-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BW+WAYRlGXpjx3whmYzU0HP4d2dDEtHxZr3mfcOnrN09lnhT5Y7n38bDWcZDU/Hk sgU7Z3sxdCr51jbxw5gFhA== 0000950131-96-000249.txt : 19960206 0000950131-96-000249.hdr.sgml : 19960206 ACCESSION NUMBER: 0000950131-96-000249 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951130 FILED AS OF DATE: 19960205 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL RESERVE FUND CENTRAL INDEX KEY: 0000005114 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 741794065 FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-02482 FILM NUMBER: 96511203 BUSINESS ADDRESS: STREET 1: 2800 POST OAK BLVD 46TH FL CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7139930500 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL RESERVE FUND INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN GENERAL RESERVE FUND INC DATE OF NAME CHANGE: 19830912 N-30D 1 RESERVE FUND SEMI-ANNUAL REPORT TABLE OF CONTENTS Letter to Shareholders...................... 1 Portfolio of Investments.................... 3 Statement of Assets and Liabilities......... 4 Statement of Operations..................... 5 Statement of Changes in Net Assets.......... 6 Financial Highlights........................ 7 Notes to Financial Statements............... 10
RES SAR 1/96 LETTER TO SHAREHOLDERS [PHOTO OF] DENNIS J. MCDONNELL AND DON G. POWELL January 18, 1996 Dear Shareholder: During the second half of 1995, the Van Kampen American Capital Reserve Fund continued to benefit from relatively high short-term interest rates and low inflation. As a result, the Fund was able to provide shareholders with a high level of current income and a high degree of safety and liquidity. ECONOMIC OVERVIEW Although our nation's economy expanded at an unexpectedly robust pace during the third quarter, economic growth in general slowed considerably in 1995. This slowdown is largely due to the Federal Reserve Board's successful efforts to contain inflationary pressures through a series of short-term rate in- creases in 1994. However, mindful of recessionary pressures in a slower eco- nomic environment, the Fed reversed its trend of raising interest rates by lowering short-term rates twice during the year, most recently in December by one-quarter percent. Because the Fed's monetary initiatives had taken hold without driving the economy into a recession, the financial markets, particularly stocks, rallied through much of the year and even reached new market highs. With slowing growth, interest rates declined and the value of many fixed-income investments rose (bond yields and prices move in opposite directions). Investors had an- ticipated such a move for months, which drove down the yields on money market instruments while boosting stock and bond prices. Still, short-term interest rates are historically high in relation to inflation. PERFORMANCE SUMMARY On November 30, 1995, the Fund's Class A shares generated a seven-day aver- age yield of 4.92 percent with an effective annual yield of 5.04 percent and a six-month total return of 2.45 percent/1/. In comparison, the average total return performance for money market funds, as calculated by Lipper Analytical Services, Inc., was 2.65 percent for the same six-month period. Longer term, the Fund produced a one-year total return of 5.00 percent/1/. We believe you will agree the Fund continued to provide shareholders with attractive yields when compared to money market accounts and certificates of deposits. Fund shares are not guaranteed or insured by the U.S. Government, and there is no assurance that the Fund will be able to maintain a stable net asset value of $1. CDs offer a guaranteed return of principal, a fixed rate of interest and are typically issued by institutions whose deposits are insured. /1/Total return assumes reinvestment of all distributions for the period ended November 30, 1995. Continued on page two 1 Adhering to the Fund's strict investment approach, we continued to invest only in those debt securities rated AA or higher by Standard & Poor's Ratings Group. While the market for these highly rated securities is relatively small, we believe they provide the greatest degree of safety and liquidity for the Fund and its shareholders. The Fund's portfolio composition for the period is further illustrated by the following chart: [PIE CHART OF] PORTFOLIO HOLDINGS BY INVESTMENT TYPE AS OF NOVEMBER 30, 1995 --COMMERCIAL PAPER 19% U.S. GOVERNMENT OBLIGATIONS 54%-- --REPURCHASE AGREEMENTS 27% OUTLOOK We anticipate the economy will grow at an annual rate of 2 to 3 percent through the first half of 1996 and inflation will be under 3 percent. Based upon this outlook of generally slow growth and low inflation, we believe that market forces will exert a downward pressure on interest rates. As a result, the Fund will continue to maintain a portfolio with an average maturity of 30 to 40 days in order to lock in higher yields for a longer period of time. During the past year, debate over tax reform dominated the agenda in Washing- ton. There has been varied speculation about the impact of reform, which may have caused you to wonder how it might affect your investment goals. At this point, no one is certain about what will finally happen. Consequently, in the near term, there may be periodic market fluctuations as various proposals come to the forefront, just as we saw during the debate over the U.S. health care system. We will continue to keep a close watch over any new developments and evaluate the potential impact they may have on your investments. Thank you for your continued confidence in your investment with Van Kampen American Capital and for the privilege of working with you in seeking to reach your financial goals. Sincerely, [SIGNATURE OF] [SIGNATURE OF] Don G. Powell Dennis J. McDonnell Chairman President Van Kampen American Capital Van Kampen American Capital Asset Management, Inc. Asset Management, Inc. 2 PORTFOLIO OF INVESTMENTS November 30, 1995 (Unaudited) - --------------------------------------------------------------------------------
Par Amount (000) Description Coupon Maturity Market Value - ------------------------------------------------------------------------------- UNITED STATES GOVERNMENT OBLIGATIONS 51.8% $ 1,415 Federal Farm Credit Banks............. 5.696% 03/11/96 $ 1,392,749 5,000 Federal Farm Credit Banks............. 5.464 05/28/96 4,867,739 1,000 Federal Home Loan Banks, Fixed Coupon. 5.900 07/25/96 1,000,000 5,000 Federal Home Loan Banks............... 5.647 12/13/95 4,990,069 480 Federal Home Loan Banks............... 6.168 01/05/96 477,158 3,675 Federal Home Loan Banks............... 5.655 01/17/96 3,647,952 13,090 Federal Home Loan Banks............... 5.659 02/29/96 12,907,020 8,000 Federal Home Loan Banks............... 5.677 03/15/96 7,869,738 10,000 Federal Home Loan Banks............... 5.610 04/12/96 9,796,767 90,000 Federal Home Loan Mortgage Corp....... 5.549 12/01/95 89,985,611 4,460 Federal Home Loan Mortgage Corp....... 5.645 01/05/96 4,435,381 10,000 Federal Home Loan Mortgage Corp....... 5.664 02/08/96 9,892,861 5,000 Federal National Mortgage Association. 5.670 12/15/95 4,988,521 10,000 Federal National Mortgage Association. 5.787 12/18/95 9,971,900 5,000 Federal National Mortgage Association. 5.700 12/21/95 4,983,842 5,000 Federal National Mortgage Association. 5.678 01/17/96 4,963,200 9,400 Federal National Mortgage Association. 5.626 03/12/96 9,252,081 8,000 Federal National Mortgage Association. 5.631 04/05/96 7,845,342 ------------ TOTAL UNITED STATES GOVERNMENT OBLIGATIONS (Cost $193,267,931)................................. 193,267,931 ------------ REPURCHASE AGREEMENTS* 25.7% 60,000 BA Securities, repurchase proceeds $60,009,800 ......................... 5.880 12/01/95 60,000,000 35,830 SBC Capital Markets, Inc., repurchase proceeds $35,835,862 ................ 5.890 12/01/95 35,830,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $95,830,000).................................. 95,830,000 ------------ COMMERCIAL PAPER 18.6% 20,000 Associates Corp. of North America..... 5.772 01/09/96 19,873,556 19,000 General Electric Capital Corp......... 5.659 02/12/96 18,782,070 15,000 General Electric Co................... 5.669 12/11/95 14,974,379 16,000 Toronto Dominion Holdings............. 5.708 03/06/96 15,760,733 ------------ TOTAL COMMERCIAL PAPER (Cost $69,390,738)............ 69,390,738 ------------ TOTAL INVESTMENTS (Cost $358,488,669) 96.1%.................... 358,488,669 OTHER ASSETS AND LIABILITIES, NET 3.9%......................... 14,677,934 ------------ NET ASSETS 100%................................................ $373,166,603 ------------
*dated 11/30/95, collateralized by U.S. Government obligations in a pool cash account 3 See Notes to Financial Statements STATEMENT OF ASSETS AND LIABILITIES November 30, 1995 (Unaudited) - -------------------------------------------------------------------------------- ASSETS Investments, at market value (Cost $358,488,669).................. $358,488,669 Cash.............................................................. 97,332 Receivable for Fund shares sold................................... 25,715,930 Other assets...................................................... 79,580 ------------ Total Assets..................................................... 384,381,511 ------------ LIABILITIES Payable for Fund shares redeemed.................................. 5,806,828 Payable for investments purchased................................. 4,867,739 Due to Adviser.................................................... 146,608 Due to shareholder service agent.................................. 139,061 Due to Distributor................................................ 100,130 Deferred Trustees' compensation................................... 62,639 Dividends payable................................................. 6,082 Accrued expenses.................................................. 85,821 ------------ Total Liabilities................................................ 11,214,908 ------------ NET ASSETS, equivalent to $1.00 per share for Class A, B, and C shares............................................................ $373,166,603 ------------ NET ASSETS WERE COMPRISED OF: Shares of beneficial interest at par; 343,684,573 Class A, 25,793,412 Class B and 3,687,542 Class C shares outstanding...... $ 3,731,655 Capital surplus................................................... 369,371,322 Undistributed net investment income............................... 63,626 ------------ NET ASSETS........................................................ $373,166,603 ------------
4 See Notes to Financial Statements STATEMENT OF OPERATIONS Six Months Ended November 30, 1995 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME Interest........................................................... $11,269,314 ----------- EXPENSES Management fees.................................................... 852,775 Shareholder service agent's fees and expenses...................... 717,183 Accounting services................................................ 50,232 Service fees--Class A.............................................. 231,656 Distribution and service fees--Class B............................. 93,526 Distribution and service fees--Class C............................. 12,971 Trustees' fees and expenses........................................ 9,832 Audit fees......................................................... 9,250 Legal fees......................................................... 2,494 Reports to shareholders............................................ 29,400 Registration and filing fees....................................... 71,741 Miscellaneous...................................................... 13 ----------- Total expenses.................................................... 2,081,073 ----------- NET INVESTMENT INCOME.............................................. 9,188,241 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $ 9,188,241 -----------
5 See Notes to Financial Statements STATEMENT OF CHANGES IN NET ASSETS (Unaudited) - --------------------------------------------------------------------------------
Six Months Ended Year Ended May November 30, 1995 31, 1995 - -------------------------------------------------------------------------------- NET ASSETS, beginning of period............ $ 324,458,539 $ 463,827,313 --------------- --------------- OPERATIONS Increase from net investment income....... 9,188,241 18,614,115 --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME Class A................................... (8,693,308) (18,623,009) Class B................................... (423,987) (15,317) Class C................................... (59,194) (2,167) --------------- --------------- (9,176,489) (18,640,493) --------------- --------------- CAPITAL TRANSACTIONS Proceeds from shares sold Class A................................... 2,359,015,958 3,148,142,161 Class B................................... 139,850,863 21,754,203 Class C................................... 25,979,179 3,049,049 --------------- --------------- 2,524,846,000 3,172,945,413 --------------- --------------- Value received for shares issued in merger (see Note 6) Class A................................... 20,714,880 -- Class B................................... 5,651,573 -- Class C................................... -- -- --------------- --------------- 26,366,453 -- --------------- --------------- Proceeds from shares issued for distributions reinvested Class A................................... 8,693,308 18,623,009 Class B................................... 423,987 15,317 Class C................................... 59,194 2,167 --------------- --------------- 9,176,489 18,640,493 --------------- --------------- Cost of shares redeemed Class A................................... (2,364,430,495) (3,310,885,859) Class B................................... (124,322,817) (17,579,714) Class C................................... (22,939,318) (2,462,729) --------------- --------------- (2,511,692,630) (3,330,928,302) --------------- --------------- Increase (decrease) in net assets resulting from capital transactions....... 48,696,312 (139,342,396) --------------- --------------- INCREASE (DECREASE) IN NET ASSETS.......... 48,708,064 (139,368,774) --------------- --------------- NET ASSETS, end of period (including undistributed net investment income of $63,626 and $51,874, respectively)........ $ 373,166,603 $ 324,458,539 --------------- ---------------
6 See Notes to Financial Statements FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each of the periods indicated. (Unaudited) - --------------------------------------------------------------------------------
Class A --------------------------------------------------- Six Months Ended Year Ended May 31 November 30, -------------------------------------- 1995 1995 1994 1993 1992 1991 - -------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ ------ Income from operations Investment income........ .0295 .0535 .0329 .0353 .052 .0758 Expenses................. (.0052) (.0101) (.0100) (.0109) (.0105) (.0094) ------ ------ ------ ------ ------ ------ Net investment income..... .0243 .0434 .0229 .0244 .0415 .0664 ------ ------ ------ ------ ------ ------ Distributions from net investment income......... (.0243) (.0434) (.0229) (.0244) (.0415) (.0664) ------ ------ ------ ------ ------ ------ Net asset value, end of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ ------ TOTAL RETURN(/1/)......... 2.45% 4.43% 2.32% 2.44% 4.20% 6.80% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions)................ $343.7 $319.7 $463.8 $279.3 $329.2 $402.3 Average net assets (millions)................ $356.4 $434.4 $326.8 $306.7 $377.5 $482.6 Ratios to average net assets (annualized) Expenses................. 1.05% 1.00% 1.03% 1.09% 1.05% .94% Net investment income.... 4.88% 4.28% 2.36% 2.44% 4.19% 6.68%
(1) Total return for a period of less than one full year is not annualized. 7 See Notes to Financial Statements FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for a share of beneficial interest outstanding throughout each of the periods indicated. (Unaudited) - --------------------------------------------------------------------------------
Class B(/1/) ------------------------------------- Six Months April 18, 1995(/2/) Ended through November 30, 1995 May 31, 1995 - ---------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period...... $ 1.00 $ 1.00 ------ ------ Income from investment operations Investment income....... .0292 .0073 Expenses................ (.0087) (.0026) ------ ------ Net investment income.... .0205 .0047 ------ ------ Distributions from net investment income........ (.0205) (.0047) ------ ------ Net asset value, end of period................... $ 1.00 $ 1.00 ------ ------ TOTAL RETURN(/3/)........ 2.07% .47% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions)............... $ 25.8 $4.2 Average net assets (millions)............... $ 20.9 $2.3 Ratios to average net assets (annualized) Expenses................ 1.79% 1.76% Net investment income... 4.07% 3.52%
(1) Based on average shares outstanding. (2) Commencement of operations. (3) Total return for periods of less than one full year are not annualized and does not consider the effect of sales charges. 8 See Notes to Financial Statements FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for a share of beneficial interest outstanding throughout each of the periods indicated. (Unaudited) - --------------------------------------------------------------------------------
Class C(/1/) ------------------------------------- Six Months April 18, 1995(/2/) Ended through November 30, 1995 May 31, 1995 - ---------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period...... $ 1.00 $ 1.00 ------ ------ Income from investment operations Investment income....... .0293 .0076 Expenses................ (.0090) (.0027) ------ ------ Net investment income.... .0203 .0049 ------ ------ Distributions from net investment income........ (.0203) (.0049) ------ ------ Net asset value, end of period................... $ 1.00 $ 1.00 ------ ------ TOTAL RETURN(/3/)........ 2.05% .49% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions)............... $3.7 $0.6 Average net assets (millions)............... $2.9 $0.3 Ratios to average net assets (annualized) Expenses................ 1.79% 1.76% Net investment income... 4.10% 3.52%
(1) Based on average shares outstanding. (2) Commencement of operations. (3) Total return for periods of less than one full year are not annualized and does not consider the effect of sales charges. 9 See Notes to Financial Statements NOTES TO FINANCIAL STATEMENTS (Unaudited) - ------------------------------------------------------------------------------- NOTE 1--SIGNIFICANT ACCOUNTING POLICIES Van Kampen American Capital Reserve Fund (the "Fund", formerly American Capi- tal Reserve Fund, Inc.) is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company. The following is a summary of significant accounting policies consistently fol- lowed by the Fund in the preparation of its financial statements. A. INVESTMENT VALUATIONS-Investments are valued at amortized cost, which ap- proximates market value. The cost of investments for federal income tax pur- poses is substantially the same as for financial reporting purposes. B. REPURCHASE AGREEMENTS-A repurchase agreement is a short-term investment in which the Fund acquires ownership of a debt security and the seller agrees to repurchase the security at a future time and specified price. The Fund may in- vest independently in repurchase agreements, or transfer uninvested cash bal- ances into a pooled cash account along with other investment companies advised by Van Kampen American Capital Asset Management, Inc. (the "Adviser"), the daily aggregate of which is invested in repurchase agreements. Repurchase agreements are collateralized by the underlying debt security. The Fund will make payment for such securities only upon physical delivery or evidence of book entry transfer to the account of the custodian bank. The seller is re- quired to maintain the value of the underlying security at not less than the repurchase proceeds due the Fund. C. FEDERAL INCOME TAXES-No provision for federal income taxes is required be- cause the Fund has elected to be taxed as a "regulated investment company" un- der the Internal Revenue Code and intends to maintain this qualification by annually distributing all of its taxable net investment income and taxable net realized gains to its shareholders. Additionally, approximately $18,000 of fi- nancial statement losses are deferred for federal income tax purposes to the 1996 fiscal year. D. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME-Investment transac- tions are accounted for on the trade date. Realized gains and losses on in- vestments are determined on the basis of amortized cost. Interest income is accrued daily. E. DIVIDENDS-The Fund records daily dividends from net investment income. These dividends are automatically reinvested in additional shares of the Fund at net asset value. Shares purchased by daily reinvestments are liquidated at net asset value on the last business day of the month and the proceeds of such redemptions paid to the shareholders electing to receive 10 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) - ------------------------------------------------------------------------------- dividends in cash. The Fund distributes tax basis earnings in accordance with the minimum distribution requirements of the Internal Revenue Code, which may differ from generally accepted accounting principles. Such distributions may result in dividends in excess of financial statement net investment income. F. DEBT DISCOUNT AND PREMIUM-For financial and tax reporting purposes, all discounts and premiums are amortized over the life of the security. NOTE 2--MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Adviser serves as investment manager of the Fund. Management fees are cal- culated monthly, based on the average daily net assets of the Fund at an an- nual rate of .50% of the first $150 million; .45% of the next $100 million; .40% of the next $100 million; and .35% of the amount in excess of $350 mil- lion. Accounting services include the salaries and overhead expenses of the Fund's Treasurer and the personnel operating under his direction. Charges are allo- cated among investment companies advised by the Adviser. During the period, these charges included $3,575 as the Fund's share of the employee costs at- tributable to the Fund's accounting officers. A portion of the accounting services expense was paid to the Adviser in reimbursement of personnel, facil- ities and equipment costs attributable to the provision of accounting services to the Fund. The services provided by the Adviser are at cost. ACCESS Investors Services, Inc., an affiliate of the Adviser, serves as the Fund's shareholder service agent. These services are provided at cost plus a profit. During the period, such fees aggregated $607,814. Under the Distribution Plans, each class of shares pays up to .15% per annum of its average daily net assets to reimburse the Distributor for expenses and service fees incurred. Class B and Class C shares pay an additional fee of up to .75% per annum of their average daily net assets to reimburse Van Kampen American Capital Distributors, Inc. (the "Distributor") for its distribution expenses. Actual distribution expenses incurred by the Distributor for Class B and Class C shares may exceed the amounts reimbursed to the Distributor by the Fund. At the end of the period, the unreimbursed expenses incurred by the Dis- tributor under the Class B and Class C plans aggregated approximately $32,000 and $5,000, respectively, and may be carried forward and reimbursed through either the collection of the contingent deferred sales charges from share re- demptions or, subject to the annual renewal of the plans, future Fund reim- bursements of distribution fees. Legal fees of $2,429 were for services rendered by O'Melveny & Myers, coun- sel for the Fund. Lawrence J. Sheehan, of counsel to that firm, is a trustee of the Fund. 11 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) - ------------------------------------------------------------------------------- Certain officers and directors of the Fund are officers and trustees of the Adviser, the Distributor and the shareholder service agent. NOTE 3-TRUSTEE COMPENSATION Fund trustees who are not affiliated with the Adviser are compensated by the Fund at the annual rate of $1,010 plus a fee of $29 per day for Board and Com- mittee meetings attended. During the period, such fees aggregated $9,555. The trustees may participate in a voluntary Deferred Compensation Plan (the "Plan"). The Plan is not funded and obligations under the Plan will be paid solely out of the Fund's general accounts. The Fund will not reserve or set aside funds for the payment of its obligations under the Plan by any form of trust or escrow. Each trustee covered by the Plan elects to be credited with an earnings component on amounts deferred equal to the income earned by the Fund on its short-term investments or equal to the total return of the Fund. NOTE 4-CAPITAL The Fund offers three classes of shares at their respective net asset values per share. Class B and Class C shares are subject to a sales charge imposed at the time of redemption on a contingent deferred basis. All classes of shares have the same rights, except that Class B and Class C shares bear the cost of distribution fees and certain other class specific expenses. Realized and unrealized gains or losses, investment income and expenses (other than class specific expenses) are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Class B and Class C shares automatically convert to Class A shares six years and ten years after pur- chase, respectively, subject to certain conditions. The offering of Class B and Class C shares commenced April 18, 1995, at which time all previously out- standing shares became Class A shares. 12 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) - ------------------------------------------------------------------------------- The Fund has an unlimited number of shares of $.01 par value beneficial in- terest authorized. Transactions in shares of beneficial interest were as fol- lows:
Six Months Ended Year Ended November 30, 1995 May 31, 1995 - -------------------------------------------------------------------------------- Shares sold Class A..................................... 2,359,012,582 3,148,142,161 Class B..................................... 139,850,863 21,754,203 Class C..................................... 25,979,179 3,049,049 -------------- -------------- 2,524,842,624 3,172,945,413 -------------- -------------- Shares issued in merger (see Note 6) Class A..................................... 20,714,880 -- Class B..................................... 5,651,573 -- Class C..................................... -- -- -------------- -------------- 26,366,453 -- -------------- -------------- Shares issued for distributions reinvested Class A..................................... 8,693,308 18,623,009 Class B..................................... 423,987 15,317 Class C..................................... 59,194 2,167 -------------- -------------- 9,176,489 18,640,493 -------------- -------------- Shares redeemed Class A..................................... (2,364,431,040) (3,310,885,862) Class B..................................... (124,322,817) (17,579,714) Class C..................................... (22,939,318) (2,462,729) -------------- -------------- (2,511,693,175) (3,330,928,305) -------------- -------------- Increase (decrease) in shares outstanding... 48,692,391 (139,342,399) -------------- --------------
NOTE 5--FUND REORGANIZATION On July 21, 1995, the shareholders approved the reorganization of the Fund to a Delaware Business Trust and the election of fourteen trustees. On July 31, 1995, the reorganization became effective. NOTE 6--BUSINESS COMBINATION On September 22, 1995, the Fund acquired the net assets of Van Kampen Money Market Fund ("VKMM") pursuant to a plan of reorganization approved by VKMM shareholders on September 21, 1995. The acquisition resulted in a tax-free ex- change of 26,366,453 shares of the Fund for the 26,366,453 shares of VKMM out- standing on September 22, 1995. VKMM's net assets at that date were $26,366,453; the Fund's net assets were $422,227,929. After the acquisition, the combined net assets of the Fund were $448,594,382. 13 FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL GLOBAL AND INTERNATIONAL Global Equity Fund Global Government Securities Fund Global Managed Assets Fund Short-Term Global Income Fund Strategic Income Fund EQUITY Growth Emerging Growth Fund Enterprise Fund Pace Fund Growth & Income Balanced Fund Comstock Fund Equity Income Fund Growth and Income Fund Harbor Fund Real Estate Securities Fund Utility Fund FIXED INCOME Corporate Bond Fund Government Securities Fund High Income Corporate Bond Fund High Yield Fund Limited Maturity Government Fund Prime Rate Income Trust Reserve Fund U.S. Government Fund U.S. Government Trust for Income TAX-FREE California Insured Tax Free Fund Florida Insured Tax Free Income Fund High Yield Municipal Fund Insured Tax Free Income Fund Limited Term Municipal Income Fund Municipal Income Fund New Jersey Tax Free Income Fund New York Tax Free Income Fund Pennsylvania Tax Free Income Fund Tax Free High Income Fund Tax Free Money Fund Texas Tax Free Income Fund THE GOVETT FUNDS Emerging Markets Fund Global Income Fund International Equity Fund Latin America Fund Pacific Strategy Fund Smaller Companies Fund Ask your investment adviser for a prospectus containing more complete information, including sales charges and expenses. Please read it carefully before you invest or send money. Or call us direct at 1-800-421-5666 weekdays from 7:00 a.m. to 7:00 p.m. Central time. 14 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND BOARD OF TRUSTEES J. MILES BRANAGAN PHILIP P. GAUGHAN LINDA H. HEAGY ROGER HILSMAN R. CRAIG KENNEDY DONALD C. MILLER JACK E. NELSON DON G. POWELL DAVID REES JEROME L. ROBINSON LAWRENCE J. SHEEHAN FERNANDO SISTO* WAYNE W. WHALEN WILLIAM S. WOODSIDE *Chairman of the Board OFFICERS DON G. POWELL President CURTIS W. MORELL Vice President and Treasurer DENNIS J. MCDONNELL ROBERT C. PECK, JR. DAVID R. TROTH PAUL R. WOLKENBERG Vice Presidents TANYA M. LODEN Vice President and Controller RONALD A. NYBERG Vice President and Secretary NICOLAS DALMASO HUEY P. FALGOUT, JR. SCOTT E. MARTIN WESTON B. WETHERELL Assistant Secretaries PERRY F. FARRELL M. ROBERT SULLIVAN Assistant Treasurers INVESTMENT ADVISER VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC. 2800 Post Oak Blvd. Houston, Texas 77056 DISTRIBUTOR VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC. One Parkview Plaza Oakbrook Terrace, Illinois 60181 SHAREHOLDER SERVICE AGENT ACCESS INVESTORS SERVICES, INC. P.O. Box 418256 Kansas City, Missouri 64141-9256 CUSTODIANS STATE STREET BANK AND TRUST CO. 225 Franklin Street Boston, Massachusetts 02110 FIRST INTERSTATE BANK Los Angeles, California COUNSEL O'MELVENY & MYERS 400 South Hope Street Los Angeles, California 90071 (C)Van Kampen American Capital Distributors, Inc., 1995 All rights reserved. SM denotes a service mark of Van Kampen American Capital Distributors, Inc. This report is submitted for the general information of the shareholders of the Fund. It is not authorized for distribution to prospective investors un- less it has been preceded or is accompanied by an effective prospectus of the Fund which contains additional information on how to purchase shares, the sales charge, and other pertinent data. 15 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND THIS PAGE INTENTIONALLY LEFT BLANK 16 -----END PRIVACY-ENHANCED MESSAGE-----