------- ---------
$ -0- $(126,996)
----------- ---------
Distributions from Net Realized
Gain on Securities (Note 1):
Class A Shares.................... $ (713,178) $(270,443)
Class B Shares.................... (762,464) (142,058)
Class C Shares.................... (132,888) (32,127)
----------- ---------
$(1,608,530) $(444,628)
----------- ---------
</TABLE>
B-44
See Notes to Financial Statements
<PAGE> 106
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 16, 1994
Year Year (Commencement of
Ended Ended Investment
December 31, December 31, Operations) to
Class A Shares 1996 (c) 1995 December 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of
the Period.................... $ 10.15 $ 9.19 $ 9.44
------- ------ ------
Net Investment Income........ -0- .08 .10
Net Realized and Unrealized
Gain/Loss on Securities..... 1.242 1.1375 (.2475)
------- ------ ------
Total from Investment
Operations.................... 1.242 1.2175 (.1475)
------- ------ ------
Less:
Distributions from and in
Excess of Net
Investment Income (Note 1).. -0- .0775 .075
Distributions from and in
Excess of Net
Realized Gain on Securities
(Note 1).................... .862 .18 .0275
------- ------ ------
Total Distributions........... .862 .2575 .1025
------- ------ ------
Net Asset Value, End of the
Period....................... $10.530 $10.15 $ 9.19
------- ------ ------
Total Return* (a)............. 12.44% 13.30% (1.57%)**
Net Assets at End of the
Period (In millions)......... $ 8.5 $ 15.5 $ 11.5
Ratio of Expenses to
Average Net Assets*.......... 2.87% 2.79% 2.75%
Ratio of Net Investment
Income/Loss to
Average Net Assets*.......... .00% .81% 1.54%
Portfolio Turnover............ 91% 135% 50%**
Average Commission Paid Per
Equity Share Traded (b)...... $ .0214 -- --
*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:
<CAPTION>
<S> <C> <C> <C>
Ratio of Expenses to Average
Net Assets................... 3.17% 3.68% 2.76%
Ratio of Net Investment
Income/Loss to
Average Net Assets........... (.30%) (.07%) 1.53%
</TABLE>
**Non-Annualized
(a) Total Return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(b) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This dis-
closure was not required in fiscal years prior to 1996.
(c) Based on average month-end shares outstanding.
See Notes to Financial Statements
B-45
<PAGE> 107
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 16, 1994
Year Year (Commencement
Ended Ended of Investment
December 31, December 31, Operations) to
Class B Shares 1996 (c) 1995 December 31, 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of
the Period.................... $ 10.10 $ 9.17 $ 9.44
------- ------ ------
Net Investment Income/Loss... (.106) (.01) .01
Net Realized and Unrealized
Gain/Loss on Securities..... 1.247 1.1375 (.2065)
------- ------ ------
Total from Investment
Operations.................... 1.141 1.1275 (.1965)
------- ------ ------
Less:
Distributions from and in
Excess of Net
Investment Income (Note 1).. -0- .0175 .046
Distributions from and in
Excess of Net
Realized Gain on Securities
(Note 1).................... .862 .18 .0275
------- ------ ------
Total Distributions........... .862 .1975 .0735
------- ------ ------
Net Asset Value, End of the
Period........................ $10.379 $10.10 $ 9.17
------- ------ ------
Total Return* (a)............. 11.51% 12.31% (2.09%)**
Net Assets at End of the
Period (In millions).......... $9.9 $8.1 $7.4
Ratio of Expenses to Average
Net Assets*.................. 3.76% 3.73% 3.92%
Ratio of Net Investment
Income/Loss to
Average Net Assets*.......... (1.01%) (.09%) .13%
Portfolio Turnover............ 91% 135% 50%**
Average Commission Paid Per
Equity Share Traded (b)....... $ .0214 -- --
<CAPTION>
*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:
<S> <C> <C> <C>
Ratio of Expenses to Average
Net Assets................... 4.06% 4.61% 3.93%
Ratio of Net Investment
Income/Loss to
Average Net Assets........... (1.30%) (.97%) .12%
</TABLE>
**Non-Annualized
(a) Total Return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(b) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This dis-
closure was not required in fiscal years prior to 1996.
(c) Based on average month-end shares outstanding.
B-46
See Notes to Financial Statements
<PAGE> 108
FINANCIAL HIGHLIGHTS (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
May 16, 1994
Year Year (Commencement
Ended Ended of Investment
December 31, December 31, Operations) to
Class C Shares 1996 (c) 1995 December 31, 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of
the Period.................... $ 10.12 $ 9.20 $ 9.44
------- ------- ------
Net Investment Income/Loss... (.104) (.02) .05
Net Realized and Unrealized
Gain/Loss on Securities..... 1.241 1.1375 (.2165)
------- ------- ------
Total from Investment
Operations.................... 1.137 1.1175 (.1665)
------- ------- ------
Less:
Distributions from and in
Excess of Net
Investment Income (Note 1).. -0- .0175 .046
Distributions from and in
Excess of Net
Realized Gain on Securities
(Note 1).................... .862 .18 .0275
------- ------- ------
Total Distributions........... .862 .1975 .0735
------- ------- ------
Net Asset Value, End of the
Period........................ $10.395 $ 10.12 $ 9.20
------- ------- ------
Total Return*................. 11.49% 12.16% (1.77%)**
Net Assets at End of the
Period (In millions).......... $ 1.7 $ 1.9 $ 1.3
Ratio of Operating Expenses to
Average Net Assets*.......... 3.78% 3.79% 3.36%
Ratio of Net Investment
Income/Loss to
Average Net Assets*.......... (.99%) (.18%) .80%
Portfolio Turnover............ 91% 135% 50%**
Average Commission Paid Per
Equity Share Traded (b)....... $ .0214 -- --
<CAPTION>
*If certain expenses had not been assumed by VKAC, total return would have
been lower and the ratios would have been as follows:
<S> <C> <C> <C>
Ratio of Operating Expenses to
Average Net Assets........... 4.07% 4.67% 3.38%
Ratio of Net Investment
Income/Loss to
Average Net Assets........... (1.28%) (1.06%) .78%
</TABLE>
**Non-Annualized
(a) Total Return is based upon net asset value which does not include payment
of the maximum sales charge or contingent deferred sales charge.
(b) Represents the average brokerage commission paid per equity share traded
during the period for trades where commissions were applicable. This dis-
closure was not required in fiscal years prior to 1996.
(c) Based on average month-end shares outstanding.
B-47
See Notes to Financial Statements
<PAGE> 109
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Global Managed Assets Fund (the "Fund") is orga-
nized as a Delaware business trust, and is registered as a non-diversified
open-end management investment company under the Investment Company Act of
1940, as amended. The Fund's investment objective is to seek total return
through a managed balance of foreign and domestic equity and debt securities.
The Fund commenced investment operations on May 16, 1994, with three classes of
beneficial interest, Class A, Class B and Class C shares.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The prepa-
ration of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent as-
sets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
A. SECURITY VALUATION-Investments in securities listed on a securities exchange
are valued at their sale price as of the close of such securities exchange. Un-
listed securities and listed securities for which the last sales price is not
available are valued at their last quoted bid price. Fixed income securities
are stated at value using market quotations. For those securities where quota-
tions or prices are not available, valuations are determined in accordance with
procedures established in good faith by the Board of Trustees. Short-term secu-
rities with remaining maturities of 60 days or less are valued at amortized
cost.
B. SECURITY TRANSACTIONS-Security transactions are recorded on a trade date ba-
sis. Realized gains and losses are determined on an identified cost basis.
The Fund may invest in repurchase agreements, which are short-term invest-
ments 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 invest independently in repurchase agreements, or transfer uninvested
cash balances into a pooled cash account along with other investment companies
advised by Van Kampen American Capital Asset Management Inc. (the "Adviser") or
its affiliates, the daily aggregate of which is invested in repurchase agree-
ments. Repurchase agreements are fully collateralized by the underlying debt
security. The Fund will make payment for such securities only upon physical de-
livery 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.
B-48
<PAGE> 110
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
C. INVESTMENT INCOME-Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. The Fund accounts for dis-
counts and premiums on the same basis as is used for federal income tax report-
ing. Accordingly, original issue discounts on debt securities purchased are
amortized over the life of the security. Premiums on debt 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.
D. FOREIGN CURRENCY TRANSLATION-Assets and liabilities denominated in foreign
currencies and commitments under forward currency contracts are translated into
U.S. dollars based on quoted exchange rates as of noon Eastern Time. Purchases
and sales of portfolio securities are translated at the rate of exchange pre-
vailing when such securities were acquired or sold. Income and expenses are
translated at rates prevailing when accrued. Gains and losses on the sale of
securities are not segregated for financial reporting purposes between amounts
arising from changes in exchange rates and amounts arising from changes in the
market prices of securities. Realized gain and loss on foreign currency in-
cludes the net realized amount from the sale of currency and the amount real-
ized between trade date and settlement date on security transactions.
E. ORGANIZATIONAL EXPENSES-The Fund has reimbursed Van Kampen American Capital
Distributors, Inc. or its affiliates (collectively "VKAC") for costs incurred
in connection with the Fund's organization in the amount of $15,000. These
costs are being amortized on a straight line basis over the 60 month period
ending May 15, 1999. The Adviser has agreed that in the event any of the ini-
tial shares of the Fund originally purchased by VKAC are redeemed during the
amortization period, the Fund will be reimbursed for any unamortized organiza-
tional expenses in the same proportion as the number of shares redeemed bears
to the number of initial shares held at the time of redemption.
F. FEDERAL INCOME TAXES-It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of its taxable income to its shareholders.
Therefore, no provision for federal income taxes is required.
G. DISTRIBUTION OF INCOME AND GAINS-The Fund declares and pays dividends annu-
ally from net investment income and from net realized gains on securities, if
any. Net investment income for federal income tax purposes includes gains and
losses realized on certain transactions in foreign currencies. These realized
gains and losses are included as net realized gains or losses for financial re-
porting purposes. For the year ended December 31, 1996 the Fund paid long-term
capital gains totaling $757,153.
B-49
<PAGE> 111
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
Due to inherent differences in the recognition of income, expenses and real-
ized gains/losses under generally accepted accounting principles and for fed-
eral income tax purposes, permanent differences between book and tax basis
reporting for the 1996 fiscal year have been identified and appropriately re-
classified. As a result, permanent differences of $97,496 due to the character-
ization of distributions for tax purposes have been reclassified from
accumulated distributions in excess of net investment income to accumulated net
realized gain on securities. In addition, permanent differences of $3,118 re-
lating to net currency losses, $618 relating to net losses on paydowns of mort-
gage pool obligations, and $9,928 relating to market discount on bonds were
reclassified from accumulated net realized gain on securities to accumulated
distributions in excess of net investment income. Also, permanent differences
of $16,590 relating to the recognition of certain expenses which are not de-
ductible for tax purposes were reclassified from accumulated distributions in
excess of net investment income to capital.
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly. The Adviser has entered into a subadvisory agreement which will termi-
nate on March 31, 1997 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. Investment advisory fees are calcu-
lated monthly, based on the average daily net assets of the Fund at the annual
rate of 1.00%. The Adviser pays 50% of its investment advisory fee to the
Subadviser. Shareholders have approved a change in the Subadviser from John
Govett & Co., Ltd. to Morgan Stanley Asset Management Inc. effective April 1,
1997. For the year ended December 31, 1996, the Adviser waived a portion of its
advisory fee. This waiver is voluntary and may be discontinued at any time.
Certain legal expenses are paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.
For the year ended December 31, 1996, the Fund recognized expenses of approx-
imately $29,600 representing VKAC's cost of providing accounting services to
the Fund. These services are provided by VKAC at cost.
ACCESS Investor Services, Inc. ("ACCESS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended De-
cember 31, 1996, the Fund recognized expenses of approximately $106,100, repre-
senting ACCESS' cost of providing transfer agency and shareholder services plus
a profit.
Additionally, for the year ended December 31, 1996, the Fund reimbursed VKAC
approximately $16,600 related to the direct cost of consolidating the VKAC
open-end fund complex. Payment was contingent upon the realization by the Fund
of cost efficiencies in shareholder services resulting from the consolidation.
B-50
<PAGE> 112
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
Certain officers and trustees of the Fund are also officers and directors of
VKAC. The Fund does not compensate its officers or trustees who are officers of
VKAC.
The Fund has implemented deferred compensation and retirement plans for its
trustees. Under the deferred compensation plan, trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those trustees who are not officers of VKAC.
At December 31, 1996, VKAC owned 10,604, 53 and 87 shares of Classes A, B and
C, respectively.
3. CAPITAL TRANSACTIONS
The Fund has outstanding three classes of shares of beneficial interest, Clas-
ses A, B and C, each with a par value of $.01 per share. There are an unlimited
number of shares of each class authorized.
At December 31, 1996, capital aggregated $6,775,618, $9,098,727 and
$1,497,201 for Classes A, B and C, respectively. For the year ended December
31, 1996, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- -------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A............................................. 343,389 $ 3,674,083
Class B............................................. 319,565 3,371,501
Class C............................................. 66,272 696,701
---------- ------------
Total Sales.......................................... 729,226 $ 7,742,285
---------- ------------
Dividend Reinvestment:
Class A............................................. 58,774 $ 608,282
Class B............................................. 65,677 670,411
Class C............................................. 9,677 98,977
---------- ------------
Total Dividend Reinvestment.......................... 134,128 $ 1,377,670
---------- ------------
Repurchases:
Class A............................................. (1,122,082) $(11,975,953)
Class B............................................. (233,170) (2,467,031)
Class C............................................. (95,831) (1,015,283)
---------- ------------
Total Repurchases.................................... (1,451,083) $(15,458,267)
---------- ------------
</TABLE>
B-51
<PAGE> 113
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
At December 31, 1995, capital aggregated $14,476,174, $7,532,071 and
$1,718,203 for Classes A, B and C, respectively. For the year ended December
31, 1995, transactions were as follows:
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales:
Class A................................................. 400,789 $ 3,909,901
Class B................................................. 315,134 3,055,675
Class C................................................. 138,887 1,374,753
-------- -----------
Total Sales.............................................. 854,810 $ 8,340,329
-------- -----------
Dividend Reinvestment:
Class A................................................. 37,488 $ 376,012
Class B................................................. 13,757 138,274
Class C................................................. 3,320 33,442
-------- -----------
Total Dividend Reinvestment.............................. 54,565 $ 547,728
-------- -----------
Repurchases:
Class A................................................. (166,010) $(1,662,569)
Class B................................................. (329,324) (3,228,108)
Class C................................................. (96,043) (969,717)
-------- -----------
Total Repurchases........................................ (591,377) $(5,860,394)
-------- -----------
</TABLE>
B-52
<PAGE> 114
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
Class B and C shares are offered without a front end sales charge, but are
subject to a contingent deferred sales charge (CDSC). The CDSC will be imposed
on most redemptions made within five years of the purchase for Class B and one
year of the purchase for Class C as detailed in the following schedule. The
Class B and C shares bear the expense of their respective deferred sales ar-
rangements, including higher distribution and service fees and incremental
transfer agency costs.
<TABLE>
<CAPTION>
CONTINGENT
DEFERRED SALES
CHARGE
YEAR OF REDEMPTION CLASS B CLASS C
- --------------------------------------------------------------------------------
<S> <C> <C>
First........................................................... 4.00% 1.00%
Second.......................................................... 4.00% None
Third........................................................... 3.00% None
Fourth.......................................................... 2.50% None
Fifth........................................................... 1.50% None
Sixth and Thereafter............................................ None None
</TABLE>
For the year ended December 31, 1996, VKAC, as Distributor for the Fund, re-
ceived commissions on sales of the Fund's Class A shares of approximately
$3,500 and CDSC on the redeemed shares of approximately $19,100. Sales charges
do not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of invest-
ments, excluding short-term investments and forward commitments, were
$20,514,576 and $31,057,421, respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio, manage the portfolio's effective yield, foreign currency exposure,
or generate potential gain. All of the Fund's portfolio holdings, including de-
rivative instruments, are marked to market each day with the change in value
reflected in the unrealized appreciation/depreciation on securities. Upon dis-
position, a realized gain or loss is recognized accordingly.
B-53
<PAGE> 115
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
FORWARD COMMITMENTS
The Fund trades certain securities under the terms of forward commitments,
whereby the settlement occurs at a specific future date. Forward commitments
are privately negotiated transactions between the Fund and dealers. While for-
ward commitments are outstanding, the Fund maintains sufficient collateral of
cash or securities in a segregated account with its custodian. The commitments
are marked to market on a daily basis with changes in value reflected as a com-
ponent of unrealized appreciation on forwards. Forward commitments have a risk
of loss due to nonperformance of counterparties.
The following forward purchase commitments were outstanding as of December
31, 1996:
<TABLE>
<CAPTION>
Par Amount
in Local Unrealized
Currency Appreciation/
(000) Description Coupon Maturity Depreciation
- -------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
AUSTRIA (Republic of)
3,220--ATS Settlement 04/07/97............... 6.250% 05/31/06 $(1,414)
GERMANY (Treuhandanstalt)
580--DEM Settlement 02/21/97............... 6.750 05/13/04 7,181
DENMARK (Kingdom of)
475--DKK Settlement 04/04/97............... 8.000 11/15/01 710
UNITED KINGDOM (Treasury)
170--GBP Settlement 04/07/97............... 7.500 12/07/06 6,572
DUTCH GOVERNMENT
890--NLG Settlement 04/04/97............... 8.500 03/15/01 (752)
UNITED STATES
208--US$ FHLMC, settlement 01/14/97........ 7.500 01/01/99 1,463
US Treasury Notes, settlement
460--US$ 11/14/97.......................... 5.750 08/15/03 (4,855)
-------
Total Forward Purchase Commitments
(Cost $2,316,515)................................. $ 8,905
-------
</TABLE>
B-54
<PAGE> 116
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
- -------------------------------------------------------------------------------
FORWARD CURRENCY CONTRACTS
A forward currency contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. Upon the settlement of
the contract, a realized gain or loss is recognized and is included as a com-
ponent of realized gain/loss on forwards. Risks may arise as a result of the
potential inability of the counterparties to meet the terms of their con-
tracts.
The following forward currency contracts were outstanding as of December 31,
1996:
<TABLE>
<CAPTION>
UNREALIZED
ORIGINAL CURRENT APPRECIATION/
DESCRIPTION VALUE VALUE DEPRECIATION
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
BUYS TO OPEN
Austrian Schilling,
3,320,000 expiring 03/27/97.................. $310,002 $308,171 $ (1,831)
Deutsche Mark,
590,000 expiring 02/21/97.................... 386,378 384,722 (1,656)
Danish Krone,
465,000 expiring 02/21/97.................... 79,315 79,156 (159)
60,000 expiring 02/21/97..................... 10,241 10,213 (28)
Pound Sterling,
140,000 expiring 03/27/97.................... 234,402 239,346 4,944
Japanese Yen,
61,000,000 expiring 02/21/97................. 553,388 530,625 (22,763)
Netherlands Guilder,
875,000 expiring 02/21/97.................... 511,217 508,541 (2,676)
85,000 expiring 02/21/97..................... 49,707 49,401 (306)
SELLS TO OPEN
French Franc,
2,004,000 expiring 04/11/97.................. 400,000 388,556 11,444
Pound Sterling,
333,489 expiring 07/16/97.................... 500,000 568,248 (68,248)
Japanese Yen,
81,120,000 expiring 01/24/97................. 800,000 702,842 97,158
5,000,000 expiring 02/21/97.................. 45,069 43,493 1,576
Netherlands Guilder,
115,000 expiring 02/21/97.................... 67,927 66,837 1,090
--------
$18,545
--------
</TABLE>
B-55
<PAGE> 117
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31, 1996
- --------------------------------------------------------------------------------
6. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a service plan (collectively
the "Plans"). The Plans govern payments for the distribution of the Fund's
shares, ongoing shareholder services and maintenance of shareholder accounts.
Annual fees under the Plans of up to .25% for Class A and 1.00% each for
Class B and Class C shares are accrued daily. Included in these fees for the
year ended December 31, 1996, are payments to VKAC of approximately $88,700.
B-56
<PAGE> 118
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)(a) First Amended and Restated Agreement and Declaration of
Trust(9)
(b) Certificate of Amendment(9)
(c) Amended and Restated Certificate of Designation+
(2) Amended and Restated Bylaws(9)
(4)(a) Specimen Class A Share Certificate+
(b) Specimen Class B Share Certificate+
(c) Specimen Class C Share Certificate+
(5)(a) Investment Advisory Agreement+
(b) Investment Sub-Advisory Agreement+
(6)(a) Distribution and Service Agreement+
(b) Form of Dealer Agreement+
(c) Form of Broker Agreement+
(d) Form of Bank Agreement+
(8)(a) Custodian Agreement+
(b) Transfer Agency and Service Agreement(9)
(9)(a) Data Access Services Agreement+
(b) Fund Accounting Agreement+
(10) Opinion of Counsel+
(11)(a) Consent of Independent Accountants+
(b) Consent of Trustees(8)
(13) Investment Letter(7)
(14)(a) Individual Retirement Account Brochure with Application(4)
(b) 403(b)(7) Custodial Account(2)
(c) ORP 403(b)(7) Custodial Account(2)
(d) Retirement Plans for the Small Business-Forms Package and
Plan Documents(5)
(e) Prototype Profit Sharing/Money Purchase Plan and Trust(1)
(f) Prototype 401(k) Plan and Trust(1)
(g) Salary Reduction Simplified Employee Pension Plan(3)
(h) Simplified Employee Pension Plan Brochure with
Application(6)
(15)(a) Plan of Distribution Pursuant to 12b-1+
(b) Form of Shareholder Assistance Agreement+
(c) Form of Administrative Service Agreement+
(d) Service Plan+
</TABLE>
C-1
<PAGE> 119
(16) Computation Measure for Performance Information+
(17)(a) List of Certain Investment Companies in Response to Item
29(a)+
(b) List of Officers and Directors of Van Kampen American
Capital Distributors, Inc. in Response to Item 29(b)+
(18) Amended Multiple Class Plan+
(19) Power of Attorney+
(27) Financial Data Schedules+
- ---------------
(1) Incorporated herein by reference to Post-Effective Amendment No. 61 to
Registrant's Registration Statement on Form N-1A of Van Kampen American
Capital Growth and Income Fund, File Number 2-21657, filed March 26, 1991.
(2) Incorporated herein by reference to Post-Effective Amendment No. 30 to
Registrant's Registration Statement on Form N-1A of Van Kampen American
Capital Reserve Fund, File Number 2-50870, filed September 24, 1992.
(3) Incorporated herein by reference to Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A of Van Kampen American
Capital World Portfolio Series Trust, File Number 33-37879, filed September
24, 1993.
(4) Incorporated herein by reference to Post-Effective Amendment No. 31 to
Registrant's Registration Statement on Form N-1A of Van Kampen American
Capital Reserve Fund, File Number 2-50870, filed September 24, 1993.
(5) Incorporated herein by reference to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A of Van Kampen American
Capital Government Securities Fund, File Number 2-90482, filed February 25,
1994.
(6) Incorporated herein by reference to Post-Effective Amendment No. 69 to
Registrant's Registration Statement on Form N-1A of Van Kampen American
Capital Growth and Income Fund, File Number 2-21657, filed March 24, 1994.
(7) Incorporated herein by reference to Post-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A, File Number 33-74024,
filed May 6, 1994.
(8) Incorporated herein by reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement on Form N-1A, File Number 33-74024,
filed July 19, 1995.
(9) Incorporated herein by reference to Post-Effective Amendment No. 4 to
Registrant's Registration Statement on Form N-1A, File Number 33-74024,
filed April 22, 1996.
+ Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
AS OF APRIL 4, 1997
<TABLE>
<CAPTION>
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ---------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Shares of Beneficial Interest, $0.01 par value 2,322 1,207 849
</TABLE>
ITEM 27. INDEMNIFICATION.
Reference is made to Article 8, Section 8.4 of the Registrant's Agreement
and Declaration of Trust.
C-2
<PAGE> 120
Article 8; Section 8.4 of the Agreement and Declaration of Trust provides
that each officer and trustee of the Registrant shall be indemnified by the
Registrant against all liabilities incurred in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which the officer or trustee may be or may have been involved by reason of
being or having been an officer or trustee, except that such indemnity shall not
protect any such person against a liability to the Registrant or any shareholder
thereof to which such person would otherwise be subject by reason of (i) not
acting in good faith in the reasonable belief that such person's actions were
not in the best interest of the Trust, (ii) willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office, or (iii) for a criminal proceeding, not having a reasonable
cause to believe that such conduct was unlawful (collectively "Disabling
Conduct"). Absent a court determination that an officer or trustee seeking
indemnification was not liable on the merits or guilty of Disabling Conduct in
the conduct of his or her office, the decision by the Registrant to indemnify
such person must be based upon the reasonable determination of independent
counsel or non-party independent trustees, after review of the facts, that such
officer or trustee is not guilty of Disabling Conduct in the conduct of his or
her office.
The Registrant has purchased insurance on behalf of its officers and
trustees protecting such persons from liability arising from their activities as
officers or trustees of the Registrant. The insurance does not protect or
purport to protect such persons from liability to the Registrant or to its
shareholders to which such 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 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(a) 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
C-3
<PAGE> 121
and offices with Van Kampen American Capital Distributors, Inc. of each of the
directors and officers thereof are set forth in Exhibit 17(b). 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.
Not applicable.
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 trustee
or trustees and to assist in communications with other shareholders as required
by Section 16(c) of the Investment Company Act of 1940.
C-4
<PAGE> 122
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
30th day of April, 1997.
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 30, 1997 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- -----
<C> <S>
Principal Executive Officer:
/s/ DENNIS J. MCDONNELL* President and Trustee
- -----------------------------------------------------
Dennis J. McDonnell
Principal Financial Officer:
/s/ EDWARD C. WOOD III* Vice President and Chief Financial Officer
- -----------------------------------------------------
Edward C. Wood III
Trustees:
/s/ J. MILES BRANAGAN* Trustee
- -----------------------------------------------------
J. Miles Branagan
/s/ LINDA HUTTON HEAGY* Trustee
- -----------------------------------------------------
Linda Hutton Heagy
/s/ ROGER HILSMAN* Trustee
- -----------------------------------------------------
Roger Hilsman
/s/ R. CRAIG KENNEDY* Trustee
- -----------------------------------------------------
R. Craig Kennedy
/s/ JACK E. NELSON* Trustee
- -----------------------------------------------------
Jack E. Nelson
Trustee
- -----------------------------------------------------
Jerome L. Robinson
/s/ PHILLIP B. ROONEY* Trustee
- -----------------------------------------------------
Phillip B. Rooney
/s/ FERNANDO SISTO* Trustee
- -----------------------------------------------------
Fernando Sisto
/s/ WAYNE W. WHALEN* Trustee
- -----------------------------------------------------
Wayne W. Whalen
- ------------
* Signed by Ronald A. Nyberg pursuant to a power of attorney filed herewith.
/s/ RONALD A. NYBERG April 30, 1997
- -----------------------------------------------------
Ronald A. Nyberg
Attorney-in-Fact
</TABLE>
<PAGE> 123
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
INDEX TO EXHIBITS TO AMENDMENT NO. 5 TO FORM N-1A
AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION
ON APRIL 30, 1997
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C> <C>
(1) (c) Amended and Restated Certificate of Designation
(4) (a) Specimen Class A Share Certificate
(b) Specimen Class B Share Certificate
(c) Specimen Class C Share Certificate
(5) (a) Investment Advisory Agreement
(b) Investment Sub-Advisory Agreement
(6) (a) Distribution and Service Agreement
(b) Form of Dealer Agreement
(c) Form of Broker Agreement
(d) Form of Bank Agreement
(8) (a) Custodian Agreement
(9) (a) Data Access Service Agreement
(b) Fund Accounting Agreement
(10) Opinion of Counsel
(11) (a) Consent of Independent Accountants
(15) (a) Plan of Distribution Pursuant to 12b-1
(b) Form of Shareholder Assistance Agreement
(c) Form of Administrative Service Agreement
(d) Service Plan
(16) Computation Measure for Performance Information
(17) (a) List of Certain Investment Companies in response to Item
29(a)
(b) List of Officers and directors Van Kampen American Capital
Distributors, Inc. in Response to Item 29(b)
(18) Amended Multiple Class Plan
(19) Power of Attorney
(27) Financial Data Schedules
</TABLE>
<PAGE> 1
EXHIBIT (1)(c)
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 (4)(a)
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 92113E100
_________________
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]
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL 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)(b)
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 92113E209
_________________
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
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL 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)(c)
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 92113E308
_________________
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]
RONALD A. NYBERG DENNIS J. MCDONNELL
SECRETARY PRESIDENT
KC 002717
- --------------------------------------------------------------------------------
COUNTERSIGNED by ACCESS INVESTOR SERVICES, INC.
P.O. BOX 418256, KANSAS CITY, MO 64141-9256
TRANSFER AGENT
By
----------------------------------------------------
AUTHORIZED OFFICER
- --------------------------------------------------------------------------------
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
VAN KAMPEN AMERICAN CAPITAL GLOBAL 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)(a)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT (hereinso called) made this 31st day of October, 1996, 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. Books and Records
In compliance with the requirements of Rule 31a-3 under the 1940 Act, the
ADVISER hereby agrees that all records which it maintains for the FUND are the
property of the FUND and further agrees to surrender promptly to the FUND any
of such records upon the FUND's request. The ADVISER further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the Act.
5. Duration of Agreement
This Agreement shall become effective on the date hereof, and shall remain in
full force until May 30, 1997 unless sooner terminated as hereinafter provided.
This Agreement 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/ DENNIS J. McDONNELL
--------------------------
Name: Dennis J. McDonnell
--------------------------
Its: President
--------------------------
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
By: /s/ PETER W. HEGEL
--------------------------
Name: Peter W. Hegel
--------------------------
Its: Executive Vice President
--------------------------
5
<PAGE> 1
EXHIBIT (5)(b)
INVESTMENT SUB-ADVISORY AGREEMENT BETWEEN
VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
AND
MORGAN STANLEY ASSET MANAGEMENT INC.
THIS AGREEMENT is made as of this 31st day of October, 1996 by and between
MORGAN STANLEY ASSET MANAGEMENT INC., a Delaware Corporation, located at 1221
Avenue of the Americas, New York, New York 10020, and VAN KAMPEN AMERICAN
CAPITAL ASSET MANAGEMENT, INC. ("VKAC") a Delaware Corporation, located at 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, MORGAN STANLEY ASSET MANAGEMENT INC. ("MSAM") has available a staff of
experienced investment personnel and facilities for providing investment
sub-advisory services to the investment portfolio; and
WHEREAS, MSAM is an investment adviser registered under the Investment Advisers
Act of 1940, as amended and is willing to provide VKAC with investment advisory
services on the terms and conditions hereinafter set forth; and
WHEREAS, VKAC and MSAM (jointly referred to as "the Advisers") desire to enter
into an agreement for MSAM to provide sub-advisory services to the Fund and to
VKAC with respect to the Fund's investments.
NOW THEREFORE it is mutually agreed:
1. INVESTMENT SUB-ADVISORY SERVICES
1.1 Investment Advice
a) Effective on April 1, 1997, and subject to the overall policies, control,
direction and review of the Fund's Trustees, MSAM shall keep under review the
investments of the Fund and continuously furnish to the Fund and to VKAC (1)
investment advice with respect to all or such portion of the Fund's assets as
the Advisers agree to from time to time; (2) economic, statistical and research
information and advice, including advice on the allocation of investments among
countries, relating to all or such portion of the Fund's assets as the Advisers
shall agree to from time to time; (3) recommendations as to the voting of
proxies solicited by or with respect to securities under MSAM's supervision;
and (4) an investment program with respect to securities and recommendations as
to what securities shall be purchased, sold or exchanged, and what portion, if
any, of the 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 various regions as they agree to from time to time.
<PAGE> 2
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, MSAM shall determine the
securities to be purchased and sold by the Fund and shall place orders for the
purchase, sale or exchange of securities for the Fund's accounts with brokers
or dealers and to that end MSAM is authorized by the Trustees to give
instructions to the Custodian and any Sub-Custodian of the Fund as to
deliveries of such securities, transfers of currencies and payments of cash for
the account of the Fund.
d) In performing these services, MSAM 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, MSAM shall have executed and
performed on behalf of and at the expense of the Fund:
i) Purchases, sales, exchanges, conversions, and placement or orders for
execution, and
ii) Reporting of all transactions to VKAC and to other entities as
directed by VKAC or by the Trustees.
f) MSAM 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. MSAM shall also make an
investment officer available to attend such meetings of the Trustees as the
Trustees may reasonably request.
g) During the period commencing with the date of this Agreement and
continuing through March 31, 1997, MSAM shall consult with VKAC and John Govett
& Company Limited ("Govett") regarding the Fund's investment portfolio and
operations in order to provide for the orderly transition of subadvisory
services from Govett to MSAM. During this period, MSAM will not provide VKAC,
Govett or the Fund with investment subadvisory services or make recommendations
with respect to the execution of portfolio trades and will not receive any
investment fees.
1.2 Restriction of MSAM's Powers
(a) MSAM shall not commit the Fund to any extent beyond the amount of the
cash and securities placed by the Fund under the control of MSAM.
(b) In carrying out its duties hereunder MSAM 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
MSAM.
(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 MSAM at any time during normal business hours. Such
records, in relation to each transaction effected by MSAM on behalf of the Fund
shall be maintained by MSAM for a period of seven years from the date of such
transaction.
<PAGE> 3
1.3 Purchase and Sale of Securities
In performing the services described above, MSAM 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, MSAM may, to the extent authorized by law, cause the Fund to pay a
broker or dealer who provides brokerage and research services an amount of
commission for effecting the Fund's investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, in recognition of the brokerage and research services
provided by the broker or dealer. To the extent authorized by law, MSAM 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
MSAM 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 MSAM 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 MSAM a copy
of each registration statement relating to the Fund as filed with the
Securities and Exchange Commission. As requested by MSAM, VKAC shall furnish
such information to MSAM as to holdings, purchases, and sales of the securities
under its management as will reasonably enable MSAM to furnish its investment
advice under this Agreement.
2.2 Compensation to MSAM
The fee for the services provided under this Agreement will be determined as
follows:
(a) An amount for each month (or such other valuation period as may be
mutually agreed upon) equivalent, on an annual basis, to 50% of the
compensation actually received by VKAC pursuant to the investment advisory fee
schedule set forth in the Investment Advisory Agreement between the Fund and
VKAC taking into account any waiver or return to the Fund of any or all of such
advisory fee by VKAC (with any such return of fees to be treated as if not
actually received). The value of the assets of the Fund shall be computed as of
the close of business on the last day of each valuation period for the Fund,
using the average of all the daily determinations of the net value of the
assets of the Fund.
(b) The foregoing fee shall be paid in cash by VKAC to MSAM within five (5)
business days after the last day of the valuation period.
3. MISCELLANEOUS
3.1 Activities of MSAM
The services of MSAM as Sub-Adviser to VKAC under this Agreement are not to
be deemed exclusive, MSAM and its affiliates being free to render services to
others. It is understood that shareholders, trustees, officers and employees of
MSAM may become interested in the Fund or VKAC as a shareholder, trustee,
officer, partner or otherwise.
<PAGE> 4
3.2 Services to Other Clients
VKAC acknowledges that MSAM 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 MSAM 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 MSAM acts in good faith, and provided,
further, that it is MSAM 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. MSAM
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, MSAM shall use its best professional
judgment to recommend actions which will provide favorable results for the
Fund. MSAM shall not be liable to the Fund or to any shareholder of the Fund
to any greater degree than VKAC.
3.4 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 May 31, 1998, 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 MSAM 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 MSAM. This
Agreement shall automatically terminate in the event of the termination of the
investment advisory agreement between VKAC and the Fund.
c) This Agreement shall terminate in the event of its assignment. The term
"assignment" for this purpose shall have the same meaning set forth in Section
2(a)(4) of the 1940 Act.
d) Termination shall be without prejudice to the completion of any
transactions which MSAM shall have committed to on behalf of the Fund prior to
the time of termination. MSAM shall not effect and the Fund shall not be
entitled to instruct MSAM 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:
<PAGE> 5
i) If VKAC or MSAM 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) MSAM 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 MSAM's possession, power or control and which are valid and in
force at the date of termination.
3.5 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 MSAM, to:
Morgan Stanley Asset Management, Inc.
1221 Avenue of the Americas
New York, New York 10020
Atten: Warren J. Olsen
with a copy to:
Morgan Stanley Asset Management, Inc.
1221 Avenue of the Americas
New York, New York 10020
Atten: Harold J. Schaaff, Esq.
If to VKAC, to:
Van Kampen American Capital Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Atten: Dennis J. McDonnell
with a copy to:
Van Kampen American Capital Asset Management, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Atten: Ronald A. Nyberg, 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.
<PAGE> 6
3.6 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 New York, without regard to the conflicts of laws
principles thereof.
3.7 Miscellaneous Provisions
The execution of this Agreement has been authorized by the Fund's Trustees
and by the shareholders. 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.
VAN KAMPEN AMERICAN CAPITAL MORGAN STANLEY
ASSET MANAGEMENT, INC. ASSET MANAGEMENT INC.
By: /s/ DENNIS J. McDONNELL By: /s/ BARTON M. BIGGS
-------------------------- -----------------------
Name: Dennis J. McDonnell Name: Barton M. Biggs
------------------------ ---------------------
Its: President Its: Manging Director
------------------------- ----------------------
<PAGE> 1
EXHIBIT (6)(a)
DISTRIBUTION AND SERVICE AGREEMENT
THIS DISTRIBUTION AND SERVICE AGREEMENT dated as of October 31, 1996 (the
"Agreement") by and between VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS
FUND, a Delaware business trust (the "Fund"), and VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
1. Appointment of Distributor. The Fund appoints the Distributor as a
principal underwriter and exclusive distributor of each class of its shares of
beneficial interest (the "Shares") offered for sale from time to time pursuant
to the then current prospectus of the Fund, subject to different combinations
of front-end sales charges, distribution fees, service fees and contingent
deferred sales charges. Classes of shares, if any, subject to a front-end
sales charge and a distribution and/or service fee are referred to herein as
"FESC Classes" and the Shares of such classes are referred to herein as "FESC
Shares." Classes of shares, if any, subject to a contingent-deferred sales
charge and a distribution and/or a service fee are referred to herein as "CDSC
Classes" and Shares of such classes are referred to herein as "CDSC Shares."
Classes of shares, if any, subject to a front-end sales charge, a
contingent-deferred sales charge and a distribution and/or service fee are
referred to herein as "Combination Classes" and Shares of such class are
referred to herein as "Combination Shares." The Fund reserves the right to
refuse at any time or times to sell Shares hereunder for any reason deemed
adequate by the Board of Trustees of the Fund.
The Distributor will use its best efforts to sell, through its
organization and through other dealers and agents, the Shares which the
Distributor has the right to purchase under Section 2 hereof, but the
Distributor does not undertake to sell any specific number of Shares.
The Distributor agrees that it will not take any long or short positions
in the Shares, except for long positions in those Shares purchased by the
Distributor in accordance with any systematic sales plan described in the then
current Prospectus of the Fund and except as permitted by Section 2 hereof, and
that so far as it can control the situation, it will prevent any of its
trustees, officers or shareholders from taking any long or short positions in
the Shares, except for legitimate investment purposes.
2. Sale of Shares to Distributor. The Fund hereby grants to the
Distributor the exclusive right, except as herein otherwise provided, to
purchase Shares directly from the Fund upon the terms herein set forth. Such
exclusive right hereby granted shall not apply to Shares issued or transferred
or sold at net asset value: (a) in connection with the merger or consolidation
of the Fund with any other investment company or the acquisition by the Fund of
all or substantially all of the assets of or the outstanding Shares of any
investment company; (b) in connection with a pro rata distribution directly to
the holders of Fund Shares in the nature of a stock dividend or stock split or
in connection with any other recapitalization approved by the Board of
Trustees; (c) upon the exercise of purchase or subscription rights granted to
the holders of Shares on a pro rata basis; (d) in connection with the automatic
reinvestment of dividends and distributions from the Fund; or (e) in connection
with the issue and sale of Shares to trustees, officers and employees of the
Fund; to directors, officers and employees of the investment adviser of the
Fund or any principal underwriter (including the Distributor) of the Fund; to
retirees of the Distributor that purchased shares of any mutual fund
distributed by the Distributor prior to retirement; to directors, officers and
employees of Van Kampen American Capital, Inc. (formerly The Van Kampen Merritt
Companies, Inc.) (the parent of the Distributor), VK/AC Holding, Inc. (formerly
VKM Holdings, Inc.)(the parent of The Van Kampen Merritt Companies, Inc.) and
to the subsidiaries of VK/AC Holding, Inc.; and to any trust, pension,
profit-sharing or other benefit plan for any of the aforesaid persons as
permitted by Rule 22d-1 under the Investment Company Act of 1940 (the "1940
Act").
The Distributor shall have the right to buy from the Fund the Shares
needed, but not more than the Shares needed (except for reasonable allowances
for clerical errors, delays and errors of transmission and cancellation of
orders) to fill unconditional orders for Shares received by the Distributor
1
<PAGE> 2
from dealers, agents and investors during each period when particular net asset
values and public offering prices are in effect as provided in Section 3
hereof; and the price which the Distributor shall pay for the Shares so
purchased shall be the respective net asset value used in determining the
public offering price on which such orders were based. The Distributor shall
notify the Fund at the end of each such period, or as soon thereafter on that
business day as the orders received in such period have been compiled, of the
number of Shares of each class that the Distributor elects to purchase
hereunder.
3. Public Offering Price. The public offering price per Share shall be
determined in accordance with the then current Prospectus of the Fund. In no
event shall the public offering price exceed the net asset value per Share,
plus, with respect to the FESC Shares, a front-end sales charge not in excess
of the applicable maximum sales charge permitted under the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., as in effect
from time to time. The net asset value per share for each class of Shares,
respectively, shall be determined in the manner provided in the Declaration of
Trust and By-Laws of the Trust as then amended, the Certificate of Designation
with respect to the Fund, as amended, and in accordance with the then current
Prospectus of the Fund consistent with the terms and conditions of the
exemptive order with respect to the Fund (Release No. IC-19600) issued by the
Securities and Exchange Commission on July 28, 1993, as it may be amended from
time to time or succeeded by other exemptive orders or rules promulgated by the
Securities and Exchange Commission under the 1940 Act. The Fund will cause
immediate notice to be given to the Distributor of each change in net asset
value as soon as it is determined. Discounts to dealers purchasing FESC Shares
from the Distributor for resale and to brokers and other eligible agents making
sales of FESC Shares to investors and compensation payable from the Distributor
to dealers, brokers and other eligible agents making sales of CDSC Shares and
Combination Shares shall be set forth in the selling agreements between the
Distributor and such dealers or agents, respectively, as from time to time
amended, and, if such discounts and compensation are described in the then
current Prospectus for the Fund, shall be as so set forth.
4. Compliance with NASD Rules, SEC Orders, etc. In selling Fund Shares,
the Distributor will in all respects duly comply with all state and federal
laws relating to the sale of such securities and with all applicable rules and
regulations of all regulatory bodies, including without limitation the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., and all
applicable rules and regulations of the Securities and Exchange Commission
under the 1940 Act, and will indemnify and save the Fund harmless from any
damage or expense on account of any unlawful act by the Distributor or its
agents or employees. The Distributor is not, however, to be responsible for
the acts of other dealers or agents, except to the extent that they shall be
acting for the Distributor or under its direction or authority. None of the
Distributor, any dealer, any agent or any other person is authorized by the
Fund to give any information or to make any representations, other than those
contained in the Registration Statement or Prospectus heretofore or hereafter
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "1933 Act") (as any such Registration Statement and
Prospectus may have been or may be amended from time to time), covering the
Shares, and in any supplemental information to any such Prospectus approved by
the Fund in connection with the offer or sale of Shares. None of the
Distributor, any dealer, any broker or any other person is authorized to act as
agent for the Fund in connection with the offering or sale of Shares to the
public or otherwise. All such sales shall be made by the Distributor as
principal for its own account.
In selling Shares to investors, the Distributor will adopt and comply with
certain standards, as set forth in Exhibit III attached hereto as to when each
respective class of Shares may appropriately be sold to particular investors.
The Distributor will require every broker, dealer and other eligible agent
participating in the offering of the Shares to agree to adopt and comply with
such standards as a condition precedent to their participation in the offering.
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<PAGE> 3
5. Expenses.
(a) The Fund will pay or cause to be paid:
(i) all expenses in connection with the registration
of Shares under the federal securities laws, and the Fund will
exercise its best efforts to obtain said registration and
qualification;
(ii) all expenses in connection with the printing of
any notices of shareholders' meetings, proxy and proxy
statements and enclosures therewith, as well as any other
notice or communication sent to shareholders in connection
with any meeting of the shareholders or otherwise, any annual,
semiannual or other reports or communications sent to the
shareholders, and the expenses of sending prospectuses
relating to the Shares to existing shareholders;
(iii) all expenses of any federal or state
original-issue tax or transfer tax payable upon the issuance,
transfer or delivery of Shares from the Fund to the
Distributor; and
(iv) the cost of preparing and issuing any Share
certificates which may be issued to represent Shares.
(b) The Distributor will also permit its officers and employees to serve
without compensation as trustees and officers of the Fund if duly elected to
such positions.
(c) The Fund shall reimburse the Distributor for out-of-pocket costs and
expenses actually incurred by it in connection with distribution of each class
of Shares respectively in accordance with the terms of a plan (the "12b-1
Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act as such
12b-1 Plan may be in effect from time to time; provided, however, that no
payments shall be due or paid to the Distributor hereunder with respect to a
class of Shares unless and until this Agreement shall have been approved for
each such class by a majority of the Board of Trustees of the Fund and by a
majority of the "Disinterested Trustees" (as such term is defined in such 12b-1
Plan) by vote cast in person at a meeting called for the purpose of voting on
this Agreement. A copy of such 12b-1 Plan as in effect on the date of this
Agreement is attached as Exhibit I hereto. The Fund reserves the right to
terminate such 12b-1 Plan with respect to a class of Shares at any time, as
specified in the Plan. The persons authorized to direct the payment of funds
pursuant to this Agreement and the 12b-1 Plan shall provide to the Fund's Board
of Trustees, and the Trustees shall review, at least quarterly, a written
report with respect to each of the classes of Shares of the amounts so paid and
the purposes for which such expenditures were made for each such class of
Shares.
(d) The Fund shall compensate the Distributor for providing services to,
and the maintenance of, shareholder accounts in the Fund (including prepaying
service fees to eligible brokers, dealers and financial intermediaries and
expenses incurred in connection therewith) and the Distributor may pay as agent
for and on behalf of the Fund a service fee with respect to each class of
Shares to brokers, dealers and financial intermediaries for the provision of
shareholder services and the maintenance of shareholder accounts in the Fund in
the amount with respect to each class of Shares set forth from time to time in
the Fund's prospectus. The Fund shall compensate the Distributor for such
expenses in accordance with the terms of a service plan (the "Service Plan"),
as such Service Plan may be in effect from time to time; provided, however,
that no service fee payments shall be due or paid to the Distributor hereunder
with respect to a class of Shares unless and until this Agreement shall have
been approved for each such class by a majority of the Board of Trustees of the
Fund and by a majority of the Disinterested Trustees by vote cast in person at
a meeting called for the purpose of voting on this Agreement. A copy of such
Service Plan as in effect on the date of this Agreement is attached as Exhibit
II hereto. The Fund reserves the right to terminate such Service Plan with
respect to a class of Shares at any time, as specified in the Plan. The
persons authorized to direct the payment of funds pursuant to this Agreement
and the Service Plan shall provide to the Fund's Board of Trustees, and the
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<PAGE> 4
Trustees shall review, at least quarterly, a written report with respect to
each of the classes of Shares of the amounts paid as service fees for each such
class of Shares.
6. Redemption of Shares. In connection with the Fund's redemption of its
Shares, the Fund hereby authorizes the Distributor to repurchase, upon the
terms and conditions hereinafter set forth, as the Fund's agent and for the
Fund's account, such Shares as may be offered for sale to the Fund from time to
time by holders of such Shares or their agents.
(a) Subject to and in conformity with all applicable federal and state
legislation, any applicable rules of the National Association of Securities
Dealers, Inc., and any applicable rules and regulations of the Securities and
Exchange Commission under the 1940 Act, the Distributor may accept offers of
holders of Shares to resell such Shares to the Fund on such terms and
conditions and at such prices as described and provided for in the then current
Prospectus of the Fund.
(b) The Distributor agrees to notify the Fund at such times as the Fund
may specify of the number of each class of Shares, respectively, repurchased
for the Fund's account and the time or times of such repurchases, and the Fund
shall notify the Distributor of the prices and, in the case of a class of CDSC
Shares or Combination Shares, of the deferred sales charge as described below,
if any, applicable to repurchases of Shares of such class.
(c) The Fund shall have the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by
telegraph or by written instrument from any of the Fund's officers. In the
event that the Distributor's authorization is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this Section 6 shall not be revived except by vote of
the Board of Trustees of the Fund.
(d) The Distributor agrees that all repurchases of Shares made by the
Distributor shall be made only as agent for the Fund's account and pursuant to
the terms and conditions herein set forth.
(e) The Fund agrees to authorize and direct its Custodian to pay, for the
Fund's account, the repurchase price (together with any applicable contingent
deferred sales charge) of any Shares so repurchased for the Fund against the
authorized transfer of book shares from an open account and against delivery of
any other documentation required by the Board of Trustees of the Fund or, in
the case of certificated Shares, against delivery of the certificates
representing such Shares in proper form for transfer to the Fund.
(f) The Distributor shall receive no commissions or other compensation in
respect of any repurchases of FESC Shares for the Fund under the foregoing
authorization and appointment as agent. With respect to any repurchase of CDSC
Shares or Combination Shares, the Distributor shall receive the deferred sales
charge, if any, applicable to the respective class of Shares that have been
held for less than a specified period of time with respect to such class as set
forth from time to time in the Fund's Prospectus. The Distributor shall
receive no other commission or other compensation in respect of any repurchases
of CDSC Shares or Combination Shares for the Fund under the foregoing
authorization and appointment as agent.
(g) If any FESC Shares sold to the Distributor under the terms of this
Agreement are redeemed or repurchased by the Fund or by the Distributor as
agent or are tendered for redemption within seven business days after the date
of the Distributor's confirmation of the original purchase by the Distributor,
the Distributor shall forfeit the amount above the net asset value received by
it in respect of such Shares, provided that the portion, if any, of such amount
re-allowed by the Distributor to dealers or agents shall be repayable to the
Fund only to the extent recovered by the Distributor from the dealer or agent
concerned. The Distributor shall include in agreements with such dealers and
agents a corresponding provision for the forfeiture by them of their concession
with respect to FESC Shares purchased by them or their principals and redeemed
or repurchased by the Fund or by the Distributor as agent within seven business
days after the date of the Distributor's confirmation of such initial
purchases.
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<PAGE> 5
7. Indemnification. The Fund agrees to indemnify and hold harmless the
Distributor and each of its trustees and officers and each person, if any, who
controls the Distributor within the meaning of Section 15 of the 1933 Act
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, claim, damage,
or expense and reasonable counsel fees incurred in connection therewith),
arising by reason of any person acquiring any Shares, based upon the ground
that the registration statement, Prospectus, shareholder reports or other
information filed or made public by the Fund (as from time to time amended)
included an untrue statement of a material fact or omitted to state a material
fact required to be stated or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading under the 1933 Act or any other statute or the common law. However,
the Fund does not agree to indemnify the Distributor or hold it harmless to the
extent that the statement or omission was made in reliance upon, and in
conformity with, information furnished to the Fund by or on behalf of the
Distributor. In no case (i) is the indemnity of the Fund in favor of the
Distributor or any person indemnified to be deemed to protect the Distributor
or any person against any liability to the Fund or its securityholders to which
the Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Fund to be liable under its indemnity agreement
contained in this Section with respect to any claim made against the
Distributor or any person indemnified unless the Distributor or any such person
shall have notified the Fund in writing of the claim within a reasonable time
after the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Distributor or any such
person (or after the Distributor or the person shall have received notice of
service on any designated agent). However, failure to notify the Fund of any
claim shall not relieve the Fund from any liability which it may have to the
Distributor or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. The Fund shall
be entitled to participate at its own expense in the defense, or, if it so
elects, to assume the defense, of any suit brought to enforce any claims, but
if the Fund elects to assume the defense, the defense shall be conducted by
counsel chosen by it and satisfactory to the Distributor or person or persons,
defendant or defendants in the suit. In the event the Fund elects to assume
the defense of any suit and retain counsel, the Distributor, officers or
trustees or controlling person or persons, defendant or defendants in the suit,
shall bear the fees and expenses of any additional counsel retained by them.
If the Fund does not elect to assume the defense of any suit, it will reimburse
the Distributor, officers or trustees or controlling person or persons,
defendant or defendants in the suit for the reasonable fees and expenses of any
counsel retained by them. The Fund agrees to notify the Distributor promptly
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of the
Shares.
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its trustees and officers and each person, if
any, who controls the Fund within the meaning of Section 15 of the 1933 Act
against any loss, liability, damage, claim or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, damage, claim
or expense and reasonable counsel fees incurred in connection therewith)
arising by reason of any person acquiring any Shares, based upon the 1933 Act
or any other statute or common law, alleging any wrongful act of the
Distributor or any of its employees or alleging that the registration
statement, Prospectus, shareholder reports or other information filed or made
public by the Fund (as from time to time amended) included an untrue statement
of a material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, insofar as the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Distributor. In no
case (i) is the indemnity of the Distributor in favor of the Fund or any person
indemnified to be deemed to protect the Fund or any such person against any
liability to which the Fund or such person would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligation and duties
under this Amended Agreement, or (ii) is the Distributor to be liable under its
indemnity agreement contained in this paragraph with respect to any claim made
against the Fund or any person indemnified unless the Fund or person, as the
case may be, shall have notified the Distributor in writing of the claim within
a reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the Fund or
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<PAGE> 6
person (or after the Fund or such person shall have received notice of service
on any designated agent). However, failure to notify the Distributor of any
claim shall not relieve the Distributor from any liability which it may have to
the Fund or any person against whom the action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. In the case of
any notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense, or, if it so elects, to assume the defense, of any
suit brought to enforce the claim, but if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Fund, to its officers and trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Distributor elects to assume the defense of any suit and retain counsel, the
Fund or controlling persons, defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them. If the Distributor does
not elect to assume the defense of any suit, it will reimburse the Fund,
officers and trustees or controlling person or persons, defendant or defendants
in the suit, for the reasonable fees and expenses of any counsel retained by
them. The Distributor agrees to notify the Fund promptly of the commencement
of any litigation or proceedings against it in connection with the issue and
sale of any of the Shares.
8. Continuation, Amendment or Termination of This Agreement. This
Agreement shall become effective on the Effective Date and thereafter shall
continue in full force and effect year to year with respect to each class of
Shares so long as such continuance is approved at least annually (i) by the
Board of Trustees of the Fund or by a vote of a majority of the outstanding
voting securities of the respective class of Shares of the Fund, and (ii) by
vote of a majority of the Trustees who are not parties to this Agreement or
interested persons in any such party (the "Independent Trustee") cast in person
at a meeting called for the purpose of voting on such approval, provided,
however, that (a) this Agreement may at any time be terminated with respect to
either class of Shares of the Fund without the payment of any penalty either by
vote of a majority of the Disinterested Trustees, or by vote of a majority of
the outstanding voting securities of the respective class of Shares of the
Fund, on written notice to the Distributor; (b) this Agreement shall
immediately terminate in the event of its assignment; and (c) this Agreement
may be terminated by the Distributor on ninety (90) days' written notice to the
Fund. Upon termination of this Agreement with respect to either class of
Shares of the Fund, the obligations of the parties hereunder shall cease and
terminate with respect to such class of Shares as of the date of such
termination, except for any obligation to respond for a breach of this
Agreement committed prior to such termination.
This Agreement may be amended with respect to either class of Shares at
any time by mutual consent of the parties, provided that such consent on the
part of the Fund shall have been approved (i) by the Board of Trustees of the
Fund, or by a vote of the majority of the outstanding voting securities of the
respective class of Shares of the Fund, and (ii) by vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such amendment.
For the purpose of this section, the terms "vote of a majority of the
outstanding voting securities", "interested persons" and "assignment" shall
have the meanings defined in the 1940 Act, as amended.
9. Limited Liability of Shareholder. Notwithstanding anything to the
contrary contained in this Agreement, you acknowledge and agree that, as
provided by Section 8.1 of the Agreement and Declaration of Trust of the Trust,
this Agreement is executed by the Trustees of the Trust and/or Officers of the
Fund by them not individually but as such Trustees and/or Officers, and the
obligations of the Fund hereunder are not binding upon any of the Trustees,
Officers or Shareholders individually, but bind only the trust estate.
10. Notice. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office
of such party or at such other address as such party shall have designated in
writing.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE GOVERNED BY, THE
LAW OF THE STATE OF ILLINOIS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF
LAWS.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
VAN KAMPEN AMERICAN CAPITAL
GLOBAL MANAGED ASSETS FUND
By: /s/ DENNIS J. McDONNELL
-----------------------------
Name: Dennis J. McDonnell
Title: President
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
By: /s/ RONALD A. NYBERG
-------------------------------
Name: Ronald A. Nyberg
Title: Executive Vice President
7
<PAGE> 1
EXHIBIT (6)(b)
DEALER AGREEMENT
WITH VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
REGARDING VAN KAMPEN AMERICAN CAPITAL
OPEN-END AND CLOSED-END INVESTMENT COMPANIES
Ladies and Gentlemen:
As dealer for our own account, we offer to sell to you shares of any of
the Van Kampen American Capital open-end investment companies (the "Open-End
Funds" or, individually, an "Open-End Fund") and Van Kampen American Capital
closed-end investment companies (the "Closed-End Funds" or, individually, a
"Closed-End Fund") distributed by Van Kampen American Capital Distributors,
Inc. ("VKAC") pursuant to the terms and conditions contained herein.
Collectively, the Open-End Funds and Closed-End Funds sometimes are referred to
herein as the "Funds" or, individually, as a "Fund".
VKAC acts as the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) for each Fund with respect to its
offering of one or more classes of shares as described in each Fund's
Prospectus. Pursuant to this Agreement, VKAC offers to sell to you shares of
each Open-End Fund and each Closed-End Fund prior to the Effective Date (as
defined herein) of each Fund's Registration Statement (as defined herein) (the
"Initial Offering Period") and after the Effective Date of each Fund's
Registration Statement (the "Continuous Offering Period") (if any) as described
in each respective Fund's Prospectus.
As used herein unless otherwise indicated, the term "Prospectus" means the
final prospectus and Statement of Additional Information included in the
registration statement for the fund on the effective date and as from time to
time thereafter amended or supplemented. As used herein unless otherwise
indicated, the term "Preliminary Prospectus" means any preliminary prospectus
and any preliminary Statement of Additional Information included at any time as
a part of the registration statement for any Fund prior to the effective date
and which is authorized by VKAC for use in connection with the offering of
shares.
In consideration of the mutual obligations contained herein, the
sufficiency of which is hereby acknowledged by you, the terms of the Agreement
are as follows:
GENERAL TERMS AND CONDITIONS
1. Your acceptance of this Agreement constitutes a representation that
you are a broker-dealer registered with the Securities and Exchange Commission
(the "SEC") and a member in good standing of the National Association of
Securities Dealers, Inc. (the "NASD") or, in the alternative, that you are a
foreign dealer or bank, not required to be registered as a broker-dealer with
the SEC and not required or eligible for membership in the NASD. If you are
such an NASD member, you agree that in making sales of shares of the one or
more classes of shares of each Fund you will comply with all applicable rules
of the NASD, including without limitation rules pertaining to the opening,
approval, supervision and monitoring of customer accounts, the NASD's
Interpretation with Respect to Free-Riding and Withholding and Sections 8, 24
and 36 of Article III of the NASD's Rules of Fair Practice. If you are such an
unregistered foreign dealer or bank, you agree not to offer or sell, or to
agree to offer or sell, directly or indirectly, except through VKAC, any shares
to any party to whom such shares may not be sold unless you are so registered
and a member of the NASD, and in making sales of such shares you agree to
comply with the NASD's Interpretation with Respect to Free-Riding and
Withholding and Sections 8, 24 and 36 of Article III of the NASD's Rules of
Fair Practice as though you were a member in
1
<PAGE> 2
good standing of the NASD and to comply with Section 25 of such Article III as
it applies to a nonmember broker or dealer in a foreign country. You and we
agree to abide by all other Rules and Regulations of the NASD, including
Section 26 of its Rules of Fair Practice, and all applicable state and Federal
laws, rules and regulations. Your acceptance also constitutes a representation
that you have been duly authorized by proper corporate or partnership action to
enter into this Agreement and to perform your obligations hereunder. You will
not accept any orders from any broker, dealer or financial institution who is
purchasing from you with a view toward distribution unless you have obtained
such person's or entity's written consent to be bound by the terms of this
Agreement.
2. In all sales of shares of the Funds to the public you shall act as
dealer for your own account, and you shall have no authority in any transaction
to act as agent for the Fund or for VKAC.
3. Each Fund has filed with the SEC and the securities commissions of one
or more states a Registration Statement (the "Registration Statement") on the
SEC Form applicable to the respective Fund. The date on which the Registration
Statement is declared effective by the SEC is referred to herein as the
"Effective Date". Prior to the Effective Date of the Registration Statement
with respect to a particular Fund, you expressly acknowledge and understand
that with respect to such Fund:
(a) Shares of such Fund may not be sold, nor may offers to buy be
accepted, (i) in any state prior to the Effective Date of the Registration
Statement with respect thereto or (ii) in any state in which such offer or sale
would be unlawful prior to registration or qualification under the securities
laws of such state.
(b) The Fund's Preliminary Prospectus, together with any sales
material distributed for use in connection with the offering of shares of such
Fund, does not constitute an offer to sell or the solicitation of an offer to
buy shares of such Fund and is subject to completion and modification by the
Prospectus. You agree that you will distribute to the public only (a) the
Preliminary Prospectus, the Prospectus and any amendment or supplement thereto
and (b) sales literature or other documents expressly authorized for such
distribution by VKAC.
(c) In the event that you transmit indications of interest to VKAC for
accumulation prior to the Effective Date, you will be responsible for
confirming such indications of interest with your customers following the
Effective Date. Indications of interest with respect to shares of a class of a
Fund's shares transmitted to VKAC prior to the Effective Date will be
conditioned upon the occurrence of the Effective Date and the registration or
qualification of the respective class of shares in the respective state.
(d) Indications of interest with respect to shares of a class of a
Fund's shares which are not canceled by you prior to the latter of the Effective
Date and the registration or qualification of the respective class of the Fund's
shares in the respective state, and accepted by VKAC will be deemed by VKAC to
be orders for shares of such class of shares of the Fund.
(e) All indications of interest and orders transmitted to VKAC are
subject to the terms and conditions of the Prospectus and this Agreement.
4. After the Effective Date, you will not offer shares of a class of the
Fund's shares for sale in any state where they are not qualified for sale under
the "blue sky" laws and regulations of such state or where you are not
qualified to act as a dealer, except for states in which they are exempt from
qualification.
5. In the event that you offer shares of the Fund for sale outside the
United States, you agree to comply with the applicable laws, rules and
regulations of the foreign government having jurisdiction over such sales,
including any regulations of the United States military authorities applicable
to solicitations to military personnel.
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<PAGE> 3
6. Upon application to VKAC, VKAC will inform you as to the jurisdictions
in which VKAC believes shares of a Fund have been qualified for sale under the
respective securities or "blue sky" laws of such jurisdictions. VKAC
understands and agrees that qualification of any shares of a Fund for sale in
such jurisdictions shall be solely VKAC's responsibility and that you assume no
responsibility or obligation with respect to such eligibility. You understand
and agree that your compliance with the requirements of the securities or "blue
sky" laws in each jurisdiction with respect to your right to sell the shares in
such jurisdiction shall be solely your responsibility.
7. No person is authorized to make any representations concerning any
class of shares of a Fund except those contained in the Fund's current
Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares
from us you shall rely solely on the representations contained in such
Prospectus. VKAC will furnish additional copies of a Fund's current Prospectus
and sales literature issued by VKAC in reasonable quantities upon request.
8. Orders received from you will be accepted by VKAC only at the public
offering price applicable to each order as specified in the then-current Fund
Prospectus. The minimum dollar purchase of any shares of each Fund by any
person shall be the applicable minimum dollar amount described in the
then-current Fund Prospectus for that class of shares, and no order for less
than such amount will be accepted hereunder. The procedures relating to the
handling of orders shall be subject to instructions that VKAC shall communicate
from time to time to you. All orders are subject to acceptance or rejection by
VKAC in its sole discretion.
9. Payment for Fund shares shall be made on or before the settlement date
specified in the VKAC confirmation at the office of VKAC's clearing agent, or
wire to the order of the Fund which reserves VKAC's right to delay issuance or
transfer of shares until such check has cleared. If such payment is not
received by VKAC, VKAC reserves the right, without notice, forthwith either to
cancel the sale or, at its option, to sell the shares ordered back to the Fund,
and in either case, VKAC may hold you responsible for any loss suffered by the
Fund. You agree that in transmitting investors' funds, you will comply with
Rule 15c2-4 under the Securities Exchange Act of 1934, as amended.
10. You shall not withhold placing orders with VKAC from your customers
so as to profit yourself as a result of such withholding; e.g., by a change in
the net asset value from that used in determining the public offering price to
your customers.
11. VKAC will not accept from you any conditioned orders for shares,
except at a definite, specified price.
12. You represent that you are familiar with Release No. 4968 under the
Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, as it relates to the distribution of
Preliminary Prospectuses (and not Statements of Additional Information) and
Prospectuses (and not Statements of Additional Information) for each Fund and
agree that you will comply therewith. You agree that if an investor or
potential investor places a request with you to receive a Statement of
Additional Information, you will (i) provide such person with a Statement of
Additional Information without charge and notify the Fund that you have done
so, (ii) notify the Fund of the request so that the Fund can fulfill the
request or (iii) tell such person to request a Statement of Additional
Information by telephoning the Fund at the number set forth on the cover of the
current Prospectus or Preliminary Prospectus. You also agree to keep an
accurate record of your distribution (including dates, number of copies and
persons to whom sent) of copies of any Preliminary Prospectus (and any
Statement of Additional Information) and/or Prospectus (and any Statement of
Additional Information) for each Fund (or any amendment or supplement to
either) and, promptly upon request by VKAC, to bring all subsequent changes to
such Preliminary Prospectus or Prospectus to the attention of anyone to whom
such material shall have been distributed. You further agree to furnish to
persons who receive a confirmation of sale of shares of any Fund a copy of the
Prospectus (and not the Statement of Additional Information) for such Fund
filed pursuant to Rule 497 under the Securities Act of 1933, as amended.
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<PAGE> 4
13. Unless otherwise indicated in a Fund's Prospectus, stock certificates
for shares of Funds sold to you shall be issued only if specifically requested.
14. VKAC will have no liability to you, except for lack of good faith and
for obligations expressly assumed by VKAC in this Agreement.
15. All communications to VKAC shall be sent to One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, Attention: Mutual Fund Department. Any
notice to you shall be duly given if sent to you at the address specified by
you below or such other address as you may designate to VKAC in writing.
16. Neither this Agreement nor the performance of the services hereunder
shall be considered to create a joint venture or partnership between VKAC and
you.
17. This Agreement shall be construed in accordance with the laws of the
State of Illinois without reference to the choice-of-law principles thereof.
18. The Fund reserves the right in its discretion and VKAC reserves the
right in its discretion, without notice, to suspend or withdraw the offering of
any shares of a Fund entirely. VKAC reserves the right, without notice, to
amend, modify or cancel the Agreement. The Agreement may not be assigned by
either party without prior written consent of the other party.
19. This Agreement may be terminated at any time by either party.
TERMS AND CONDITIONS APPLICABLE ONLY TO OPEN-END FUNDS
20. Each of the Open-End Fund's is subject to an alternative distribution
plan (the "Alternative Distribution Plan") as described in such Fund's
then-current Prospectus pursuant to which the Open-End Fund may sell multiple
classes of its shares with varying combinations of front-end service charges
(each a "FESC"), distributions fees, service fees, contingent deferred sales
charges (each a "CDSC"), exchange features, conversion rights, voting rights,
expenses allocations and investment requirements. As used herein, classes of
shares of a Fund subject to a FESC will be referred to as FESC Shares, and
classes of shares of a Fund subject to a CDSC will be referred to as CDSC
Shares.
21.(a) With respect to any shares of a class of FESC Shares of an
Open-End Fund, the public offering price for such shares shall be the net asset
value per share plus a FESC, expressed as a percentage of the applicable public
offering price, as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. The dealer discount applicable
to any sale of shares of a class of FESC Shares of an Open-End Fund shall be a
percentage of the applicable public offering price for such shares as provided
for in the then-current Prospectus of such Open-End Fund or, if not so
provided, as provided to you from time to time in writing by VKAC.
(b) With respect to any shares of a class of CDSC Shares of an Open-End
Fund, the public offering price for such shares shall be the net asset value
per share as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. The dealer sales compensation
payable by VKAC applicable to any sale of shares of a class of CDSC Shares of
an Open-End Fund shall be the percentage of the applicable public offering
price for such shares as provided for in the then-current Prospectus of such
Open-End Fund or, if not so provided, as provided to you from time to time in
writing by VKAC.
22. Should you wish to participate in the Distribution Plan with respect
to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule
12b-1 Plan") under the Investment Company Act of 1940, as amended, or the
Service Plan with respect to a class of shares, it is understood that you must
be approved by the Board of Directors of such Open-End Fund and execute a
Distribution Assistance Agreement.
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23. With respect to the Open-End Funds, your acceptance of this Agreement
constitutes a representation that you will adopt policies and procedures to
comply with Rule 18f-3 under the Investment Company Act of 1940, with respect
to when you may appropriately sell the various classes of shares of the
Open-End Funds to investors and that you will sell such shares only in
accordance therewith.
24.(a) You agree to purchase shares of an Open-End Fund only from VKAC or
from your customers. If you purchase shares of an Open-End Fund from VKAC, you
agree that all such purchases shall be made only: (i) to cover orders already
received by you from your customers or (ii) for your own bona fide investment.
If you purchase shares of an Open-End Fund from your customers, you agree to
pay such customers not less than the applicable repurchase price for such
shares as established by the then-current Prospectus for such Open-End Fund.
VKAC in turn agrees that it will not purchase any shares from an Open-End Fund
except for the purpose of covering purchase orders that it has already
received.
(b) With respect to shares of a class of CDSC Shares of an Open-End Fund
purchased from your customers, you additionally agree to resell such shares
only to VKAC as agent for the Fund at the repurchase price for such shares as
established by the then-current Prospectus of such Open-End Fund. You
acknowledge and understand that shares of a class of CDSC Shares of an Open-End
Fund may be subject to a CDSC payable to VKAC as set forth in the Prospectus
for such Open-End Fund in effect at the time of the original purchase of such
shares from the Open-End Fund and that the repurchase price for such shares
that will be paid by VKAC will reflect the imposition of any applicable CDSC.
25.(a) You shall sell shares of a class of shares of an Open-End Fund
only: (i) to customers at the applicable public offering price or (ii) to VKAC
as agent for the Open-End Fund at the repurchase price in the then-current
Prospectus of such Open-End Fund. In such a sale to VKAC, you may act either
as principal for your own account or as agent for your customer. If you act as
principal for your own account in purchasing shares of a class of shares of an
Open-End Fund for resale to VKAC, you agree to pay your customer not less than
the price that you receive from VKAC. If you act as agent for your customer in
selling shares of a class of shares of an Open-End Fund to VKAC, you agree not
to charge your customer more than a fair commission for handling the
transaction. You acknowledge and understand that CDSC Shares of an Open-End
Fund may be subject to a CDSC payable to VKAC as set forth in the Prospectus of
such Open-End Fund in effect at the time of the original purchase of such CDSC
Shares and that the repurchase price that will be paid by VKAC for such CDSC
Shares will reflect the imposition of any such CDSC.
26. If any shares of a class of FESC Shares of an Open-End Fund sold to
or by you under the terms of this Agreement are repurchased by the Fund or by
VKAC as agent for the Fund or are tendered for redemption within seven business
days after the date of VKAC's confirmation of the original purchase, it is
agreed that you shall forfeit your right to any dealer discount received by you
on such FESC Shares. VKAC will notify you of any such repurchase or redemption
within ten business days from the date on which the repurchase or redemption
order in proper form is delivered to VKAC or to the Fund, and you shall
forthwith refund to VKAC the full dealer discount allowed to you on such sale.
VKAC agrees, in the event of any such repurchase or redemption, to refund to
the Fund its share of any discount allowed to VKAC and, upon receipt from you
of the refund of the discount allowed to you, to pay such refund forthwith to
the Fund.
TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS
27. No Closed-End Fund will issue fractional shares.
28. VKAC may, in its sole discretion, allocate shares of a Closed-End
Fund among brokers and dealers participating in the Initial Offering Period or
among brokers, dealers and banks in the Continuous Offering Period, as the case
may be, on other than a pro rata basis, which may result in
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<PAGE> 6
certain brokers, dealers and banks not being allocated the full amount of
shares of such fund sold by them while certain other brokers, dealers and banks
may receive their full allocation.
29. You agree that with respect to orders for shares of a Closed-End
Fund, you will transmit such orders received during the Initial Offering Period
to VKAC within the time period as specified in such Closed-End Fund's
Prospectus (or in the time period as extended by VKAC in writing). You also
agree to transmit any customer order received during the Continuous Offering
Period to VKAC prior to the time that the public offering price for such
Closed-End Fund is next determined after your receipt of such order as set
forth in the Closed-End Fund's Prospectus. There is no assurance that each
Closed-End Fund will engage in a continuous offering of shares.
30. On each order accepted by VKAC for shares of a Closed-End Fund, you
will be entitled to receive a concession paid out of VKAC's own assets as set
forth in the then-current Prospectus of such Closed-End Fund (exclusive of
additional compensation that may be payable pursuant to sales programs, if any,
that may be established from time to time as described in the Prospectus for
such Closed-End Fund, which will be payable only as and to the extent the
requirements of such programs are satisfied). In no event will any Closed-End
Fund reimburse VKAC for any such sales concessions or other additional
compensation or pay any such concession or other additional compensation or
allowance directly to you. VKAC will specify for each Closed-End Fund a period
after the date that the shares of such Closed-End Fund are listed on the New
York Stock Exchange, the American Stock Exchange or another national securities
market system (which period will end no later that the first dividend payment
date with respect to such Closed-End Fund) during which sales concessions and
other additional compensation are subject to forfeiture as provided in the
following sentence (the "Forfeiture Period"). During the Forfeiture Period for
any Closed-End Fund, physical delivery of certificates representing shares will
be required to transfer ownership of such shares. In the event that any shares
of a Closed-End Fund sold through an order received from you in the Initial
Offering Period or the Continuous Offering Period are resold in the open market
or otherwise during the Forfeiture Period, VKAC reserves the right to require
you to forfeit any sales concessions and other additional compensation with
respect to such shares. In the event of a forfeiture, VKAC may withhold any
forfeited sales concessions and other additional compensation that has not yet
been paid or from other amounts yet to be paid to you (whether or not payable
with respect to such shares) and you agree to repay to VKAC, promptly upon
demand, any forfeited sales concessions and other compensation that has been
paid. Determinations of the amounts to be paid to you or by you to VKAC shall
be made by VKAC and shall be conclusive.
31. During the Initial Offering Period and any Continuous Offering Period
for any Closed-End Fund, you agree to supply VKAC, not less frequently than
once a week by Friday, 5:00 p.m. Eastern Time, during such Closed-End Fund's
Initial Offering Period, a list setting forth by state and in the aggregate all
indications of interest and, during any Continuous Offering Period, all shares
sold by you of such Closed-End Fund during such week (or lesser period of
time), and a list setting forth by name and location each registered
representative making said sales and indicating the amount of all sales per
Closed-End Fund to date.
32. You expressly acknowledge and understand that there is no Rule 12b-1
Plan for the Closed-End Funds.
33. You expressly acknowledge and understand that shares of the
Closed-End Funds will not be repurchased by either the Closed-End Funds (other
than through tender offers from time to time, if any) or by VKAC and that no
secondary market for such shares is expected to develop until the shares have
begun trading on a national exchange or national market system. You hereby
covenant that, until notified by VKAC that the distribution of such shares has
been completed or that the Forfeiture Period has ended, you (a) will not make a
secondary market in any shares of such a Closed-End Fund, (b) will not purchase
or hold shares of such Closed-End Fund in inventory for the purpose of resale
in the open market or to your customers and (c) without VKAC's consent, will
not repurchase shares of such Closed-End Fund in the open market or from your
customers for any account in which you have a beneficial interest.
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<PAGE> 7
34. Unlike the other Closed-End Funds, the Continuous Offering period
with respect to the Van Kampen American Capital Prime Rate Income Trust (the
"Prime Rate Fund") may continue indefinitely. The offer to sell shares of the
Prime Rate Fund is subject to further terms and conditions in addition to those
set forth above as follows:
(a) You expressly acknowledge and understand that shares of the Prime
Rate Fund will not be repurchased by either the Prime Rate Fund (other than
through tender offers from time to time, if any) or VKAC, and that no secondary
market for the shares of the Prime Rate Fund exists currently, or is expected
to develop. You also expressly acknowledge and agree that, in the event your
customer cancels their order for shares after confirmation, such shares may not
be repurchased, remarketed or otherwise disposed of by or through VKAC.
(b) You acknowledge and understand that, while the Board of Trustees of
the Prime Rate Fund intends to consider tendering for all or a portion of the
Prime Rate Fund's shares on a quarterly basis, there is no assurance the Prime
Rate Fund will tender for shares at any time or, following such a tender offer,
that shares so tendered will be repurchased by the Prime Rate Fund. You
acknowledge and understand that an early withdrawal charge payable to VKAC will
be imposed on most shares accepted for tender by the Prime Rate Fund which have
been held for less than five years, as set forth in the Prime Rate Fund's
Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY THE PRIME RATE FUND,
OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S CURRENT PROSPECTUS
IS EXPRESSLY PROHIBITED.
Please accept the foregoing by signing this Dealer Agreement, keeping a
copy for your files and returning the original to us.
Accepted and Agreed to:
(PRINT OR TYPE)
Dated: By:
-------------------------------- Its:
-------------------------------- VAN KAMPEN AMERICAN CAPITAL
Broker-Dealer Name DISTRIBUTORS, INC.
--------------------------------
Broker-Dealer Taxpayer ID Number
--------------------------------
Address
--------------------------------
City, State, Zip
By:
--------------------------------
Signature
--------------------------------
Name
--------------------------------
Title
--------------------------------
Phone
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<PAGE> 1
EXHIBIT (6)(c)
BROKER FULLY DISCLOSED CLEARING AGREEMENT
WITH VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
REGARDING VAN KAMPEN AMERICAN CAPITAL
OPEN-END AND CLOSED-END INVESTMENT COMPANIES
Ladies and Gentlemen:
As dealer for our own account, we offer to make available to you shares of
any of the Van Kampen American Capital open-end investment companies (the
"Open-End Funds" or, individually, an "Open-End Fund") and Van Kampen
American Capital closed-end investment companies (the "Closed-End Funds"
or, individually, a "Closed-End Fund") distributed by Van Kampen American
Capital Distributors, Inc. ("VKAC") pursuant to the terms and conditions
contained herein. Collectively, the Open-End Funds and Closed-End Funds
sometimes are referred to herein as the "Funds" or, individually, as a
"Fund". You are a broker-dealer that desires to make available shares
of such Funds to your customers on a fully disclosed basis wherein VKAC
would confirm transactions of your customers in a Fund directly to them.
VKAC acts as the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) for each Fund with respect to its
offering of one or more classes of shares as described in each Fund's
Prospectus. Pursuant to this Agreement, VKAC offers to make available to you
shares of each Open-End Fund and each Closed-End Fund, prior to the Effective
Date (as defined herein) of each Fund's Registration Statement (the "Initial
Offering Period") and after the Effective Date of each Fund's Registration
Statement (as defined herein) (the "Continuous Offering Period") (if any) as
described in each respective Fund's Prospectus.
As used herein unless otherwise indicated, the term "Prospectus" means the
final prospectus and Statement of Additional Information included in the
registration statement for the fund on the effective date and as from time to
time thereafter amended or supplemented. As used herein unless otherwise
indicated, the term "Preliminary Prospectus" means any preliminary prospectus
and any preliminary Statement of Additional Information included at any time as
a part of the registration statement for any Fund prior to the effective date
and that is authorized by VKAC for use in connection with the offering of
shares.
In consideration of the mutual obligations contained herein, the
sufficiency of which is hereby acknowledged by you, the terms of the Agreement
are as follows:
GENERAL TERMS AND CONDITIONS
1. Your acceptance of this Agreement constitutes a representation that
you are a securities broker-dealer registered with the Securities and Exchange
Commission (the "SEC") and a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"). You agree to abide by
the laws, rules and regulations of the SEC and NASD, including without
limitation rules pertaining to the opening, approval, supervision and
monitoring of customer accounts, the NASD's Interpretation with Respect to
Free-Riding and Withholding and Sections 8, 24 and 36 of Article III of the
NASD's Rules of Fair Practice. You and we agree to abide by all other Rules
and Regulations of the NASD, including Section 26 of its Rules of Fair
Practice. Your acceptance also constitutes a representation that you have been
duly authorized by proper corporate or partnership action to enter into this
Agreement and to perform your obligations hereunder. You will not accept any
orders from any broker, dealer or financial institution who is purchasing from
you with a view toward distribution unless you have obtained such person's or
entity's written consent to be bound by the terms of this Agreement.
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<PAGE> 2
2. For the purposes of the Securities and Exchange Commission's Financial
Responsibility Rules and the Securities Investor's Protection Act, your
customers will be considered customers of VKAC and not of your firm. VKAC has
been granted an exemption from the NASD rules of Fair Practice, Article III
Section 45 requirements to send customer statements and thus will not do so.
Customer statements showing account activity and balances will be mailed to the
customer by the Funds each time a financial transaction occurs in their account
and on a monthly or quarterly basis. Nothing herein shall cause your firm's
customers to be interpreted as customers of VKAC for any other purpose, or to
negate the intent of any other section of this agreement, including, but not
limited to, the delineation of responsibilities as set forth elsewhere in this
agreement.
3. In transactions where you make available shares of the Funds to the
public, you shall have no authority to act as agent for the Fund or for VKAC.
4. Each Fund has filed with the SEC and the securities commissions of one
or more states a Registration Statement (the "Registration Statement") on the
SEC form applicable to the respective Fund. The date on which the Registration
Statement is declared effective by the SEC is referred to herein as the
"Effective Date". Prior to the Effective Date of the Registration Statement
with respect to a particular Fund, you expressly acknowledge and understand
that with respect to such Fund:
(a) Shares of such Fund may not be sold, nor may offers to buy be
accepted, (i) prior to the Effective Date of the Registration Statement or (ii)
in any state in which such offer or sale would be unlawful prior to
registration or qualification under the securities laws of such state.
(b) The Fund's Preliminary Prospectus, together with any sales
material distributed for use in connection with the offering of shares of
such Fund, does not constitute an offer to sell or the solicitation of an
offer to buy shares of such Fund and is subject to completion and modification
by the Prospectus.
(c) In the event that you transmit indications of interest to VKAC for
accumulation prior to the Effective Date, upon your instruction VKAC will send
confirmation of such indications of interest directly to your customers in
writing, together with copies of the Preliminary Prospectus for the Fund, and
send copies of the confirmations to you. Indications of interest with respect
to shares of a class of a Fund's shares transmitted to VKAC prior to the
Effective Date are subject to acceptance or rejection by VKAC in its sole
discretion and are conditioned upon the occurrence of (i) the Effective Date
and (ii) the registration or qualification of the respective class of shares in
the respective state.
(d) Indications of interest with respect to shares of a class of a
Fund's shares not cancelled by you prior to or on the later of (i) the Effective
Date and (ii) the registration or qualification of the respective class of
shares in the respective state, and accepted by VKAC will be deemed by VKAC to
be orders for Shares.
(e) Upon your instruction, VKAC will send confirmations of orders
accepted by VKAC (including indications of interest deemed orders) directly to
your customers in writing, together with copies of the Prospectus for the Fund,
and send copies of the confirmations to you.
(f) Upon receipt of duplicate confirmations you will examine the same
and promptly notify VKAC of any errors or discrepancies that you discover and
will promptly bring to VKAC's attention any errors in such confirmations claimed
by your customers. All confirmations to your customers will indicate that
orders were placed on a fully disclosed basis.
(g) All indications of interest and orders transmitted to VKAC are
subject to the terms and conditions of the Fund's Prospectus and this Agreement
and are subject to acceptance or rejection by VKAC in its sole discretion.
5. After the Effective Date, you will not make shares of a class of the
Fund's shares available in any state where they are not qualified for sale
under the "blue sky" laws and regulations of such state, except for states in
which they are exempt from qualification.
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<PAGE> 3
6. In the event that you make shares of the Fund available outside the
United States, you agree to comply with the applicable laws, rules and
regulations of the foreign government having jurisdiction over such sales,
including any regulations of the United States military authorities applicable
to solicitations to military personnel.
7. Upon application to VKAC, VKAC will inform you as to the jurisdictions
in which VKAC believes shares of a Fund have been qualified for sale under the
respective securities or "blue sky" laws of such jurisdictions. VKAC
understands and agrees that qualification of any shares of a Fund for sale in
such jurisdictions shall be solely VKAC's responsibility and that you assume no
responsibility or obligation with respect to such eligibility. You understand
and agree that your compliance with the requirements of the securities or "blue
sky" laws in each jurisdiction with respect to your right to make the shares
available in such jurisdiction shall be solely your responsibility.
8. No person is authorized to make any representations concerning any
class of shares of a Fund except those contained in the Fund's current
Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares
from us you shall rely solely on the representations contained in such
Prospectus. VKAC will furnish additional copies of a Fund's current Prospectus
and sales literature issued by VKAC in reasonable quantities upon request.
9. You agree that you will distribute to the public only (a) the
Preliminary Prospectus, the Prospectus and any amendment or supplement thereto
and (b) sales literature or other documents expressly authorized for such
distribution by VKAC.
10. Orders received from you will be accepted by VKAC only at the public
offering price applicable to each order as specified in the then-current Fund
Prospectus. The minimum dollar purchase of any shares of each Fund by any
person shall be the applicable minimum dollar amount described in the
then-current Fund Prospectus for that class of shares, and no order for less
than such amount will be accepted hereunder. The procedures relating to the
handling of orders shall be subject to instructions that VKAC shall communicate
from time to time to you. All orders are subject to acceptance or rejection by
VKAC in its sole discretion. Upon acceptance of an order, we shall confirm
directly to the customer in writing upon your instruction and send a copy of
the confirmation to you. In addition, we will send a Fund Prospectus with the
confirmation. You agree that upon receipt of duplicate confirmations you will
examine the same and promptly notify VKAC of any errors or discrepancies that
you discover and shall promptly bring to VKAC's attention any errors in such
confirmations claimed by your customers. All confirmations to your customers
will indicate that orders were placed on a fully disclosed basis.
11. Payment for Fund shares shall be made on or before the settlement
date specified in the VKAC confirmation at the office of VKAC's clearing agent,
or wire to the order of the Fund which reserves VKAC's right to delay issuance
of transfer of shares until such check has cleared. If such payment is not
received by VKAC, VKAC reserves the right, without notice, forthwith either to
cancel the trade at our option or as required by the provisions of Regulation
T, and in either case, VKAC may hold you responsible for any loss suffered by
the Fund. You agree that in transmitting investors' funds, you will comply
with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended.
12. You shall not withhold placing orders with VKAC from your customers
so as to profit yourself as a result of such withholding; e.g., by a change in
the net asset value from that used in determining the public offering price to
your customers.
13. VKAC will not accept from you any conditioned orders for shares,
except at a definite, specified price.
14. You represent that you are familiar with Release No. 4968 under the
Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, as it relates to the distribution of
Preliminary Prospectuses (and not Statements of Additional Information) and
Prospectuses (and not Statements of Additional Information) for each Fund and
agree that you will comply therewith. You agree that if an investor or
potential investor places a request with you to receive a Statement of
Additional Information, you will (i) provide such person with a Statement of
Additional Information without charge and notify the Fund that you have done
so, (ii) notify the Fund of the request so that the Fund can fulfill the
request or (iii) tell such person to request a Statement of Additional
Information by telephoning the Fund at the number set forth on the cover
of the current Prospectus or Preliminary Prospectus. You also agree to
keep an accurate record of your distribution (including dates,
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<PAGE> 4
number of copies and persons to whom sent) of copies of any Preliminary
Prospectus (and any Statement of Additional Information) and/or Prospectus
(and any Statement of Additional Information) for each Fund (or any amendment
or supplement to either) and, promptly upon request by VKAC, to bring
all subsequent changes to such Preliminary Prospectus or Prospectus to the
attention of anyone to whom such material shall have been distributed. You
further agree to furnish to persons who receive a confirmation of sale of
shares of any Fund a copy of the Prospectus for such Fund filed pursuant to
Rule 497 under the Securities Act of 1933, as amended. Upon your request,
VKAC will furnish to such persons a copy of the Prospectus for such Fund
filed pursuant to Rule 497 Under the Securities Act of 1993, as amended.
15. The names of your customers shall remain your sole property and shall
not be used by VKAC for any purpose except for servicing and informational
mailings in the normal course of business to Fund shareholders.
16. Unless otherwise indicated in a Fund's Prospectus, stock certificates
for shares sold will be issued to your customers only if specifically
requested.
17. VKAC will have no liability to you, except for lack of good faith and
for obligations expressly assumed by VKAC in this Agreement.
18. All communications to VKAC shall be sent to One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, Attention: Mutual Fund Department. Any
notice to you shall be duly given if sent to you at the address specified by
you below or such other address as you may designate to VKAC in writing.
19. Neither this Agreement nor the performance of the services hereunder
shall be considered to create a joint venture or partnership between VKAC and
you.
20. This Agreement shall be construed in accordance with the laws of the
State of Illinois without reference to the choice-of-law principles thereof.
21. The Fund reserves the right in its discretion and VKAC reserves the
right in its discretion, without notice, to suspend or withdraw the offering of
any shares of a Fund entirely. VKAC reserves the right, without notice, to
amend, modify or cancel the Agreement. The Agreement may not be assigned by
either party without prior written consent of the other party.
22. This Agreement may be terminated at any time by either party.
TERMS AND CONDITIONS APPLICABLE TO OPEN-END FUNDS
23. Each of the Open-End Funds is subject to an alternative distribution
plan (the "Alternative Distribution Plan") as described in such Fund's
then-current Prospectus pursuant to which the Open-End Fund may sell multiple
classes of its shares with varying combinations of front-end service charges
(each a "FESC"), distributions fees, service fees, contingent deferred sales
charges (each a "CDSC"), exchange features, conversion rights, voting rights,
expenses allocations and investment requirements. As used herein, classes of
shares of a Fund subject to a FESC will be referred to as FESC Shares, and
classes of shares of a Fund subject to a CDSC will be referred to as CDSC
Shares.
24.(a) With respect to any shares of a class of FESC Shares of an
Open-End Fund, the public offering price for such shares shall be the net asset
value per share plus a FESC, expressed as a percentage of the applicable public
offering price, as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. On each order for shares of a
class of FESC Shares of an Open-End Fund accepted by us, you will be entitled
to receive the applicable agency commission for such shares as provided for in
the then-current Prospectus of such Open-End Fund or, if not so provided, as
provided to you from time to time in writing by VKAC.
(b) With respect to any shares of a class of CDSC Shares of an Open-End
Fund, the public offering price for such shares shall be the net asset value
per share as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. You will remit payment of the
aggregate public offering price to VKAC for the CDSC Shares sold, and on each
order accepted by us, you will be entitled to receive the applicable selling
compensation for such shares as
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<PAGE> 5
provided for in the then-current Prospectus of such Open-End Fund or,
if not so provided, as provided to you from time to time in writing by VKAC.
25. Should you wish to participate in the Distribution Plan with respect
to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule
12b-1 Plan") under the Investment Company Act of 1940, as amended, or the
Service Plan with respect to a class of shares, it is understood that you must
be approved by the Board of Directors of such Open-End Fund and execute a
Distribution Assistance Agreement.
26. With respect to the Open-End Funds, your acceptance of this Agreement
constitutes a representation that you will adopt policies and procedures to
comply with Rule 18f-3 under the Investment Company Act of 1940, with respect
to when you may appropriately make available the various classes of shares of
the Open-End Funds to investors and that you will make available such shares
only in accordance therewith.
27. You agree to make shares of an Open-End Fund available to your
customers only: (i) at the applicable public offering price, (ii) from VKAC
and (iii) to cover orders already received by you from your customers. VKAC in
turn agrees that it will not purchase any shares from an Open-End Fund except
for the purpose of covering purchase orders that it has already received.
28.(a) If any shares of a class of FESC Shares of an Open-End Fund sold
to your customers under the terms of this Agreement are repurchased by the Fund
or by VKAC as agent for the Fund or are tendered for redemption within seven
business days after the date of VKAC's confirmation of the original purchase,
it is agreed that you shall forfeit your right to any agency commission
received by you on such FESC Shares. VKAC will notify you of any such
repurchase or redemption within ten business days from the date on which the
repurchase or redemption order in proper form is delivered to VKAC or to the
Fund, and you shall forthwith refund to VKAC the full agency commission allowed
to you on such sale. VKAC agrees, in the event of any such repurchase or
redemption, to refund to the Fund its share of any discount allowed to VKAC
and, upon receipt from you of the refund of the agency commission allowed to
you, to pay such refund forthwith to the Fund.
(b) If any shares of a class of CDSC Shares sold to your customers under
the terms of this Agreement are repurchased by the Fund or by VKAC as agent for
the Fund or are tendered for redemption within seven business days after the
date of VKAC's confirmation of the original purchase, it is agreed that you
shall forfeit your right to any sales compensation received by you on such CDSC
Shares. We will notify you of any such repurchase or redemption within ten
business days from the date on which the repurchase or redemption order in
proper form is delivered to VKAC or to the Fund, and you shall forthwith refund
to VKAC the full sales compensation paid to you.
TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS
29. No Closed-End Fund will issue fractional shares.
30. VKAC may, in its sole discretion, allocate shares of a Closed-End
Fund among brokers, dealers and, if permitted by applicable laws, banks
participating in the Initial Offering Period or among brokers, dealers and
banks in the Continuous Offering Period, as the case may be, on other than a
pro rata basis, which may result in certain brokers, dealers and banks not
being allocated the full amount of shares of such Fund sold by them while
certain other brokers, dealers and banks may receive their full allocation.
31. You agree that with respect to orders for shares of a Closed-End
Fund, you will transmit such orders received during the Initial Offering Period
to VKAC within the time period as specified in such Closed-End Fund's
Prospectus (or in the time period as extended by VKAC in writing). You also
agree to transmit any customer order received during the Continuous Offering
Period to VKAC prior to the time that the public offering price for such
Closed-End Fund is next determined after your receipt of such order, as set
forth in the Closed-End Fund's Prospectus. There is no assurance that each
Closed-End Fund will engage in a continuous offering of shares.
32. On each order accepted by VKAC for shares of a Closed-End Fund, you
will be entitled to receive a concession paid out of VKAC's own assets as set
forth in the then-current Prospectus of such Closed-End Fund (exclusive of
additional compensation that may be payable pursuant to sales programs, if
any, that may be established from time to time as described in the
Prospectus for such Closed-End Fund, which will be payable only as and to
the extent the requirements
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<PAGE> 6
of such programs are satisfied). In no event will any Closed-End Fund reimburse
VKAC for any such sales concessions or other additional compensation or pay any
such concession or other additional compensation or allowance directly to you.
VKAC will specify for each Closed-End Fund a period after the date that the
shares of such Closed-End Fund are listed on the New York Stock Exchange, the
American Stock Exchange or another national securities market system (which
period will end no later than the first dividend payment date with respect
to such Closed-End Fund) during which sales concessions and other additional
compensation are subject to forfeiture as provided in the following sentence
(the "Forfeiture Period"). During the Forfeiture Period for any Closed-End
Fund, physical delivery of certificates representing shares will be required to
transfer ownership of such shares. In the event that any shares of a
Closed-End Fund sold through an order received from you in the Initial Offering
Period or the Continuous Offering Period are resold in the open market or
otherwise during the Forfeiture Period, VKAC reserves the right to require you
to forfeit any sales concessions and other additional compensation with respect
to such shares. In the event of a forfeiture, VKAC may withhold any forfeited
sales concessions and other additional compensation that has not yet been paid
or from other amounts yet to be paid to you (whether or not payable with
respect to such shares), and you agree to repay to VKAC, promptly upon demand,
any forfeited sales concessions and other compensation that has been paid.
Determinations of the amounts to be paid to you or by you to VKAC shall be made
by VKAC and shall be conclusive.
33. During the Initial Offering Period and any Continuous Offering Period
for any Closed-End Fund, you agree to supply VKAC, not less frequently than
once a week by Friday, 5:00 p.m. Eastern Time, during such Closed-End Fund's
Initial Offering Period, a list setting forth by state and in the aggregate all
indications of interest and, during any Continuous Offering Period, all shares
sold by you of such Closed-End Fund during such week (or lesser period of time)
and a list setting forth by name and location each registered representative
making said sales and indicating the amount of all sales per Closed-End Fund to
date.
34. You expressly acknowledge and understand that there is no Rule 12b-1
Plan for the Closed-End Funds.
35. You expressly acknowledge and understand that shares of the
Closed-End Funds will not be repurchased by either the Closed-End Funds (other
than through tender offers from time to time, if any) or by VKAC and that no
secondary market for such shares is expected to develop until the shares have
begun trading on a national exchange or national market system. You hereby
covenant that, until notified by VKAC that the distribution of such shares has
been completed or that the Forfeiture Period has ended, you (a) will not make a
secondary market in any shares of such a Closed-End Fund, (b) will not purchase
or hold shares of such Closed-End Fund in inventory for the purpose of resale
in the open market or to your customers and, (c) without VKAC's consent, will
not repurchase shares of such Closed-End Fund in the open market or from your
customers for any account in which you have a beneficial interest.
36. Unlike the other Closed-End Funds, the Continuous Offering period
with respect to the Van Kampen American Capital Prime Rate Income Trust (the
"Prime Rate Fund") may continue indefinitely. The offer to make available to
you shares of the Prime Rate Fund is subject to further terms and conditions in
addition to those set out above, as follows:
(a) You expressly acknowledge and understand that shares of the Prime
Rate Fund will not be repurchased by either the Prime Rate Fund (other than
through tender offers from time to time, if any) or VKAC and that no secondary
market for the shares of the Prime Rate Fund exists currently or is expected to
develop. You also expressly acknowledge and agree that, in the event your
customer cancels their order for shares after confirmation, such shares may not
be repurchased, remarketed or otherwise disposed of by or through VKAC.
(b) You acknowledge and understand that, while the Board of Trustees
of the Prime Rate Fund intends to consider tendering for all or a portion of the
Prime Rate Fund's shares on a quarterly basis, there is no assurance the Prime
Rate Fund will tender for shares at any time or, following such a tender offer,
that shares so tendered will be repurchased by the Prime Rate Fund. You
acknowledge and understand that an early withdrawal charge payable to VKAC
will be imposed on most shares accepted for tender by the Prime Rate Fund that
have been held for less than five years, as set forth in the Prime Rate Fund's
Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY THE
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PRIME RATE FUND, OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S
CURRENT PROSPECTUS, IS EXPRESSLY PROHIBITED.
Please accept the foregoing by signing this Broker Fully Disclosed
Clearing Agreement, keeping a copy for your files and returning the original to
us.
Accepted and Agreed to: (PRINT OR TYPE)
Dated: By:
--------------------------------- Its:
--------------------------------- VAN KAMPEN AMERICAN CAPITAL
Broker-Dealer Name DISTRIBUTORS, INC.
---------------------------------
Broker-Dealer Taxpayer ID Number
---------------------------------
Address
---------------------------------
City, State, Zip
By:
---------------------------------
Signature
---------------------------------
Name
---------------------------------
Title
---------------------------------
Phone
7
<PAGE> 8
EXHIBIT A
POLICIES AND PROCEDURES
WITH RESPECT TO SALES UNDER THE
ALTERNATIVE DISTRIBUTION PLAN
As certain Van Kampen American Capital open-end investment companies (the
"funds") offer multiple classes of shares subject to either front-end sales
charges ("FESC Shares") or contingent deferred sales charges ("CDSC Shares"),
it is important for an investor not only to choose the Fund that best suits his
or her investment objectives, but also to choose the alternative distribution
method that best suits his or her particular situation. To assist investors in
these decisions, we (the selling firm) are instituting the following policy.
1. Any purchase order for $1 million or more must be for Class A Shares.
2. Any purchase order for $100,000 but less than $1 million is subject to
approval by [appropriate selling firm supervisor], who must approve the
purchase order ticket for the appropriate class of shares in light of the
relevant facts and circumstances, including:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold his shares; and
(c) any other relevant circumstances, such as the availability of
purchase price discounts under a Letter of Intent or a Quantity Discount.
There are instances when one financing method may be more appropriate than
the other. For example, investors who would qualify for a significant purchase
price discount from the maximum sales charge on shares of a class of FESC
Shares that has such purchase price discounts may determine that payment of
such a reduced front-end sales charge is superior to electing to purchase
shares of a class of CDSC Shares with no front-end service charge but subject
to a higher aggregate distribution and service fee. On the other hand, an
investor whose order would not qualify for such purchase price discounts and
intends to remain invested until after the expiration of the applicable CDSC
may wish to defer the sales charge and have all his or her funds invested in
Class B Shares initially. In addition, if such investor anticipates that he or
she will redeem such shares prior to the expiration of the CDSC period
applicable to Class B Shares the investor may, depending on the amount of his
or her purchase, wish to acquire Class C Shares. However, investors who intend
to hold their shares for a significantly long time may not wish to continue to
bear the ongoing distribution and service expenses of shares of Class C Shares,
irrespective of the fact that a contingent deferred sales charge would
eventually not apply to a redemption of such shares.
[The appropriate selling firm supervisor] must ensure that all employees
receiving investor inquiries about the purchase of shares from funds subject to
Van Kampen American Capital Distributors, Inc.'s alternative distribution plan
advise the investor of the available alternative distribution methods offered
by such funds and the impact of choosing one method over another. It may be
appropriate for [the appropriate selling firm supervisor] to discuss the
purchase with the investor.
This policy is effective immediately with respect to any order for the
purchase of shares from a fund subject to Van Kampen American Capital
Distributors, Inc.'s alternative distribution plan.
Questions relating to this policy should be directed to [appropriate
selling firm supervisor].
<PAGE> 1
EXHIBIT (6)(d)
BANK FULLY DISCLOSED CLEARING AGREEMENT
WITH VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
REGARDING VAN KAMPEN AMERICAN CAPITAL
OPEN-END AND CLOSED-END INVESTMENT COMPANIES
Ladies and Gentlemen:
As dealer for our own account, we offer to make available to you shares of
any of the Van Kampen American Capital open-end investment companies (the
"Open-End Funds" or, individually, an "Open-End Fund") and Van Kampen American
Capital closed-end investment companies (the "Closed-End Funds" or,
individually, a "Closed-End Fund") distributed by Van Kampen American Capital
Distributors, Inc. ("VKAC") pursuant to the terms and conditions contained
herein. Collectively, the Open-End Funds and Closed-End Funds sometimes are
referred to herein as the "Funds" or, individually, as a "Fund". You are a bank
that desires to make available shares of such Funds to your customers on a fully
disclosed basis wherein VKAC would confirm transactions of your customers in a
Fund directly to them. You agree not to make available shares of such Funds
during any fixed price offering of such shares.
VKAC acts as the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) for each Fund with respect to its
offering of one or more classes of shares as described in each Fund's
Prospectus. Pursuant to this Agreement, VKAC offers to make available to you
shares of each Open-End Fund and each Closed-End Fund prior to the Effective
Date (as defined herein) of each Fund's Registration Statement (as defined
herein) (the "Initial Offering Period"), to the extent permitted by applicable
law, and after the Effective Date of each Fund's Registration Statement (the
"Continuous Offering Period") (if any) as described in such Closed-End Fund's
Prospectus.
As used herein unless otherwise indicated, the term "Prospectus" means the
final prospectus and Statement of Additional Information included in the
Registration Statement for the Fund on the Effective Date and as from time to
time thereafter amended or supplemented. As used herein unless otherwise
indicated, the term "Preliminary Prospectus" means any preliminary prospectus
and any Statement of Additional Information included at any time as a part of
the Registration Statement for any Fund prior to the Effective Date and that is
authorized by VKAC for use in connection with the offering of shares.
In consideration of the mutual obligations contained herein, the
sufficiency of which is hereby acknowledged by you, the terms of the Agreement
are as follows:
GENERAL TERMS AND CONDITIONS
1. Your acceptance of this Agreement constitutes a representation that
you are a bank as defined in Section 3(a)(6) of the Securities Exchange Act of
1934, as amended, and have been duly authorized to enter into this Agreement
and perform your obligations hereunder. This Agreement as well as your
authority to make shares available to your customers will automatically
terminate if you shall cease to be a bank as defined above. You agree not to
offer or sell shares of any Fund except through VKAC. You will not accept any
orders from any broker, dealer or financial institution who is purchasing from
you with a view toward distribution unless you have obtained such person's or
entity's written consent to be bound by the terms of this Agreement.
2. For the purposes of the Securities and Exchange Commission's Financial
Responsibility Rules and the Securities Investor's Protection Act, your
customers will be considered customers of VKAC and not of your firm. VKAC has
been granted an exemption from the NASD rules of Fair Practice, Article III
Section 45 requirements to send customer statements and thus will not do so.
Customer statements showing account activity and balances will be mailed to the
customer by the Funds
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each time a financial transaction occurs in their account and on a monthly or
quarterly basis. Nothing herein shall cause your firm's customers to be
interpreted as customers of VKAC for any other purpose, or to negate the intent
of any other section of this agreement, including, but not limited to, the
delineation of responsibilities as set forth elsewhere in this agreement.
3. In transactions where you make available shares of the Funds to the
public, you shall have no authority to act as agent for the Fund or for VKAC.
The customers in question are for all purposes your customers and not customers
of VKAC. We will clear transactions for each of your customers only upon your
authorization, it being understood in all cases that (a) you are acting as the
agent for the customer; (b) the transactions are without recourse against you
by the customer except to the extent that your failure to transmit orders in a
timely fashion results in a loss to your customer; (c) as between you and the
customer, the customer will have full beneficial ownership of the Fund shares;
(d) each transaction is initiated solely upon the order of the customer; and
(e) each transaction is for the account of the customer and not for your
account.
4. Each Fund has filed with the Securities and Exchange Commission (the
"SEC") and the securities commissions of one or more states a Registration
Statement (the "Registration Statement") on the SEC form applicable to the
respective Fund. The date on which the Registration Statement is declared
effective by the SEC is hereinafter referred to as the "Effective Date". Prior
to the Effective Date of the Registration Statement with respect to a
particular Fund, you expressly acknowledge and understand that with respect to
such Fund:
(a) Shares of such Fund may not be sold, nor may offers to buy be
accepted, (i) prior to the Effective Date of the Registration Statement or (ii)
in any state in which such offer or sale would be unlawful prior to
registration or qualification under the securities laws of such state.
(b) Except to the extent permitted by law, you will not solicit or
transmit to VKAC any indications of interest to purchase shares during any
fixed-price offering.
(c) The Fund's Preliminary Prospectus, together with any sales
material distributed for use in connection with the offering of shares of such
Fund, does not constitute an offer to sell or the solicitation of an offer to
buy shares of such Fund and is subject to completion and modification by the
Prospectus.
(d) In the event and to the extent permitted by applicable law you
transmit indications of interest to VKAC for accumulation prior to the
Effective Date, upon your instruction VKAC will send confirmation of such
indications of interest directly to your customers in writing, together with
copies of the Preliminary Prospectus for the Fund, and send copies of the
confirmations to you. Indications of interest with respect to shares of a
class of a Fund's shares transmitted to VKAC prior to the Effective Date are
subject to acceptance or rejection by VKAC in its sole discretion and are
conditioned upon the occurrence of (i) the Effective Date and (ii) the
registration or qualification of the respective class of shares in the
respective state.
(e) Indications of interest with respect to shares of a class of a
Fund's shares not canceled by you prior to or on the later of (i) the Effective
Date and (ii) the registration or qualification of the respective class of
shares in the respective state, and accepted by VKAC will be deemed by VKAC to
be orders for Shares solely to the extent permitted by applicable law.
(f) Upon your instruction, VKAC will send confirmations of orders
accepted by VKAC (including indications of interest deemed orders) directly to
your customers in writing, together with copies of the Prospectus for the Fund,
and send copies of the confirmations to you.
(g) Upon receipt of duplicate confirmations you will examine the same
and promptly notify VKAC of any errors or discrepancies that you discover and
will promptly bring to VKAC's attention any errors in such confirmations claimed
by your customers. All confirmations to your customers will indicate that
orders were placed on a fully disclosed basis.
(h) All indications of interest and orders transmitted to VKAC are
subject to the terms and conditions of the Fund's Prospectus and this Agreement
and are subject to acceptance or rejection by VKAC in its sole discretion.
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<PAGE> 3
5. After the Effective Date, you will not make shares of a class of the
Fund's shares available in any state where they are not qualified for sale
under the "blue sky" laws and regulations of such state, except for states in
which they are exempt from qualification.
6. In the event that you make shares of the Fund available outside the
United States, you agree to comply with the applicable laws, rules and
regulations of the foreign government having jurisdiction over such sales,
including any regulations of the United States military authorities applicable
to solicitations to military personnel.
7. Upon application to VKAC, VKAC will inform you as to the jurisdictions
in which VKAC believes shares of a Fund have been qualified for sale under the
respective securities or "blue sky" laws of such jurisdictions. VKAC
understands and agrees that qualification of any shares of a Fund for sale in
such jurisdictions shall be solely VKAC's responsibility and that you assume no
responsibility or obligation with respect to such eligibility. You understand
and agree that your compliance with the requirements of the securities or "blue
sky" laws in each jurisdiction with respect to your right to make the shares
available in such jurisdiction shall be solely your responsibility.
8. No person is authorized to make any representations concerning any
class of shares of a Fund except those contained in the Fund's current
Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares
from us you shall rely solely on the representations contained in such
Prospectus. VKAC will furnish additional copies of a Fund's current Prospectus
and sales literature issued by VKAC in reasonable quantities upon request.
9. You agree that you will distribute to the public only (i) the
Prospectus and any amendment or supplement thereto and (ii) sales literature or
other documents expressly authorized for such distribution by VKAC.
10. Orders received from you will be accepted by VKAC only at the public
offering price applicable to each order as specified in the then-current Fund
Prospectus. The minimum dollar purchase of any shares of each Fund by any
person shall be the applicable minimum dollar amount described in the
then-current Fund Prospectus for that class of shares, and no order for less
than such amount will be accepted hereunder. The procedures relating to the
handling of orders shall be subject to instructions that VKAC shall communicate
from time to time to you. All orders are subject to acceptance or rejection by
VKAC in its sole discretion. Upon acceptance of an order, we shall confirm
directly to the customer in writing upon your instruction and send a copy of
the confirmation to you. In addition, we will send a Fund Prospectus with the
confirmation. You agree that upon receipt of duplicate confirmations you will
examine the same and promptly notify VKAC of any errors or discrepancies that
you discover and shall promptly bring to VKAC's attention any errors in such
confirmations claimed by your customers. All confirmations to your customers
will indicate that orders were placed on a fully disclosed basis.
11. Payment for Fund shares shall be made on or before the settlement
date specified in the VKAC confirmation at the office of VKAC's clearing agent,
or wire to the order of the Fund which reserves VKAC's right to delay issuance
or transfer of shares until such check has cleared. If such payment is not
received by VKAC, VKAC reserves the right, without notice, forthwith either to
cancel the trade at our option or as required by the provisions of Regulation
T, and in either case, VKAC may hold you responsible for any loss suffered by
the Fund. You agree that in transmitting investors' funds, you will comply
with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended.
12. You shall not withhold placing orders with VKAC from your customers
so as to profit yourself as a result of such withholding; e.g., by a change in
the net asset value from that used in determining the public offering price to
your customers.
13. VKAC will not accept from you any conditioned orders for shares,
except at a definite, specified price.
14. You represent that you are familiar with Release No. 4968 under the
Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, as it relates to the distribution of
Preliminary Prospectuses (and not Statements of Additional Information) and
Prospectuses (and not Statements of Additional Information) for each Fund and
agree that you will comply therewith. You agree that if an investor or
potential investor places a request with you to receive
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<PAGE> 4
a Statement of Additional Information, you will (i) provide such person with a
Statement of Additional Information without charge and notify the Fund that
you have done so, (ii) notify the Fund of the request so that the Fund can
fulfill the request or (iii) tell such person to request a Statement of
Additional Information by telephoning the Fund at the number set forth on the
cover of the current Prospectus or Preliminary Prospectus. You also agree to
keep an accurate record of your distribution (including dates, number of copies
and persons to whom sent) of copies of any Preliminary Prospectus (and any
Statement of Additional Information) and/or Prospectus (and any Statement of
Additional Information) for each Fund (or any amendment or supplement to
either) and, promptly upon request by VKAC, to bring all subsequent changes to
such Preliminary Prospectus or Prospectus to the attention of anyone to whom
such material shall have been distributed. You further agree to furnish to
persons who receive a confirmation of sale of shares of any Fund a copy of the
Prospectus for such Fund filed pursuant to Rule 497 under the Securities Act of
1933, as amended. Upon your request, VKAC will furnish to such persons a copy
of the Prospectus for such Fund filed pursuant to Rule 497 Under the Securities
Act of 1993, as amended.
15. The names of your customers shall remain your sole property and shall
not be used by VKAC for any purpose except for servicing and informational
mailings in the normal course of business to Fund shareholders.
16. Unless otherwise indicated in a Fund's Prospectus, stock certificates
for shares sold will be issued to your customers only if specifically
requested.
17. VKAC will have no liability to you, except for lack of good faith and
for obligations expressly assumed by VKAC in this Agreement.
18. All communications to VKAC shall be sent to One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, Attention: Mutual Fund Department. Any
notice to you shall be duly given if sent to you at the address specified by
you below or such other address as you may designate to VKAC in writing.
19. Neither this Agreement nor the performance of the services hereunder
shall be considered to create a joint venture or partnership between VKAC and
you.
20. This Agreement shall be construed in accordance with the laws of the
State of Illinois without reference to the choice-of-law principles thereof.
21. The Fund reserves the right in its discretion and VKAC reserves the
right in its discretion, without notice, to suspend or withdraw the offering of
any shares of a Fund entirely. VKAC reserves the right, without notice, to
amend, modify or cancel the Agreement. The Agreement may not be assigned by
either party without prior written consent of the other party.
22. This Agreement may be terminated at any time by either party.
TERMS AND CONDITIONS APPLICABLE TO OPEN-END FUNDS
23. Each of the Open-End Funds is subject to an alternative distribution
plan (the "Alternative Distribution Plan") as described in such Fund's
then-current Prospectus pursuant to which the Open-End Fund may sell multiple
classes of its shares with varying combinations of front-end service charges
(each a "FESC"), distributions fees, service fees, contingent deferred sales
charges (each a "CDSC"), exchange features, conversion rights, voting rights,
expenses allocations and investment requirements. As used herein, classes of
shares of a Fund subject to a FESC will be referred to as FESC Shares, and
classes of shares of a Fund subject to a CDSC will be referred to as CDSC
Shares.
24. (a) With respect to any shares of a class of FESC Shares of an
Open-End Fund, the public offering price for such shares shall be the net asset
value per share plus a FESC, expressed as a percentage of the applicable public
offering price, as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. On each order for shares of a
class of FESC Shares of an Open-End Fund accepted by us, you will be entitled
to receive the applicable agency commission for such shares as provided for in
the then-current Prospectus of such Open-End Fund or, if not so provided, as
provided to you from time to time in writing by VKAC.
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<PAGE> 5
(b) With respect to any shares of a class of CDSC Shares of an Open-End
Fund, the public offering price for such shares shall be the net asset value
per share as determined and effective as of the time specified in the
then-current Prospectus of such Open-End Fund. You will remit payment of the
aggregate public offering price to VKAC for the CDSC Shares sold, and on each
order accepted by us, you will be entitled to receive the applicable selling
compensation for such shares as provided for in the then-current Prospectus of
such Open-End Fund or, if not so provided, as provided to you from time to time
in writing by VKAC.
25. Should you wish to participate in the Distribution Plan with respect
to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule
12b-1 Plan") under the Investment Company Act of 1940, as amended, or the
Service Plan with respect to a class of shares, it is understood that you must
be approved by the Board of Directors of such Open-End Fund and execute an
Administrative Service Agreement.
26. With respect to the Open-End Funds, your acceptance of this Agreement
constitutes a representation that you will adopt policies and procedures to
comply with Rule 18f-3 under the Investment Company Act of 1940, with respect
to when you may appropriately make available the various classes of shares of
the Open-End Funds to investors and that you will make available such shares
only in accordance therewith.
27. You agree to make shares of an Open-End Fund available to your
customers only: (i) at the applicable public offering price, (ii) from VKAC
and (iii) to cover orders already received by you from your customers. VKAC in
turn agrees that it will not purchase any shares from an Open-End Fund except
for the purpose of covering purchase orders that it has already received.
28. (a) If any shares of a class of FESC Shares of an Open-End Fund sold
to your customers under the terms of this Agreement are repurchased by the Fund
or by VKAC as agent for the Fund or are tendered for redemption within seven
business days after the date of VKAC's confirmation of the original purchase,
it is agreed that you shall forfeit your right to any agency commission
received by you on such FESC Shares. VKAC will notify you of any such
repurchase or redemption within ten business days from the date on which the
repurchase or redemption order in proper form is delivered to VKAC or to the
Fund, and you shall forthwith refund to VKAC the full agency commission allowed
to you on such sale. VKAC agrees, in the event of any such repurchase or
redemption, to refund to the Fund its share of any discount allowed to VKAC
and, upon receipt from you of the refund of the agency commission allowed to
you, to pay such refund forthwith to the Fund.
(b) If any shares of a class of CDSC Shares sold to your customers under
the terms of this Agreement are repurchased by the Fund or by VKAC as agent for
the Fund or are tendered for redemption within seven business days after the
date of VKAC's confirmation of the original purchase, it is agreed that you
shall forfeit your right to any sales compensation received by you on such CDSC
Shares. We will notify you of any such repurchase or redemption within ten
business days from the date on which the repurchase or redemption order in
proper form is delivered to VKAC or to the Fund, and you shall forthwith refund
to VKAC the full sales compensation paid to you.
TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS
29. No Closed-End Fund will issue fractional shares.
30. VKAC may, in its sole discretion, allocate shares of a Closed-End
Fund among brokers, dealers and, to the extent permitted by applicable law,
banks participating in the Initial Offering Period or among brokers, dealers
and banks participating in the Continuous Offering Period, as the case may be,
on other than a pro rata basis, which may result in certain brokers, dealers
and banks not being allocated the full amount of shares of such Fund sold by
them while certain other brokers, dealers and banks may receive their full
allocation.
31. You agree that with respect to orders for shares of a Closed-End
Fund, you will transmit such orders received, to the extent permitted by
applicable law, during the Initial Offering Period to VKAC within the time
period as specified in such Closed-End Fund's Prospectus (or in the time period
as extended by VKAC in writing). You also agree to transmit any customer order
received during the
5
<PAGE> 6
Continuous Offering Period to VKAC prior to the time that the public offering
price for such Closed-End Fund is next determined after your receipt of such
order, as set forth in the Closed-End Fund's Prospectus. There is no assurance
that each Closed-End Fund will engage in a continuous offering of shares.
32. On each order accepted by VKAC for shares of a Closed-End Fund, you
will be entitled to receive a concession paid out of VKAC's own assets as set
forth in the then-current Prospectus of such Closed-End Fund (exclusive of
additional compensation that may be payable pursuant to sales programs, if any,
that may be established from time to time as described in the Prospectus for
such Closed-End Fund, which will be payable only as and to the extent the
requirements of such programs are satisfied). In no event will any Closed-End
Fund reimburse VKAC for any such sales concessions or other additional
compensation or pay any such concession or other additional compensation or
allowance directly to you. VKAC will specify for each Closed-End Fund a period
after the date that the shares of such Closed-End Fund are listed on the New
York Stock Exchange, the American Stock Exchange or another national securities
market system (which period will end no later than the first dividend payment
date with respect to such Closed-End Fund) during which sales concessions and
other additional compensation are subject to forfeiture as provided in the
following sentence (the "Forfeiture Period"). During the Forfeiture Period for
any Closed-End Fund, physical delivery of certificates representing shares will
be required to transfer ownership of such shares. In the event that any shares
of a Closed-End Fund sold through an order received from you, to the extent
permitted by applicable law, in the Initial Offering Period or the Continuous
Offering Period are resold in the open market or otherwise during the
Forfeiture Period, VKAC reserves the right to require you to forfeit any sales
concessions and other additional compensation with respect to such shares. In
the event of a forfeiture, VKAC may withhold any forfeited sales concessions
and other additional compensation that has not yet been paid or from other
amounts yet to be paid to you (whether or not payable with respect to such
shares), and you agree to repay to VKAC, promptly upon demand, any forfeited
sales concessions and other compensation that has been paid. Determinations of
the amounts to be paid to you or by you to VKAC shall be made by VKAC and shall
be conclusive.
33. During the Initial Offering Period or any Continuous Offering Period
for any Closed-End Fund, you agree to supply VKAC, not less frequently than
once a week by Friday, 5:00 p.m. Eastern Time, during such Closed-End Fund's
Initial Offering Period, a list setting forth by state and in the aggregate all
indications of interest and, during any Continuous Offering Period, all shares
sold by you of such Closed-End Fund during such week (or lesser period of time)
and a list setting forth by name and location each registered representative
making said sales and indicating the amount of all sales per Closed-End Fund to
date.
34. You expressly acknowledge and understand that there is no Rule 12b-1
Plan for the Closed-End Funds.
35. You expressly acknowledge and understand that shares of the
Closed-End Funds will not be repurchased by either the Closed-End Funds (other
than through tender offers from time to time, if any) or by VKAC and that no
secondary market for such shares is expected to develop until the shares have
begun trading on a national exchange or national market system. You hereby
covenant that, until notified by VKAC that the distribution of such shares has
been completed or that the Forfeiture Period has ended, you (a) will not make a
secondary market in any shares of such a Closed-End Fund, (b) will not purchase
or hold shares of such Closed-End Fund in inventory for the purpose of resale
in the open market or to your customers and, (c) without VKAC's consent, will
not repurchase shares of such Closed-End Fund in the open market or from your
customers for any account in which you have a beneficial interest.
36. Unlike the other Closed-End Funds, the Continuous Offering period
with respect to the Van Kampen American Capital Prime Rate Income Trust (the
"Prime Rate Fund") may continue indefinitely. The offer to make available to
you shares of the Prime Rate Fund is subject to further terms and conditions in
addition to those set out above, as follows:
(a) You expressly acknowledge and understand that shares of the Prime
Rate Fund will not be repurchased by either the Prime Rate Fund (other than
through tender offers from time to time, if any) or VKAC and that no secondary
market for the shares of the Prime Rate Fund exists currently or is expected to
develop. You also expressly acknowledge and agree that, in the event your
6
<PAGE> 7
customer cancels their order for shares after confirmation, such shares may not
be repurchased, remarketed or otherwise disposed of by or through VKAC.
(b) You acknowledge and understand that, while the Board of Trustees of
the Prime Rate Fund intends to consider tendering for all or a portion of the
Prime Rate Fund's shares on a quarterly basis, there is no assurance the Prime
Rate Fund will tender for shares at any time or, following such a tender offer,
that shares so tendered will be repurchased by the Prime Rate Fund. You
acknowledge and understand that an early withdrawal charge payable to VKAC will
be imposed on most shares accepted for tender by the Prime Rate Fund that have
been held for less than five years, as set forth in the Prime Rate Fund's
Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY THE PRIME RATE FUND,
OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S CURRENT PROSPECTUS,
IS EXPRESSLY PROHIBITED.
Please accept the foregoing by signing this Bank Fully Disclosed Clearing
Agreement, keeping a copy for your files and returning the original to us.
Accepted and Agreed to: (PRINT OR TYPE)
Dated:
------------------------------ By:
Bank Name Its:
------------------------------ VAN KAMPEN AMERICAN CAPITAL
Bank Taxpayer ID Number DISTRIBUTORS, INC.
------------------------------
Address
By:
------------------------------
Signature
------------------------------
Name
------------------------------
Title
------------------------------
Phone
7
<PAGE> 8
EXHIBIT A
POLICIES AND PROCEDURES
WITH RESPECT TO SALES UNDER THE
ALTERNATIVE DISTRIBUTION PLAN
As certain Van Kampen American Capital open-end investment companies (the
"funds") offer multiple classes of shares subject to either front-end sales
charges ("FESC Shares") or contingent deferred sales charges ("CDSC Shares"),
it is important for an investor not only to choose the Fund that best suits his
or her investment objectives, but also to choose the alternative distribution
method that best suits his or her particular situation. To assist investors in
these decisions, we (the selling firm) are instituting the following policy.
1. Any purchase order for $1 million or more must be for Class A Shares.
2. Any purchase order for $100,000 but less than $1 million is subject to
approval by [appropriate selling firm supervisor], who must approve the
purchase order ticket for the appropriate class of shares in light of the
relevant facts and circumstances, including:
(a) the specific purchase order dollar amount;
(b) the length of time the investor expects to hold his shares; and
(c) any other relevant circumstances, such as the availability of
purchase price discounts under a Letter of Intent or a Quantity Discount.
There are instances when one financing method may be more appropriate than
the other. For example, investors who would qualify for a significant purchase
price discount from the maximum sales charge on shares of a class of FESC
Shares that has such purchase price discounts may determine that payment of
such a reduced front-end sales charge is superior to electing to purchase
shares of a class of CDSC Shares with no front-end service charge but subject
to a higher aggregate distribution and service fee. On the other hand, an
investor whose order would not qualify for such purchase price discounts and
intends to remain invested until after the expiration of the applicable CDSC
may wish to defer the sales charge and have all his or her funds invested in
Class B Shares initially. In addition, if such investor anticipates that he or
she will redeem such shares prior to the expiration of the CDSC period
applicable to Class B Shares the investor may, depending on the amount of his
or her purchase, wish to acquire Class C Shares. However, investors who intend
to hold their shares for a significantly long time may not wish to continue to
bear the ongoing distribution and service expenses of shares of Class C Shares,
irrespective of the fact that a contingent deferred sales charge would
eventually not apply to a redemption of such shares.
[The appropriate selling firm supervisor] must ensure that all employees
receiving investor inquiries about the purchase of shares from funds subject to
Van Kampen American Capital Distributors, Inc.'s alternative distribution plan
advise the investor of the available alternative distribution methods offered
by such funds and the impact of choosing one method over another. It may be
appropriate for [the appropriate selling firm supervisor] to discuss the
purchase with the investor.
This policy is effective immediately with respect to any order for the
purchase of shares from a fund subject to Van Kampen American Capital
Distributors, Inc.'s alternative distribution plan.
Questions relating to this policy should be directed to [appropriate
selling firm supervisor].
<PAGE> 1
EXHIBIT 8(a)
CUSTODIAN CONTRACT
Between
EACH OF THE PARTIES LISTED ON APPENDIX A
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Moneys . . . . . . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased . . . . . . . . . . . . . 7
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in Securities System . . . . . . . 8
2.11 Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Segregated Account . . . . . . . . . . . . . . . . . . . . 10
2.13 Ownership Certificates for Tax Purposes . . . . . . . . . 10
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.15 Communications Relating to Fund Securities . . . . . . . . 11
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . . . 11
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . 11
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . 11
3.3 Foreign Securities Systems . . . . . . . . . . . . . . . . 12
3.4 Agreements with Foreign Banking Institutions . . . . . . . 12
3.5 Access of Independent Accountants of the Fund . . . . . . 12
3.6 Reports by Custodian . . . . . . . . . . . . . . . . . . . 12
3.7 Transactions in Foreign Custody Account . . . . . . . . . 13
3.8 Liability of Foreign Sub-Custodians . . . . . . . . . . . 13
3.9 Liability of Custodian . . . . . . . . . . . . . . . . . . 13
3.10 Reimbursement for Advances . . . . . . . . . . . . . . . . 14
3.11 Monitoring Responsibilities . . . . . . . . . . . . . . . 14
3.12 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.13 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . 15
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . 15
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . 16
6. Actions Permitted Without Express Authority . . . . . . . . . . . 16
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . 17
8. Duties of Custodian With Respect to the Books
of Account and Calculation of Net Asset Value
and Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10. Opinion of Fund's Independent Accountants . . . . . . . . . . . . 18
11. Reports to Fund by Independent Public Accountants . . . . . . . . 18
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . 18
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . 18
14. Effective Period, Termination and Amendment . . . . . . . . . . . 19
15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . 20
16. Interpretive and Additional Provisions . . . . . . . . . . . . . . 21
17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . . 21
18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . 22
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 22
20. Shareholder Communications . . . . . . . . . . . . . . . . . . . . 22
21. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 4
CUSTODIAN CONTRACT
This Contract between each fund or series of a fund listed on
Appendix A which evidences its agreement to be bound hereby by executing a copy
of this Contract (each such fund is individually hereafter referred to as
the "Fund"), and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WITNESSETH THAT, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets
of the Fund, including securities which the Fund desires to be held in places
within the United States ("domestic securities") and securities it desires to
be held outside the United States ("foreign securities") pursuant to the
provisions of the Fund's governing documents. The Fund agrees to deliver to
the Custodian all securities and cash of the Fund, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Fund from time to time, and the cash consideration
received by it for such new or treasury shares of capital stock, beneficial
interest or partnership interest, as applicable, of the Fund, ("Shares") as
may be issued or sold from time to time. The Custodian shall not be
responsible for any property of a Fund held or received by the Fund and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Fund from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of the Fund, and provided
that the Custodian shall have no more or less responsibility or liability to
the Fund on account of any actions or omissions of any sub-custodian so
employed than any such sub-custodian has to the Custodian. The Custodian may
employ as sub-custodian for the Fund's foreign securities the foreign banking
institutions and foreign securities depositories designated in Schedule A
hereto but only in accordance with the provisions of Article 3.
1
<PAGE> 5
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Fund all non-cash property, to be held by it
in the United States including all domestic securities owned by such
Fund, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S. Department
of the Treasury, collectively referred to herein as "Securities
System" and (b) commercial paper of an issuer for which State Street
Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian (the "Direct Paper System") pursuant to
Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Fund held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions from the Fund, which may be
continuing instructions when deemed appropriate by the parties, and
only in the following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee
2
<PAGE> 6
name of any agent appointed pursuant to Section 2.9 or into
the name or nominee name of any sub-custodian appointed
pursuant to Article 1; or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the account of the Fund,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned by
the Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed;
3
<PAGE> 7
12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding account
deposits in connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase
or redemption; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund, a
certified copy of a resolution of the Board or of the
Executive Committee of the Fund signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Fund to be delivered, setting
forth the purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such
securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Fund or in the name of any nominee of the Fund or of any nominee of
the Custodian which nominee shall be assigned exclusively to the Fund,
unless the Fund has authorized in writing the appointment of a nominee
to be used in common with other registered investment companies having
the same investment adviser as the Fund, or in the name or nominee
name of any agent appointed pursuant to Section 2.9 or in the name or
nominee name of any sub-custodian appointed pursuant to
4
<PAGE> 8
Article 1. All securities accepted by the Custodian under the terms
of this Contract shall be in "street name" or other good delivery
form. If, however, the Fund directs the Custodian to maintain
securities in "street name", the Custodian shall utilize its best
efforts only to timely collect income due the Fund on such securities
and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Fund ,
subject only to draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for
the account of the Fund, other than cash maintained by the Fund in a
bank account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940. Funds held by the Custodian for a
Fund may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940 and that
each such bank or trust company and the funds to be deposited with
each such bank or trust company shall on behalf of each applicable
Fund be approved by vote of a majority of the Board of the Fund.
Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions from the Fund, make federal funds available to such Fund
as of specified times agreed upon from time to time by the Fund and
the Custodian in the amount of checks received in payment for Shares
of such Fund which are deposited into the Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held hereunder
to which each Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis
all income and other payments with respect to bearer domestic
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall credit such
income, as collected, to such Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when
5
<PAGE> 9
due on securities held hereunder. Income due each Fund on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund
in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper Instructions from the
Fund, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out moneys of a Fund in the
following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Fund but only (a) against the delivery of such securities
or evidence of title to such options, futures contracts or
options on futures contracts to the Custodian (or any bank,
banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a custodian and has
been designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of
a nominee of the Custodian referred to in Section 2.3 hereof
or in proper form for transfer; (b) in the case of a purchase
effected through a Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance
with the conditions set forth in Section 2.11; (d) in the case
of repurchase agreements entered into between the Fund and
the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Fund of securities owned by the Custodian
along with written evidence of the agreement by the Custodian
to repurchase such securities from the Fund or (e) for
transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund
as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
6
<PAGE> 10
3) For the redemption or repurchase of Shares issued by the Fund
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Fund
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund, a certified
copy of a resolution of the Board or of the Executive
Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall
be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from
time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
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<PAGE> 11
2.10 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Fund in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund;
3) The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon (i) receipt of advice
from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all
advices from the Securities System of transfers of securities
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to
the Fund at its request. Upon request, the Custodian shall
furnish the Fund confirmation of each transfer to or from the
account of the Fund in the form of a written advice or notice
and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities
System for the account of the Fund.
4) The Custodian shall provide the Fund with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
8
<PAGE> 12
5) The Custodian shall have received from the Fund the initial or
annual certificate, as the case may be, required by Article 14
hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Fund for any loss or damage to the Fund resulting from use of
the Securities System by reason of any negligence, misfeasance
or misconduct of the Custodian or any of its agents or of any
of its or their employees or from failure of the Custodian or
any such agent to enforce effectively such rights as it may
have against the Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claim against the Securities
System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent
that the Fund has not been made whole for any such loss or
damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a Fund in
the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund ;
2) The Custodian may keep securities of the Fund in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper
System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the
account of the Fund upon the making of an entry on the records
of the Custodian to reflect such payment and transfer of
securities to the account of the Fund. The Custodian shall
transfer securities sold for the account of the Fund upon the
making of an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account of the
Fund;
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<PAGE> 13
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of a
written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the
Fund;
6) The Custodian shall provide the Fund with any report on its
system of internal accounting control as the Fund may
reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund establish and maintain a segregated account
or accounts for and on behalf of each such Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund , the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government securities
in connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold by
the Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund , a certified copy of a
resolution of the Board or of the Executive Committee of the Fund
signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper corporate
purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Fund held by it
and in connection with transfers of securities.
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<PAGE> 14
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund all
written information (including, without limitation, pendency of calls
and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased
or sold by the Fund) received by the Custodian from issuers of the
securities being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Fund all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Fund shall notify the Custodian at
least three business days prior to the date on which the Custodian is
to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Section 5 of this
Contract, together with a certified resolution of the Fund's Board,
the Custodian and the Fund may agree to amend Schedule A hereto from
time to time to designate additional foreign banking institutions and
foreign securities depositories to act as sub-custodian. Upon receipt
of Proper Instructions, the Fund may instruct the Custodian to cease
the employment of any one or more such sub-custodians for maintaining
custody of the Fund's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to:
(a) "foreign securities", as defined in
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<PAGE> 15
paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to
effect the Fund's foreign securities transactions. The Custodian
shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Funds shall be
maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving
as sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.4 hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
the Fund will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership for the assets of
the Fund will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the Fund;
(d) officers of or auditors employed by, or other representatives of
the Custodian, including to the extent permitted under applicable law
the independent public accountants for the Fund, will be given access
to the books and records of the foreign banking institution relating
to its actions under its agreement with the Custodian; and (e) assets
of the Fund held by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.
3.5 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Fund held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Fund securities and other assets and
advices or notifications of any transfers of securities to or from
each custodial account maintained by a foreign banking
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<PAGE> 16
institution for the Custodian on behalf of the Fund indicating, as to
securities acquired for a Fund, the identity of the entity having
physical possession of such securities.
3.7 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Fund held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of the Fund and delivery of securities
maintained for the account of the Fund may be effected in accordance
with the customary established securities trading or securities
processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor
(or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a
foreign sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless from
any liability as a holder of record of such securities.
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable
care in the performance of its duties and to indemnify, and hold
harmless, the Custodian and each Fund from and against any loss,
damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At
the election of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a foreign
banking institution as a consequence of any such loss, damage, cost,
expense, liability or claim if and to the extent that the Fund has not
been made whole for any such loss, damage, cost, expense, liability or
claim.
3.9 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.12 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this
13
<PAGE> 17
paragraph 3.9, in delegating custody duties to State Street London
Ltd., the Custodian shall not be relieved of any responsibility to the
Fund for any loss due to such delegation, except such loss as may
result from (a) political risk (including, but not limited to,
exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.10 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a Fund
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee
shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable Fund shall
be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash
and to dispose of such Fund's assets to the extent necessary to obtain
reimbursement.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the
Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Fund's assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of
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<PAGE> 18
said Act. The appointment of any such branch as a sub-custodian shall
be governed by paragraph 1 of this Contract. (b) Cash held for each
Fund in the United Kingdom shall be maintained in an interest bearing
account established for the Fund with the Custodian's London branch,
which account shall be subject to the direction of the Custodian,
State Street London Ltd. or both.
3.13 Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of the United States of
America or any state or political subdivision thereof. It shall be
the responsibility of the Fund to notify the Custodian of the
obligations imposed on the Fund or the Custodian as custodian of the
Fund by the tax law of jurisdictions other than those mentioned in the
above sentence, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts to assist
the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such
information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent of the Fund and deposit into the account of the
appropriate Fund such payments as are received for Shares of that Fund issued
or sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund and the Transfer Agent of any receipt by it of
payments for Shares of such Fund.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board
of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions
from the Transfer Agent, make funds available for payment to holders of Shares
who have delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of Shares of
a Fund, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by
a holder of Shares, which checks have been furnished by the Fund to the holder
of Shares, when presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time between the Fund and
the Custodian.
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5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of the Fund
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes
them to have been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all oral
instructions to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by the Board of the
Fund accompanied by a detailed description of procedures approved by the Board,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Funds' assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from
the Fund:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund ;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Fund except as otherwise directed by the Board of the
Fund.
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<PAGE> 20
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of the Fund as conclusive evidence (a) of the authority of any person to
act in accordance with such vote or (b) of any determination or of any action
by the Board pursuant to the governing documents of the Fund as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Fund to keep the books of
account of each Fund and/or compute the net asset value per share of the
outstanding shares of each Fund or, if the Custodian and the Fund execute the
applicable Price Source Authorization (the "Authorization"), the Custodian
shall keep such books of account and/or compute such net asset value per share
pursuant to the terms of the Authorization and the attachments thereto. If so
directed, the Custodian shall also calculate daily the net income of the Fund
as described in the Fund's currently effective Prospectus and shall advise the
Fund and the Transfer Agent daily of the total amounts of such net income and,
if instructed in writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share and the
daily income of each Fund shall be made at the time or times described from
time to time in the Fund's currently effective Prospectus.
9. Records
The Custodian shall with respect to each Fund create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Fund and held by the Custodian and shall, when requested to
17
<PAGE> 21
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and Form N-SAR or
other annual reports to the Securities and Exchange Commission and with respect
to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
the Fund to provide reasonable assurance that any material inadequacies would
be disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in
18
<PAGE> 22
good faith without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United states (except as specifically provided in Article 3.9)
and regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S.
bank, as contemplated by paragraph 3.12 hereof, the Custodian shall not be
liable for any loss, damage, cost, expense, liability or claim resulting from
or caused by, the direction or authorization by the Fund to maintain custody of
any securities or cash of the Fund in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions or acts of war or terrorism.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned
to the Fund being liable for the payment of money or incurring liability of
some other form, the Fund, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the
Fund assets to the extent necessary to obtain reimbursement.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30)
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<PAGE> 23
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Fund act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of the Fund has approved the initial use of a
particular Securities System by such Fund and the receipt of a certificate of
the Secretary or an Assistant Secretary that the Board has reviewed any
subsequent change regarding the use by such Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act of 1940,
as amended and that the Custodian shall not with respect to a Fund act under
Section 2.11 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board has approved the initial use
of the Direct Paper System by such Fund and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Board of the
Fund has reviewed the use by such Fund of the Direct Paper System; provided
further, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any
time by action of its Board (i) substitute another bank or trust company for
the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund shall be appointed by the Board
of the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities of the Fund then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of the
Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such
20
<PAGE> 24
termination shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, doing business in Boston, Massachusetts, of its
own selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of the
Fund and all instruments held by the Custodian relative thereto and all other
property held by it under this Contract on behalf of the Fund and to transfer
to an account of such successor custodian all of the securities of the Fund
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision
of the governing documents of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
17. Additional Funds
In the event that Van Kampen American Capital Distributors , Inc.
establishes any funds in addition to the Funds listed on Appendix A with
respect to which it desires to have the Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if the
Custodian agrees in writing to provide such services, such fund shall become a
Fund hereunder, subject to the delivery by the new Fund of resolutions
authorizing the appointment of the Custodian and such other supporting or
related documentation as the Custodian may request. All references herein to
the "Fund" are to each of the Funds listed on Appendix A individually, as if
21
<PAGE> 25
this Contract were between each such individual Fund and the Custodian. With
respect to any Fund which issues shares in separate classes or series, each
class or series of such Fund shall be treated as a separate Fund hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Funds and the Custodian relating to the custody of
the Fund's assets.
20. Shareholder Communications
Securities and Exchange Commission Rule 14b-2 requires banks which
hold securities for the account of customers to respond to requests by issuers
of securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If the Fund tells the
Custodian "no", the Custodian will not provide this information to requesting
companies. If the Fund tells the Custodian "yes" or does not check either
"yes" or "no" below, the Custodian is required by the rule to treat the Fund as
consenting to disclosure of this information for all securities owned by the
Fund. For the Fund's protection, the Rule prohibits the requesting company
from using the Fund's name and address for any purpose other than corporate
communications. Please indicate below whether the Fund consent or object by
checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the name,
address, and share positions of each Fund listed on
Exhibit A.
NO [X] The Custodian is not authorized to release the name,
address, and share positions of each Fund listed on
Exhibit A.
22
<PAGE> 26
21. Limitation of Liability.
The execution of this Contract has been authorized by each Fund's
Board. This Contract is executed on behalf of each Fund or the trustees of
such Fund as trustees and not individually and the obligations of the Fund
under this Contract are not binding upon any of the Fund's trustees, officers
or shareholders individually but are binding only upon the assets and property
of the Fund. A Certificate of Trust in respect of each Fund is on file with
the Secretary of State of Delaware.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 21st day of June, 1995.
ATTEST EACH OF THE FUNDS LISTED ON APPENDIX A
/s/ HUEY P. FALGOUT, JR. By: /s/ NORI L. GABERT
- ------------------------ -----------------------------------
Nori L. Gabert, Vice President
ATTEST STATE STREET BANK AND TRUST COMPANY
[ILLEGIBLE] By: [ILLEGIBLE]
- ------------------------ -----------------------------------
Executive Vice President
23
<PAGE> 27
APPENDIX A
FUND NAMES
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 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 Limited Maturity Government 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
24
<PAGE> 1
EXHIBIT (9)(a)
DATA ACCESS SERVICES AGREEMENT
This Data Access Services Agreement is a supplement to that certain
Custodian Contract dated June 21, 1995 between the undersigned each of the
Funds listed on Appendix A of the Custodian Contract (the "Customer") and State
Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, the Customer desires the ability to access certain
Customer-related data ("Customer Data") maintained by State Street on data
bases under the control and ownership of State Street ("Data Access Services");
and
WHEREAS, State Street agrees to grant the Customer such access to the
Customer Data as is consistent with the policy and standards issued from time
to time by State Street.
NOW THEREFORE, the parties agree as follows:
1. Services
A. State Street maintains Customer Data within its proprietary data
base system. State Street agrees to provide the Customer with certain Data
Access Services as provided herein and in the Data Access operating procedures
as may be issued from time to time.
B. Customer agrees to use the Data Access Services solely for its
internal use and benefit and not for resale or other transfer or disposition
to, or use by or for the benefit of any other person or organization without
the prior written approval of State Street. Customer agrees to comply with user
identification and other password control requirements and other security
procedures as may be issued from time to time by State Street.
2. Proprietary Information
Customer acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to Customer by State Street as part of the Data Access
Services constitute copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to State Street.
Customer agrees to treat all Proprietary Information as proprietary to State
Street and further agrees that it shall not divulge any Proprietary Information
to any person or organization except as may be provided hereunder. Without
limiting the foregoing, Customer agrees for itself and its employees and agents:
(1) to access Customer Data solely from locations as may be designated
in writing by State Street and solely in accordance with State Street's
applicable user documentation;
(2) to refrain from copying or duplicating in any way the Proprietary
Information;
(3) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform State Street in a timely manner of such fact and dispose of
such information in accordance with State Street's instructions;
<PAGE> 2
(4) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of State Street;
(5) that the Customer shall have access only to those authorized
transactions agreed upon by the parties;
(6) to honor all reasonable written requests made by State Street to
protect at State Street's expense the rights of State Street in
Proprietary Information at common law, under federal copyright law and
under other federal or state law.
Customer's obligation to maintain the confidentiality of the
Proprietary Information shall not apply where such:
(1) was already in Customer's possession prior to disclosure by State
Street, and such was received by Customer without obligation of
confidence;
(2) is or becomes publicly available without breach of this Agreement;
(3) is rightly received by Customer from a third party, who is not a
current or former employee, officer, director or agent of State Street,
without obligation of confidence;
(4) is disclosed by Customer with the written consent of State Street;
or
(5) is released in accordance with a valid order of a court or
governmental agency.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this section 2. The obligations of this section
shall survive any earlier termination of this agreement.
3. Warranties
If Customer notifies State Street that any of the Data Access Services
do not operate in material compliance with the most recently issued user
documentation for such services, State Street shall endeavor in a timely
manner to correct such failure. Organizations from which State Street may
obtain certain data included in the Data Access Services are solely responsible
for the contents of such data and Customer agrees to make no claim against
State Street arising out of the contents of such third-party data, including,
but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER
PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED
ON AN AS IS, AS AVAILABLE BASIS. STATE STREET EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
4. Limitation of Liability
State Street shall not be liable to the Customer for any loss or damage
claimed to have resulted from the use of the Data Access Services except for
the direct loss or damage resulting from the negligence or willful conduct of
State
-2-
<PAGE> 3
Street. STATE STREET SHALL NOT BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL,
OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
ATTORNEYS' FEES) IN ANY WAY DUE TO OR ARISING IN CONNECTION WITH CUSTOMER'S USE
OF THE DATA ACCESS SERVICES OR THE PERFORMANCE OF OR FAILURE TO PERFORM STATE
STREET'S OBLIGATIONS UNDER THIS AGREEMENT. This disclaimer applies without
limitation to claims (i) arising from the provision of the Data Access
Services, the delivery, installation, use, maintenance, or removal of State
Street provided equipment, or any failure or delay in connection with any of
the foregoing; (ii) regardless of the form of action, whether in contract, tort
(including negligence), strict liability, or otherwise; and (iii) regardless of
whether such damages are foreseeable. Further, in no event shall State Street be
liable for any claims that arise more than one (1) year prior to the
institution of suit therefor or any claim arising from causes beyond State
Street's control.
5. Force Majeure
State Street shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Customer as a result of
work stoppage, power or other mechanical failure, natural disaster,
governmental action, communication disruption or other impossibility of
performance.
6. Exclusive Remedy
In consideration of the fees charged for Data Access Services, if any,
Customer's exclusive recovery with respect to Data Access Services regardless
of the basis of the claims asserted by it against State Street shall not exceed
six (6) times the average monthly fees billed to Customer hereunder and
computed by averaging the monthly billing for each of the twelve months
preceding the month in which the damage or injury is alleged to have occurred,
but if this agreement has not been in effect for twelve months preceding such
date, then by averaging the monthly billings for each of the preceding months
that this agreement has been in effect.
7. Indemnification
The Customer agrees to indemnify and hold State Street free and
harmless from any expense, loss, damage or claim including reasonable
attorney's fees, (collectively "costs") suffered by State Street and caused by
or resulting from (i) the negligence or willful misconduct in the use by the
Customer, its employees or agents, of the Data Access Services or the
application software systems supporting such services, including any costs
incurred by State Street resulting from a security breach at the Customer's
location or committed by its former or present employees or agents and (ii)
claims resulting from incorrect Customer Originated Electronic Financial
Instruction.
8. Customer Originated Electronic Financial Instruction ("COEFI")
If the transactions available to Customer include the ability to
originate electronic instructions to State Street in order to (i) effect the
transfer or movement of cash or securities held under custody or (ii) transmit
accounting or other information (such transactions constituting a "COEFI"),
then in such event State Street shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further inquiry as
long as such instruction is
-3-
<PAGE> 4
undertaken in conformity with security procedures established by State Street
from time to time.
9. Injunctive Relief
In the event of a breach or threatened breach by Customer of Section 1
or 2 hereof, State Street shall be entitled to obtain injunctive relief in
addition to any other remedies available at law or equity.
10. General
10.1 Term of Agreement. This agreement is effective from the date
it is accepted by State Street and shall remain in full force
and effect until terminated as hereinafter provided. Either
party may terminate this agreement for any reason by giving the
other party at least thirty days prior written notice of
termination. In addition, either party may terminate this
agreement immediately for failure of the other party to comply
with any material term and condition by giving the other party
written notice of termination. This agreement shall in any
event terminate contemporaneously with the Custodian Contract
applicable hereto.
10.2 Charges. Charges, if any, for Data Access Services shall be
as agreed upon between the parties from time to time.
10.3 Assignment; Successors. This Agreement shall not be assigned
by either party without the prior written consent of the other
party, except that either party may assign to a successor of
all or a substantial portion of its business, or to a party
controlling, controlled by, or under common control with such
party.
10.4 Survival. All provisions regarding indemnification,
warranty, liability and limits thereon, and confidentiality
and/or protection of proprietary rights and trade secrets shall
survive the termination of this agreement.
10.5 Consent to Breach not Waiver. No term or provision hereof
shall be deemed waived and no breach excused, unless such
waiver or consent shall be in writing and signed by the party
claimed to have waived or consented. Any consent by any party
to, or waiver of, a breach by the other, whether express or
implied, shall not constitute a consent to, waiver of, or
excuse for any other different or subsequent breach.
11. Signatory
The individual signing the agreement represents that he or she is an
authorized officer of the Customer (and, if identified below or on an attached
schedule, such investment manager or other party as may use Data Access
Services with respect to the Customer) so as to cause this agreement to be a
valid and binding obligation upon the Customer (and, if applicable, such other
parties as may be identified on the signature line below or on an attached
schedule).
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement.
STATE STREET BANK AND EACH OF THE VAN KAMPEN
TRUST COMPANY AMERICAN CAPITAL FUNDS
LISTED ON APPENDIX A OF
THE CUSTODIAN CONTRACT
By: [Illegible]
---------------------------
Title: Executive Vice President By: /s/ NORI L. GABERT
------------------------ --------------------
Nori L. Gabert
Date:
------------------------- Title: Vice President
-----------------
Date: June 21, 1995
------------------
-5-
<PAGE> 1
EXHIBIT (9)(b)
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT, dated October 31, 1996, by and between the parties set
forth in Schedule A hereto (designated collectively hereafter as the "Funds")
and VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP., a Delaware
corporation ("Advisory Corp.").
W I T N E S S E T H:
WHEREAS, each of the Funds is registered as a management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, Advisory Corp. has the capability of providing certain accounting
services to the Funds; and
WHEREAS, each desires to utilized Advisory Corp. in the provision of such
accounting services; and
WHEREAS, Advisory Corp. intends to maintain its staff in order to
accommodate the provision of all such services.
NOW THEREFORE, in consideration of the premises and the mutual covenants
spelled out herein, it is agreed between the parties hereto as follows:
1. Appointment of Advisory Corp.. As agent, Advisory Corp. shall provide each
of the Funds the accounting services ("Accounting Services") as set forth in
Paragraph 2 of this Agreement. Advisory Corp. accepts such appointment and
agrees to furnish the Accounting Services in return for the compensation
provided in Paragraph 3 of this Agreement.
2. Accounting Services to be Provided. Advisory Corp. will provide to each
respective Fund accounting related services in connection with the maintenance
of the financial records of such Fund, including without limitation: (i)
maintenance of the general ledger and other financial books and records; (ii)
processing of portfolio transactions; (iii) coordination of the valuation of
portfolio securities; (iv) calculation of the Fund's net asset value; (v)
coordination of financial and regulatory reporting; (vi) preparation of
financial reports for each Fund's Board of Trustees; (vii) coordination of tax
and financial compliance issues; (viii) the establishment and maintenance of
accounting policies; (ix) recommendations with respect to dividend policies;
(x) preparation of each Fund's financial reports and other accounting and tax
related notice information to shareholders; and (xi) the assimilation and
interpretation of accounting data for meaningful management review. Advisory
Corp. shall provide accurate maintenance of each Fund's financial books and
records as required by the applicable securities statutes and regulations, and
shall hire persons (collectively the "Accounting Service Group") as needed to
provide such Accounting Services.
<PAGE> 2
3. Expenses and Reimbursements. Advisory Corp. shall be reimbursed by the
Funds for all costs and services incurred in connection with the provision of
the aforementioned Accounting Services ("Accounting Service Expenses"),
including but not limited to all salary and related benefits paid to the
personnel of the Accounting Service Group, overhead and expenses related to
office space and related equipment and out-of-pocket expenses.
The Accounting Services Expenses will be paid by Advisory Corp. and
reimbursed by the Funds. Advisory Corp. will tender to each Fund a monthly
invoice as of the last business day of each month which shall certify the total
support service expenses expended. Except as provided herein, Advisory Corp.
will receive no other compensation in connection with Accounting Services
rendered in accordance with this Agreement.
4. Payment for Accounting Service Expenses Among the Funds. As to one quarter
(25%) of the Accounting Service Expenses incurred under the Agreement, the
expense shall be allocated between all Funds based on the number of classes of
shares of beneficial interest that each respective Fund has issued. As to the
remaining three quarters (75%) of the Accounting Service Expenses incurred
under the Agreement, the expense shall be allocated between all Funds based on
their relative net assets. For purposes of determining the percentage of
expenses to be allocated to any Fund, the liquidation preference of any
preferred shares issued by any such Fund shall not be considered a liability of
such Fund for the purposes of calculating relative net assets of such Fund.
5. Maintenance of Records. All records maintained by Advisory Corp. in
connection with the performance of its duties under this Agreement will remain
the property of each respective Fund and will be preserved by Advisory Corp.
for the periods prescribed in Section 31 of the 1940 Act and the rules
thereunder or such other applicable rules that may be adopted from time to time
under the act. In the event of termination of the Agreement, such records will
be promptly delivered to the respective Funds. Such records may be inspected
by the respective Funds at reasonable times.
6. Liability of Advisory Corp. Advisory Corp. shall not be liable to any Fund
for any action taken or thing done by it or its agents or contractors on behalf
of the fund in carrying out the terms and provisions of the Agreement if done
in good faith and without gross negligence or misconduct on the part of
Advisory Corp., its agents or contractors.
7. Indemnification By Funds. Each Fund will indemnify and hold Advisory Corp.
harmless from all lost, cost, damage and expense, including reasonable expenses
for legal counsel, incurred by Advisory Corp. resulting from: (a) any claim,
demand, action or suit in connection with Advisory Corp.'s acceptance of this
Agreement; (b) any action or omission by Advisory Corp. in the performance of
its duties hereunder; (c) Advisory Corp.'s acting upon instructions believed by
it to have been executed by a duly authorized officer of the Fund; or (d)
Advisory Corp.'s acting upon information provided by the Fund in form and under
policies agreed to by Advisory Corp. and the Fund. Advisory Corp. shall not be
entitled to such indemnification in respect of actions or omissions
constituting gross negligence or willful misconduct of Advisory Corp. or its
agents or contractors. Prior to confessing any claim against it which may be
subject to this indemnification, Advisory Corp. shall give the Fund reasonable
opportunity to defend against said claim in its own name or in the name of
Advisory Corp.
8. Indemnification By Advisory Corp. Advisory Corp. will indemnify and hold
harmless each Fund from all loss, cost, damage and expense, including
reasonable expenses for legal counsel, incurred by the Fund resulting from any
claim, demand, action or suit arising out of Advisory Corp.'s failure to comply
with the terms of this Agreement or which arises out of the gross negligence or
willful misconduct of Advisory Corp. or its agents or contractors; provided
that such negligence or misconduct is not attributable to the Funds, their
agents or contractors. Prior to confessing any claim against it which may be
subject to this indemnification, the Fund shall give Advisory Corp. reasonable
opportunity to defend against said claim in its own name or in the name of such
Fund.
2
<PAGE> 3
9. Further Assurances. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
10. Dual Interests. It is understood that some person or persons may be
directors, trustees, officers or shareholders of both the Funds and Advisory
Corp. (including Advisory Corp.'s affiliates), and that the existence of any
such dual interest shall not affect the validity hereof or of any transactions
hereunder except as otherwise provided by a specific provision of applicable
law.
11. Execution, Amendment and Termination. The term of this Agreement shall
begin as of the date first above written, and unless sooner terminated as
herein provided, this Agreement shall remain in effect through May, 1998, and
thereafter from year to year, if such continuation is specifically approved at
least annually by the Board of Trustees of each Fund, including a majority of
the independent Trustees of each Fund. This Agreement may be modified or
amended from time to time by mutual agreement between the parties hereto and
may be terminated after May, 1998, by at least sixty (60) days' written notice
given by one party to the others. Upon termination hereof, each Fund shall pay
to Advisory Corp. such compensation as may be due as of the date of such
termination and shall likewise reimburse Advisory Corp. for its costs, expenses
and disbursements payable under this Agreement to such date. This Agreement
may be amended in the future to include as additional parties to the Agreement
other investment companies for with Advisory Corp., any subsidiary or affiliate
serves as investment advisor or distributor if such amendment is approved by
the President of each Fund.
12. Assignment. Any interest of Advisory Corp. under this Agreement shall not
be assigned or transferred, either voluntarily or involuntarily, by operation
of law or otherwise, without the prior written consent of the Funds. This
Agreement shall automatically and immediately terminate in the event of its
assignment without the prior written consent of the Funds.
13. Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or sent by registered or certified mail, postage prepaid, to the
other party at such address as such other party may designate for the receipt
of such notices. Until further notice to the other parties, it is agreed that
for this purpose the address of each Fund is One Parkview Plaza, Oakbrook
Terrace, Illinois 60181, Attention: President and that of Advisory Corp. for
this purpose is One Parkview Plaza, Oakbrook Terrace, Illinois 60181,
Attention: President.
14. Personal Liability. As provided for in the Agreement and Declaration of
Trust of the various Funds, under which the Funds are organized as
unincorporated trusts, the shareholders, trustees, officers, employees and
other agents of the Fund shall not personally be found by or liable for the
matters set forth hereto, nor shall resort be had to their private property for
the satisfaction of any obligation or claim hereunder.
15. Interpretative Provisions. In connection with the operation of this
Agreement, Advisory Corp. and the Funds may agree from time to time on such
provisions interpretative of or in addition to the provisions of this Agreement
as may in their joint opinion be consistent with the general tenor of this
Agreement.
16. State Law. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Illinois.
17. Captions. The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this amended and restated
Agreement to be executed as of the day and year first above written.
ALL OF THE PARTIES SET FORTH IN SCHEDULE A
By: /s/ RONALD A. NYBERG
-----------------------------------
Ronald A. Nyberg, Vice President
VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
By: /s/ DENNIS J. McDONNELL
------------------------------------
Dennis J. McDonnell, President
4
<PAGE> 5
SCHEDULE A
I. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
CLOSED END FUNDS
Van Kampen American Capital Municipal Income Trust
Van Kampen American Capital California Municipal Trust
Van Kampen American Capital Intermediate Term High Income Trust
Van Kampen American Capital Limited Term High Income Trust
Van Kampen American Capital Investment Grade Municipal Trust
Van Kampen American Capital Municipal Trust
Van Kampen American Capital California Quality Municipal Trust
Van Kampen American Capital Florida Quality Municipal Trust
Van Kampen American Capital New York Quality Municipal Trust
Van Kampen American Capital Ohio Quality Municipal Trust
Van Kampen American Capital Pennsylvania Quality Municipal Trust
Van Kampen American Capital Trust For Insured Municipals
Van Kampen American Capital Trust For Investment Grade Municipals
Van Kampen American Capital Trust For Investment Grade California Municipals
Van Kampen American Capital Trust For Investment Grade Florida Municipals
Van Kampen American Capital Trust For Investment Grade New Jersey Municipals
Van Kampen American Capital Trust For Investment Grade New York Municipals
Van Kampen American Capital Trust For Investment Grade Pennsylvania Municipals
Van Kampen American Capital Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust
Van Kampen American Capital Advantage Pennsylvania Municipal Income Trust
Van Kampen American Capital Strategic Sector Municipal Trust
Van Kampen American Capital Value Municipal Income Trust
Van Kampen American Capital California Value Municipal Income Trust
Van Kampen American Capital Massachusetts Value Municipal Income Trust
Van Kampen American Capital New Jersey Value Municipal Income Trust
Van Kampen American Capital New York Value Municipal Income Trust
Van Kampen American Capital Ohio Value Municipal Income Trust
Van Kampen American Capital Pennsylvania Value Municipal Income Trust
Van Kampen American Capital Municipal Opportunity Trust II
Van Kampen American Capital Florida Municipal Opportunity Trust
Van Kampen American Capital Advantage Municipal Income Trust II
Van Kampen American Capital Select Sector Municipal Trust
INSTITUTIONAL FUNDS
II. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL MANAGEMENT, INC.
("MANAGEMENT, INC.") (COLLECTIVELY, THE "FORMER VAN KAMPEN FUNDS"):
The Explorer Institutional Trust
on behalf of its series
Explorer Institutional Active Core Fund
Explorer Institutional Limited Duration Fund
5
<PAGE> 6
OPEN END FUNDS
III. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC.
("ASSET MANAGEMENT, INC.") (COLLECTIVELY, THE "FORMER AMERICAN CAPITAL
FUNDS"):
Van Kampen American Capital Comstock Fund ("Comstock Fund")
Van Kampen American Capital Corporate Bond Fund ("Corporate Bond Fund")
Van Kampen American Capital Emerging Growth Fund ("Emerging Growth Fund")
Van Kampen American Capital Enterprise Fund ("Enterprise Fund")
Van Kampen American Capital Equity Income Fund ("Equity Income Fund")
Van Kampen American Capital Limited Maturity Government Fund ("Limited
Maturity Government Fund")
Van Kampen American Capital Global Managed Assets Fund ("Global Managed
Assets Funds")
Van Kampen American Capital Government Securities Fund ("Government
Securities Fund")
Van Kampen American Capital Government Target Fund ("Government Target
Fund")
Van Kampen American Capital Growth and Income Fund ("Growth and Income
Fund")
Van Kampen American Capital Harbor Fund ("Harbor Fund")
Van Kampen American Capital High Income Corporate Bond Fund ("High Income
Corporate Bond Fund")
Van Kampen American Capital Life Investment Trust ("Life Investment
Trust" or "LIT")
on behalf of its Series
Enterprise Portfolio ("LIT Enterprise Portfolio")
Domestic Income Portfolio ("LIT Domestic Income Portfolio")
Emerging Growth Portfolio ("LIT Emerging Growth Portfolio")
Government Portfolio ("LIT Government Portfolio")
Asset Allocation Portfolio ("LIT Asset Allocation Portfolio")
Money Market Portfolio ("LIT Money Market Portfolio")
Real Estate Securities Portfolio ("LIT Real Estate Securities
Portfolio")
Growth and Income Portfolio ("LIT Growth and Income Portfolio")
Van Kampen American Capital Pace Fund ("Pace Fund")
Van Kampen American Capital Real Estate Securities Fund ("Real Estate
Securities Fund")
Van Kampen American Capital Reserve Fund ("Reserve Fund")
Van Kampen American Capital Small Capitalization Fund ("Small
Capitalization Fund")
Van Kampen American Capital Tax-Exempt Trust ("Tax-Exempt Trust")
on behalf of its Series
Van Kampen American Capital High Yield Municipal Fund ("High Yield
Municipal Fund")
Van Kampen American Capital U.S. Government Trust for Income ("U.S.
Government Trust for Income")
6
<PAGE> 7
IV. FUNDS ADVISED BY VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY
CORP. ("INVESTMENT ADVISORY CORP.") (COLLECTIVELY, THE "FORMER VAN KAMPEN
FUNDS"):
Van Kampen American Capital U.S. Government Trust ("U.S. Government
Trust")
on behalf of its series
Van Kampen American Capital U.S. Government Fund ("U.S. Government Fund")
Van Kampen American Capital Tax Free Trust ("Tax Free Trust")
on behalf of its series
Van Kampen American Capital Insured Tax Free Income Fund ("Insured Tax
Free Income Fund")
Van Kampen American Capital Tax Free High Income Fund ("Tax Free High
Income Fund")
Van Kampen American Capital California Insured Tax Free Fund ("California
Insured Tax Free Fund")
Van Kampen American Capital Municipal Income Fund ("Municipal Income
Fund")
Van Kampen American Capital Intermediate Term Municipal Income Fund
(Intermediate Term Municipal Income Fund")
Van Kampen American Capital Florida Insured Tax Free Income Fund
("Florida Insured Tax Free Income Fund")
Van Kampen American Capital New Jersey Tax Free Income Fund ("New Jersey
Tax Free Income Fund")
Van Kampen American Capital New York Tax Free Income Fund ("New York Tax
Free Income Fund")
Van Kampen American Capital California Tax Free Income Fund ("California
Tax Free Income Fund")
Van Kampen American Capital Michigan Tax Free Income Fund ("Michigan Tax
Free Income Fund")
Van Kampen American Capital Missouri Tax Free Income Fund ("Missouri Tax
Free Income Fund")
Van Kampen American Capital Ohio Tax Free Income Fund ("Ohio Tax Free
Income Fund")
Van Kampen American Capital Trust ("VKAC Trust")
Van Kampen American Capital High Yield Fund ("High Yield Fund")
Van Kampen American Capital Short-Term Global Income Fund ("Short-Term
Global Income Fund")
Van Kampen American Capital Strategic Income Fund ("Strategic Income
Fund")
Van Kampen American Capital Equity Trust ("Equity Trust")
on behalf of its series
Van Kampen American Capital Utility Fund ("Utility Fund")
Van Kampen American Capital Balanced Fund ("Balanced Fund")
Van Kampen American Capital Growth Fund ("Growth Fund")
Van Kampen American Capital Value Fund ("Value Fund")
Van Kampen American Capital Great American Companies Fund ("Great
American Companies Fund")
Van Kampen American Capital Prospector Fund ("Prospector Fund")
Van Kampen American Capital Aggressive Growth Fund ("Aggressive Growth
Fund")
Van Kampen American Capital Foreign Securities Fund ("Foreign Securities
Fund")
Van Kampen American Capital Pennsylvania Tax Free Income Fund
("Pennsylvania Tax Free Income Fund")
Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund");
and
7
<PAGE> 1
[LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)]
EXHIBIT (10)
April 30, 1997
Van Kampen American Capital
Global Managed Assets Fund
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital Global Managed Assets Fund
Registration Statement on Form N-1A
(File Nos. 33-74024 and 811-8286)
Ladies and Gentlemen:
We have acted as counsel to Van Kampen American Capital Global Managed
Assets Fund (the "Trust"), a Delaware business trust, in connection with the
preparation of Post-Effective Amendment No. 5 to the Trust's Registration
Statement on Form N-1A (as amended, the "Registration Statement") to be filed
under the Securities Act of 1933, as amended (the "1933 Act"), and the
Investment Company Act of 1940, as amended (the "1940 Act"), with the
Securities and Exchange Commission (the "Commission") on or about April 30,
1997. The Registration Statement relates to the registration under the 1933
Act and 1940 Act of an indefinite number of each of Class A Shares of beneficial
interest, par value $.01 per share, Class B Shares of beneficial interest, par
value $.01 per share, and Class C Shares of beneficial interest, par value
$.01 per share, of the Trust (collectively, the "Shares").
This opinion is delivered in accordance with the requirements of Item
24(b)(10) of Form N-1A under the 1933 Act and the 1940 Act.
In connection with this opinion, we have examined the originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Certificate of Trust filed with the Secretary of State of Delaware, (ii)
<PAGE> 2
Van Kampen American Capital
Global Managed Assets Fund
April 30, 1997
Page 2
the Agreement and Declaration of Trust and By-Laws of the Trust, each as
amended to date (the "Declaration of Trust" and "By-Laws", respectively), (iii)
the Certificate of Designation establishing the series of the Trust,
(iv) the resolutions adopted by the Board of Trustees of the Trust relating to
the authorization, issuance and sale of the Shares, the filing of the
Registration Statement and any amendments or supplements thereto and related
matters and (v) such other documents as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
In such examination we have assumed the legal capacity of natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed, photostatic, or other copies
and the authenticity of the originals of such latter documents. As to any
facts material to such opinion which were not independently established, we
have relied on statements or representations of officers and other
representatives of the Trust or others.
Members of our firm are admitted to the practice of law in the State
of Illinois, and we do not express any opinion as to the laws of any other
jurisdiction other than matters relating to the Delaware business
organizational statutes (including statutes relating to Delaware business
trusts) and the federal laws of the United States of America to the extent
specifically referred to herein.
Based upon and subject to the foregoing, we are of the opinion that the
issuance and sale of Shares by the Trust have been validly authorized and,
assuming certificates therefor have been duly executed, countersigned,
registered and delivered or the shareholders' accounts have been duly credited
and the Shares represented thereby have been fully paid for, such Shares will
be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 10 to the Registration Statement. We also consent to the reference to
our firm under the heading "Legal Counsel" in the Registration Statement. In
giving this consent, we do not hereby
<PAGE> 3
Van Kampen American Capital
Global Managed Assets Fund
April 30, 1997
Page 3
admit that we are in the category of persons whose consent is required under
Section 7 of the 1933 Act or the rules and regulations of the Commission.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom (Illinois)
<PAGE> 1
EXHIBIT (11)(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 5, Amendment No. 7 to the
Registration Statement on Form N-1A (the "Registration Statement") of our report
dated February 7, 1997, 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 28, 1997
<PAGE> 1
EXHIBIT (15)(a)
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
The plan set forth below (the "Distribution Plan") is the written plan
contemplated by Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), for the VAN KAMPEN AMERICAN CAPITAL GLOBAL
MANAGED ASSETS FUND (the "Fund"). This Distribution Plan describes the
material terms and conditions under which assets of the Fund may be used in
connection with financing distribution related activities with respect to each
of its classes of shares of beneficial interest (the "Shares"), each of which
is offered and sold subject to a different combination of front-end sales
charges, distribution fees, service fees and contingent deferred sales
charges.(1) Classes of shares, if any, subject to a front-end sales charge and
a distribution and/or service fee are referred to herein as "Front-End Classes"
and the Shares of such classes are referred to herein as "Front-End Shares."
Classes of shares, if any, subject to a contingent-deferred sales charge and a
distribution and/or a service fee are referred to herein as "CDSC Classes" and
Shares of such classes are referred to herein as "CDSC Shares." Classes of
shares, if any, subject to a front-end sales charge, a contingent-deferred
sales charge and a distribution and/or service fee are referred to herein as
"Combination Classes" and Shares of such class are referred to herein as
"Combination Shares."
The Fund has adopted a service plan (the "Service Plan") pursuant to which
the Fund is authorized to expend on an annual basis a portion of its average
net assets attributable to any or each class of Shares in connection with the
provision by the principal underwriter (within the meaning of the 1940 Act) of
the Shares and by brokers, dealers and other financial intermediaries
(collectively, "Financial Intermediaries") of personal services to holders of
Shares and/or the maintenance of shareholder accounts. The Fund also has
entered into a distribution and services agreement (the "Distribution and
Services Agreement") with Van Kampen American Capital Inc. (the "Distributor"),
pursuant to which the Distributor acts as the principal underwriter with
respect to each class of Shares and provides services to the Fund and acts as
agent on behalf of the Fund in connection with the implementation of the
Service Plan. The Distributor may enter into selling agreements (the "Selling
Agreements") with Financial Intermediaries in order to implement the
Distribution and Services Agreement, the Service Plan and this Distribution
Plan.
1. The Fund hereby is authorized to pay the Distributor a distribution fee with
respect to each class of its Shares to compensate the Distributor for
activities which are primarily intended to result in the sale of such Shares
("distribution related activities") performed by the Distributor with respect
to the respective class of Shares of the Fund. Such distribution related
activities include without limitation: (a) printing and distributing copies of
any prospectuses and annual and interim reports of the Fund (after the Fund has
prepared and set in type such materials) that are used by such Distributor in
connection with the offering of Shares; (b) preparing, printing or otherwise
manufacturing and distributing any other literature or materials of any nature
used by such Distributor in connection with promoting, distributing or offering
the Shares; (c) advertising, promoting and selling Shares to broker-dealers,
banks and the public; (d) distribution related overhead and the provision of
information programs and shareholder services intended to enhance the
attractiveness of investing in the Fund; (e) incurring initial outlay expenses
in connection with compensating Financial Intermediaries for (i) selling CDSC
Shares and Combination Shares and (ii) providing personal services to
shareholders and the maintenance of
- ----------------------------
(1) The Fund is authorized to offer multiple classes of shares pursuant to a
Rule 18f-3 Plan adopted under the 1940 Act.
1
<PAGE> 2
shareholder accounts of all classes of Shares, including paying interest
on and incurring other carrying costs on funds borrowed to pay such
initial outlays; and (f) acting as agent for the Fund in connection with
implementing this Distribution Plan pursuant to the Selling Agreements.
2. The amount of the distribution fee hereby authorized with respect to each
class of Shares of the Fund shall be as follows:
3. With respect to Class A Shares, the distribution fee authorized hereby and
the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 0.25% of the Fund's average daily net
assets attributable to Class A Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to Class A Shares. The
Fund may pay a distribution fee as determined from time to time by its Board of
Trustees in an annual amount not to exceed the lesser of (i) (A) 0.25% of the
Fund's average daily net asset value during such year attributable to Class A
Shares sold on or after the date on which this Distribution Plan was first
implemented with respect to Class A Shares minus (B) the amount of the service
fee with respect to the Class A Shares actually expended during such year by
the Fund pursuant to the Service Plan and (ii) the actual amount of
distribution related expenses incurred by the Distributor with respect to Class
A Shares.
4. With respect to Class B Shares, the distribution fee authorized hereby and
the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class B Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class B Shares. The
Fund may pay a distribution fee with respect to the Class B Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class B Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class B
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class B Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class B Shares.
5. With respect to Class C Shares, the distribution fee authorized hereby and
the service fee authorized pursuant to the Service Plan, in the aggregate,
shall not exceed on an annual basis 1.00% of the Fund's average daily net
assets attributable to Class C Shares sold on or after the date on which this
Distribution Plan is first implemented with respect to the Class C Shares. The
Fund may pay a distribution fee with respect to the Class C Shares as
determined from time to time by its Board of Trustees in an annual amount not
to exceed the lesser of (A) 0.75% of the Fund's average daily net asset value
during such year attributable to Class C Shares sold on or after the date on
which this Distribution Plan is first implemented with respect to the Class C
Shares and (B) the actual amount of distribution related expenses incurred by
the Distributor during such year plus prior unreimbursed distribution related
expenses less the amount of any contingent deferred sales charge paid to the
Distributor, in each case with respect to the Class C Shares sold on or after
the date on which this Distribution Plan is first implemented with respect to
the Class C Shares.
6. Payments pursuant to this Distribution Plan shall not be made more often
than monthly upon receipt by the Fund of a separate written expense report with
respect to each class of Shares setting forth the expenses qualifying for such
reimbursement allocated to each class of Shares and the purposes thereof.
7. In the event that amounts payable hereunder with respect to shares of a
Front-End Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of such class, there
is no carryforward of reimbursement obligations to succeeding years. In the
event the amounts payable hereunder with respect to shares of a CDSC Class or a
Combination Class do not fully reimburse the Distributor for its actual
distribution related expenses with respect to the Shares of the respective
class, such unreimbursed distribution expenses will be carried forward and paid
by the Fund hereunder in future years so long as this Distribution Plan remains
in effect, subject to applicable laws
2
<PAGE> 3
and regulations. Reimbursements for distribution related expenses payable
hereunder with respect to a particular class of Shares may not be used to
subsidize the sale of Shares of any other class of Shares.
8. The Fund shall not compensate the Distributor, and neither the Fund nor the
Distributor shall compensate any Financial Intermediary, for any distribution
related expenses incurred with respect to a class of Shares prior to the later
of (a) the implementation of this Distribution Plan with respect to such class
of Shares or (b) the date that such Financial Intermediary enters into a
Selling Agreement with the Distributor.
9. The Fund hereby authorizes the Distributor to enter into Selling Agreements
with certain Financial Intermediaries to provide compensation to such Financial
Intermediaries for activities and services of the type referred to in Paragraph
1 hereof. Prior to the implementation of a Selling Agreement, such agreement
shall be approved by a majority of the Board of Trustees of the Trust and a
majority of the Disinterested Trustees (within the meaning of the 1940 Act) by
a vote cast in person at a meeting called for the purpose of voting on such
Selling Agreements. The Distributor may reallocate all or a portion of its
distribution fee to such Financial Intermediaries as compensation for the
above-mentioned activities and services. Such reallocation shall be in an
amount as set forth from time to time in the Fund's prospectus. Such Selling
Agreements shall provide that the Financial Intermediaries shall provide the
Distributor with such information as is reasonably necessary to permit the
Distributor to comply with the reporting requirements set forth in Paragraphs 3
and 8 hereof.
10. Subject to the provisions of this Distribution Agreement, the Fund is
hereby authorized to pay a distribution fee to any person that is not an
"affiliated person" or "interested person" of the Fund or its "investment
adviser" or "principal underwriter" (as such terms are defined in the 1940 Act)
who provides any of the foregoing services for the Fund. Such fee shall be
paid only pursuant to written agreements between the Fund and such other person
the terms of which permit payments to such person only in accordance with the
provisions of this Distribution Agreement and which have the approval of a
majority of the Disinterested Trustees by vote cast separately with respect to
each class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.
11. The Fund and the Distributor shall prepare separate written reports for
each class of Shares and shall submit such reports to the Fund's Board of
Trustees on a quarterly basis summarizing all payments made by them with
respect to each class of Shares pursuant to this Distribution Plan, the Service
Plan and the agreements contemplated hereby, the purposes for which such
payments were made and such other information as the Board of Trustees or the
Disinterested Trustees may reasonably request from time to time, and the Board
of Trustees shall review such reports and other information.
12. This Distribution Plan shall become effective upon its approval by (a) a
majority of the Board of Trustees and a majority of the Disinterested Trustees
by vote cast separately with respect to each class of Shares cast in person at
a meeting called for the purpose of voting on this Distribution Plan, and (b)
with respect to each class of Shares, a "majority of the outstanding voting
securities" (as such phrase is defined in the 1940 Act) of such class of Shares
voting separately as a class.
13. This Distribution Plan and any agreement contemplated hereby shall continue
in effect beyond the first anniversary of its adoption by the Board of Trustees
of the Fund only so long as (a) its continuation is approved at least annually
in the manner set forth in clause (a) of paragraph 9 above and (b) the
selection and nomination of those trustees of the Fund who are not "interested
persons" of the Fund are committed to the discretion of such trustees.
14. This Distribution Plan may be terminated with respect to a class of Shares
without penalty at any time by a majority of the Disinterested Trustees or by a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund.
15. This Distribution Plan may not be amended to increase materially the
maximum amounts permitted to be expended hereunder except with the approval of
a "majority of the outstanding voting securities" of the respective class of
Shares of the Fund and may not be amended in any other material
3
<PAGE> 4
respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform this Distribution Plan to changes in the Rule
or to other changes in the 1940 Act or the rules and regulations thereunder
shall not be deemed to be material amendments.
16. To the extent any service fees paid by the Fund pursuant to the Service
Plan are deemed to be payments for the financing of any activity primarily
intended to result in the sale of Shares issued by the Fund within the meaning
of the Rule, the terms and provisions of such plan and any payments made
pursuant to such plan hereby are authorized pursuant to this Distribution Plan
in the amounts and for the purposes authorized in the Service Plan without any
further action by the Board of Trustees or the shareholders of the Fund. To
the extent the terms and provisions of the Service Plan conflict with the terms
and provisions of this Distribution Plan, the terms and provisions of the
Service Plan shall prevail with respect to amounts payable pursuant thereto.
This paragraph 13 is adopted solely due to the uncertainty that may exist with
respect to whether payments to be made by the Fund pursuant to the Service Plan
constitute payments primarily intended to result in the sale of Shares issued
by the Fund within the meaning of the Rule.
17. The Trustees of the Trust have adopted this Distribution Plan as trustees
under the Declaration of Trust of the Trust and the policies of the Trust
adopted hereby are not binding upon any of the Trustees or shareholders of the
Trust individually, but bind only the trust estate.
4
<PAGE> 1
EXHIBIT (15)(b)
FORM OF
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
SHAREHOLDER ASSISTANCE AGREEMENT
This Agreement is entered into as of the _____day of _____, 199__, by and
between Van Kampen American Capital Distributors, Inc. (the "Company") and the
undersigned (the "Broker-Dealer").
WHEREAS, the Company is the principal underwriter of the open-end
investment companies listed on Schedule 1 to this Agreement (hereinafter
individually the "Fund" or collectively the "Funds"); and
WHEREAS, the Broker-Dealer is registered as a broker-dealer with the
National Association of Securities Dealers, Inc.; and
WHEREAS, each respective Fund has adopted a Distribution Plan (the
"Distribution Plan") and a service plan (the "Service Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"1940 Act"), relating to such Fund, the Distribution Plans being described in
the Fund's Prospectus and Statement of Additional Information; and
WHEREAS, each respective Fund's Distribution Plans authorize the Company
to enter into distribution assistance agreements such as this Agreement with
broker-dealers selected by the Company, and the Broker-Dealer has been so
selected; and
WHEREAS, each respective Fund's Distribution Plans authorize the Company
to make payments at a rate specified in an agreement such as this Agreement
varying directly with the aggregate average daily net asset value of shares of
each respective Fund sold by such broker-dealer on or after the effective date
of this Agreement, as determined pursuant to Section 4 hereof, and held at the
close of each day in accounts of clients or customers of a particular
broker-dealer, such amount being referred to herein as the "Holding Level"; for
purposes of calculating the Holding Level, shares of such Fund which are
redeemed or otherwise disposed of from any account existing prior to such
effective date shall be deemed to have been shares sold prior to such effective
date to the extent of the number of shares held in such account immediately
after the close of business on the day prior to such effective date; and
WHEREAS, this Agreement is a "related agreement" to the Distribution Plan
as that term is used in the Rule and is subject to all of the provisions of the
Rule as to such agreements;
NOW, THEREFORE, the Company and the Broker-Dealer agree as follows:
1. Subject to continuing compliance with its obligations pursuant to
Section 2 hereof, the Broker-Dealer shall be entitled distribution fee and
service fee to payments, if any, to be paid by the Company at the annual
percentage rate of the Holding Level set forth from time to time in the then
current Prospectus of the Fund on a quarterly basis (prorated for any portion
of such period during which this Agreement is in effect for less than the full
amount of such period); it is understood and agreed that the Company may make
final and binding determinations as to whether such continuing compliance and
as to whether or not any Fund shares are to be considered in determining the
Holding Level of any particular broker-dealer and what Fund shares, if any, are
to be attributed to such purpose to a particular broker-dealer, to a different
broker-dealer or to no broker-dealer. Payments shall be made to the
Broker-Dealer named above and portions of the payments may be, in the
discretion of the Broker-Dealer,
1
<PAGE> 2
paid over to individual registered representatives of said Broker-Dealer to
whom there have been assigned accounts of clients or customers of the
Broker-Dealer with respect to which the respective Holding Level was determined.
2. The distribution fee payments with respect to a class of the Fund's
shares to be made in accordance with Section 1 hereof, if any, shall be paid to
the Broker-Dealer as compensation for selling shares of the respective class.
3. In consideration for the service fee payments to be made in accordance
with Section 1 hereof, the Broker-Dealer shall provide to its clients or
customers who hold shares of each respective Fund with respect to which
payments to the Broker-dealer may be made under such Fund's Distribution Plan
such services and other assistance as may from time to time be reasonably
requested by the Company, including but not limited to answering inquiries
regarding the Fund, providing information programs regarding the fund, assisting
in selected dividend payment options, account designations and addresses and
maintaining the investment of such customer or client in the Fund.
4. The Company shall have the right at any time and from time to time
without notice to the Broker-Dealer to amend its Prospectus with respect to the
amount of the service free and the amount of the distribution fee to be paid
pursuant hereto. Such amendments shall be effective as of the date of the
amended Prospectus.
5. This Agreement shall go into effect on the later of the date set forth
above or the date on which it is approved by a vote of each Fund's Board of
Directors (or Trustees, as the case may be), and of those Directors/Trustees
(the "Qualified Directors/Trustees") who are not interested persons (as defined
in the 1940 Act), of the Fund and have no direct or indirect financial interest
in the operations of the Distribution Plan or any agreement related to the
Distribution Plan cast in person at a meeting called for the purpose of voting
on this Agreement and shall continue in effect (unless terminated) until the
June 30th next succeeding such effective date and will continue thereafter only
if such continuance is specifically approved at least annually in the manner
heretofore specified for initial approval. This agreement will terminate
automatically in the event of its assignment (as that term is used in the Rule)
or if the Distribution Plan is terminated. This Agreement may also be
terminated at any time, without the payment of any penalty, on sixty (60) days
written notice to the Broker-dealer, by vote of a majority of the Qualified
Directors/Trustees or by vote of a majority (as that term is used in the Rule)
of the outstanding voting securities of the Fund.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
VAN KAMPEN AMERICAN CAPITAL
- -------------------------- DISTRIBUTORS, INC.
Broker-dealer Firm Name
- -------------------------- By:
Firm Address -------------------------
Senior Vice President
By:
-----------------------
Title:
--------------------
2
<PAGE> 1
EXHIBIT (15)(c)
FORM OF
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is entered into as of the ____ day of ____, 19__, by and
between Van Kampen American Capital Distributors, Inc. (the "Company") and the
undersigned (the "Intermediary").
WHEREAS, the Company is the principal underwriter of the open-end
investment companies listed on Schedule 1 to this Agreement (hereinafter
individually the "Fund" or collectively the "Funds"); and
WHEREAS, each respective Fund has adopted a Distribution Plan (the
"Distribution Plan") pursuant to Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940, as amended (the "1940 Act"), and a Service Plan (the
"Service Plan") relating to such Fund, the Distribution Plans being described
in the Fund's Prospectus and Statement of Additional Information; and
WHEREAS, each respective Fund's Distribution Plans authorize the Company
to enter into distribution services agreements such as this Agreement with
certain financial intermediaries selected by the Company, and the Intermediary
has been so selected; and
WHEREAS, each respective Fund's Distribution Plans authorize the Company
to make payments at a rate specified in an agreement such as this Agreement
varying directly with the aggregate average daily net asset value of shares of
each respective Fund sold by such financial intermediary on or after the
effective date of this Agreement, as determined pursuant to Section 4 hereof,
and held at the close of each day in accounts of clients or customers of
particular intermediary, such amount being referred to herein as the "Holding
Level"; for purposes of calculating the Holding Level, shares of such Fund
which are redeemed or otherwise disposed of from any account existing prior to
such effective date shall be deemed to have been shares sold prior to such
effective date to the extent of the number of shares held in such account
immediately after the close of business on the day prior to such effective
date; and
WHEREAS, this Agreement is a "related agreement" to the Distribution Plan
as that term is used in the Rule and is subject to all of the provisions of the
Rule as to such agreements;
NOW, THEREFORE, the Company and the Intermediary agree as follows:
1. Subject to continuing compliance with its obligations pursuant to
Section 2 hereof, the Intermediary shall be entitled to distribution fee and
service fee payments, if any, to be paid by the Company with respect to each
class of the Fund's shares at the annual percentage rate of the Holding Level
set forth from time to time in the then current Prospect of the Fund on a
quarterly basis (prorated for any portion of such period during which this
Agreement is in effect for less than the full amount of such period); it is
understood and agreed that the Company may make final and binding
determinations as to whether such continuing compliance and as to whether or
not any Fund shares are to be considered in determining the Holding Level of
any particular financial intermediary and what Fund shares, if any, are to be
attributed to such purpose to a particular financial intermediary, to a
different financial intermediary or to no financial intermediary.
1
<PAGE> 2
2. The distribution fee payments with respect to a class of the Fund's
shares to be made in accordance with Section 1 hereof, if any, shall be paid to
the Broker-Dealer as compensation for selling shares of the respective class.
3. In consideration for the service fee payments to be made in accordance
with Section 1 hereof, the Intermediary shall provide to its clients or
customers who hold shares of each respective Fund with respect to which
payments to the Intermediary may be made under such Fund's Distribution Plan
such services and other assistance as may from time to time be reasonably
requested by the Company, including but not limited to answering inquiries
regarding the Fund, providing information programs regarding the Fund,
assisting in selected dividend payment options, account designations and
addresses and maintaining the investment of such customer or client in the
Fund.
4. The Company shall have the right at any time and from time to time
without notice to the Broker-Dealer to amend its Prospectus with respect to the
amount of the service free and the amount of the distribution fee to be paid
pursuant hereto. Such amendments shall be effective as of the date of the
amended Prospectus.
5. This Agreement shall go into effect on the later of the date set forth
above or the date on which it is approved by a vote of each Fund's Board of
Directors (or Trustees, as the case may be) and of those Directors/Trustees
(the "Qualified Directors/Trustees") who are not interested persons (as defined
in the 1940 Act) of the Fund and have no direct or indirect financial interest
in the operations of the Distribution Plan or any agreement related to the
Distribution Plan cast in person at a meeting called for the purpose of voting
on this Agreement and shall continue in effect (unless terminated) until the
June 30th next succeeding such effective date and will continue thereafter only
if such continuance is specifically approved at least annually in the manner
heretofore specified for initial approval. This agreement will terminate
automatically in the event of its assignment (as that term is used in the Rule)
or if the Distribution Plan is terminated. This Agreement may also be
terminated at any time, without the payment of any penalty, on sixty (60) days
written notice to the Intermediary, by vote of a majority of the Qualified
Directors/Trustees or by vote of a majority (as that term is used in the Rule)
of the outstanding voting securities of the Fund.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
By:
- ------------------------ ----------------------
Intermediary Senior Vice President
- ------------------------
Address
By:
---------------------
Title
2
<PAGE> 1
EXHIBIT (15)(d)
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
SERVICE PLAN
The plan set forth below (the "Service Plan") for the VAN KAMPEN AMERICAN
CAPITAL GLOBAL MANAGED ASSETS FUND (the "Fund"), describes the material
terms and conditions under which assets of the Fund may be used to compensate
the Fund's principal underwriter, within the meaning of the Investment Company
Act of 1940, as amended (the "1940 Act"), brokers, dealers and other financial
intermediaries (collectively "Financial Intermediaries") for providing personal
services to shareholders and/or the maintenance of shareholder accounts with
respect to each of its Class A Shares of beneficial interest (the "Class A
Shares"), its Class B Shares of beneficial interest (the "Class B Shares"), and
its Class C Shares of beneficial interest (the "Class C Shares") The Class A
Shares, Class B Shares and Class C Shares sometimes are referred to herein
collectively as the "Shares." Each class of Shares is offered and sold subject
to a different combination of front-end sales charges, distribution fees,
service fees and contingent deferred sales charges.(1) Classes of shares, if
any, subject to a front-end sales charge and a distribution and/or service fee
are referred to herein as "Front-End Classes" and the Shares of such classes
are referred to herein as "Front-End Shares." Classes of shares, if any,
subject to a contingent-deferred sales charge and a distribution and or a
service fee are referred to herein as "CDSC Classes" and Shares of such classes
are referred to herein as "CDSC Shares." Classes of shares, if any, subject to
a front-end sales charge, a contingent-deferred sales charge and a distribution
and/or service fee are referred to herein as "Combination Classes" and Shares
of such class are referred to herein as "Combination Shares."
The Fund has adopted a distribution plan (the "Distribution Plan")
pursuant to which the Fund is authorized to expend on an annual basis a portion
of its average net assets attributable to each class of Shares in connection
with financing distribution related activities. The Fund also has entered into
a distribution and services agreement (the "Distribution and Services
Agreement") with Van Kampen American Capital Distributors, Inc. (the
"Distributor"), pursuant to which the Distributor acts as agent on behalf of
the Fund in connection with the implementation of the Service Plan and acts as
the principal underwriter with respect to each class of Shares. The
Distributor may enter into selling agreements (the "Selling Agreements") with
brokers, dealers and other financial intermediaries ("Financial
Intermediaries") in order to implement the Distribution Agreement, the
Distribution Plan and this Service Plan.
1. The Fund hereby is authorized to pay a service fee with respect to its Class
A Shares, Class B Shares and Class C Shares to any person who sells such Shares
and provides personal services to shareholders and/or maintains shareholder
accounts in an annual amount not to exceed 0.25% of the average annual net
asset value of the Shares maintained in the Fund by such person that were sold
on or after the date on which this Service Plan was first implemented. The
aggregate annual amount of all such payments with respect to each such class of
Shares may not exceed 0.25% of the Fund's average annual net assets
attributable to the respective class of Shares sold on or after the date on
which this Service Plan was first implemented and maintained in the Fund more
than one year.
2. Payments pursuant to this Service Plan may be paid or prepaid on behalf of
the Fund by the Distributor acting as the Fund's agent.
- --------------------------------
(1) The Fund is authorized to offer multiple classes of shares pursuant to a
Rule 18f-3 Plan adopted under the 1940 Act.
1
<PAGE> 2
3. Payments by the Fund to the Distributor pursuant to this Service Plan shall
not be made more often than monthly upon receipt by the Fund of a separate
written expense report with respect to each class of Shares setting forth the
expenses qualifying for such reimbursement allocated to each class of Shares
and the purposes thereof.
4. In the event that amounts payable hereunder with respect to a class of
Shares do not fully reimburse the Distributor for pre-paid service fees, such
unreimbursed service fee expenses will be carried forward and paid by the Fund
hereunder in future years so long as this Service Plan remains in effect,
subject to applicable laws and regulations. Reimbursements for service fee
related expenses payable hereunder with respect to a particular class of Shares
may not be used to subsidize services provided with respect to any other class
of Shares.
5. The Fund shall not compensate the Distributor, and neither the Fund nor the
Distributor shall compensate any Financial Intermediary, for any service
related expenses incurred with respect to a class of Shares prior to the later
of (a) the implementation of this Service Plan with respect to such class of
Shares or (b) the date that such Financial Intermediary enters into a Selling
Agreement with the Distributor.
6. The Fund hereby authorizes the Distributor to enter into Selling Agreements
with certain Financial Intermediaries to provide compensation to such Financial
Intermediaries for activities and services of the type referred to in Paragraph
1 hereof. Prior to the implementation of a Selling Agreement, such agreement
shall be approved by a majority of the Board of Trustees of the Trust and a
majority of the Disinterested Trustees (within the meaning of the 1940 Act) by
a vote cast in person at a meeting called for the purpose of voting on such
Selling Agreements. Such Selling Agreements shall provide that the Financial
Intermediaries shall provide the Distributor with such information as is
reasonably necessary to permit the Distributor to comply with the reporting
requirements set forth in Paragraphs 3 and 8 hereof.
7. Subject to the provisions of this Service Agreement, the Fund is hereby
authorized to pay a service fee to any person that is not an "affiliated
person" or "interested person" of the Fund or its "investment adviser" or
"principal underwriter" (as such terms are defined in the 1940 Act) who
provides any of the foregoing services for the Fund. Such fee shall be paid
only pursuant to written agreements between the Fund and such other person the
terms of which permit payments to such person only in accordance with the
provisions of this Service Agreement and which have the approval of a majority
of the Disinterested Trustees by vote cast separately with respect to each
class of Shares and cast in person at a meeting called for the purpose of
voting on such written agreement.
8. The Fund and the Distributor shall prepare separate written reports for each
class of Shares and shall submit such reports to the Fund's Board of Trustees
on a quarterly basis summarizing all payments made by them with respect to each
class of Shares pursuant to this Service Plan and the agreements contemplated
hereby, the purposes for which such payments were made and such other
information as the Board of Trustees or the Disinterested Trustees may
reasonably request from time to time, and the Board of Trustees shall review
such reports and other information.
9. This Service Plan may be terminated with respect to a class of Shares
without penalty at any time by a majority of the Disinterested Trustees or by a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund.
10. This Service Plan shall become effective upon its approval by (a) a
majority of the Board of Trustees and a majority of the Disinterested Trustees
by vote cast separately with respect to each class of Shares cast in person at
a meeting called for the purpose of voting on this Distribution Plan, and (b)
with respect to each class of Shares, a "majority of the outstanding voting
securities" (as such phrase is defined in the 1940 Act) of such class of Shares
voting separately as a class.
11. This Service Plan and any agreement contemplated hereby shall continue in
effect beyond the first anniversary of its adoption by the Board of Trustees of
the Fund only so long as (a) its continuation
2
<PAGE> 3
is approved at least annually in the manner set forth in clause (a) of paragraph
10 above and (b) the selection and nomination of those trustees of the Fund who
are not "interested persons" of the Fund are committed to the discretion of such
trustees.
12. This Service Plan may not be amended to increase materially the maximum
amounts permitted to be expended hereunder except with the approval of a
"majority of the outstanding voting securities" of the respective class of
Shares of the Fund. This Service Plan may not be amended in any material
respect except with the approval of a majority of the Disinterested Trustees.
Amendments required to conform this Service Plan to changes in Rule 12b-1 under
the 1940 Act, the rules and regulations thereunder or the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. shall not be
deemed to be material amendments.
The Trustees of the Trust have adopted this Service Plan as trustees under
the Declaration of Trust of the Trust and the policies of the Trust adopted
hereby are not binding upon any of the Trustees or shareholders of the Trust
individually, but bind only the trust estate.
3
<PAGE> 1
EXHIBIT (16)
GLOBAL MANAGED ASSETS FUND -- CLASS A SHARES
TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C>
Formula..................................................... P(1+T)(n) = ERV
Including Payment of the Sales Charge
Net Asset Value............................................. $10.53
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,070.63 = ERV
One year period ended 12/31/96.............................. 1 = (n)
TOTAL RETURN FOR THE PERIOD................................. 7.06% = T
Excluding Payment of the Sales Charge
Net Asset Value............................................. $10.53
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,124.41 = ERV
One year period ended 12/31/96.............................. 1 = (n)
TOTAL RETURN FOR THE PERIOD................................. 12.44% = T
TOTAL RETURN CALCULATION INCEPTION THROUGH DECEMBER 31, 1996
Formula..................................................... P(1+T)(n) = ERV
Including Payment of the Sales Charge
Net Asset Value............................................. $10.53
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,194.51 = ERV
Inception through 12/31/96.................................. 2.63 = (n)
TOTAL RETURN FOR THE PERIOD................................. 6.99% = T
Excluding Payment of the Sales Charge
Net Asset Value............................................. $10.53
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,253.98 = ERV
Inception through 12/31/96.................................. 2.63 = (n)
TOTAL RETURN FOR THE PERIOD................................. 8.99% = T
</TABLE>
<PAGE> 2
GLOBAL MANAGED ASSETS FUND -- CLASS A SHARES
NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION
INCEPTION THROUGH DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C>
Formula..................................................... ERV - P = T
---------
P
Including Payment of the Sales Charge
Net Asset Value............................................. $10.53
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,194.51 = ERV
TOTAL RETURN FOR THE PERIOD................................. 19.45% = T
Excluding Payment of the Sales Charge
Net Asset Value............................................. $10.53
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,253.98 = ERV
TOTAL RETURN FOR THE PERIOD................................. 25.40% = T
</TABLE>
<PAGE> 3
GLOBAL MANAGED ASSETS FUND -- CLASS B SHARES
TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C>
Formula..................................................... P(1+T)(n) = ERV
Including Payment of the CDSC
Net Asset Value............................................. $10.38
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,075.10 = ERV
One year period ended 12/31/96.............................. 1 = (n)
TOTAL RETURN FOR THE PERIOD................................. 7.51% = T
Excluding Payment of the CDSC
Net Asset Value............................................. $10.38
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,115.10 = ERV
One year period ended 12/31/96.............................. 1 = (n)
TOTAL RETURN FOR THE PERIOD................................. 11.51% = T
TOTAL RETURN CALCULATION INCEPTION THROUGH DECEMBER 31, 1996
Formula..................................................... P(1+T)(n) = ERV
Including Payment of the CDSC
Net Asset Value............................................. $10.38
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,196.21 = ERV
Inception through 12/31/96.................................. 2.63 = (n)
TOTAL RETURN FOR THE PERIOD................................. 7.05% = T
Excluding Payment of the CDSC
Net Asset Value............................................. $10.38
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,226.21 = ERV
Inception through 12/31/96.................................. 2.63 = (n)
TOTAL RETURN FOR THE PERIOD................................. 8.06% = T
</TABLE>
<PAGE> 4
GLOBAL MANAGED ASSETS FUND -- CLASS B SHARES
NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION
INCEPTION THROUGH DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C>
Formula..................................................... ERV - P = T
---------
P
Including Payment of the CDSC
Net Asset Value............................................. $10.38
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,196.21 = ERV
TOTAL RETURN FOR THE PERIOD................................. 19.62% = T
Excluding Payment of the CDSC
Net Asset Value............................................. $10.38
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,226.21 = ERV
TOTAL RETURN FOR THE PERIOD................................. 22.62% = T
</TABLE>
<PAGE> 5
GLOBAL MANAGED ASSETS FUND -- CLASS C SHARES
TOTAL RETURN CALCULATION ONE YEAR PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C>
Formula..................................................... P(1+T)(n) = ERV
Including Payment of the CDSC
Net Asset Value............................................. $10.40
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,104.88 = ERV
One year period ended 12/31/96.............................. 1 = (n)
TOTAL RETURN FOR THE PERIOD................................. 10.49% = T
Excluding Payment of the CDSC
Net Asset Value............................................. $10.40
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,114.88 = ERV
One year period ended 12/31/96.............................. 1 = (n)
TOTAL RETURN FOR THE PERIOD................................. 11.49% = T
TOTAL RETURN CALCULATION INCEPTION THROUGH DECEMBER 31, 1996
Formula..................................................... P(1+T)(n) = ERV
Including Payment of the CDSC
Net Asset Value............................................. $10.40
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,228.31 = ERV
Inception through 12/31/96.................................. 2.63 = (n)
TOTAL RETURN FOR THE PERIOD................................. 8.13% = T
Excluding Payment of the CDSC
Net Asset Value............................................. $10.40
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,228.31 = ERV
Inception through 12/31/96.................................. 2.63 = (n)
TOTAL RETURN FOR THE PERIOD................................. 8.13% = T
</TABLE>
<PAGE> 6
GLOBAL MANAGED ASSETS FUND -- CLASS C SHARES
NON-STANDARDIZED CUMULATIVE TOTAL RETURN CALCULATION
INCEPTION THROUGH DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C>
Formula..................................................... ERV - P = T
---------
P
Including Payment of the CDSC
Net Asset Value............................................. $10.40
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,228.31 = ERV
TOTAL RETURN FOR THE PERIOD................................. 22.83% = T
Excluding Payment of the CDSC
Net Asset Value............................................. $10.40
Initial Investment.......................................... $1,000.00 = P
Ending Redeemable Value..................................... $1,228.31 = ERV
TOTAL RETURN FOR THE PERIOD................................. 22.83% = T
</TABLE>
<PAGE> 1
EXHIBIT (17)(a)
INVESTMENT COMPANIES FOR WHICH
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS INC.
ACTS AS PRINCIPAL UNDERWRITER OR DEPOSITOR
APRIL 4, 1997
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 Intermediate 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 Equity Trust
Van Kampen American Capital Utility Fund
Van Kampen American Capital Value Fund
Van Kampen American Capital Great American Companies Fund
Van Kampen American Capital Growth Fund
Van Kampen American Capital Prospector Fund
Van Kampen American Capital Aggressive Growth Fund
Van Kampen American Capital Foreign Securities 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 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
<PAGE> 2
Van Kampen American Capital Life Investment Trust
Van Kampen American Capital Enterprise Portfolio
Van Kampen American Capital Domestic Income Portfolio
Van Kampen American Capital Emerging Growth Portfolio
Van Kampen American Capital Global Equity Portfolio
Van Kampen American Capital Government Portfolio
Van Kampen American Capital Money Market Portfolio
Van Kampen American Capital Asset Allocation Portfolio
Van Kampen American Capital Real Estate Securities Portfolio
Van Kampen American Capital Growth and Income Portfolio
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 U.S. Government Trust for Income
Van Kampen American Capital World Portfolio Series Trust
Van Kampen American Capital Global Equity Fund
Van Kampen American Capital Global Government Securities Fund
Internet Trust
Michigan Real Estate Income and Growth Trust
Van Kampen American Capital Insured Income Trust
Van Kampen American Capital Insured Income Trust (Intermediate)
Strategic Ten Trust, United States
Strategic Ten Trust, United Kingdom
Strategic Ten Trust, Hong Kong
Strategic Five Trust, United States
Global Fifteen Trust
Global Thirty Trust
Van Kampen American Capital Equity Opportunity Trust
Great International Firms Trust
Gruntal & Co. Incorporated Undervalued Growth Opportunities Trust
Principal Trust Princor Emerging Growth and Treasury
International Assets Advisory Corporation Global Blue Chip Trust
Renaissance Trust
Mississippi Insured Municipal Trust
Blue Chip Opportunity and Treasury Trust
Wheat First Butcher Singer Wheat First Strategic Opportunity Unit Trust
Baby Boomer Opportunity Trust
Van Kampen American Capital Utility Income Trust
Global Energy Trust
Michigan Select Trust
International Assets Advisory Corp. Latin American Trust
Brand Name Equity Trust
Aggressive Growth Series Global Health Care Trust
Global Precious Metals Trust
<PAGE> 3
<TABLE>
<S> <C>
Emerging Markets Municipal Income Trust Series 1
Insured Municipals Income Trust Series 1 through 387
Insured Municipals Income Trust (Discount) Series 5 through 13
Insured Municipals Income Trust (Short Intermediate Term) Series 1 through 106 1009
Insured Municipals Income Trust (Intermediate Term) Series 5 through 89
Insured Municipals Income Trust (Limited Term) Series 9 through 86
Insured Municipals Income Trust (Premium Bond Series) Series 1 through 3
Insured Municipals Income Trust (Intermediate Laddered Maturity) Series 1 and 2
Insured Tax Free Bond Trust Series 1 through 6
Insured Tax Free Bond Trust (Limited Term) Series 1
Investors' Quality Tax-Exempt Trust Series 1 through 93
Investors' Quality Tax-Exempt Trust-Intermediate Series 1
Investors' Corporate Income Trust Series 1 through 12
Investors' Governmental Securities Income Trust Series 1 through 7
Van Kampen Merritt International Bond Income Trust Series 1 through 21
Alabama Investors' Quality Tax-Exempt Trust Series 1
Alabama Insured Municipals Income Trust Series 1 through 9
Arizona Investors' Quality Tax-Exempt Trust Series 1 through 16
Arizona Insured Municipals Income Trust Series 1 through 18
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 164
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 83
Colorado Investors' Quality Tax-Exempt Trust Series 1 through 18
Connecticut Insured Municipals Income Trust Series 1 through 34
Connecticut Investors' Quality Tax-Exempt Trust Series 1
Delaware Investor's Quality Tax-Exempt Trust Series 1 and 2
Florida Insured Municipal Income Trust - Intermediate Series 1 and 2
Florida Insured Municipals Income Trust Series 1 through 113
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 83
Georgia Investors' Quality Tax-Exempt Trust Series 1 through 16
Hawaii Investors' Quality Tax-Exempt Trust Series 1
Indiana Insured Municipals Income 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 59
Louisiana Insured Municipals Income Trust Series 1 through 17
Maine Investor's Quality Tax-Exempt Trust Series 1
Maryland Investors' Quality Tax-Exempt Trust Series 1 through 81
Massachusetts Insured Municipals Income Trust Series 1 through 34
Massachusetts Insured Municipals Income Trust (Premium Bond Series) Series 1
Michigan Financial Institutions Trust Series 1
Michigan Insured Municipals Income Trust Series 1 through 143
Michigan Insured Municipals Income Trust (Premium Bond Series) Series 1
Michigan Insured Municipals Income Trust (1st Intermediate Series) Series 1 through 3
Michigan Investors' Quality Tax-Exempt Trust Series 1 through 30
Michigan Select Trust Series 1
Minnesota Insured Municipals Income Trust Series 1 through 60
Minnesota Investors' Quality Tax-Exempt Trust Series 1 through 21
Mississippi Insured Municipals Income Trust Series 1
Missouri Insured Municipals Income Trust Series 1 through 100
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Nebraska Investors' Quality Tax-Exempt Trust Series 1 through 9
New Mexico Insured Municipals Income Trust Series 1 through 18
New Jersey Insured Municipals Income Trust Series 1 through 118
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 140
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 91
Ohio Insured Municipals Income Trust Series 1 through 106
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 228
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 85
Stepstone Growth Equity and Treasury Securities Trust Series 1
Tennessee Insured Municipals Income Trust Series 1-3 and 5-39
Texas Insured Municipals Income Trust Series 1 through 40
Texas Insured Municipal Income Trust (Intermediate Ladder) Series 1
Virginia Investors' Quality Tax-Exempt Trust Series 1 through 76
Van Kampen American Capital Equity Opportunity Trust Series 1 through 54
Van Kampen American Capital Utility Income Trust Series 1 through 8
Van Kampen American Capital Insured Income Trust Series 1 through 64
Van Kampen American Capital Insured Income Trust (Intermediate Term) Series 1 through 62
Van Kampen Merritt Select Equity Trust Series 1
Van Kampen Merritt Select Equity and Treasury Trust Series 1
Washington Insured Municipals Income Trust Series 1
West Virginia Insured Municipals Income Trust Series 1 through 7
Principal Financial Institutions Trust Series 1
Internet Trust Series 1 through 5
Michigan Real Estate Income and Growth Trust Series 1
Strategic Ten Trust, United States Series 1 through 14
Strategic Ten Trust, United Kingdom Series 1 through 12
Strategic Ten Trust, Hong Kong Series 1 through 12
Strategic Five Trust, United States Series 1 through 8
Global Fifteen Trust Series 1 through 2
Global Thirty Trust Series 1 through 3
Great International Firms Trust Series 1 through 3
Undervalued Growth Opportunities Trust Series 1
Emerging Growth and Treasury Series 1
Global Blue Chip Trust Series 1
Renaissance Trust Series 1
Blue Chip Opportunity and Treasury Trust Series 1 through 4
Wheat First Strategic Opportunity Unit Trust Series 1
Baby Boomer Opportunity Trust Series 1 through 2
</TABLE>
<PAGE> 1
EXHIBIT 17 (b)
Officers
Van KampenAmerican 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 & Assistant Secretary
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
D. Bruce Johnston Sr. Vice President Oakbrook Terrace, IL
Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Secretary
Mark T. McGannon Sr. Vice President Oakbrook Terrace, IL
Charles G. Millington Sr. Vice President & Treasurer Oakbrook Terrace,
Robert S. West Sr. Vice President Oakbrook Terrace, IL
John H. Zimmermann, III Sr. Vice President Oakbrook Terrace, IL
Dominic C. Martellaro 1st Vice President Danville, CA
Mark R. McClure 1st Vice President Oakbrook Terrace, IL
James J. Ryan 1st Vice President Oakbrook Terrace, IL
Michael L. Stallard 1st Vice President Oakbrook Terrace, IL
Patrick J. Woelfel 1st Vice President Oakbrook Terrace, IL
Laurence J. Althoff Vice President & Controller Oakbrook Terrace, IL
James K. Ambrosio Vice President Massapequa, NY
Brian P. Arcara Vice President Buffalo, NY
Sheldon Barker Vice President Moon, PA
Patricia A. Bettlach Vice President Chesterfield, MO
Carol S. Biegel Vice President Oakbrook Terrace, IL
Christopher M. Bisaillon Vice President Oakbrook Terrace, IL
James J. Boyne Vice President, Associate General Oakbrook Terrace, IL
Counsel & Assistant Secretary
Michael P. Boos Vice President Oakbrook Terrace, IL
Robert C. Brooks Vice President Oakbrook Terrace, IL
Brooksley Burke Vice President Marina Del Ray, CA
William F Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Christine Cleary Byrum Vice President Tampa, FL
Glenn M. Cackovic Vice President Laguna Niguel, CA
Joseph N. Caggiano Vice President New York, NY
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
Richard J. Charlino Vice President Houston, TX
Deanna Margaret Chiaro Vice President Oakbrook Terrace, IL
Scott A. Chriske Vice President Plano, TX
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 Oakbrook Terrace, IL
Ken DeFrancesca Vice President Oakbrook Terrace, IL
Daniel R. DeJong Vice President Oakbrook Terrace, IL
Tracey M. DeLusant Vice President New York, NY
Mark B. Doremus Vice President Houston, TX
Michael E. Eccleston Vice President Oakbrook Terrace, IL
Jonathan Eckard Vice President Tampa, FL
Charles Edward Fisher Vice President Naperville, IL
William J. Fow Vice President Redding, CT
Nicholas J. Foxhoven Vice President Englewood, CO
Charles Friday Vice President Gibsonia, PA
Erich P. Gerth Vice President Piedmont, CA
Richard G. Golod Vice President Annapolis, MD
Timothy D. Griffith Vice President Kirkland, WA
Kyle D. Haas Vice President Oakbrook Terrace, IL
Daniel Hamilton Vice President Austin, TX
John A. Hanhauser Vice President Philadelphia, PA
John G. Hansen Vice President Oakbrook Terrace, IL
Eric J. Hargens Vice President Orlando, FL
Calvin B. Hays Vice President Richmond, VA
Joseph Hays Vice President Cherry Hill, NJ
Gregory Heffington Vice President Ft. Collins, CO
Scott F. Heyer Vice President Tampa, FL
Susan J. Hill Vice President Oakbrook Terrace, IL
David S. Hogaboom Vice President Oakbrook Terrace, IL
Bryn M. Hoggard Vice President Houston, TX
Robert S. Hunt Vice President Phoenix, MD
Lowell Jackson Vice President Norcross, GA
Kevin G. Jajuga Vice President Baltimore, MD
Jeffrey S. Kinney Vice President Overland Park, KS
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
Richard D. Kozlowski Vice President Atlanta, GA
Thomas W. Knowles Vice President Cary, NC
Patricia D. Lathrop Vice President Tampa, FL
Brian Laux Vice President Statten Island, NY
S. William Lehew III Vice President Charlotte, NC
Tony E. Leal Vice President Daphne, AL
Eric Levinson Vice President San Francisco, CA
Jonathan Linstra Vice President Oakbrook Terrace, IL
Walter Lynn Vice President Flower Mound, TX
Richard M. Lundgren Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Carl Mayfield Vice President Lakewood, CO
Brooks D. McCartney Vice President Puyallup, WA
Anne Therese McGrath Vice President Los Gatos, CA
John Mills Vice President Kenner, LA
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Ted Morrow Vice President Dallas, TX
Robert Muller, Jr. Vice President Cypress, TX
Michael D. Ossmen Vice President Oakbrook Terrace, IL
Christopher Petrungaro Vice President Oakbrook Terrace, IL
Anthony Piazza Vice President Old Bridge, NJ
Ronald E. Pratt Vice President Marietta, GA
Craig S. Prichard Vice President Fairlawn, OH
Daniel D. Reams Vice President Royal Oak, MI
Walter E. Rein Vice President Oakbrook Terrace, IL
Michael W. Rohr Vice President Oakbrook Terrace, IL
Suzette N. Rothberg Vice President Plymouth, MN
Jeffrey Rourke Vice President Oakbrook Terrace, IL
Thomas Rowley Vice President St. Louis, MO
Heather R. Sabo Vice President Richmond, VA
Stephanie Scarlata Vice President Bedford Corners, NY
Ronald J. Schuster Vice President Tampa, FL
Jeffrey C. Shirk Vice President Swampscott, MA
Kimberly M. Spangler Vice President Fairfax, VA
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
Gary R. Steele Vice President Philadelphia, PA
Richard Stefanec Vice President Los Angeles, CA
James D. Stevens Vice President North Andover, MA
William C. Strafford Vice President Granger, IN
Eric Studer Vice President Flemington, NJ
David A. Tabone Vice President Scottsdale, AZ
James C. Taylor Vice President Naperville, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Todd Volkman Vice President Austin, TX
Christopher Walsh Vice President Oakbrook Terrace, IL
Jeff Warland Vice President Oakbrook Terrace, IL
Sandra A. Waterworth Vice President and Assistant Oakbrook Terrace, IL
Secretary
Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
Harold Whitworth, III Vice President Oakbrook Terrace, IL
Kirk Wiggins Vice President Arlington, TX
James R. Yount Vice President Mercer Island, WA
Patrick M. Zacchea Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Nicholas Dalmaso Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Huey P. Falgout, Jr. Asst. Vice President & Asst. Secretary Houston, TX
Walter C. Gray Asst. Vice President Houston, TX
Michael B. Kollins Asst. Vice President Oakbrook Terrace, IL
Laurie L. Jones Asst. Vice President Houston, TX
Ivan R. Lowe Asst. Vice President Houston, TX
Linda S. MacAyeal Asst. Vice President Oakbrook Terrace, IL
Stuart R. Moehlman Asst. Vice President Houston, TX
Gregory S. Parker Asst. Vice President Houston, TX
David B. Partain Asst. Vice President Oakbrook Terrace, IL
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Michael Quinn Asst. Vice President Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Thomas J. Sauerborn Asst. Vice President New York, NY
Bruce Saxon Asst. Vice President Oakbrook Terrace, IL
Andrew J. Scherer Asst. Vice President Oakbrook Terrace, IL
Traci T. Tighe Asst. Vice President Oakbrook Terrace, IL
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Robert A. Watson Asst. Vice President Oakbrook Terrace, IL
Natalie Wilson Asst. Vice President New York, NY
Barbara A. Withers Asst. Vice President Oakbrook Terrace, IL
Gina M. Costello Asst. Secretary Oakbrook Terrace, IL
Cathy Napoli Asst. Secretary Oakbrook Terrace, IL
Elizabeth M. Brown Officer Houston, TX
John Browning Offier Oakbrook Terrace. IL
Leticia George Officer Houston, TX
Sarah Kessler Officer Oakbrook Terrace, IL
William D. McLaughlin Officer Houston, TX
Becky Newman Officer Houston, TX
Rosemary Pretty Officer Houston, TX
Colette Saucedo Officer Houston, TX
Frederick Shepherd Officer Houston, TX
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX
</TABLE>
<PAGE> 1
EXHIBIT (18)
AMENDED
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. The Fund
adopted this Plan on January 26, 1996 and amended the Plan as of January 1,
1997.
A. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
1. The Act - Investment Company Act of 1940, as amended.
2. CDSC - contingent deferred sales charge.
3. CDSC Period - the period of years following acquisition during
which Shares are assessed a CDSC upon redemption.
4. Class - a class of Shares of a Fund.
5. Class A Shares - shall have the meaning ascribed in Section B. 1.
6. Class B Shares - shall have the meaning ascribed in Section B. 1.
7. Class C Shares - shall have the meaning ascribed in Section B. 1.
8. Distribution Expenses - expenses incurred in activities which are
primarily intended to result in the distribution and sale of
Shares as defined in a Plan of Distribution and/or board
resolutions.
9. Distribution Fee - a fee paid by a Fund to the Distributor in
reimbursement of Distribution Expenses.
10. Distributor - Van Kampen American Capital Distributors, Inc.
11. Fund - an investment company listed on Exhibit A hereto and each
series thereof.
12. Money Market Fund - Van Kampen American Capital Reserve Fund or
Van Kampen American Capital Tax Free Money Market Fund.
<PAGE> 2
13. Plan of Distribution - Any plan adopted under Rule 12b-1 under the
Act with respect to payment of a Distribution Fee.
14. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders and/or
the maintenance of shareholder accounts.
15. Share - a share of beneficial interest in a Fund.
16. Trustees - the trustees of a Fund.
B. Classes. Each Fund may offer three Classes as follows:
1. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Trustees and set forth in the Funds' prospectus,
which may be reduced or eliminated for Money Market Funds,
larger purchases, under a combined purchase privilege, under a
right of accumulation, under a letter of intent or for certain
categories of purchasers as permitted by Rule 22(d) of the Act
and as set forth in the Fund's prospectus. Class A Shares that
are not subject to a front-end sales charge as a result of the
foregoing, may be subject to a CDSC for the CDSC Period set forth
in Section D.1. The offering price of Shares subject to a
front-end sales charge shall be computed in accordance with Rule
22c-1 and Section 22(d) of the Act and the rules and regulations
thereunder. Class A Shares shall be subject to ongoing Service
Fees approved from time to time by the Trustees and set forth in
the Funds' prospectus. Although shares of Van Kampen American
Capital Tax Free Money Market Fund are not designated as "Class A"
they are substantially similar to Class A Shares as defined herein
and shall be treated as Class A shares for the purposes of this
Plan.
2. Class B Shares. Class B Shares shall be (1) offered at net asset
value, (2) subject to a CDSC for the CDSC Period set forth in
Section D. 1, (3) subject to ongoing Service Fees and
Distribution Fees approved from time to time by the Trustees and
set forth in the Funds' prospectus and (4) converted to Class A
Shares three to ten years after the calendar month in which the
shareholder's order to purchase was accepted, which number of
years shall be as approved from time to time by the Trustees and
set forth in the respective Fund's prospectus.
3. Class C Shares. Class C Shares shall be (1) offered at net
asset value, (2) subject to a CDSC for the CDSC Period set forth
in Section D. 1. , (3) subject to ongoing Service Fees and
Distribution Fees approved from time to time by the Trustees and
set forth in the Funds' prospectus and (4) prior to January 1,
1997, converted to Class A Shares eight to fifteen years after
the calendar month in which the shareholder's order to purchase
was accepted, which number of years shall be as approved from
time to time by the Trustees and set forth in the respective
Fund's prospectus.
<PAGE> 3
C. Rights and Privileges of Classes. Each Class of each Fund will
represent an interest in the same portfolio of investments of that
Fund and will have identical voting, dividend, liquidation and other
rights, preferences, powers, restrictions, limitations,
qualifications, designations and terms and conditions except as
described otherwise herein.
D. CDSC. A CDSC may be imposed upon redemption of Class A Shares, Class
B Shares and Class C Shares that do not incur a front end sales charge
subject to the following conditions:
1. CDSC Period. The CDSC Period for Class A Shares and Class C Shares
shall be one year. The CDSC Period for Class B Shares shall be at
least three but not more than ten years as recommended by the
Distributor and approved by the Trustees.
2. CDSC Rate. The CDSC rate shall be recommended by the Distributor
and approved by the Trustees. If a CDSC is imposed for a period
greater than one year the CDSC rate must decline during the CDSC
Period such that (a) the CDSC rate is less in the last year of the
CDSC Period than in the first and (b) in each succeeding year the
CDSC rate shall be less than or equal to the CDSC rate in the
preceding year.
3. Disclosure and Changes. The CDSC rates and CDSC Period shall be
disclosed in a Fund's prospectus and may be decreased at the
discretion of the Distributor but may not be increased unless
approved as set forth in Section L.
4. Method of Calculation. The CDSC shall be assessed on an amount
equal to the lesser of the then current market value or the cost of
the Shares being redeemed. No sales charge shall be imposed on
increases in the net asset value of the Shares being redeemed above
the initial purchase price. No CDSC shall be assessed on Shares
derived from reinvestment of dividends or capital gains
distributions. The order in which Class B Shares and Class C
Shares are to be redeemed when not all of such Shares would be
subject toa CDSC shall be as determined by the Distributor in
accordance with the provisions of Rule 6c-10 under the Act.
5. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares under circumstances
previously approved by the Trustees and disclosed in the Fund's
prospectus or statement of additional information and as allowed
under Rule 6c-10 under the Act.
6. Calculation of offering price. The offering price of Shares subject
to a CDSC shall be computed in accordance with Rule 22c-1 and
Section 22(d) of the Act and the rules and regulations thereunder.
7. Retention by Distributor. The CDSC paid with respect to Shares of
a Fund may be retained by the Distributor to reimburse the
Distributor for commissions paid by it in
<PAGE> 4
connection with the sale of Shares subject to a CDSC and
Distribution Expenses to the extent of such commissions and
Distribution Expenses eligible for reimbursement and approved by
the Trustees.
E. Service and Distribution Fees. Class A Shares shall be subject to a
Service Fee and Class B and Class C Shares shall be subject to a
Service Fee and a Distribution Fee. The Service Fee applicable to any
class shall not exceed 0.25% per annum of the average daily net assets
of the Class and the Distribution Fee shall not exceed 0.75% per annum
of the average daily net assets of the Class. All other terms and
conditions with respect to Service Fees and Distribution Fees shall be
governed by the plans adopted by the Fund with respect to such fees
and Rule 12b-1 of the Act.
F. Conversion. Shares purchased through the reinvestment of dividends
and distributions paid on Shares subject to conversion shall be
treated as if held in a separate sub-account . Each time any Shares
in a Shareholder's account (other than Shares held in the sub-
account) convert to Class A Shares, a proportionate number of Shares
held in the sub-account shall also convert to Class A Shares. All
conversions shall be effected on the basis of the relative net asset
values of the two Classes without the imposition of any sales load or
other charge. So long as any Class of Shares converts into Class A
Shares, the Distributor shall waive or reimburse each Fund, or take
such other actions with the approval of the Trustees as may be
reasonably necessary, to ensure the expenses, including payments
authorized under a Plan of Distribution, applicable to the Class A
Shares are not higher than the expenses, including payments authorized
under the Plan of Distribution, applicable to the class of shares
converting into Class A Shares.
G. Allocation of Expenses, Income and Gains Among Classes.
1. Expenses applicable to a particular class. Each Class of each
Fund shall pay any Service Fee, Distribution Fee and CDSC
applicable to that Class. Other expenses applicable to a
particular Class such as incremental transfer agency fees, but not
including advisory or custodial fees or other expenses related to
the management of the Fund's assets, shall be allocated between
Classes in different amounts if they are actually incurred in
different amounts by the Classes or the Classes receive services
of a different kind or to a different degree than other Classes.
2. Distribution Expenses. Distribution Expenses actually
attributable to the sale of all Classes shall be allocated to each
Class based upon the ratio which sales of each Class bears to the
sales of all Shares of the Fund. For this purpose, Shares issued
upon reinvestment of dividends or distributions, upon conversion
from Class B Shares or Class C Shares to Class A Shares or upon
stock splits will not be considered sales.
3. Income, capital gains and losses, and other expenses applicable to
all Classes. Income, realized and unrealized capital gains and
losses, and expenses such as advisory fees applicable to all
Classes shall be allocated to each Class on the basis of the net
asset value of that Class in relation to the net asset value of
the Fund.
<PAGE> 5
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.
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.
<PAGE> 6
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 information as the
Trustees may from time to time deem to be reasonably necessary to
evaluate this Plan.
L. Amendment. Any material amendment to this Plan shall be approved by
the affirmative vote of a majority of the Trustees of a Fund,
including the affirmative vote of the trustees of the Fund
who are not interested persons of the Fund, except that any amendment
that increases the CDSC rate schedule or CDSC Period must also be
approved by the affirmative vote of a majority of the Shares of the
affected Class. The Distributor shall provide the Trustees such
information as may be reasonably necessary to evaluate any amendment
to this Plan.
<PAGE> 7
EXHIBIT A
VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
VAN KAMPEN AMERICAN CAPITAL EMERGING GROWTH FUND
VAN KAMPEN AMERICAN CAPITAL ENTERPRISE FUND
VAN KAMPEN AMERICAN CAPITAL EQUITY INCOME FUND
VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
VAN KAMPEN AMERICAN CAPITAL GOVERNMENT SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL GROWTH AND INCOME FUND
VAN KAMPEN AMERICAN CAPITAL HARBOR FUND
VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND
VAN KAMPEN AMERICAN CAPITAL LIMITED MATURITY GOVERNMENT FUND
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
VAN KAMPEN AMERICAN CAPITAL PACE FUND
VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL RESERVE FUND
VAN KAMPEN AMERICAN CAPITAL TAX-EXEMPT TRUST
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST
VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST
VAN KAMPEN AMERICAN CAPITAL TRUST
<PAGE> 1
EXHIBIT (19)
POWER OF ATTORNEY
The undersigned, being officers and trustees of each of the Van Kampen
American Capital Open-End Trusts, as indicated on Schedule 1 attached hereto and
incorporated by reference, each a Delaware business trust, except for the Van
Kampen American Capital Pennsylvania Tax Free Income Fund, being a Pennsylvania
business trust (individually, a "Trust"), do hereby, in the capacities shown
below, individually appoint Dennis J. McDonnell and Ronald A. Nyberg, each of
Oakbrook Terrace, Illinois, and each of them, as the agents and
attorneys-in-fact with full power of substitution and resubstitution, for each
of the undersigned, to execute and deliver, for and on behalf of the
undersigned, any and all amendments to the Registration Statement filed by each
Trust with the Securities and Exchange Commission pursuant to the provisions of
the Securities Act of 1933 and the Investment Company Act of 1940.
This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together shall constitute one
instrument.
Dated: April 15, 1997
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ FERNANDO SISTO, SC.D. Trustee
- -----------------------------------------------------
Fernando Sisto, Sc.D.
/s/ DENNIS J. MCDONNELL President and Trustee
- -----------------------------------------------------
Dennis J. McDonnell
/s/ J. MILES BRANAGAN Trustee
- -----------------------------------------------------
J. Miles Branagan
/s/ LINDA HUTTON HEAGY Trustee
- -----------------------------------------------------
Linda Hutton Heagy
/s/ PHILLIP ROONEY Trustee
- -----------------------------------------------------
Phillip Rooney
/s/ R. CRAIG KENNEDY Trustee
- -----------------------------------------------------
R. Craig Kennedy
/s/ JACK E. NELSON Trustee
- -----------------------------------------------------
Jack E. Nelson
/s/ WAYNE W. WHALEN Trustee and Chairman
- -----------------------------------------------------
Wayne W. Whalen
Trustee
- -----------------------------------------------------
Jerome L. Robinson
/s/ EDWARD C. WOOD III Vice President and
- ----------------------------------------------------- Chief Financial Officer
Edward C. Wood III
</TABLE>
2
<PAGE> 2
SCHEDULE 1
<TABLE>
<S> <S>
1. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST
2. VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST
3. VAN KAMPEN AMERICAN CAPITAL TRUST
4. VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME
5. FUND
6. VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
7. VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
8. VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
9. VAN KAMPEN AMERICAN CAPITAL EMERGING GROWTH FUND
10. VAN KAMPEN AMERICAN CAPITAL ENTERPRISE FUND
11. VAN KAMPEN AMERICAN CAPITAL EQUITY INCOME FUND
12. VAN KAMPEN AMERICAN CAPITAL LIMITED MATURITY GOVERNMENT FUND
13. VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
14. VAN KAMPEN AMERICAN CAPITAL GOVERNMENT SECURITIES FUND
15. VAN KAMPEN AMERICAN CAPITAL GOVERNMENT TARGET FUND
16. VAN KAMPEN AMERICAN CAPITAL GROWTH AND INCOME FUND
17. VAN KAMPEN AMERICAN CAPITAL HARBOR FUND
18. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND
19. VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST
20. VAN KAMPEN AMERICAN CAPITAL PACE FUND
21. VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND
22. VAN KAMPEN AMERICAN CAPITAL RESERVE FUND
23. VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
24. VAN KAMPEN AMERICAN CAPITAL TAX-EXEMPT TRUST
25. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
26. VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
27. VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000917547
<NAME> VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
<SERIES>
<NUMBER> 001
<NAME> VCAC GLOBAL MANAGED ASSETS - CLASS A SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 17247064<F1>
<INVESTMENTS-AT-VALUE> 19794071<F1>
<RECEIVABLES> 234452<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 377541<F1>
<TOTAL-ASSETS> 20406064<F1>
<PAYABLE-FOR-SECURITIES> 88025<F1>
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 216377<F1>
<TOTAL-LIABILITIES> 304402<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 6775618
<SHARES-COMMON-STOCK> 808511
<SHARES-COMMON-PRIOR> 1528430
<ACCUMULATED-NII-CURRENT> (7148)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 157379<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 2579885<F1>
<NET-ASSETS> 8513467
<DIVIDEND-INCOME> 307364<F1>
<INTEREST-INCOME> 399022<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (819178)<F1>
<NET-INVESTMENT-INCOME> (112792)<F1>
<REALIZED-GAINS-CURRENT> 1701201<F1>
<APPREC-INCREASE-CURRENT> 1005068<F1>
<NET-CHANGE-FROM-OPS> 2593477<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (713178)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 343389
<NUMBER-OF-SHARES-REDEEMED> (1122082)
<SHARES-REINVESTED> 58774
<NET-CHANGE-IN-ASSETS> (6997654)
<ACCUMULATED-NII-PRIOR> 0<F1>
<ACCUMULATED-GAINS-PRIOR> 168396<F1>
<OVERDISTRIB-NII-PRIOR> (14634)<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 250405<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 892697<F1>
<AVERAGE-NET-ASSETS> 13868823
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> 0.013
<PER-SHARE-GAIN-APPREC> 1.229
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.862)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.530
<EXPENSE-RATIO> 2.87
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000917547
<NAME> VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
<SERIES>
<NUMBER> 002
<NAME> CLASS B SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 17247064<F1>
<INVESTMENTS-AT-VALUE> 19794071<F1>
<RECEIVABLES> 234452<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 377541<F1>
<TOTAL-ASSETS> 20406064<F1>
<PAYABLE-FOR-SECURITIES> 88025<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 216377<F1>
<TOTAL-LIABILITIES> 304402<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 9098727
<SHARES-COMMON-STOCK> 954327
<SHARES-COMMON-PRIOR> 802255
<ACCUMULATED-NII-CURRENT> (7148)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 157379<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 2579885<F1>
<NET-ASSETS> 9904714
<DIVIDEND-INCOME> 307364<F1>
<INTEREST-INCOME> 399022<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (819178)<F1>
<NET-INVESTMENT-INCOME> (112792)<F1>
<REALIZED-GAINS-CURRENT> 1701201<F1>
<APPREC-INCREASE-CURRENT> 1005068<F1>
<NET-CHANGE-FROM-OPS> 2593477<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (762464)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 319565
<NUMBER-OF-SHARES-REDEEMED> (233170)
<SHARES-REINVESTED> 65677
<NET-CHANGE-IN-ASSETS> 1800999
<ACCUMULATED-NII-PRIOR> 0<F1>
<ACCUMULATED-GAINS-PRIOR> 168396<F1>
<OVERDISTRIB-NII-PRIOR> (14634)<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 250405<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 892697<F1>
<AVERAGE-NET-ASSETS> 9261452
<PER-SHARE-NAV-BEGIN> 10.10
<PER-SHARE-NII> (0.093)
<PER-SHARE-GAIN-APPREC> 1.234
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.862)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.379
<EXPENSE-RATIO> 3.76
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 003
<NAME> VKAC GLOBAL MANAGED ASSET - CLASS C SHARES
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 17247064<F1>
<INVESTMENTS-AT-VALUE> 19794071<F1>
<RECEIVABLES> 234452<F1>
<ASSETS-OTHER> 0<F1>
<OTHER-ITEMS-ASSETS> 377541<F1>
<TOTAL-ASSETS> 20406064<F1>
<PAYABLE-FOR-SECURITIES> 88025<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 216377<F1>
<TOTAL-LIABILITIES> 304402<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 1497201
<SHARES-COMMON-STOCK> 161951
<SHARES-COMMON-PRIOR> 181833
<ACCUMULATED-NII-CURRENT> (7148)<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> 157379<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 2579885<F1>
<NET-ASSETS> 1683481
<DIVIDEND-INCOME> 307364<F1>
<INTEREST-INCOME> 399022<F1>
<OTHER-INCOME> 0<F1>
<EXPENSES-NET> (819178)<F1>
<NET-INVESTMENT-INCOME> (112792)<F1>
<REALIZED-GAINS-CURRENT> 1701201<F1>
<APPREC-INCREASE-CURRENT> 1005068<F1>
<NET-CHANGE-FROM-OPS> 2593477<F1>
<EQUALIZATION> 0<F1>
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (132888)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 66272
<NUMBER-OF-SHARES-REDEEMED> (95831)
<SHARES-REINVESTED> 9677
<NET-CHANGE-IN-ASSETS> (156711)<F1>
<ACCUMULATED-NII-PRIOR> 0<F1>
<ACCUMULATED-GAINS-PRIOR> 168396<F1>
<OVERDISTRIB-NII-PRIOR> (14634)<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 250405<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 892697<F1>
<AVERAGE-NET-ASSETS> 1910196
<PER-SHARE-NAV-BEGIN> 10.12
<PER-SHARE-NII> (0.121)
<PER-SHARE-GAIN-APPREC> 1.258
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.862)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.395
<EXPENSE-RATIO> 3.78
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This item relates to the Fund on a composite basis and not on a class basis.
</FN>
</TABLE>
