-----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, WvrlPs5MBPSZEVoUC+8aoWkAQvOSmJPb3fK9KIcsQy/BYTZd6D0JQYn6L7c4o1g5 /6RAzoKrLr+Nfx5dGYYlUw== 0000950137-96-001839.txt : 19961002 0000950137-96-001839.hdr.sgml : 19961002 ACCESSION NUMBER: 0000950137-96-001839 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 26 FILED AS OF DATE: 19961001 EFFECTIVENESS DATE: 19961001 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: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-50870 FILM NUMBER: 96637882 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-02482 FILM NUMBER: 96637883 BUSINESS ADDRESS: STREET 1: ONE PARKVIEW PLAZA CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 BUSINESS PHONE: 7139934495 MAIL ADDRESS: STREET 1: ONE PARKVIEW PLAZA CITY: OAKBROOK TERRACE STATE: IL ZIP: 60181 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 485BPOS 1 FORM N-1A 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1996 REGISTRATION NO. 2-50870 NO. 811-2482 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/ POST-EFFECTIVE AMENDMENT NO. 37 /X/ REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/ AMENDMENT NO. 22 /X/
VAN KAMPEN AMERICAN CAPITAL RESERVE FUND (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) ONE PARKVIEW PLAZA, OAKBROOK TERRACE, IL 60181 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (630) 684-6000 RONALD A. NYBERG, ESQ. EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY VAN KAMPEN AMERICAN CAPITAL, INC. ONE PARKVIEW PLAZA OAKBROOK TERRACE, IL 60181 (NAME AND ADDRESS OF AGENT FOR SERVICE) --------------------- COPIES TO: WAYNE W. WHALEN, ESQ. THOMAS A. HALE, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM 333 WEST WACKER DRIVE CHICAGO, IL 60606 (312) 407-0700 Approximate Date of Proposed Public Offering: As soon as practicable following effectiveness of this Registration Statement. --------------------- It is proposed that this filing will become effective: / / immediately upon filing pursuant to paragraph (b) /X/ on September 28, 1996 pursuant to paragraph (b) / / 60 days after filing pursuant to paragraph (a)(i) / / on (date) pursuant to paragraph (a)(i) / / 75 days after filing pursuant to paragraph (a)(ii) / / on (date) pursuant to paragraph (a)(ii) of Rule 485. If appropriate, check the following box: / / This post-effective amendment designates a new effective date for a previously filed post-effective amendment. DECLARATION PURSUANT TO RULE 24F-2. REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940 AND INTENDS TO FILE WITH THE SECURITIES AND EXCHANGE COMMISSION A FORM 24F-2 FOR ITS FISCAL YEAR ENDING MAY 31, 1997 ON OR BEFORE JULY 30, 1997. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND CROSS REFERENCE SHEET
FORM N-1A ITEM LOCATION IN PROSPECTUS ------------------------------------------- PART A 1. Cover Page................................. Front 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 Objective and Policies; Investment Practices; Description of Shares of the Fund 5. Management of the Fund..................... The Fund; Investment Practices; Investment Advisory Services; Inside Back Cover 6. Capital Stock and Other Securities......... The Fund; Alternative Sales Arrangements; Shareholder Services; Distribution and Service Plans; Redemption of Shares; Distributions from the Fund; Tax Status; Description of Shares of the Fund; Inside Back Cover 7. Purchase of Securities Being Offered....... Alternative Sales Arrangements; Purchase of Shares; Shareholder Services; Distribution and Service Plans 8. Redemption or Repurchase................... Shareholder Services; Redemption of Shares 9. Pending Legal Proceedings.................. Inapplicable
PART B STATEMENT OF ADDITIONAL INFORMATION ------------------------------------------- 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; Investment Restrictions 14. Management of the Fund..................... Investment Advisory Agreement; General Information; Trustees and Executive Officers 15. Control Persons and Principal Holders of Securities............................... General Information; Investment Advisory Agreement; Trustees and Officers 16. Investment Advisory and Other Services..... Investment Advisory Agreement; Distributor; Distribution and Service Plans; Transfer Agent; Other Information; Portfolio Transactions and Brokerage 17. Brokerage Allocation and Other Practices... Portfolio Transactions and Brokerage 18. Capital Stock and Other Securities......... Purchase of Shares; Redemption of Shares 19. Purchase, Redemption and Pricing of Securities Being Offered................. Determination of Net Asset Value; Purchase and Redemption of Shares; Exchange Privilege 20. Tax Status................................. Dividends and Taxes 21. Underwriters............................... Distributor 22. Calculation of Performance Data............ Fund Performance 23. Financial Statements....................... Report of Independent Accountants; Financial Statements; Notes to Financial Statements
PART C Information required to be included in Part C is set forth under the appropriate item in Part C of the Registration Statement. 3 - -------------------------------------------------------------------------------- VAN KAMPEN AMERICAN CAPITAL RESERVE FUND - -------------------------------------------------------------------------------- Van Kampen American Capital Reserve Fund (the "Fund") is a diversified mutual fund. The investment objective of the Fund is to seek protection of capital and high current income. The Fund seeks to achieve its investment objective by investing in U.S. dollar denominated money market securities. INVESTMENTS IN THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. ALTHOUGH THE FUND SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE THERE IS NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO. The Fund's investment adviser is Van Kampen American Capital Asset Management, Inc. This Prospectus sets forth certain information that a prospective investor should know before investing in the Fund. Please read it carefully and retain it for future reference. The address of the Fund is One Parkview Plaza, Oakbrook Terrace, Illinois 60181, and its telephone number is (800)421-5666. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR STATE REGULATORS NOR HAS THE COMMISSION OR STATE REGULATORS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. A Statement of Additional Information, dated September 28, 1996, containing additional information about the Fund has been filed with the Securities and Exchange Commission ("SEC") and is hereby incorporated by reference in its entirety into this Prospectus. A copy of the Statement of Additional Information may be obtained without charge by calling (800)421-5666 or for Telecommunications Device For the Deaf by calling (800)772-8889. ------------------ VAN KAMPEN AMERICAN CAPITAL SM ------------------ THIS PROSPECTUS IS DATED SEPTEMBER 28, 1996. 4 - ------------------------------------------------------------------------------ TABLE OF CONTENTS - ------------------------------------------------------------------------------
PAGE --- Prospectus Summary............................................... 3 Shareholder Transaction Expenses................................. 5 Annual Fund Operating Expenses and Example....................... 6 Financial Highlights............................................. 8 The Fund......................................................... 10 Investment Objective and Policies................................ 10 Investment Practices............................................. 13 Investment Advisory Services..................................... 13 Alternative Sales Arrangements................................... 15 Purchase of Shares............................................... 17 Shareholder Services............................................. 22 Redemption of Shares............................................. 26 Distribution and Service Plans................................... 30 Distributions from the Fund...................................... 32 Tax Status....................................................... 32 Fund Performance................................................. 33 Description of Shares of the Fund................................ 34 Additional Information........................................... 35
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 5 - ------------------------------------------------------------------------------ PROSPECTUS SUMMARY - ------------------------------------------------------------------------------ THE FUND. Van Kampen American Capital Reserve Fund (the "Fund) is a diversified, open-end management investment company organized as a Delaware business trust. MINIMUM PURCHASE. $500 minimum initial investment for each class of shares and $25 minimum subsequent investment for each class of shares (or less as described under "Purchase of Shares"). INVESTMENT OBJECTIVE. The investment objective of the Fund is to seek protection of capital and high current income. There is no assurance that the Fund will achieve its objective. See "Investment Objective and Policies." INVESTMENT POLICY. The Fund seeks to maintain a constant net asset value of $1.00 per share by investing in a diversified portfolio of money market instruments. It seeks high current income from these short-term investments to the extent consistent with protection of capital. RISK FACTORS. Investments in the Fund are neither insured nor guaranteed by the U.S. Government. Although the Fund seeks to maintain a stable net asset value of $1.00 per share, there can be no assurance that the Fund will be able to do so. INVESTMENT RESULTS. The investment results of the Fund are shown in the table of "Financial Highlights." See "Fund Performance." 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. Unless investors intend to exchange their Fund shares for Class B shares or Class C shares of other Van Kampen American Capital funds, they should purchase the Fund's Class A shares because there is no distribution fee. Even investors who do intend to exchange their Fund shares for Class B shares or Class C shares of other Van Kampen American Capital funds may prefer to purchase Class A shares of the Fund and then redeem those shares and use the proceeds to purchase Class B shares or Class C shares of other Van Kampen American Capital funds. See "Alternative Sales Arrangements -- Factors for Consideration." Each class of shares represents an interest in the same portfolio of investments of the Fund. The per share dividends on Class B shares and Class C shares will be lower than the per share dividends on Class A shares. See "Alternative Sales Arrangements." For information on redeeming shares see "Redemption of Shares." 3 6 Class A Shares. Class A shares are offered at net asset value per share. The Fund pays an annual service fee of up to 0.15% of its average daily net assets attributable to such class of shares. See "Purchase of Shares -- Class A Shares" and "Distribution and Service Plans." Class B Shares. Class B shares are offered at net asset value per share and are subject to a maximum contingent deferred sales charge of 4.00% of redemption proceeds on redemptions made within the first year after purchase, declining thereafter to 0.00% after the fifth year. See "Redemption of Shares." Class B shares are subject to a combined annual distribution fee and service fee of up to 0.90% of its average daily net assets attributable to such class of shares. See "Purchase of Shares -- Class B Shares" and "Distribution and Service Plans." Class B shares will convert automatically to Class A shares eight years after the end of the calendar month in which the shareholder's order to purchase was accepted. See "Alternative Sales Arrangements -- Conversion Feature." Class C Shares. Class C shares are offered at net asset value per share and are subject to a contingent deferred sales charge of 1.00% of redemption proceeds on redemptions made within one year of purchase. See "Redemption of Shares." Class C shares are subject to a combined annual distribution fee and service fee of up to 0.90% of its average daily net assets attributable to such class of shares. See "Purchase of Shares -- Class C Shares" and "Distribution and Service Plans." Class C shares will convert automatically to Class A shares ten years after the end of the calendar month in which the shareholder's order to purchase was accepted. See "Alternative Sales Arrangements -- Conversion Feature." INVESTMENT ADVISER. Van Kampen American Capital Asset Management, Inc. (the "Adviser") is the Fund's investment adviser. DISTRIBUTOR. Van Kampen American Capital Distributors, Inc. (the "Distributor") is the distributor of the Fund's shares. DISTRIBUTIONS FROM THE FUND. Dividends from net investment income and capital gains, if any, are declared and paid daily. All dividends and distributions are automatically reinvested in shares of the Fund at net asset value per share (without sales charge) unless payment in cash is requested. See "Distributions from the Fund." The foregoing is qualified in its entirety by reference to the more detailed information appearing elsewhere in this Prospectus. 4 7 - ------------------------------------------------------------------------------ SHAREHOLDER TRANSACTION EXPENSES - ------------------------------------------------------------------------------
CLASS A CLASS B CLASS C SHARES SHARES SHARES --------- ----------------- ------------- Maximum sales charge imposed on purchases (as a percentage of offering price)............... None None None Maximum sales charge imposed on reinvested dividends (as a percentage of offering price)........................ None None None Deferred sales charge (as a percentage of the lesser of original purchase price or redemption proceeds).......... None Year 1--4.00% Year 1--1.00% Year 2--4.00% After -- None Year 3--3.00% Year 4--2.50% Year 5--1.50% After--None Redemption fees (as a percentage of amount redeemed)........... None None None Exchange fee.................... None None None
5 8 - ------------------------------------------------------------------------------ ANNUAL FUND OPERATING EXPENSES AND EXAMPLE - ------------------------------------------------------------------------------
CLASS A CLASS B CLASS C SHARES SHARES SHARES -------- -------- -------- Management Fees (as a percentage of average daily net assets)............... 0.44% 0.44% 0.44% 12b-1 Fees(1) (as a percentage of average daily net assets)....................... 0.13% 0.90%(2) 0.90%(2) Other Expenses (as a percentage of average daily net assets)....................... 0.50% 0.52% 0.53% Total Fund Operating Expenses (as a percentage of average daily net assets)................................. 1.07% 1.86% 1.87%
- ------------------------------------------------------------------------------ (1) Class A shares are subject to an annual service fee of up to 0.15% 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 0.90% of the average daily net assets attributable to such class of shares. See "Distribution and Service Plans." (2) Individual long-term shareholders may pay more than the economic equivalent of the maximum front-end sales charges permitted as a fund-level expense by NASD Rules. 6 9
ONE THREE FIVE TEN EXAMPLE: YEAR YEARS YEARS YEARS ------ ------ ------ ------ You would pay the following expenses on a $1,000 investment, assuming (i) an operating expense ratio of 1.07% for Class A shares, 1.86% for Class B shares and 1.87% for Class C shares, (ii) a 5% annual return and (iii) redemption at the end of each time period: Class A............................... $ 11 $ 34 $ 59 $131 Class B............................... $ 60 $ 91 $118 $197* Class C............................... $ 29 $ 59 $101 $219 You would pay the following expenses on the same $1,000 investment assuming no redemption at the end of each time period: Class A............................... $ 11 $ 34 $ 59 $131 Class B............................... $ 19 $ 58 $101 $197* Class C............................... $ 19 $ 59 $101 $219
- ------------------------------------------------------------------------------ *Based on conversion to Class A shares after eight years. The purpose of the foregoing table is to assist an investor in understanding the various costs and expenses that an investor in the Fund will bear directly or indirectly. The "Example" reflects expenses based on the "Annual Fund Operating Expenses" table as shown above carried out to future years and is included to provide a means for the investor to compare expense levels of funds with different fee structures over varying investment periods. To facilitate such comparison, all funds are required by the Securities and Exchange Commission (the "SEC") to utilize a 5% annual return assumption. Class B shares acquired through the exchange privilege are subject to the deferred sales charge schedule relating to the Class B shares of the Fund from which the purchase of Class B shares was originally made. Accordingly, future expenses as projected could be higher than those determined in the above table if the investor's Class B shares were exchanged from a fund with a higher contingent deferred sales charge. THE INFORMATION CONTAINED IN THE ABOVE TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For a more complete description of such costs and expenses, see "Purchase of Shares," "Investment Advisory Services," "Redemption of Shares" and "Distribution and Service Plans." 7 10 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING THROUGHOUT EACH OF THE PERIODS INDICATED) - -------------------------------------------------------------------------------- The following financial highlights have been audited by Price Waterhouse LLP, independent accountants, whose report thereon was unqualified and is included in the Statement of Additional Information, which may be obtained by shareholders without charge by calling the telephone number on the cover of this prospectus. This information should be read in conjunction with the financial statements and notes thereto included in the Statement of Additional Information.
CLASS A SHARES ---------------------------------------------------------------------------------- YEAR ENDED MAY 31 ---------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990 ---------- ---------- ---------- ---------- ---------- ---------- ---------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period........ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 ---------- ---------- ---------- ---------- ---------- ---------- ---------- INCOME FROM INVESTMENT OPERATIONS Investment income.......................... .0572 .0535 .0329 .0353 .052 .0758 .0893 Expenses................................... (.0107) (.0101) (.0100) (.0109) (.0105) (.0094) (.0092) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net investment income....................... .0465 .0434 .0229 .0244 .0415 .0664 .0801 Net realized and unrealized gain on securities................................. -- -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total from investment operations............ .0465 .0434 .0229 .0244 .0415 .0664 .0801 ---------- ---------- ---------- ---------- ---------- ---------- ---------- LESS DISTRIBUTIONS FROM Net investment income...................... (.0465) (.0434) (.0229) (.0244) (.0415) (.0664) (.0801) Net realized gain on securities............ -- -- -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total dividends and distributions........... .0465 (.0434) (.0229) (.0244) (.0415) (.0664) (.0801) ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net asset value, end of period.............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 =========== =========== =========== =========== =========== =========== =========== TOTAL RETURN(1)............................. 4.75% 4.43% 2.32% 2.44% 4.20% 6.80% 8.33% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions)........ $440.3 $319.7 $463.8 $279.3 $329.2 $402.3 $426.1 Ratios to average net assets (annualized) Expenses................................... 1.07% 1.00% 1.03% 1.09% 1.05% .94% .91% Expense, without expense reimbursement..... 1.07% -- -- -- -- -- -- Net investment income...................... 4.62% 4.28% 2.36% 2.44% 4.19% 6.68% 7.99% Net investment income, without expense reimbursement............................ 4.62% -- -- -- -- -- -- ------------------------------------------ YEAR ENDED MAY 31 --------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 19 1989 1988 1987 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------ ------------ ------------ PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period........ $1.00 $1.00 $1.00 ------------ ------------ ------------ INCOME FROM INVESTMENT OPERATIONS Investment income.......................... .0891 .0729 .0647 Expenses................................... (.0076) (.0078) (.0092) ------------ ------------ ------------ Net investment income....................... .0815 .0651 .0555 Net realized and unrealized gain on securities................................. .000007 .000015 .000102 ------------ ------------ ------------ Total from investment operations............ .081507 .065115 .055602 ------------ ------------ ------------ LESS DISTRIBUTIONS FROM Net investment income...................... (.0815) (.0651) (.0556) Net realized gain on securities............ (.000007) (.000015) (.000002) ------------ ------------ ------------ Total dividends and distributions........... (.081507) (.065115) (.055602) ------------ ------------ ------------ Net asset value, end of period.............. $1.00 $1.00 $1.00 ============== ============== ============== TOTAL RETURN(1)............................. 8.49% 6.71% 5.71% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions)........ $474.2 $500.7 $377.8 Ratios to average net assets (annualized) Expenses................................... .76% .78% .92% Expense, without expense reimbursement..... -- -- -- Net investment income...................... 8.19% 6.56% 5.60% Net investment income, without expense reimbursement............................ -- -- --
- --------------- (1) Total Return does not reflect the effect of sales charges. (Table continued on following page) 8 11 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS -- (CONTINUED) - --------------------------------------------------------------------------------
CLASS B SHARES CLASS C SHARES ----------------------------- ----------------------------- APRIL 18, APRIL 18, 1995(1) 1995(1) YEAR ENDED THROUGH YEAR ENDED THROUGH MAY 31, MAY 31, MAY 31, MAY 31, 1996 1995(2) 1996 1995(2) ---------- -------------- ---------- -------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period............................. $1.00 $1.00 $1.00 $1.00 --------- ---------- -------- -------- INCOME FROM INVESTMENT OPERATIONS Investment income.............................................. .0580 .0073 .0577 .0076 Expenses....................................................... (.0192) (.0026) (.0190) (.0027) --------- ---------- -------- -------- Net investment income............................................ .0388 .0047 .0387 .0049 Net realized and unrealized gain on securities................... -- -- -- -- Total from investment operations................................. .0388 .0047 .0387 .0049 --------- ---------- -------- -------- LESS DISTRIBUTIONS FROM Net investment income.......................................... (.0388) (.0047) (.0387) (.0049) Net realized gains on securities............................... -- -- -- -- --------- ---------- -------- -------- Total dividends and distributions................................ (.0388) (.0047) (.0387) (.0049) --------- ---------- -------- -------- Net asset value, end of period................................... $1.00 $1.00 $1.00 $1.00 ========= ========== ======== ======== TOTAL RETURN(3).................................................. 3.95% .47% 3.94% .49% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions)............................. $81.5 $4.2 $9.7 $0.6 Ratios to average net assets (annualized) Expenses........................................................ 1.86% 1.76% 1.87% 1.76% Expense, without expense reimbursement.......................... 1.86% -- 1.87% -- Net investment income........................................... 3.75% 3.52% 3.81% 3.52% Net investment income, without expense reimbursement............ 3.75% -- 3.81% --
- --------------- (1) Commencement of operations. (2) Based on average shares outstanding. (3) Total return for a period of less than one full year is not annualized. Total return does not reflect the effect of sales charges. 12 - ------------------------------------------------------------------------------ THE FUND - ------------------------------------------------------------------------------ The Fund is an open-end, diversified management investment company. This type of company is 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 - ------------------------------------------------------------------------------ The investment objective of the Fund is to seek protection of capital and high current income. The Fund seeks to achieve its investment objective by investing in U.S. dollar denominated money market securities. These securities may include obligations of the U.S. Government and its agencies, bank obligations, commercial paper and repurchase agreements secured by such obligations. Such securities are described below. The Fund seeks to maintain a constant net asset value of $1.00 per share by investing in a diversified portfolio of money market instruments with remaining maturities of 13 months or less and with a dollar-weighted average maturity of 90 days or less as required by rules promulgated by the SEC. There can be no guarantee that the Fund will achieve its investment objective or be able at all times to maintain its net asset value per share at $1.00. The daily dividend rate paid by the Fund may be expected to fluctuate. The Fund uses the amortized cost method for valuing portfolio securities purchased at a discount. See "Determination of Net Asset Value." OBLIGATIONS OF THE U.S. GOVERNMENT AND ITS AGENCIES. The Fund may invest in obligations issued or guaranteed as to principal and interest by the U.S. Government, its agencies and instrumentalities which are supported by any of the following: (a) the full faith and credit of the U.S. Government, (b) the right of the issuer to borrow an amount limited to a specific line of credit from the U.S. Government, (c) discretionary authority of the U.S. Government agency or instrumentality, or (d) the credit of the instrumentality. Such agencies or instrumentalities include, but are not limited to, the Federal National Mortgage 10 13 Association, the Government National Mortgage Association, Federal Land Banks, and the Farmer's Home Administration. BANK OBLIGATIONS. The Fund may invest in certificates of deposit, time deposits and bankers' acceptances issued by domestic banks, foreign branches or subsidiaries of domestic banks, and domestic or foreign branches of foreign banks which at the time of investment are rated in the two highest categories by Standard & Poor's Corporation ("S&P") (A-1 and A-2) or by Moody's Investors Service ("Moody's") (Prime-1 and Prime-2). The ratings of Moody's and S&P represent their opinions of the quality of the bank obligations they undertake to rate. It should be emphasized, however, that ratings are general and are not absolute standards of quality. The Fund's current policy is to limit investments in bank obligations to obligations rated A-1 or Prime-1. Certificates of deposit are certificates representing the obligation of a bank to repay funds deposited with it for a specified period of time. Time deposits are non-negotiable deposits maintained in a bank for a specified period of time (in no event longer than seven days) at a stated interest rate. Time deposits which may be held by the Fund will not benefit from insurance from the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. Bankers' acceptances are credit instruments evidencing the obligation of a bank to pay a draft drawn on it by a customer. These instruments reflect the obligation both of the bank and of the drawer to pay the face amount of the instrument upon maturity. The purchase of obligations of foreign banks may subject the Fund to additional investment risks that are different in some respect from those incurred in investing in obligations of domestic banks. Foreign banks and foreign branches or subsidiaries of domestic banks are not necessarily subject to the same or similar regulatory requirements that apply to domestic banks, such as mandatory reserve requirements, loan limitations and accounting, audit and financial record keeping requirements. In addition, less information may be publicly available about a foreign bank or about a foreign branch of a domestic bank. Because evidences of ownership of obligations of foreign branches or subsidiaries of foreign banks usually are held outside the United States, the Fund will be subject to additional risks which include possible adverse political and economic developments, possible seizure or nationalization of foreign deposits and possible adopting of governmental restrictions which might adversely affect the payment of principal and interest on the foreign obligations or might restrict the payment of principal and interest to investors located outside the country of the issuer, whether from currency blockage or otherwise. Income earned or received by the Fund from sources within foreign countries may be reduced by withholding and other taxes imposed by such countries. 11 14 COMMERCIAL PAPER. The Fund may invest in short-term obligations of companies which at the time of investment are (a) rated in the two highest categories by S&P (A-1 and A-2) or by Moody's (Prime-1 and Prime-2), or (b) if not rated, issued by a company which at the date of investment has any outstanding long-term debt securities rated at least A by S&P or by Moody's. Commercial paper consists of short-term (usually from 1 to 270 days) unsecured promissory notes issued by corporations in order to finance their current operations. The Fund's current policy is to limit investments in commercial paper to obligations rated A-1 or Prime-1. REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with domestic banks (or a foreign branch or subsidiary thereof) which have a short-term debt rating of high quality (in one of the two highest categories) by either Moody's or S&P and with primary government securities dealers reporting to the Federal Reserve Bank of New York. 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. No repurchase agreement may exceed one year, and the Fund may not invest in repurchase agreements maturing in more than seven days if such investment, together with any other illiquid securities held by the Fund, exceeds 10% of the value of the net assets. 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 period, and (c) expenses of enforcing its rights. For the purpose of investing in repurchase agreements, the Adviser may aggregate the cash that substantially all of the funds advised or subadvised by the Adviser would otherwise invest separately into a joint account. The cash in the joint account is then invested and the funds that contributed to the joint account share pro rata in the net revenue generated. The Adviser believes that the joint account produces greater efficiencies and economies of scale that may contribute to reduced transaction costs, higher returns, higher quality investments and greater diversity of investments for the Fund that would be available to the Fund investing separately. The manner in which the joint account is managed is subject to conditions set forth in the SEC order obtained by the Fund authorizing this practice, which conditions are designed to ensure the fair administration of the joint account and to protect the amounts in that account. 12 15 - ------------------------------------------------------------------------------ INVESTMENT PRACTICES - ------------------------------------------------------------------------------ BROKERAGE PRACTICES. The Adviser is responsible for the placement of orders for the purchase and sale of portfolio securities for the Fund. Most transactions made by the Fund are principal transactions at net prices which incur little or no brokerage costs. Dealers 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 Adviser is authorized to place portfolio transactions with brokerage firms participating in the distribution of shares of the Fund and other Van Kampen American Capital mutual funds if it reasonably believes that the quality of the execution and the commission are comparable to that available from other qualified firms. No brokerage commissions were paid by the Fund during the past three fiscal years. INVESTMENT RESTRICTIONS. The Fund has adopted certain investment restrictions which, like the investment objective, may not be changed without the approval of a majority (as defined in the Investment Company Act of 1940 ("1940 Act")) vote of the Fund's shareholders. The Fund may not borrow money, except from banks for temporary or emergency purposes, such as to accommodate heavy redemption requests, and then in amounts not exceeding 10% of the value of the Fund's total net assets. The Fund may not mortgage, pledge or hypothecate any assets except in connection with any such borrowing and in amounts not exceeding the lesser of the dollar amount borrowed or 5% of the value of the Fund's assets at the time of such borrowing. The Fund may not lend money, except through the purchase or holding of the types of debt securities in which the Fund may invest. Other investment restrictions are described in the Statement of Additional Information. Except to the extent governed by the Fund's fundamental investment restrictions, the investment policies described under "Investment Objective and Policies" can be changed by the Trustees. - ------------------------------------------------------------------------------ INVESTMENT ADVISORY SERVICES - ------------------------------------------------------------------------------ THE ADVISER. The Adviser is a wholly-owned subsidiary of Van Kampen American Capital, Inc. ("Van Kampen American Capital"). Van Kampen American Capital is a diversified asset management company with more than two million retail investor accounts, extensive capabilities for managing institutional portfolios, and more than $57 billion under management or supervision. Van Kampen American Capital's more than 40 open-end and 38 closed-end funds and more than 2,800 unit investment trusts are professionally distributed by leading financial advisers nationwide. Van Kampen American Capital Distributors, Inc., the distributor of the Fund and its sponsor of the funds mentioned above, is also a wholly-owned subsidiary of Van Kampen American Capital. 13 16 Van Kampen American Capital is a wholly-owned subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc. is controlled, through the ownership of a substantial majority of its common stock, by The Clayton & Dubilier Private Equity Fund IV Limited Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is managed by Clayton, Dubilier & Rice, Inc. a New York based private investment firm. The General Partner of C&D L.P. is Clayton & Dubilier Associates IV Limited Partnership ("C&D Associates L.P."). The general partners of C&D Associates L.P. are Joseph L. Rice, III, B. Charles Ames, William A. Barbe, Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and Andrall E. Pearson, each of whom is a principal of Clayton, Dubilier & Rice, Inc. In addition, certain officers, directors and employees of Van Kampen American Capital own, in the aggregate, not more than 6% of the common stock of VK/AC Holding, Inc. and have the right to acquire, upon the exercise of options, approximately an additional 12% of the common stock of VK/AC Holding, Inc. Presently, and after giving effect to the exercise of such options, no officer or trustee of the Fund owns 5% or more of the common stock of VKAC Holding, Inc. 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. 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 as follows:
AVERAGE DAILY NET ASSETS % PER ANNUM - ---------------------------------------------------------- ----------- First $150 million........................................ 0.50% Next $100 million......................................... 0.45% Next $100 million......................................... 0.40% Over $350 million......................................... 0.35%
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, custodial fees, legal and accounting fees, the costs of reports and proxies to shareholders, trustees' fees, and all other business expenses not specifically assumed by the Adviser. From time to time as the Adviser 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. 14 17 PERSONAL INVESTING POLICIES. The Fund and the Adviser have adopted Codes of Ethics designed to recognize the fiduciary relationship between the Fund and the Adviser and its employees. The Codes permit directors, trustees, officers and employees to buy and sell securities for their personal accounts subject to certain restrictions. Persons with access to certain sensitive information are subject to preclearance and other procedures designed to prevent conflicts of interest. - ------------------------------------------------------------------------------ ALTERNATIVE SALES ARRANGEMENTS - ------------------------------------------------------------------------------ The Alternative Sales Arrangements permit an investor to choose the method of purchasing shares that is most beneficial given the amount of the purchase and the length of time the investor expects to hold the shares. CLASS A SHARES. Class A shares are sold at net asset value. Class A shares are subject to an ongoing service fee at an annual rate of up to 0.15% of the Fund's aggregate average daily net assets attributable to the Class A shares. 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 0.15% 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. The ongoing distribution fee paid by Class B shares will cause such shares to have a higher expense ratio and to pay lower dividends than those related to Class A shares. See "Purchase of Shares -- Class B Shares." Class B shares automatically convert to Class A shares eight years after the end of the calendar month in which the shareholder's order to purchase was accepted. See "Conversion Feature" below for discussion on applicability of conversion feature to Class B shares. CLASS C SHARES. Class C shares are sold at net asset value and are subject to a deferred sales charge if redeemed within one year of purchase. Class C shares are subject to an ongoing service fee at an annual rate of up to 0.15% 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. The ongoing distribution fee paid by Class C shares will cause such shares to have a higher expense ratio and to pay lower dividends than those related to Class A shares. See "Purchase of Shares -- Class C Shares." Class C shares automatically convert to Class A shares ten years after the end of the calendar month in which the shareholder's order to purchase was accepted. See "Conversion Feature" below for discussion on applicability of conversion feature to Class C shares. 15 18 CONVERSION FEATURE. Class B shares and Class C shares automatically convert to Class A shares eight years or ten years, respectively, after the end of the month in which the shares were purchased and will no longer be subject to the distribution fee. Such conversion will be on the basis of the relative net asset values per share, without the imposition of any sales load, fee or other charge. The purpose of the conversion feature is to relieve the holders of the Class B shares and Class C shares that have been outstanding for a period of time sufficient for the Distributor to have been substantially compensated for distribution expenses related to the Class B shares or Class C shares, as the case may be, from the burden of the ongoing distribution fee. For purposes of conversion to Class A shares, shares purchased through the reinvestment of dividends and distributions paid on Class B shares and Class C shares in a shareholder's Fund account will be considered to be held in a separate sub-account. Each time any Class B shares or Class C shares in the shareholder's Fund account (other than those in the sub-account) convert to Class A shares, an equal pro rata portion of the Class B shares or Class C shares in the sub-account will also convert to Class A shares. The conversion of Class B shares and Class C shares to Class A shares is subject to the continuing availability of an opinion of counsel or a private letter ruling from the Internal Revenue Service to the effect that (i) the assessment of the distribution fee and higher transfer agency costs with respect to Class B shares and Class C shares does not result in the Fund's dividends or distributions constituting "preferential dividends" under the Internal Revenue Code, as amended (the "Code"), and (ii) the conversion of shares does not constitute a taxable event under federal income tax law. The conversion of Class B shares and Class C shares may be suspended if an opinion or ruling is no longer available at the time such conversion is to occur that such conversion does not constitute a taxable event. In that event, no further conversions of Class B shares or Class C shares would occur, and shares might continue to be subject to the distribution fee for an indefinite period which may extend beyond the period ending eight years or ten years, respectively, after the end of the calendar month in which the shareholder's order to purchase was accepted. FACTORS FOR CONSIDERATION. Class B shares and Class C shares of the Fund are made available primarily to allow investors to directly purchase Class B shares and Class C shares and later exchange such shares directly into Class B shares and Class C shares of the other Van Kampen American Capital funds that offer an exchange privilege. Investors purchasing shares of the Fund without regard to the availability of exchanges should purchase Class A shares because there is no distribution fee and, therefore, Class A shares will have a higher yield than Class B shares and Class C shares. Investors who wish to have the ability to exchange their shares for Class B shares or Class C shares of other Van Kampen American Capital 16 19 funds should consider purchasing Class A shares of the Fund and then redeeming those shares when they wish to invest in Class B shares or Class C shares of other Van Kampen American Capital funds. Since Class A shares are not subject to an ongoing distribution fee, purchasing Class A shares and then redeeming them to purchase Class B shares or Class C shares of another Van Kampen American Capital fund is likely to result in a higher return to the investor than purchasing Class B shares or Class C shares of the Fund and then exchanging them for Class B shares or Class C shares of another Van Kampen American Capital fund. 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. GENERAL. The distribution expenses incurred by the Distributor in connection with the sale of Class B shares and Class C shares will be reimbursed from the proceeds of the ongoing distribution fee and any contingent deferred sales charge incurred upon redemption within five years or one year, respectively, of purchase. Distribution expenses by the Distributor in connection with the sale of Class A shares are not reimbursed by the Fund. 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 Class B shares and Class C shares. Sales personnel are not entitled to receive compensation for selling Class A shares. Dividends paid by the Fund with respect to Class A shares, Class B shares and Class C shares will be calculated in the same manner at the same time on the same day, except that the distribution fees and any incremental transfer agency costs relating to Class B shares or Class C shares will be borne by the respective class. Shares of the Fund may be exchanged, subject to certain limitations, for shares of the same class of certain other mutual funds distributed by the Distributor. - ------------------------------------------------------------------------------ PURCHASE OF SHARES - ------------------------------------------------------------------------------ GENERAL The Fund offers three classes of shares to the public on a continuous basis through the Distributor as principal underwriter, which is located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Shares are also offered through members of the National Association of Securities Dealers, Inc. ("NASD") who are acting as securities dealers ("dealers") and NASD members or eligible non-NASD members who are acting as brokers or agents for investors ("brokers"). The term "dealers" and "brokers" are sometimes referred to herein as "authorized dealers." Initial investments must be at least $500 for each class of shares and subsequent investments must be at least $25 for each class of shares. Both minimums may be 17 20 waived by the Distributor for plans involving periodic investments. The Fund and the Distributor reserve the right to refuse any order for the purchase of shares. Shares of the Fund may be sold in foreign countries where permissible. The Fund also reserves the right to suspend the sale of the Fund's shares in response to conditions in the securities markets or for other reasons. Shares of the Fund may be purchased on any business day through authorized dealers. Shares also may be purchased by completing the application accompanying this prospectus and forwarding the application through the authorized dealer, to the shareholder service agent, ACCESS Investor Services, Inc., ("ACCESS"), a wholly-owned subsidiary of the Van Kampen American Capital. When purchasing shares of this Fund, investors must specify whether the purchase is Class A shares, Class B shares or Class C shares. Purchases of shares are priced at the next determined net asset value after a purchase order becomes effective, which is upon receipt by the Fund of federal funds. 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 adding the total market value of all portfolio securities owned by the Fund, cash and other assets, including accrued interest and dividends attributable to such class. All liabilities attributable to such class, including accrued expenses, are subtracted. The resulting amount is divided by the total number of shares of the class outstanding to arrive at the net asset value of each share of the class. The Fund's assets are valued on the basis of amortized cost, which involves valuing a portfolio security at its cost and, thereafter, assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides for certainty in valuation it may result in periods in which value as determined by amortized cost is higher or lower than the price the Fund would receive if it sold the security. Each class of shares represents an interest in the same portfolio of investments of the Fund, has the same rights and is identical in all respects, except that (i) Class B shares and Class C shares bear the expenses of the deferred sales arrangement and any expenses (including the distribution fee and incremental transfer agency costs) resulting from such sales arrangement, (ii) generally, each class has exclusive voting rights with respect to approvals of the Rule 12b-1 distribution plan pursuant to which its distribution fee or service fee is paid which relate to a specific class, and (iii) Class B shares and Class C shares are subject to a conversion feature. Each class has different exchange privileges and certain different shareholder service options available. The net income attributable to, and dividends payable on, Class B shares and Class C shares will be reduced by the amount of the distribution fee and incremental transfer agency expenses associated with such distribution fees. Sales 18 21 personnel of authorized dealers distributing the Fund's shares and other persons entitled to receive compensation for selling such shares may receive differing compensation for selling Class A shares, Class B shares or Class C shares. Agreements are in place which provide, among other things and subject to certain conditions, for certain favorable distribution arrangements for shares of the Fund with subsidiaries of The Travelers Inc. The Distributor may from time to time implement programs under which an authorized dealer's sales force may be eligible to win nominal awards for certain sales efforts or under which the Distributor will reallow to any authorized dealer that sponsors sales contests or recognition programs conforming to criteria established by the Distributor, or participates in sales programs sponsored by the Distributor, an amount not exceeding the total applicable sales charges on sales generated by the authorized dealer at the public offering price during such programs. Other programs provide, among other things and subject to certain conditions, for certain favorable distribution arrangements for shares of the Fund. Also, the Distributor in its discretion may from time to time, pursuant to objective criteria established by the Distributor, pay fees to, and sponsor business seminars for, qualifying authorized dealers for certain services or activities which are primarily intended to result in sales of shares of the Fund. Fees may include payment for travel expenses, including lodging, incurred in connection with trips taken by invited registered representatives and members of their families to locations within or outside of the United States for meetings or seminars of a business nature. Such fees paid for such services and activities with respect to the Fund will not exceed in the aggregate 1.25% of the average total daily net assets of the Fund on an annual basis. The Distributor may provide additional compensation to Edward D. Jones & Co. or an affiliate thereof based on a combination of its sales of shares and increases in assets under management. All of the foregoing payments are made by the Distributor out of its own assets. These programs will not change the price an investor will pay for shares or the amount that a Fund will receive from such sale. CLASS A SHARES Class A shares are offered at net asset value without sales charge. The Fund permits unitholders of unit investment trusts to reinvest distributions from such trusts in Class A shares of the Fund with no minimum or subsequent investment requirement. In order to qualify for this privilege, 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 19 22 (2) provide ACCESS with appropriate backup data for each participating investor in a computerized format fully compatible with ACCESS's processing system. In addition, 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 quarterly basis only, even if their investments are made more frequently. Persons desiring more information with respect to this program, including the applicable terms and conditions thereof, should contact their securities broker or dealer or the Distributor. The Fund reserves the right to modify or terminate this program at any time. CLASS B SHARES Class B shares are offered at net asset value. Class B shares which are redeemed within five years of purchase are subject to a contingent deferred sales charge at the rates set forth 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 contingent deferred sales charge, if any, varies depending on the number of years from the time of payment for the purchase of Class B shares until the time of redemption of such shares. Solely for purposes of determining the number of years from the time of any payment for the purchases of shares, all payments during a month are aggregated and deemed to have been made on the last day of the month. - ------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE AS A PERCENTAGE OF YEAR SINCE PURCHASE DOLLAR AMOUNT SUBJECT TO CHARGE - ----------------------------------------------------------------------- First................................ 4.00% Second............................... 4.00% Third................................ 3.00% Fourth............................... 2.50% Fifth................................ 1.50% Sixth and After...................... None
- ------------------------------------------------------------------------------ In determining whether a contingent deferred sales charge is applicable to a redemption, it is assumed that the redemption is first of any shares in the 20 23 shareholder's Fund account that are not subject to a contingent deferred sales charge, second of shares held for over five years or shares acquired pursuant to reinvestment of dividends or distributions and third of shares held longest during the five-year period. A commission or transaction fee of 4.00% of the purchase amount will be paid to authorized dealers and at the time of purchase. Additionally, the Distributor may, from time to time, pay additional promotional incentives, in the form of cash or other compensation, to authorized dealers that sell Class B shares of the Fund. CLASS C SHARES Class C shares are offered at net asset value. Class C shares which are redeemed within the first year of purchase are subject to a contingent deferred sales charge of 1.00%. The charge is assessed on an amount equal to the lower of the then current market value or the cost of the shares being redeemed. Accordingly, no sales charge is imposed on increases in net asset value above the initial purchase price. In addition, no charge is assessed on shares derived from reinvestment of dividends or capital gains distributions. It is presently the policy of the Distributor not to accept any order in an amount of $1 million or more for Class C shares because it ordinarily will be more advantageous for an investor making such an investment to purchase Class A shares. In determining whether a contingent deferred sales charge is applicable to a redemption, the calculation is determined in the manner that results in the lowest possible rate being charged. Therefore, it is assumed that the redemption is first of any shares in the shareholder's Fund account that are not subject to a contingent deferred sales charge and second of shares held for more than one year or shares acquired pursuant to reinvestment of dividends or distributions. A commission or transaction fee of 1.00% of the purchase amount will be paid to authorized dealers at the time of purchase. Authorized dealers also will be paid ongoing commissions and transaction fees of up to 0.75% of the average daily net assets of the Fund's Class C shares for the second through tenth year after purchase. Additionally, the Distributor may, from time to time, pay additional promotional incentives, in the form of cash or other compensation, to authorized dealers that sell Class C shares of the Fund. WAIVER OF CONTINGENT DEFERRED SALES CHARGE The contingent deferred sales charge may be waived on redemptions of Class B shares and Class C shares (i) following the death or disability (as defined in the Code) of a shareholder, (ii) in connection with certain distributions from an IRA or other retirement plan, (iii) pursuant to the Fund's systematic withdrawal plan but limited to 12% annually of the initial value of the account; and 21 24 (iv) effected pursuant to the right of the Fund to liquidate a shareholder's account as described herein under "Redemption of Shares." The contingent deferred sales charge is also waived on redemptions of Class C shares as it relates to the reinvestment of redemption proceeds in shares of the same class of the Fund within 120 days after redemption. See the Statement of Additional Information for further discussion of waiver provisions. - ------------------------------------------------------------------------------ SHAREHOLDER SERVICES - ------------------------------------------------------------------------------ The Fund offers a number of shareholder services designed to facilitate the investment in its shares at little or no extra cost to the investor. Below is a description of such services. As used herein, "Participating Funds" refers to all open-end investment companies distributed by the Distributor other than Van Kampen American Capital Tax Free Money Fund ("Tax Free Money Fund") and the Govett Funds, Inc. INVESTMENT ACCOUNT. Each shareholder has an investment account under which the investor's shares are held by ACCESS the fund's transfer agent. ACCESS performs bookkeeping, data processing and administrative services related to the maintenance of shareholder accounts. Each shareholder has an investment account under which shares are held by ACCESS. 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 will receive statements quarterly from ACCESS showing any reinvestment of dividends and capital gains distributions and any other activity in the account since the preceding statement. Such shareholders also will receive separate confirmations for each purchase or sale transaction other than reinvestment of dividends and capital gains distributions and systematic purchases or redemptions. Additions to an investment account may be made at any time by purchasing shares through authorized dealers or by mailing a check directly to ACCESS. SHARE CERTIFICATES. Generally, the Fund will not issue share certificates. However, upon written or telephone request to the Fund, a share certificate will be issued, representing shares (with the exception of fractional shares) of the Fund. A shareholder will be required to surrender such certificates upon redemption thereof. In addition, if such certificates are lost the shareholder must write to Van Kampen American Capital Funds, c/o ACCESS, P.O. Box 418256, Kansas City, MO 64141-9256, requesting an "affidavit of loss" and obtain a Surety Bond in a form acceptable to ACCESS. On the date the letter is received ACCESS will calculate no more than 2.00% of the net asset value of the issued shares, and bill the party to whom the certificate was mailed. REINVESTMENT PLAN. A convenient way for investors to accumulate additional shares is by accepting dividends and capital gains distributions in shares of the 22 25 Fund. Such shares are acquired at net asset value (without sales charge) on the record date. Unless the shareholder instructs otherwise, the reinvestment plan is automatic. This instruction may be made by telephone by calling (800) 421-5666 ((800) 772-8889 for the hearing impaired) or in writing to ACCESS. The investor may, on the initial application or prior to any declaration, instruct that dividends be paid in cash and capital gains distributions be reinvested at net asset value, or that both dividends and capital gains distributions be paid in cash. AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under which a shareholder may 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 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 accompanied by this Prospectus or by calling (800) 421-5666, ((800) 772-8889 for the hearing impaired), elect to have all dividends and other distributions paid on a Class A, Class B or Class C account in the Fund invested into a pre-existing Class A, Class B or Class C account in any of the Participating Funds or Tax Free Money Fund. Both accounts must be of the same type, either non-retirement or retirement. Any two non-retirement accounts can be used. If the accounts are retirement 23 26 accounts, they must both be for the same class and of the same type of retirement plan (e.g. IRA, 403(b)(7), 401(k), Keogh) and for the benefit of the same individual. If a qualified, pre-existing account does not exist, the shareholder must establish a new account subject to minimum investment and other requirements of the fund into which distributions would be invested. Distributions are invested into the selected fund at its net asset value as of the payable date of the distribution. EXCHANGE PRIVILEGE. Shares of the Fund or of any Participating Fund, other than Van Kampen American Capital Government Target Fund ("Government Target"), may be exchanged for shares of the same class of any other Van Kampen American Capital Fund, provided that shares of certain Van Kampen American Capital fixed-income funds are subject to a 30 day holding period requirement for exchange. Shares of Government Target may be exchanged for Class A shares of the Fund without sales charge. Class B shareholders and Class C shareholders of the Fund have the ability to exchange their shares ("original shares") for the same class of shares of any other Van Kampen American Capital fund that offers such shares ("new shares") in an amount equal to the aggregate net asset value of the original shares, without the payment of any contingent deferred sales charge otherwise due upon redemption of the original shares. Such shares remain subject to the contingent deferred sales charge imposed by the fund initially purchased by the shareholder upon their redemption from the Van Kampen American Capital complex of Funds. Class A shareholders who acquired their shares in exchange for Class B shares or Class C shares of a Participating Fund may exchange their Class A shares for the same class of shares of a Participating Fund (also, "new shares") as the class of shares they disposed of in acquiring their current shares (also, "original shares") without incurring a contingent deferred sales charge. For purposes of computing the contingent deferred sales charge payable upon a disposition of the new shares, the holding period for the original shares is added to the holding period of the new shares. 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. 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 designated otherwise in the application form accompanied by 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 24 27 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 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 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 information regarding such fund. SYSTEMATIC WITHDRAWAL PLAN. Any investor whose shares in a single account total $10,000 or more at the next determined net asset value after receipt of instructions may establish a monthly, quarterly, semi-annual or annual withdrawal plan. This plan provides for the orderly use of the entire account, not only the income but also the capital, if necessary. Each withdrawal constitutes a redemption of shares on which any capital gain or loss will be recognized. The planholder may arrange for monthly, quarterly, semiannual, or annual checks in any amount, not less than $25. Such a systematic withdrawal plan also may be maintained by an investor purchasing shares for a retirement plan. A Class B shareholder or Class C shareholder, or a Class A shareholder who acquired his or her shares in the Fund in exchange for Class B shares or Class C shares of another Van Kampen American Capital mutual fund, may redeem up to 12% annually of the shareholder's initial account balance without incurring a contingent deferred sales charge. Initial account balance means the amount of the shareholder's investment at the time the election to participate in the plan is made. For more detail regarding waiver of contingent deferred sales charges, please refer to the prospectus of the original fund. See "Purchase of Shares -- Waiver of Contingent Deferred Sales Charge" and the Statement of Additional Information. Under the plan, sufficient shares of the Fund are redeemed to provide the amount of the periodic withdrawal payment. Dividends and capital gains distributions on 25 28 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. CHECK WRITING PRIVILEGE. A Class A shareholder holding shares of the Fund (a) for which certificates have not been issued, (b) which are in a non-escrow status and (c) which were not acquired in exchange for Class B shares or Class C shares of another Van Kampen American Capital mutual fund may appoint ACCESS as agent by completing the AUTHORIZATION FOR REDEMPTION BY CHECK form and the appropriate section of the application and returning the form and application to ACCESS. Once the form is properly completed, signed and returned to ACCESS, a supply of checks drawn on State Street Bank will be sent to the shareholder. Those checks may be made payable by the shareholder to the order of any person in any amount of $100 or more. When a check is presented to State Street Bank for payment, full and fractional Class A shares required to cover the amount of the check are redeemed from the shareholder's Class A account by ACCESS at the next determined net asset value. Checks will not be honored for redemption of Class A shares held less than 15 calendar days, unless such Class A shares have been paid for by bank wire. Any Class A shares for which there are outstanding certificates may not be redeemed by check. If the amount of the check is greater than the proceeds of all uncertificated Class A shares held in the shareholder's account, the check will be returned and the shareholder may be subject to additional charges. A Class A shareholder may not liquidate the entire account by means of a check. The check writing privilege may be terminated or suspended at any time by the Fund or State Street Bank. A "stop payment" system is not available on these checks. Retirement Plans and accounts that are subject to backup withholding are not eligible for the privilege. See the Statement of Additional Information for further information regarding the establishment of the privilege. - ------------------------------------------------------------------------------ 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. As described herein under "Purchase of Shares," redemptions of Class B shares or Class C shares are subject to a contingent deferred sales charge. The contingent 26 29 deferred sales charge 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, and the names must be exactly the same as the names which were signed when the shares were purchased. If the proceeds of the redemption exceed $50,000, 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 savings and loan association; a member firm of a national securities exchange, registered securities association or clearing agency; or 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 does so if a special request has been made to ACCESS. In the case of shareholders holding certificates, the certificates for the shares being redeemed must accompany the redemption request. In the event the redemption is requested by a corporation, partnership, trust, fiduciary, executor or administrator, and the name and title of the individual(s) authorizing such redemption is not shown in the account registration, a copy of the corporate resolution or other legal documentation appointing the authorized signer and certified within the prior 60 days must accompany the redemption request. IRA redemption requests should be sent to the IRA custodian to be forwarded to ACCESS. Where Van Kampen American Capital Trust Company serves as custodian, special IRA, 403(b)(7), or Keogh distribution forms must be obtained from and must be forwarded to Van Kampen American Capital Trust Company, P.O. Box 944, Houston, Texas 77001-0944. Contact the custodian for information. In all cases, the redemption price is the net asset value per share next determined after the request for redemption is received in proper form by ACCESS. Payment for shares redeemed is made by check mailed within seven days after acceptance by ACCESS of the request and any other necessary documents in proper order. Such payment may be postponed or the right of redemption suspended as provided by the rules of the SEC. If the shares to be redeemed have been recently purchased by check, ACCESS may delay mailing a redemption check until the purchase check has cleared, usually a period of up to 15 days. Such delay can be avoided if such payment of shares is made by bank wire. Any taxable gain or loss will be recognized by the shareholder upon redemption of shares. The Fund may redeem any shareholder account with a net asset value on the date of the notice of redemption less than the minimum initial investment as specified in this prospectus. At least 60 days advance written notice of any such involuntary 27 30 redemption is required and the shareholder is given an opportunity to purchase the required value of additional shares at the next determined net asset value without sales charge. Any applicable contingent deferred sales charge will be deducted from the proceeds of this redemption. Any involuntary redemption may only occur if the shareholder account is less than the minimum initial investment due to shareholder redemptions. TELEPHONE REDEMPTIONS. In addition to the regular redemption procedures set forth above, the Fund permits redemption of shares by telephone and for redemption proceeds to be sent to the address of record of 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 form accompanied by this Prospectus or call the Fund at (800) 421-5666 to request that a copy of the Telephone Redemption Authorization form be sent to them for completion. To redeem shares contact the telephone transaction line at (800) 421-5684. VKAC and the Fund employ procedures considered by them to be reasonable to confirm that instructions communicated by telephone are genuine. Such procedures include requiring certain personal identification information prior to acting upon telephone instructions, tape recording telephone communications, and providing written confirmation of instructions communicated by telephone. If reasonable procedures are employed, neither VKAC nor the Fund will be liable for following telephone instructions which it reasonably believes to be genuine. VKAC and the Fund may be liable for any losses due to unauthorized or fraudulent instructions if reasonable procedures are not followed. Telephone redemptions may not be available if the shareholder cannot reach ACCESS by telephone, whether because all telephone lines are busy or for any other reason; in such case, a shareholder would have to use the Fund's regular redemption procedure described above. 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 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. 28 31 The Fund reserves the right at any time to terminate, limit or otherwise modify this redemption privilege. EXPEDITED REDEMPTIONS. Shareholders of the Fund who have completed the appropriate section of the application may request expedited redemption payment of shares having a value of $1,000 or more, by calling (800) 421-5671 (Alaska and Hawaii residents should call collect at (816) 283-3114). Redemption proceeds in the form of federal funds will be wired to the bank designated in the application. Expedited redemption requests received in good order prior to 10:00 a.m. Kansas City time are processed on the date of receipt. Redemption requests received by ACCESS after such hour are priced at the net asset value next determined and the proceeds are wired on the next banking day following receipt of such request. ACCESS reserves the right to deduct the wiring costs from the proceeds of the redemption. A shareholder may change the bank account previously designated at any time by written notice to ACCESS with the signature of the shareholder guaranteed. The Fund reserves the right at any time to terminate, limit or otherwise modify this expedited redemption privilege. REDEMPTION UPON DISABILITY. The Fund will waive the contingent deferred sales charge on redemptions following the 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 disability before it determines to waive the contingent deferred sales charge on Class B shares and Class C shares. In cases of disability, the contingent deferred sales charge on Class B shares and Class C shares will be waived where the disabled person is either an individual shareholder or owns the shares as a joint tenant with right of survivorship or is the beneficial owner of a custodial or fiduciary account, and where the redemption is made within one year of the initial determination of disability. This waiver of the contingent deferred sales charge on Class B shares and Class C shares applies to a total or partial redemption, but only to redemptions of shares held at the time of the initial determination of disability. REINSTATEMENT PRIVILEGE. A Class A shareholder or Class B shareholder who has redeemed shares of the Fund may reinstate any portion or all of the net proceeds of such redemption in Class A shares of the Fund. A Class C shareholder who has redeemed shares of the Fund may reinstate any portion or all of the proceeds of such redemption in Class C shares of the Fund with credit given for any contingent 29 32 deferred sales charge paid upon such redemption. Such reinstatement is made at the net asset value (without sales charge except as described under "Shareholder Services -- Exchange Privilege") next determined after the order is received, which must be within 120 days after the date of the redemption. See "Purchase of Shares -- Waiver of Contingent Deferred Sales Charge" and the Statement of Additional Information. Reinstatement at net asset value is also offered to participants in those eligible retirement plans held or administered by Van Kampen American Capital Trust Company for repayment of principal (and interest) on their borrowings on such plans. - ------------------------------------------------------------------------------ DISTRIBUTION AND SERVICE PLANS - ------------------------------------------------------------------------------ The Fund has adopted a distribution plan (the "Distribution Plan") with respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act. The Fund also has adopted a service plan (the "Service Plan") with respect to each class of its shares. The Distribution Plan and the Service Plan provide that the Fund may spend a portion of the Fund's average daily net assets attributable to each class of shares in connection with distribution of the respective class of shares and in connection with the provision of ongoing services to shareholders of each class. The Distribution Plan and the Service Plan are being implemented through an agreement with the Distributor and sub-agreements between the Distributor and brokers, dealers or financial intermediaries (collectively, "Selling Agreements") that may provide for their customers or clients certain services or assistance. CLASS A SHARES. The Fund may spend an aggregate amount up to 0.15% 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 0.15% 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 0.15% 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 0.15% 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. 30 33 CLASS C SHARES. The Fund may spend up to 0.75% per year of the average daily net assets attributable to the Class C shares of the Fund pursuant to the Distribution Plan. From such amount, the Fund, or the Distributor as agent for the Fund, pays brokers, dealers or financial intermediaries in connection with the distribution of the Class C shares up to 0.75% of the Fund's average daily net assets attributable to Class C shares maintained in the Fund more than one year by such broker's, dealer's or financial intermediary's customers. The Fund pays the Distributor the lesser of the balance of 0.75% not paid to such brokers, dealers or financial intermediaries or the amount of the Distributor's actual distribution related expense attributable to the Class C shares. In addition, the Fund may spend up to 0.15% per year of the Fund's average daily net assets attributable to the Class C shares pursuant to the Service Plan in connection with the ongoing provision of services to holders of such shares by the Distributor and by brokers, dealers or financial intermediaries and in connection with the maintenance of such shareholders' accounts. OTHER INFORMATION. Amounts payable to the Distributor with respect to the Class A Shares under the Distribution Plan in a given year may not fully reimburse the Distributor for its actual distribution-related expenses during such year. In such event, with respect to the Class A shares, there is no carryover of such reimbursement obligations to succeeding years. The Distributor's actual expenses with respect to Class B shares or Class C shares for any given year may exceed the amounts payable to the Distributor with respect to such class of shares under the Distribution Plan, the Service Plan and payments received pursuant to the contingent deferred sales charge. In such event, with respect to any such class of shares, any unreimbursed expenses will be carried forward and paid by the Fund (up to the amount of the actual expenses incurred) in future years so long as such Distribution Plan is in effect. Except as mandated by applicable law, the Fund does not impose any limit with respect to the number of years into the future that such unreimbursed expenses may be carried forward (on a Fund level basis). Because such expenses are accounted on a Fund level basis, in periods of extreme net asset value fluctuation such amounts with respect to a particular Class B share or Class C share may be greater or less than the amount of the initial commission (including carrying cost) paid by the Distributor with respect to such share. In such circumstances, a shareholder of a share may be deemed to incur expenses attributable to other shareholders of such class. As of May 31, 1996, there were $190,000 and $9,000 of unreimbursed distribution expenses with respect to Class B shares and Class C shares, respectively, representing 0.57% and 0.18% of the Fund's average net assets attributable to Class B shares and Class C shares, respectively. If the Distribution Plan was terminated or not continued, the Fund would not be contractually obligated to pay the Distributor for any expenses not previously reimbursed by the Fund or recovered through contingent deferred sales charges. 31 34 The Distributor will not use the proceeds from the contingent deferred sales charge applicable to a particular class of shares to defray distribution related expenses attributable to any other class of shares. Various federal and state laws prohibit national banks and some state-chartered commercial banks from underwriting or dealing in the Fund's shares. In addition, state securities laws on this issue may differ from the interpretations of federal law, and banks and financial institutions may be required to register as dealers pursuant to state law. In the unlikely event that a court were to find that these laws prevent such banks from providing such services described above, the Fund would seek alternate providers and expects that shareholders would not experience any disadvantage. - ------------------------------------------------------------------------------ DISTRIBUTIONS FROM THE FUND - ------------------------------------------------------------------------------ The Fund's net income is declared and paid as a dividend on a daily basis. Dividends are paid to shareholders of record immediately prior to the determination of net asset value for that day. Since shares are issued and redeemed at the time net asset value is determined, dividends commence on the day following the date shares are issued and are paid for the day shares are redeemed. All dividends are automatically invested in additional full and fractional shares of the Fund at net asset value. Shareholders may elect to receive monthly payment of dividends in cash by written instruction to ACCESS. Shares purchased by daily reinvestments are liquidated at the net asset value on the last business day of the month and the proceeds of such redemption mailed to the shareholder electing cash payment. A redeeming shareholder receives all dividends accrued through the date of redemption. The per share dividends on Class B shares and Class C shares will be lower than the per share dividends on Class A shares as a result of the distribution fees and incremental transfer agency fees applicable to such classes of shares. The Fund's net income for dividend purposes is calculated daily and consists of interest accrued or discount earned, plus or minus any net realized gains or losses on portfolio securities, less any amortization of premium and the expenses of the Fund. - ------------------------------------------------------------------------------ TAX STATUS - ------------------------------------------------------------------------------ The Fund has qualified and intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended. By qualifying as a regulated investment company, the Fund generally is not subject to federal income taxes to the extent it distributes its net investment income (which includes for this purpose net short-term capital gains, but not net capital gains, which is the excess of net long-term capital gains over net short-term capital losses) and net capital gains. The Fund intends to distribute substantially all 32 35 of its net investment income and net capital gains, if any, at least annually. Distributions in excess of the Fund's earnings and profits will first reduce the adjusted tax basis of the shares held by a shareholder and, after such adjusted tax basis is reduced to zero, will constitute capital gains to such shareholder (assuming such shares are held as a capital asset). Dividends from net investment income are taxable to shareholders as ordinary income. Distributions of the Fund's net capital gains are taxable to shareholders as long-term capital gains regardless of the length of time the shares of the Fund have been held by such shareholders. However, shareholders not subject to tax on their income will not be required to pay tax on amounts distributed to them. Information as to the federal tax status of dividends and distributions is provided by the Fund to shareholders annually if such amounts are $10.00 or more. To avoid being subject to a 31% federal back-up withholding tax on dividends, distributions and redemption payments, a shareholder must, among other things, furnish the Fund with a certification of their correct taxpayer identification number. The foregoing is a brief summary of some of the federal income tax considerations affecting the Fund and its investors who are U.S. residents or U.S. corporations. Investors should consult their tax advisers for more detailed tax advice including state and local tax considerations. Foreign investors should consult their own counsel for further information as to the U.S. and their country of residence or citizenship tax consequences of receipt of dividends and distributions from the Fund. See "Dividends, Distributions and Taxes" in the Statement of Additional Information. - ------------------------------------------------------------------------------ FUND PERFORMANCE - ------------------------------------------------------------------------------ From time to time, the Fund may advertise its "yield" and "effective yield." Both yield figures are based on historical earnings and are not intended to indicate future performance. The "yield" of the Fund refers to the income generated by an investment in the Fund over a seven-day period (which period will be stated in the advertisement). This income is then "annualized." That is, the amount of income generated by the investment during that week is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The "effective yield" is calculated similarly but, when annualized, the income earned by an investment in the Fund is assumed to be reinvested. The "effective yield" will be slightly higher than the "yield" because of the compounding effect of this assumed reinvestment. The current and effective yields for the seven-day period ending May 31, 1996, and a description of the method by which the yield was calculated is contained in the Statement of Additional Information. 33 36 Since yield fluctuates, yield data cannot necessarily be used to compare an investment in the Fund's shares with bank deposits, savings accounts and similar investment alternatives which often provide an agreed or guaranteed fixed yield for a stated period of time. Shareholders should remember that yield is generally a function of the type and quality of the securities held in a portfolio, portfolio maturity, operating expenses and market conditions. Yield is calculated separately for Class A shares, Class B shares and Class C shares. Because of the differences in distribution fees, the yields for each of the classes will differ with Class B shares and Class C shares having a lower yield than Class A 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., Donoghue's Money Market Report or similar independent services which monitor the performance of mutual funds, with other appropriate indexes 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. 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 information. A copy of the Annual Report may be obtained without charge by calling or writing the Fund at the telephone number and address printed on the cover page of this prospectus. - ------------------------------------------------------------------------------ DESCRIPTION OF SHARES OF THE FUND - ------------------------------------------------------------------------------ The Fund originally was incorporated in Maryland on March 28, 1974. The Fund was reorganized on July 31, 1995, under the laws of the state of Delaware as a Delaware business trust and adopted its current name at that time. Shares issued by the Fund are fully paid, non-assessable and have no preemptive or conversion rights. The Fund is authorized to issue an unlimited number of Class A shares, Class B shares and Class C shares of beneficial interest of $0.01 par value. Other classes of shares may be established from time to time in accordance with provisions of the Fund's Declaration of Trust. The Fund currently offers three classes, designated Class A shares, Class B shares and Class C shares. Each class of shares represents an interest in the same assets of the Fund and generally are identical in all respects 34 37 except that each class bears certain distribution expenses and has exclusive voting rights with respect to its distribution fee. The Fund is permitted to issue an unlimited number of classes of shares. Each class of share is equal as to earnings, assets and voting privileges, except as noted above, and each class bears the expenses related to the distribution of its shares. There are no conversion, preemptive or other subscription rights, except with respect to the conversion of Class B shares and Class C shares into Class A shares as described above. In the event of liquidation, each of the shares of the Fund is entitled to its portion of all of the Fund's net assets after all debt and expenses of the Fund have been paid. Since Class B shares and Class C shares pay higher distribution expenses, the liquidation proceeds to Class B shareholders and Class C shareholders are likely to be lower than to other shareholders. The Fund does not contemplate holding regular meetings of shareholders to elect Trustees or otherwise. More detailed information concerning the Fund is set forth in the Statement of Additional Information. The Fund's Declaration of Trust provides that no Trustee, officer or shareholder of the Fund shall be held to any personal liability, nor shall resort be had to their private property for the satisfaction of any obligation or liability of the Fund but the assets of the Fund only shall be liable. - ------------------------------------------------------------------------------ ADDITIONAL INFORMATION - ------------------------------------------------------------------------------ This Prospectus and the Statement of Additional Information do not contain all the information set forth in the Registration Statement filed by the Fund with the SEC under the Securities Act of 1933. Copies of the Registration Statement may be obtained at a reasonable charge from the SEC or may be examined, without charge, at the office of the SEC in Washington, D.C. An investment in the Fund may not be appropriate for all investors. The Fund is not intended to be a complete investment program, and investors should consider their long-term investment goals and financial needs when making an investment decision with respect to the Fund. An investment in the Fund is intended to be a long-term investment, and should not be used as a trading vehicle. 35 38 EXISTING SHAREHOLDERS-- FOR INFORMATION ON YOUR EXISTING ACCOUNT PLEASE CALL THE FUND'S TOLL-FREE NUMBER--(800) 421-5666 PROSPECTIVE INVESTORS--CALL YOUR BROKER OR (800) 421-5666 DEALERS--FOR DEALER INFORMATION, SELLING AGREEMENTS, WIRE ORDERS, OR REDEMPTIONS CALL THE DISTRIBUTOR'S TOLL-FREE NUMBER--(800) 421-5666 FOR SHAREHOLDER AND DEALER INQUIRIES THROUGH TELECOMMUNICATIONS DEVICE FOR THE DEAF (TDD) DIAL (800) 772-8889 FOR TELEPHONE TRANSACTIONS DIAL (800) 421-5684 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND One Parkview Plaza Oakbrook Terrace, IL 60181 Investment Adviser VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC. One Parkview Plaza Oakbrook Terrace, IL 60181 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 Reserve 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 Reserve Fund Legal Counsel SKADDEN, ARPS, SLATE, MEAGHER & FLOM 333 West Wacker Drive Chicago, IL 60606 Independent Accountants PRICE WATERHOUSE LLP 1201 Louisiana, Suite 2900 Houston, TX 77002 39 ------------------------------------------------------------------------------ RESERVE FUND ------------------------------------------------------------------------------ P R O S P E C T U S SEPTEMBER 28, 1996 ------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------ VAN KAMPEN AMERICAN CAPITAL ------------------------------------------------------------------------ 40 STATEMENT OF ADDITIONAL INFORMATION VAN KAMPEN AMERICAN CAPITAL RESERVE FUND This Statement of Additional Information is not a Prospectus and should be read in conjunction with the current Prospectus for the Van Kampen American Capital Reserve Fund (the "Prospectus"). This Statement of Additional Information does not include all the information a prospective investor should consider before purchasing shares of the Fund. Investors should obtain and read the Prospectus prior to purchasing shares of the Fund. A Prospectus may be obtained without charge by calling or writing Van Kampen American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois 60181 at (800) 421-5666. TABLE OF CONTENTS
PAGE ---- General Information........................................................... B-2 Investment Policies........................................................... B-2 Investment Restrictions....................................................... B-3 Trustees and Officers......................................................... B-5 Legal Counsel................................................................. B-13 Investment Advisory Agreement................................................. B-13 Distributor................................................................... B-14 Distribution and Service Plans................................................ B-15 Transfer Agent................................................................ B-15 Portfolio Transactions and Brokerage.......................................... B-16 Determination of Net Asset Value.............................................. B-16 Purchase of Shares............................................................ B-17 Exchange Privilege............................................................ B-19 Redemption of Shares.......................................................... B-19 Check Writing Privilege....................................................... B-19 Dividends, Distributions and Taxes............................................ B-20 Yield Information............................................................. B-21 Other Information............................................................. B-22 Rating Categories............................................................. B-22 Report of Independent Accountants............................................. B-25 Financial Statements.......................................................... B-26 Notes to Financial Statements................................................. B-33
This Statement of Additional Information is dated September 28, 1996. B-1 41 GENERAL INFORMATION Van Kampen American Capital Reserve Fund, formerly known as American Capital Reserve Fund, Inc. (the "Fund"), originally was incorporated in Maryland on March 28, 1974, and reorganized as a business trust under the laws of Delaware and adopted its current name on July 31, 1995. Van Kampen American Capital Asset Management, Inc. (the "Adviser"), Van Kampen American Capital Distributors, Inc. (the "Distributor"), and ACCESS Investor Services, Inc. ("ACCESS") are wholly owned subsidiaries of Van Kampen/American Capital, Inc. ("VKAC"), which is a wholly owned subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc. is controlled, through the ownership of a substantial majority of its common stock, by The Clayton & Dubilier Private Equity Fund IV Limited Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is managed by Clayton, Dubilier & Rice, Inc., a New York based private investment firm. The General Partner of C&D L.P. is Clayton & Dubilier Associates IV Limited Partnership ("C&D Associates L.P."). The general partners of C&D Associates L.P. are Joseph L. Rice, III, B. Charles Ames, William A. Barbe, Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and Andrall E. Pearson, each of whom is a principal of Clayton, Dubilier & Rice, Inc. In addition, certain officers, directors and employees of VKAC own, in the aggregate, not more than 6% of the common stock of VK/AC Holding, Inc. and have the right to acquire, upon the exercise of options, approximately an additional 12% of the common stock of VK/AC Holding, Inc. Presently, and after giving effect to the exercise of such options, no officer or trustee of the Fund owns or would own 5% or more of the Common Stock of VK/AC Holding, Inc. As of September 17, 1996, no one person was known to own beneficially or hold of record 5% or more of the outstanding shares of any class of the Fund, except for those listed below:
NAME AND ADDRESS NUMBER OF OF RECORD HOLDER CLASS OF SHARES SHARES HELD PERCENT OF CLASS - -------------------------------- --------------- ------------ ---------------- Van Kampen American Capital A 90,052,194 23.34% Trust Company B 49,836,873 55.45% 2800 Post Oak Blvd. C 2,804,897 31.25% Houston, TX 77056 Concorp Inc. C 667,039 7.43% Prof. Sh. Pl. R.L. Pennington TR P.O. Box 425 Nitro, WV 25143-0425
Van Kampen American Capital Trust Company acts as custodian for certain employee benefit plans and independent retirement accounts. INVESTMENT POLICIES The Fund seeks to maintain a net asset value of $1.00 per share for purchases and redemptions. To do so, the Fund uses the amortized cost method of valuing the Fund's securities pursuant to Rule 2a-7 under the Investment Company Act of 1940 (the "1940 Act"), certain requirements of which are summarized below. In accordance with Rule 2a-7, the Fund is required to maintain a dollar-weighted average portfolio maturity of 90 days or less, purchase only instruments having remaining maturities of 13 months or less and invest only in U.S. dollar denominated securities determined in accordance with procedures established by the Trustees to present minimal credit risks and which are rated in one of the two highest rating categories for debt obligations by at least two nationally recognized statistical rating organizations (or one rating organization if the instrument was rated by only one such organization) or, if unrated, are of comparable quality as determined in accordance with procedures established by the Trustees. The nationally recognized statistical B-2 42 rating organizations currently rating instruments of the type the Fund may purchase are Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S & P"), Fitch Investors Services, Inc., Duff and Phelps, Inc. and IBCA Limited and IBCA Inc. See Appendix hereto. In addition, the Fund will not invest more than 5% of its total assets in the securities (including the securities collateralizing a repurchase agreement) of, or subject to puts issued by, a single issuer, except that (i) the Fund may invest more than 5% of its total assets in a single issuer for a period of up to three business days in certain limited circumstances, (ii) the Fund may invest in obligations issued or guaranteed by the U.S. Government without any such limitation, and (iii) the limitation with respect to puts does not apply to unconditional puts if no more than 10% of the Fund's total assets is invested in securities issued or guaranteed by the issuer of the unconditional put. Investments in rated securities not rated in the highest category by at least two rating organizations (or one rating organization if the instrument was rated by only one such organization), and unrated securities not determined by the Trustees to be comparable to those rated in the highest category, will be limited to 5% of the Fund's total assets, with the investment in any one such issuer being limited to no more than the greater of 1% of the Fund's total assets or $1,000,000. As to each security, these percentages are measured at the time the Fund purchases the security. There can be no assurance that the Fund will be able to maintain a stable net asset value of $1.00 per share. REPURCHASE AGREEMENTS. Repurchase agreements are collateralized by the underlying debt securities and may be considered to be loans under the 1940 Act. The Fund makes payment 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 is required to maintain the value of the underlying securities marked-to-market daily at not less than the repurchase price. The underlying securities must be of a type in which the Fund may invest (normally securities of the U.S. Government, or its agencies and instrumentalities), except that the underlying securities may have maturity dates exceeding one year. LOANS OF PORTFOLIO SECURITIES. The Fund may lend portfolio securities to brokers, dealers and financial institutions provided that cash equal to 100% of the market value of the securities loaned is deposited by the borrower with the Fund and is maintained each business day. 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 does not presently intend to lend its portfolio securities in excess of 5% of its total assets. Any loans would be made for short-term purposes and would be 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 be less restrictive than the investment policies stated in the Prospectus and may not be changed without approval by the holders of a majority of its outstanding shares. Such majority is defined by the 1940 Act as the lesser of (i) 67% or more of the voting securities present at a meeting, if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy; or (ii) more than 50% of the Fund's outstanding voting securities. In addition to the fundamental investment limitations set forth in the Fund's Prospectus, the Fund may not: 1. Purchase any security which matures more than two years from the date of purchase. As set forth under "Investment Objective and Policies" in the Prospectus, the Fund's operating policy is not to purchase any security having a remaining maturity of more than 13 months; 2. Purchase any security other than (a) obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities; (b) bank time deposits, certificates of deposit and bankers' acceptances B-3 43 which are obligations of a domestic bank (or a foreign branch or subsidiary thereof), or of a foreign bank, rated at the time of investment A-1 and A-2 by Moody's or Prime-1 and Prime-2 by S & P; (c) instruments secured by a bank obligation described in item 2(b); (d) commercial paper if rated A by S & P's or Prime by Moody's, or if not rated, issued by a company having an outstanding debt issue rated at least A by S & P's or Moody's (see Appendix for an explanation of these ratings); and (e) repurchase agreements collateralized by the debt securities described above; 3. Issue any senior security, although the Fund may borrow as set forth under item 14 below; 4. Purchase or sell real estate; although the Fund may purchase securities issued by companies, including real estate investment trusts, which invest in real estate or interest therein; 5. Purchase securities on margin, make short sales of securities or maintain a short position; 6. Purchase or sell commodities or commodity contracts, or invest in oil, gas or mineral exploration or development programs; 7. Acquire voting securities of any issuer or any securities of other investment companies; 8. Make investments for the purpose of exercising control or management; 9. Lend its portfolio securities in excess of 10% of its total assets, both taken at market value provided that any loans shall be in accordance with the guidelines established for such loans by the Trustees of the Fund as described under "Loans of Portfolio Securities," including the maintenance of collateral from the borrower equal at all times to the current market value of the securities loaned; 10. Invest in securities, except repurchase agreements, for which there are legal or contractual restrictions on resale; 11. Underwrite securities of other issuers except that the Fund may sell an investment position even though it may be deemed an underwriter as that term is defined under the Securities Act of 1933; 12. Invest in warrants, or write, purchase or sell puts, calls, straddles, spreads or combinations thereof; 13. Purchase or retain securities of any issuer if those officers and directors of the Fund or its investment adviser who own beneficially more than 0.50% of the securities of such issuer, together own more than 5% of the securities of such issuer; 14. Borrow money, except from banks for temporary or emergency purposes and then in amounts not exceeding 10% of the value of the Fund's total net assets; or mortgage, pledge, or hypothecate any assets except in connection with any such borrowing and in amounts not exceeding the lesser of the dollar amount borrowed or 5% of the value of the Fund's assets at the time of such borrowing (the Fund will not borrow for leveraging or investment but only to meet redemption requests which might otherwise require undue dispositions of portfolio securities); 15. Lend money, except through the purchase or holding of the types of debt securities in which the Fund may invest; 16. With respect to 75% of its assets, purchase securities if the purchase would cause the Fund, at that time, to have more than 5% of the value of its total assets invested in the securities of any one issuer (except obligations of the U.S. government, its agencies or instrumentalities and repurchase agreements fully collateralized thereby); 17. Invest in the securities of any issuer, if immediately thereafter, the Fund would own more than 10% of the total value of all outstanding securities of such issuer; 18. Invest more than 5% of its assets in companies having a record together with predecessors, of less than three years continuous operation; and 19. Invest more than 25% of the value of its total assets in securities of issuers in any particular industry (except obligations of the U.S. Government and of domestic branches of U.S. banks). B-4 44 The Fund has committed to one state that so long as its shares are registered for sale in that state it will apply the restriction contained in No. 17 above to any class of the outstanding securities of any issuer. Consistent with its investment objectives, the Fund may make additional commitments more restrictive than its fundamental policies. Should the Fund determine in the future that a commitment is no longer in the best interests of the Fund and its shareholders, it will revoke the commitment by withdrawing its shares from sale in the state to which the commitment was made. TRUSTEES AND OFFICERS The tables below list the trustees and officers of the Fund and their principal occupations for the last five years and their affiliations, if any, with Van Kampen American Capital Asset Management, Inc. (the "AC Adviser" or "Adviser"), Van Kampen American Capital Investment Advisory Corp. (the "VK Adviser"), Van Kampen American Capital Management, Inc., McCarthy, Crisanti & Maffei, Inc., MCM Asia Pacific Company, Limited, Van Kampen American Capital Distributors, Inc. (the "Distributor"), Van Kampen American Capital, Inc. ("Van Kampen American Capital" or "VKAC") or VK/AC Holding, Inc. For purposes hereof, the term "Van Kampen American Capital Funds" includes each of the open-end investment companies advised by the VK Adviser (excluding The Explorer Institutional Trust) and each of the open-end investment companies advised by the AC Adviser (excluding the Van Kampen American Capital Exchange Fund and the Common Sense Trust). TRUSTEES
PRINCIPAL OCCUPATIONS OR NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS - ----------------------------------- ---------------------------------------------------------
J. Miles Branagan.................. Co-founder, Chairman, Chief Executive Officer and Strafford Hall President of MDT Corporation, a company which develops, Suite 200 manufactures, markets and services medical and scientific 1009 Slater Road equipment. A Trustee of each of the Van Kampen American Morrisville, NC 27560 Capital Funds. Date of Birth: 07/14/32 Linda Hutton Heagy................. Managing Partner, Paul Ray Berndtson, an executive 10 South Riverside Plaza recruiting and management consulting firm. Formerly, Suite 720 Executive Vice President of ABN AMRO, N.A., a Dutch bank Chicago, IL 60606 holding company. Prior to 1992, Executive Vice President Date of Birth: 06/03/49 of La Salle National Bank. A Trustee of each of the Van Kampen American Capital Funds. Roger Hilsman...................... Professor of Government and International Affairs 251-1 Hamburg Cove Emeritus, Columbia University. A Trustee of each of the Lyme, CT 06371 Van Kampen American Capital Funds. Date of Birth: 11/23/19 R. Craig Kennedy................... President and Director, German Marshall Fund of the 11 DuPont Circle, N.W. United States. Formerly, advisor to the Dennis Trading Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive Date of Birth: 02/29/52 Officer, Director and member of the Investment Committee of the Joyce Foundation, a private foundation. A Trustee of each of the Van Kampen American Capital Funds.
B-5 45
PRINCIPAL OCCUPATIONS OR NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS - ----------------------------------- --------------------------------------------------------- Dennis J. McDonnell*............... President, Chief Operating Officer and a Director of the One Parkview Plaza VK Adviser, the AC Adviser and Van Kampen American Oakbrook Terrace, IL 60181 Capital Management, Inc. Executive Vice President and a Date of Birth: 05/20/42 Director of VK/AC Holding, Inc. and Van Kampen American Capital. Chief Executive Officer of McCarthy, Crisanti & Maffei, Inc. Chairman and a Director of MCM Asia Pacific Company, Ltd. Executive Vice President and a Trustee of each of the Van Kampen American Capital Funds. President of the closed-end investment companies advised by the VK Adviser. Prior to December, 1991, Senior Vice President of Van Kampen Merritt Inc. Donald C. Miller................... Prior to 1992, Director of Royal Group, Inc., a company 415 North Adams in insurance related businesses. Formerly Vice Chairman Hinsdale, IL 60521 and Director of Continental Illinois National Bank and Date of Birth: 03/31/20 Trust Company of Chicago and Continental Illinois Corporation. A Trustee of each of the Van Kampen American Capital Funds and Chairman of each Van Kampen American Capital Fund advised by the VK Adviser. Jack E. Nelson..................... President of Nelson Investment Planning Services, Inc., a 423 Country Club Drive financial planning company and registered investment Winter Park, FL 32789 adviser. President of Nelson Investment Brokerage Date of Birth: 02/13/36 Services Inc., a member of the National Association of Securities Dealers, Inc. ("NASD") and Securities Investors Protection Corp. A Trustee of each of the Van Kampen American Capital Funds. Jerome L. Robinson................. President of Robinson Technical Products Corporation, a 115 River Road manufacturer and processor of welding alloys, supplies Edgewater, NJ 07020 and equipment. Director of Pacesetter Software, a Date of Birth: 10/10/22 software programming company specializing in white collar productivity. Director of Panasia Bank. A Trustee of each of the Van Kampen American Capital Funds. Fernando Sisto..................... George M. Bond Chaired Professor and, prior to 1995, Dean Stevens Institute of Graduate School and Chairman, Department of Mechanical of Technology Engineering, Stevens Institute of Technology. Director of Castle Point Station Dynalysis of Princeton, a firm engaged in engineering Hoboken, NJ 07030 research. A Trustee of each of the Van Kampen American Date of Birth: 08/02/24 Capital Funds and Chairman of the Van Kampen American Capital Funds advised by the AC Adviser. Wayne W. Whalen*................... Partner in the law firm of Skadden, Arps, Slate, Meagher 333 West Wacker Drive & Flom, legal counsel to the Van Kampen American Capital Chicago, IL 60606 Funds. A Trustee of each of the Van Kampen American Date of Birth: 08/22/39 Capital Funds. He also is a Trustee of the Explorer Institutional Trust and closed-end investment companies advised by an affiliate of the AC Adviser.
B-6 46
PRINCIPAL OCCUPATIONS OR NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS - ----------------------------------- --------------------------------------------------------- William S. Woodside................ Vice Chairman of the Board of LSG Sky Chefs, Inc., a 712 Fifth Avenue caterer of airline food. Formerly, Director of Primerica 40th Floor Corporation (currently known as The Traveler's Inc.). New York, NY 10019 Formerly, Director of James River Corporation, a producer Date of Birth: 01/31/22 of paper products. Trustee, and former President of Whitney Museum of American Art. Formerly, Chairman of Institute for Educational Leadership, Inc., Board of Visitors, Graduate School of The City University of New York, Academy of Political Science. Trustee of Committee for Economic Development. Director of Public Education Fund Network, Fund for New York City Public Education. Trustee of Barnard College. Member of Dean's Council, Harvard School of Public Health. Member of Mental Health Task Force, Carter Center. A Trustee of each of the Van Kampen American Capital Funds.
- --------------- * Such Trustees are "interested persons" (within the meaning of Section 2(a)(19) of the 1940 Act). Mr. McDonnell is an interested person of the Adviser and the Fund by reason of his position with the Adviser. Mr. Whalen is an interested person of the Fund by reason of his firm acting as legal counsel to the Fund. The Fund's Officers other than Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell and Hill are located at 2800 Post Oak Blvd., Houston, TX 77056. Messrs. Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell and Hill are located at One Parkview Plaza, Oakbrook Terrace, IL 60181. B-7 47 OFFICERS
POSITIONS AND PRINCIPAL OCCUPATIONS NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS - ------------------------- -------------------------- ------------------------------------------- William N. Brown......... Vice President Executive Vice President of the VK Adviser, Date of Birth: 05/26/53 AC Adviser, VK/AC Holding, Inc., VKAC, Van Kampen American Capital Advisors, Inc., American Capital Contractual Services, Inc., Van Kampen American Capital Exchange Corporation, ACCESS Investor Services, Inc., and Van Kampen American Capital Trust Company. Director of American Capital Shareholders Corporation. Vice President of each of the Van Kampen American Capital Funds. Peter W. Hegel........... Vice President Executive Vice President of the VK Adviser, Date of Birth: 06/25/56 AC Adviser, Van Kampen American Capital Advisors, Inc. Director of McCarthy, Crisanti & Maffei, Inc. Vice President of each of the Van Kampen American Capital Funds. Vice President of the closed-end funds advised by the VK Adviser. Curtis W. Morell......... Vice President and Chief Vice President and Chief Accounting Officer Date of Birth: 08/04/46 Accounting Officer of most of the investment companies advised by the AC Adviser. Ronald A. Nyberg......... Vice President and Executive Vice President, General Counsel Date of Birth: 07/29/53 Secretary and Secretary of Van Kampen American Capital and VK/AC Holding, Inc. Executive Vice President, General Counsel and a Director of the Distributor. Executive Vice President and General Counsel of the VK Adviser and the AC Adviser, Van Kampen American Capital Management, Inc., Van Kampen Merritt Equity Advisors Corp., and Van Kampen Merritt Equity Holdings Corp. Executive Vice President, General Counsel and Assistant Secretary of Van Kampen American Capital Advisors, Inc., American Capital Contractual Services, Inc., Van Kampen American Capital Exchange Corporation, ACCESS Investor Services, Inc., American Capital Shareholders Corporation, and Van Kampen American Capital Trust Company. General Counsel of McCarthy, Crisanti & Maffei, Inc. Vice President and Secretary of each of the Van Kampen American Capital Funds. Secretary of the closed-end funds advised by the VK Adviser. Director of ICI Mutual Insurance Co., a provider of insurance to members of the Investment Company Institute. Robert C. Peck, Jr....... Vice President Executive Vice President of the VK Adviser. Date of Birth: 10/01/46 Executive Vice President and Director of the AC Adviser. Vice President of each of the Van Kampen American Capital Funds.
B-8 48
POSITIONS AND PRINCIPAL OCCUPATIONS NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS - ------------------------- -------------------------- ------------------------------------------- Alan T. Sachtleben....... Vice President Executive Vice President of the VK Adviser. Date of Birth: 04/20/42 Executive Vice President and a Director of the AC Adviser. Vice President of each of the Van Kampen American Capital Funds. Paul R. Wolkenberg....... Vice President Executive Vice President of the VK Adviser Date of Birth: 11/10/44 and the AC Adviser. President, Chief Executive Officer and a Director of Van Kampen American Capital Trust Company and ACCESS. Vice President of each of the Van Kampen American Capital Funds. Edward C. Wood III....... Vice President and Chief Senior Vice President of VK Adviser and the Date of Birth: 01/11/56 Financial Officer AC Adviser. Vice President and Chief Financial Officer of each of the Van Kampen American Capital Funds. Vice President, Treasurer and Chief Financial Officer of the closed-end funds advised by VK Adviser. John L. Sullivan......... Treasurer First Vice President of the VK Adviser and Date of Birth: 08/20/55 AC Adviser. Treasurer of each of the Van Kampen American Capital Funds. Controller of the closed-end funds advised by the VK Adviser. Formerly Controller of open-end funds advised by VK Adviser. Tanya M. Loden........... Controller Controller of most of the investment Date of Birth: 11/19/59 companies advised by the Adviser, formerly Tax Manager/Assistant Controller. Nicholas Dalmaso......... Assistant Secretary Assistant Vice President and Senior Date of Birth: 03/01/65 Attorney of VKAC. Assistant Vice President and Assistant Secretary of the Distributor, the VK Adviser, the AC Adviser, and Van Kampen American Capital Management, Inc. Assistant Vice President of Van Kampen American Capital Advisors, Inc. Assistant Secretary of each of the Van Kampen American Capital Funds, Assistant Secretary of the closed-end funds advised by the VK Adviser. Prior to May 1992, attorney for Cantwell & Cantwell, a Chicago law firm. Huey P. Falgout, Jr...... Assistant Secretary Assistant Vice President and Senior Date of Birth: 11/15/63 Attorney of VKAC. Assistant Vice President and Assistant Secretary of the Distributor, the VK Adviser, the AC Adviser, Van Kampen American Capital Management, Inc., Van Kampen American Capital Advisors, Inc., American Capital Contractual Services, Inc., Van Kampen American Capital Exchange Corporation, ACCESS, and American Capital Shareholders Corporation. Assistant Secretary of each of the Van Kampen American Capital Funds.
B-9 49
POSITIONS AND PRINCIPAL OCCUPATIONS NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS - ------------------------- -------------------------- ------------------------------------------- Scott E. Martin.......... Assistant Secretary Senior Vice President, Deputy General Date of Birth: 08/20/56 Counsel and Assistant Secretary of VKAC. Senior Vice President, Deputy General Counsel and Secretary of the VK Adviser, the AC Adviser and the Distributor, Van Kampen American Capital Management, Inc., Van Kampen American Capital Advisers, Inc., American Capital Contractual Services, Inc., Van Kampen American Capital Exchange Corporation, ACCESS Investor Services, Inc., Van Kampen Merritt Equity Advisors Corp., Van Kampen Merritt Equity Holdings Corp., American Capital Shareholders Corporation. Secretary and Deputy General Counsel of McCarthy, Crisanti, & Maffei, Inc. Chief Legal Officer of McCarthy, Crisanti & Maffei, S.A. Assistant Secretary of each of the Van Kampen American Capital Funds. Assistant Secretary of the closed-end funds advised by the VK Adviser. Weston B. Wetherell...... Assistant Secretary Vice President, Associate General Counsel Date of Birth: 06/15/56 and Assistant Secretary of VKAC, the VK Adviser, the AC Adviser and the Distributor, Van Kampen American Capital Management, Inc. Van Kampen American Capital Advisors, Inc. Assistant Secretary of each of the Van Kampen American Capital Funds. Assistant Secretary of closed-end funds advised by VK Adviser. Steven M. Hill........... Assistant Treasurer Assistant Vice President of the VK Adviser Date of Birth: 10/16/64 and AC Adviser. Assistant Treasurer of each of the Van Kampen American Capital Funds. Assistant Treasurer of the closed-end funds advised by the VK Adviser. Robert Sullivan.......... Assistant Controller Assistant Controller of each of the Van Date of Birth: 03/30/33 Kampen American Capital Funds.
Each of the foregoing trustees and officers holds the same position with each of the Van Kampen American Capital mutual funds (the "Fund Complex"). Each trustee who is not an affiliated person of the Adviser, the Distributor or VKAC (each a "Non-Affiliated Trustee") is compensated by an annual retainer and meeting fees for services to the funds in the Fund Complex. Each fund in the Fund Complex provides a deferred compensation plan to its Non-Affiliated Trustees that allows trustees to defer receipt of his or her compensation and earn a return on such deferred amounts based upon the return of the common shares of the funds in the Fund Complex as more fully described below. Each Fund in the Fund Complex also provides a retirement plan to its Non-Affiliated Trustees that provides Non-Affiliated Trustees with compensation after retirement, provided that certain eligibility requirements are met. The compensation of each Non-Affiliated Trustee includes a retainer by the funds in the Fund Complex advised by the AC Adviser (the "AC Funds") in an amount equal to $35,000 per calendar year, due in four quarterly installments on the first business day of each calendar quarter. The AC Funds pay each Non- Affiliated Trustee a per meeting fee in the amount of $2,000 per regular quarterly meeting attended by the Non-Affiliated Trustee, due on the date of such meeting, plus reasonable expenses incurred by the Non-Affiliated Trustee in connection with his or her services as a trustee. Payment of the annual retainer and the regular meeting fee is allocated among the AC Funds (i) 50% on the basis of the relative net assets of each B-10 50 AC Fund to the aggregate net assets of all the AC Funds and (ii) 50% equally to each AC Fund, in each case as of the last business day of the preceding calendar quarter. Each AC Fund participating in any special meeting of the trustees generally pays each Non-Affiliated Trustee a per meeting fee in the amount of $125 per special meeting attended by the Non-Affiliated Trustee, due on the date of such meeting, plus reasonable expenses incurred by the Non-Affiliated Trustee in connection with his or her services as a trustee, provided that no compensation will be paid in connection with certain telephonic special meetings. The trustees have approved an aggregate compensation cap with respect to the Fund Complex of $84,000 per Non-Affiliated Trustee per year (excluding any retirement benefits) for the period July 22, 1995 through December 31, 1996, subject to the net assets and the number of mutual funds in the Fund Complex as of July 21, 1995 and certain other exceptions. In addition, the Adviser has agreed to reimburse each fund in the Fund Complex through December 31, 1996 for any increase in the aggregate trustee's compensation over the aggregate compensation paid by such fund in its 1994 fiscal year, provided that if a fund did not exist for the entire 1994 fiscal year appropriate adjustments will be made. Each Non-Affiliated Trustee can elect to defer receipt of all or a portion of the compensation earned by such Non-Affiliated Trustee until retirement. Amounts deferred are retained by the Fund and earn a rate of return determined by reference to the return on the common shares of the Fund or other mutual funds in the Fund Complex as selected by the respective Non-Affiliated Trustee. To the extent permitted by the 1940 Act, the Fund will invest in securities of those mutual funds selected by the Non-Affiliated Trustees in order to match the deferred compensation obligation. The deferred compensation plan is not funded and obligations thereunder represent general unsecured claims against the general assets of the Fund. The Fund adopted a retirement plan on January 25, 1996. Under the Fund's retirement plan, a Non-Affiliated Trustee who is receiving trustee's fees from the Fund prior to such Non-Affiliated Trustee's retirement, has at least ten years of service and retires at or after attaining the age of 60, is eligible to receive a retirement benefit equal to $2,500 per year for each of the ten years following such trustee's retirement. Under certain conditions, reduced benefits are available for early retirement provided the trustee has served at least five years. As of the date hereof, the retirement plan contains a Fund Complex retirement benefit cap of $60,000 per year. The Adviser will reimburse the Fund for expenses related to the retirement plan through December 31, 1996. B-11 51 Additional information regarding compensation before deferral paid by the Fund and other funds in the Fund Complex is set forth below. COMPENSATION TABLE(1)
TOTAL COMPENSATION AGGREGATE PENSION OR ESTIMATED BEFORE DEFERRAL COMPENSATION RETIREMENT ANNUAL FROM FUND BEFORE DEFERRAL BENEFITS ACCRUED BENEFITS AND FUND FROM AS PART OF FUND UPON COMPLEX PAID TO NAME(2) FUND(3) EXPENSES(4) RETIREMENT(5) TRUSTEE(6) - --------------------------------------- ---------------- ---------------- ----------- --------------- J. Miles Branagan...................... $1,575 $-0- 2,500 $84,250 Dr. Richard E. Caruso.................. 780 -0- -0- 57,250 Philip P. Gaughan...................... 750 -0- -0- 76,500 Linda Hutton Heagy..................... 870 -0- 2,500 38,417 Dr. Roger Hilsman...................... 1,615 -0- 2,500 91,250 R. Craig Kennedy....................... 1,010 -0- 2,500 92,625 Donald C. Miller....................... 950 -0- -0- 94,625 Jack E. Nelson......................... 1,010 -0- 2,500 93,625 David Rees............................. 1,580 -0- 2,500 83,250 Jerome L. Robinson..................... 1,010 -0- -0- 89,375 Lawrence J. Sheehan.................... 1,615 -0- -0- 91,250 Dr. Fernando Sisto..................... 1,750 -0- 2,500 98,750 Wayne W. Whalen........................ 1,010 -0- 2,500 93,375 William S. Woodside.................... 1,510 -0- 2,500 79,125
- --------------- (1) As indicated in the other explanatory notes, the amounts in the table relate to the applicable trustees during the Fund's last fiscal year ended May 31, 1996 or the Fund Complex's last calendar year ended December 31, 1995. (2) Mr. McDonnell, a trustee of the Fund, is an affiliated person of the Adviser and is not eligible for compensation or retirement benefits from the Registrant. Messrs. Gaughan, Kennedy, Miller, Nelson, Robinson and Whalen were elected by shareholders to the Board of Trustees on July 21, 1995. Ms. Heagy was appointed to the Board of Trustees on September 7, 1995. Mr. McDonnell was appointed to the Board of Trustees on January 29, 1996. Mr. Don G. Powell resigned from the Board of Trustees on August 15, 1996, and was not eligible to receive any compensation or benefits from the Fund while a trustee because he was an affiliated person of the Adviser. Messrs. Gaughan and Rees retired from the Board of Trustees on January 26, 1996 and January 29, 1996, respectively. Messrs. Caruso and Sheehan were removed from the Board of Trustees effective September 7, 1995 and January 29, 1996, respectively. (3) The amounts shown in this column are accumulated from the aggregate compensation paid by the Fund during its fiscal year ended May 31, 1996 before deferral by the trustees under the Fund's deferred compensation plan. The following trustees deferred all or a portion of their compensation from the Fund during the fiscal year ended May 31, 1996: Dr. Caruso, $780; Mr. Gaughan, $200; Ms. Heagy, $630; Mr. Kennedy, $700; Mr. Miller, $640; Mr. Nelson, $700; Mr. Rees, $370; Mr. Robinson, $700; and Mr. Whalen, $700. For trustees who have served more than one year and have deferred account balances, the cumulative deferred compensation (including interest) accrued with respect to each trustee from the Fund as of May 31, 1996 is as follows: Dr. Caruso, $6,245; Mr. Gaughan, $276; Ms. Heagy, $637; Mr. Kennedy, $707; Mr. Miller, $646; Mr. Nelson, $707; Mr. Rees, $33,196; Mr. Robinson, $707; Dr. Sisto, $6,093; and Mr. Whalen, $707. The deferred compensation plan is described above the Compensation Table. Amounts deferred are retained by the Fund and earn a rate of return determined by reference to either the return on the common shares of the Fund or other mutual funds in the Fund Complex as selected by the respective Non-Affiliated Trustee. To the extent permitted by the 1940 Act, it is anticipated that the Fund will invest in securities of those mutual funds selected by the Non-Affiliated Trustees in order to match the deferred compensation obligation. (4) The amounts in this column are zero because the Adviser has agreed to reimburse the Fund for expenses related to the retirement plan through December 31, 1996. Absent such reimbursement, the aggregate expenses of the Fund for all trustees would have been approximately $6,000 for the Fund's 1996 fiscal year. The retirement plan is described above the Compensation Table. (footnotes continued on following page) B-12 52 (5) The amounts shown in this column are the annual benefits payable per year from the Fund for the 10-year period commencing in the year of such trustee's retirement. The amounts were computed based on each trustee's anticipated retirement date. The retirement plan is described above the Compensation Table. (6) The amounts shown in this column are accumulated from the aggregate compensation paid by all of the mutual funds in the Fund Complex as of December 31, 1995 before deferral by the trustees under each Fund's deferred compensation plan. The following trustees deferred compensation paid by the Fund and the Fund Complex during the calendar year ended December 31, 1995; Dr. Caruso, $41,750; Mr. Gaughan, $57,750; Ms. Heagy, $8,750; Mr. Kennedy, $65,875; Mr. Miller, $65,875; Mr. Nelson, $65,875; Mr. Rees, $8,375; Mr. Robinson, $62,375; Dr. Sisto, $30,260; and Mr. Whalen, $65,625. The deferred compensation earns a rate of return determined by reference to the return on the common shares of the Fund or other mutual funds in the Fund Complex as selected by the respective Non-Affiliated Trustee. To the extent permitted by the 1940 Act, it is anticipated that the Fund will invest in securities of those mutual funds selected by the Non-Affiliated Trustees in order to match the deferred compensation obligation. The trustees' Fund Complex compensation cap commenced on July 22, 1995 and covered the period between July 22, 1995 and December 31, 1995. Compensation received prior to July 22, 1995 was not subject to the cap. For the calendar year ended December 31, 1995, while certain trustees received compensation over $84,000 in the aggregate, no trustee received compensation in excess of the pro rata amount of the Fund Complex cap for the period July 22, 1995 through December 31, 1995. In addition to the amounts set forth above, certain trustees received lump sum retirement benefit distributions not subject to the cap in 1995 related to three mutual funds that ceased investment operations during 1995 as follows: Mr. Gaughan, $22,136; Mr. Miller, $33,205; Mr. Nelson, $30,851; Mr. Robinson, $11,068; and Mr. Whalen, $27,332. The Adviser and its affiliates also serve as investment adviser for other investment companies; however, with the exception of Messrs. McDonnell and Whalen, the trustees were not trustees of such investment companies. Combining the Fund Complex with other investment companies advised by the Adviser and its affiliates, Mr. Whalen received Total Compensation of $268,857 during the calendar year ended December 31, 1995. As of September 17, 1996, the trustees and officers of the Fund as a group owned less than 1% of the shares of the Fund. Mr. McDonnell owns, or has the opportunity to purchase, an equity interest in VK/AC Holding, Inc., the parent company of VKAC, and has entered into an employment contract (for a term of five years) with VKAC. As of September 17, 1996, no trustee or officer of the Fund owns or would be able to acquire 5% or more of the common stock of VK/AC Holding, Inc. LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom, Chicago, Illinois. INVESTMENT ADVISORY AGREEMENT The 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. 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. The services provided by the Adviser are at cost. The Fund also pays transfer agency fees, custodian fees, legal and auditing fees, the costs of reports to shareholders and all other ordinary expenses not specifically assumed by the Adviser. B-13 53 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: 0.50% on the first $150 million net assets; 0.45% on the next $100 million of net assets; 0.40% on the next $100 million of net assets; and 0.35% on the net assets over $350 million. 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 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 fees payable to the adviser by the Fund 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 subsidiary of VK/AC Holding, Inc. in connection with obtaining such commissions, fees, brokerage or similar payments. The Adviser agrees to use its best efforts to recapture tender solicitation fees and exchange offer fees for the Fund's benefit and to advise the Trustees of the Fund of any other commissions, fees, brokerage or similar payments which may be possible for the Adviser or any other direct or indirect majority owned subsidiary of VK/AC Holding, Inc., to receive in connection with the Fund's portfolio transactions or other arrangements which may benefit the Fund. The Advisory Agreement also provides that, in the event the ordinary business expenses of the Fund for any fiscal year exceed one percent of the Fund's average net assets, the compensation due the Adviser will be reduced by the amount of such excess and that, if a reduction in and refund of the advisory fee is insufficient, the Adviser will pay the Fund monthly an amount sufficient to make up the deficiency, subject to readjustment during the year. Ordinary business expenses do not include (1) interest and taxes; (2) brokerage commissions; (3) certain litigation and indemnification expenses as described in the Advisory Agreement and (4) payments made by the Fund pursuant to the Distribution Plans. The Advisory Agreement also provides that the Adviser shall not be liable to the Fund for any actions or omissions if it acted in good faith without negligence or misconduct. The Advisory Agreement has an initial term of two years and 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 60 days' written notice. Charges are allocated among the investment companies advised or subadvised by the Adviser. During the fiscal years ended May 31, 1996, 1995 and 1994, the Adviser received $1,842,244, $1,896,937 and $1,494,701, respectively in advisory fees from the Fund. A portion of these amounts was paid to the Adviser or its parent in reimbursement of personnel, facilities and equipment costs attributable to the provision of accounting services to the Fund. OTHER AGREEMENTS ACCOUNTING SERVICES AGREEMENT. The Fund has entered into an accounting services agreement pursuant to which the VK Adviser provides accounting services supplementary to those provided by the Custodian. Such services are expected to enable the Fund to more closely monitor and maintain its accounts and records. The Fund shares with the other Van Kampen American Capital mutual funds distributed by the Distributor and advised by the VK Adviser in the cost of providing such services, with 25% of such costs shared proportionately based on the respective number of classes of securities issued per fund and the remaining 75% of such cost based proportionally on their respective net assets. For the years ended May 31, 1996, 1995 and 1994, the Fund paid expenses of approximately $127,090, $100,666 and $106,905, respectively, representing the VK Adviser's cost of providing accounting services. DISTRIBUTOR The Distributor acts as the principal underwriter of the Fund's shares pursuant to a written agreement (the "Underwriting Agreement"). The Distributor has the exclusive right to distribute shares of the Fund B-14 54 through affiliated and unaffiliated dealers. The Distributor's obligation is an agency or "best efforts" arrangement under which the Distributor is required to take and pay for only such shares of the Fund as may be sold to the public. The Distributor is not obligated to sell any stated number of shares. The Distributor bears the cost of printing (but not typesetting) prospectuses used in connection with this offering and the cost and expense of supplemental sales literature, promotion and advertising. The Underwriting Agreement is renewable from year to year if approved (a) by the Fund's Trustees or by a vote of a majority of the Fund's outstanding voting securities and (b) by the affirmative vote of a majority of Trustees who are not parties to the Underwriting Agreement or interested persons of any party, by votes cast in person at a meeting called for such purpose. The Underwriting Agreement provides that it will terminate if assigned, and that it may be terminated without penalty by either party on 60 days' written notice. No brokerage commissions were paid by the Fund during the past three fiscal years. DISTRIBUTION AND SERVICE PLANS The Fund has adopted a distribution plan (the "Distribution Plan") with respect to each class of its shares pursuant to Rule 12b-1 under the 1940 Act. The Fund also has adopted a service plan (the "Service Plan") with respect to each class of its shares. The Distribution Plan and the Service Plan sometimes are referred to herein as the "Plans". The Plans provide that the Fund may spend a portion of the Fund's average daily net assets attributable to each class of shares in connection with distribution of the respective class of shares and in connection with the provision of ongoing services to shareholders of such class, respectively. The Distribution Plan and the Service Plan are being implemented through an agreement (the "Distribution and Service Agreement") with the Distributor of each class of the Fund's shares, sub-agreements between the Distributor and members of the NASD who are acting as securities dealers and NASD members or eligible non-members who are acting as brokers or agents and similar agreements between the Fund and financial intermediaries who are acting as brokers (collectively, "Selling Agreements") that may provide for their customers or clients certain services or assistance, which may include, but not be limited to, processing purchase and redemption transactions, establishing and maintaining shareholder accounts regarding the Fund, and such other services as may be agreed to from time to time and as may be permitted by applicable statute, rule or regulation. Brokers, dealers and financial intermediaries that have entered into sub-agreements with the Distributor and sell shares of the Fund are referred to herein as "financial intermediaries." The Distributor must submit quarterly reports to the Board of Trustees of the Trust, of which the Fund is a series, setting forth separately by class of shares all amounts paid under the Distribution Plan and the purposes for which such expenditures were made, together with such other information as from time to time is reasonably requested by the Trustees. The Plans provide that they will continue in full force and effect from year to year so long as such continuance is specifically approved by a vote of the Trustees, and also by a vote of the disinterested Trustees, cast in person at a meeting called for the purpose of voting on the Plans. Each of the Plans may not be amended to increase materially the amount to be spent for the services described therein with respect to either class of shares without approval by a vote of a majority of the outstanding voting shares of such class, and all material amendments to either of the Plans must be approved by the Trustees and also by the disinterested Trustees. Each of the Plans may be terminated with respect to either class of shares at any time by a vote of a majority of the disinterested Trustees or by a vote of a majority of the outstanding voting shares of such class. For the year ended May 31, 1996, the Fund has paid expenses under the Distribution Plan of $0, $249,345 and $37,115 for the Class A shares, Class B shares and Class C shares, respectively; and the Fund paid expenses under the Service Plan of $495,324, $49,472 and $7,370 under the Selling Agreements for the Class A shares, Class B shares and Class C shares, respectively. TRANSFER AGENT During the fiscal years ending May 31, 1996, 1995 and 1994, ACCESS, shareholder service agent and dividend disbursing agent for the Fund, received fees aggregating $1,280,376, $1,266,690 and $898,801 respectively, for these services. These services are provided at cost plus a profit. B-15 55 PORTFOLIO TRANSACTIONS AND BROKERAGE The Adviser is 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, if any, on such transactions. As most transactions made by the Fund are principal transactions at net prices, the Fund incurs little or no brokerage cost. During the past three years the Fund paid no commissions to brokers on the purchase or sale of portfolio securities. Portfolio securities are normally purchased directly from the issuer or from an underwriter or market maker for the securities. Purchases from underwriters of portfolio securities include a commission or concession paid by the issuer to the underwriter and purchases from dealers serving as market makers include the spread between the bid and asked price. The Adviser places portfolio transactions in a manner deemed fair and reasonable to the Fund and not according to any formula. The primary consideration in all portfolio transactions is prompt execution of orders in an effective manner at a favorable price. The Adviser places portfolio transactions for other advisory accounts including other investment companies, and seeks 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, the main factors considered by the Adviser 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. DETERMINATION OF NET ASSET VALUE Purchases of shares will be priced at the net asset value next determined after a purchase order becomes effective which is upon receipt by the Fund of federal funds. The net asset value per share 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. The Exchange is currently closed on weekends and on the following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset value is computed by dividing the value of the Fund's securities plus all cash and other assets (including accrued interest) less all liabilities (including accrued expenses) by the number of shares outstanding. The valuation of the Fund's portfolio securities is based upon their amortized cost, which does not take into account unrealized capital gains or losses. Amortized cost valuation involves initially valuing an instrument at its cost and thereafter, assuming a constant amortization to maturity of any discount or premium, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price that the Fund would receive if it sold the instrument. The Fund's use of the amortized cost method of valuing its portfolio securities is permitted by a rule adopted by the Securities and Exchange Commission ("SEC"). Under this rule, the Fund must maintain a dollar-weighted average portfolio maturity of 90 days or less, purchase only instruments having remaining maturities of thirteen months or less and invest only in securities determined by the Adviser to be of eligible quality with minimal credit risks. The Fund's Trustees has established procedures reasonably designed, taking into account current market conditions and the Fund's investment objective, to stabilize the net asset value per share for purposes of sales and redemptions at $1.00. These procedures include review by the Trustees, at such intervals as it deems appropriate, to determine the extent, if any, to which the net asset value per share calculated by using available market quotations deviates from $1.00 per share based on amortized cost. In the event such deviation should exceed four tenths of one percent, the Trustees is required to promptly consider what action, if any, should be initiated. If the Trustees believes that the extent of any deviation from a $1.00 amortized cost price per share may result in material dilution or other unfair results to new or existing shareholders, it will take such steps as it considers appropriate to eliminate or reduce these consequences to the extent reasonably practicable. Such steps may include selling portfolio securities prior to maturity; shortening the average maturity of the portfolio; B-16 56 withholding or reducing dividends; or utilizing a net asset value per share determined by using available market quotations. The assets belonging to the Class A shares, the Class B shares and the Class C shares will be invested together in a single portfolio. The net asset value of each class will be determined separately by subtracting the expenses and liabilities allocated to that class from the assets belonging to that class pursuant to an order issued by the SEC. PURCHASE OF SHARES Shares of the Fund are sold in a continuous offering and may be purchased on any business day through ACCESS. All orders become effective when the wire or check payment is converted into federal funds. A check order will normally be converted into federal funds on the second business day following receipt of payment by ACCESS. When payment is by wire transfer of federal funds, such order becomes effective upon receipt provided that prior notice has been given as described below; other bank wire payments will normally be converted into federal funds on the day following receipt. After each initial and subsequent investment, the shareholder receives a statement of the number of shares owned. Certificates for shares purchased will not normally be issued but shares will be held on deposit by ACCESS. However, the shareholder may request a certificate by writing ACCESS for shares at any time. It is preferred that such request for a certificate be for at least 1,000 shares in order to minimize shareholder service agent costs. ALTERNATIVE SALES ARRANGEMENTS The Fund issues three classes of shares: Class A shares, Class B shares and Class C shares. The three classes of shares each represent interests in the same portfolio of investments of the Fund, have the same rights and are identical in all respects, except that Class B shares and Class C shares bear the expenses of the deferred sales arrangements, distribution fees, and any expenses (including higher transfer agency costs) resulting from such sales arrangements, and have exclusive voting rights with respect to the Rule 12b-1 distribution plan pursuant to which the distribution fee is paid. WAIVER OF CLASS B AND CLASS C CONTINGENT DEFERRED SALES CHARGE ("CDSC -- CLASS B AND C") The CDSC -- Class B and C may be waived on redemptions of Class B shares and Class C shares in the circumstances described below: (a) Redemption Upon Disability or Death The Fund will waive the CDSC -- Class B and C on redemptions following the death or disability of a Class B and Class C shareholder. An individual will be considered disabled for this purpose if he or she meets the definition thereof in Section 72(m)(7) of the Internal Revenue Code of 1986, as amended (the "Code"), which in pertinent part defines a person as disabled if such person "is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration." While the Fund does not specifically adopt the balance of the Code's definition which pertains to furnishing the Secretary of Treasury with such proof as he or she may require, the Distributor will require satisfactory proof of death or disability before it determines to waive the CDSC -- Class B and C. In cases of disability or death, the CDSC -- Class B 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-17 57 (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 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. (d) Involuntary Redemptions of Shares in Accounts that Do Not Have the Required Minimum Balance A shareholder may elect to participate in a systematic withdrawal plan ("Plan") with respect to the shareholder's investment in the Fund. Under the Plan, a dollar amount of a participating shareholder's investment in the Fund will be redeemed systematically by the Fund on a periodic basis, and the proceeds mailed to the shareholder. The amount to be redeemed and frequency of the systematic withdrawals will be specified by the shareholder upon his or her election to participate in the Plan. The CDSC -- Class B and C will be waived on redemptions made under the Plan. The amount of the shareholder's investment in a Fund at the time the election to participate in the Plan is made with respect to the Fund is hereinafter referred to as the "initial account balance." The amount to be systematically redeemed from such Fund without the imposition of a CDSC -- Class B and C may not exceed a maximum of 12% annually of the shareholder's initial account balance. The Fund reserves the right to change the terms and conditions of the Plan and the ability to offer the Plan. (e) 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. Any involuntary redemption may only occur if the shareholder account is less than the amount specified in the Prospectus due to shareholder redemptions. The Fund will waive the CDSC -- Class B and Class C upon such involuntary redemption. (f) Reinvestment of Redemption Proceeds in Shares of the Same Fund Within 120 Days After Redemption A shareholder who has redeemed Class C shares of a Fund may reinvest, with credit for any CDSC -- Class C paid on the redeemed shares, any portion or all of his or her redemption proceeds (plus that amount necessary to acquire a fractional share to round off his or her purchase to the nearest full share) in shares of the Fund, provided that the reinvestment is effected within 120 days after such redemption and the shareholder has not previously exercised this reinvestment privilege with respect to Class C shares of the Fund. Shares acquired in this manner will be deemed to have the original cost and purchase date of the redeemed shares for purposes of applying the CDSC -- Class C to subsequent redemptions. B-18 58 (g) Redemption by Adviser The Fund may waive the CDSC -- Class B and C when a total or partial redemption is made by the Adviser with respect to its investments in the Fund. EXCHANGE PRIVILEGE The following supplements the discussion of "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 (collectively, "Van Kampen American Capital"), 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. 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 above. 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. REDEMPTION OF SHARES Redemptions are not made on days during which the New York Stock Exchange is closed. The right of redemption may be suspended and the payment therefor may be postponed for more than seven days during any period when (a) the New York Stock Exchange is closed for other than customary weekends or holidays; (b) trading on the New York Stock Exchange is restricted; (c) an emergency exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for the Fund to fairly determine the value of its net assets; or (d) the SEC, by order, so permits. CHECK WRITING PRIVILEGE To establish the check writing privilege, a shareholder must complete the appropriate section of the application and the Authorization for Redemption form and return both documents to ACCESS before checks will be issued. All signatures on the authorization card must be guaranteed if any of the signators are persons not referenced in the account registration or if more than 30 days have elapsed since ACCESS established the account on its records. Moreover, if the shareholder is a corporation, partnership, trust, fiduciary, executor or administrator, the appropriate documents appointing authorized signers (corporate resolutions, partnerships or trust agreements) must accompany the authorization card. The documents must be certified in original form, and the certificates must be dated within 60 days of their receipt by ACCESS. The privilege does not carry over to accounts established through exchanges or transfers. It must be requested separately for each fund account. B-19 59 DIVIDENDS, DISTRIBUTIONS AND TAXES DIVIDENDS AND DISTRIBUTIONS The Fund's net income is declared and paid as dividend on a daily basis. Dividends are paid to shareholders of record immediately prior to the determination of net asset value for that day. Since shares are issued and redeemed at the time net asset value is determined, dividends commence on the day following the date shares are issued and are received for the day shares are redeemed. The per share dividends on Class B and Class C shares will be lower than the per share dividends on Class A shares as a result of the distribution fees and higher transfer agency fees applicable to the Class B and Class C shares. All dividends are automatically invested in additional full and fractional shares of the Fund at net asset value. Shareholders may elect to receive monthly payment of dividends in cash by written instruction to ACCESS. Shares purchased by daily reinvestments are liquidated at the net asset value on the last business day of the month and the proceeds of such redemption less any applicable CDSC mailed to the shareholder electing cash payment. A redeeming shareholder receives all dividends accrued through the date of redemption. The Fund's net income for dividend purposes is calculated daily and consists of interest accrued or discount earned, plus or minus any net realized gains or losses on portfolio securities, less any amortization of premium and the expenses of the Fund. Should the Fund incur or anticipate any unusual expense, or loss or depreciation which would adversely affect its net asset value per share or income for a particular period, the Trustees would at that time consider whether to adhere to the present dividend policy described above or to revise it in the light of the then prevailing circumstances. For example, if the Fund's net asset value per share was reduced below $1.00, the Board may suspend further dividend payments until net asset value returned to $1.00. Thus, such expenses or losses or depreciation may result in an investor receiving no dividends for the period during which he held his shares and in his receiving upon redemption a price per share lower than that which he paid. TAX STATUS OF THE FUND The following discussion reflects applicable federal income tax law, as of the date hereof. The Fund intends to qualify each year and to elect to be treated as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). To qualify as a regulated investment company, the Fund must comply with certain requirements of the Code relating to, among other things, the source of its income and the diversification of its assets. Included among such requirements is the requirement that the Fund must derive at least 90% of its gross income from dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of stocks, securities or foreign currencies or other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to its business of investing in such stocks, securities or currencies. If the Fund qualifies as a regulated investment company and distributes each year to its shareholders at least 90% of its net investment income (which includes for this purpose net short-term capital gains, but not net capital gains, which are the excess of net long-term capital gains over net short-term capital losses), 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 distribution requirement. The Fund will not be subject to federal income tax on any net capital gains distributed to its shareholders. If for any taxable year the Fund does not qualify as a regulated investment company, all of its taxable income, including any net capital gains, would be subject to tax at regular corporate rates (without any deduction for distributions to shareholders) and all distributions out of earnings and profits would be taxed to shareholders as ordinary income. The Fund is subject to a 4% excise tax to the extent it does not distribute to its shareholders during any calendar year at least 98% of its ordinary taxable income for the twelve months ended December 31, plus 98% of its capital gain net income for the twelve months ended October 31 of such year. 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 B-20 60 of, the Fund will be treated as having been distributed. The Fund intends to distribute sufficient amounts to avoid liability for the excise tax. If shares of the Fund are sold or exchanged within 90 days of acquisition and shares of the same or a related mutual fund are acquired, to the extent the sales charge is reduced or waived on the subsequent acquisition, the sales charge may not be used to determine the basis in the disposed shares for purposes of determining gain or loss. To the extent the sales charge is not allowed in determining gain or loss on the initial shares, it is capitalized in the basis of the subsequent shares. Dividends and distributions declared payable to shareholders of record after September 30 of any year and paid before February 1 of the following year are considered taxable income to shareholders on the record date even though paid in the next year. Dividends to foreign shareholders, including shareholders who are non-resident aliens, may be subject to a United States withholding tax at a rate up to 30% under existing provisions of the Code applicable to foreign individuals and entities unless a reduced rate of withholding or a withholding exemption is provided under applicable treaty law. Non-resident shareholders are urged to consult their own tax advisers concerning the applicability of the United States withholding tax. Back-up Withholding. The Fund is required to withhold and remit to the United States Treasury 31% of (i) reportable taxable dividends and distributions and (ii) the proceeds of any redemptions of Fund shares with respect to any shareholder who is not exempt from withholding and who fails to furnish the Fund with a correct taxpayer identification number, who fails to report fully dividend or interest income, or who fails to certify to the Fund that he has provided a correct taxpayer identification number and that he is not subject to withholding. (An individual's taxpayer identification number is his social security number.) The 31% back-up withholding tax is not an additional tax and may be credited against a taxpayer's regular federal income tax liability. The foregoing is a general and abbreviated summary of the applicable provisions of the Code and Treasury Regulations presently in effect. For the complete provisions, reference should be made to the pertinent Code sections and the Treasury Regulations promulgated thereunder. The Code and these Treasury Regulations are subject to change by legislative or administrative action either prospectively or retroactively. Dividends and any distributions may also be subject to state and local taxes. Shareholders are urged to consult their attorneys or tax advisers regarding specific questions as to Federal, state or local taxes and any proposed tax law changes. YIELD INFORMATION The annualized current yield for Class A shares for the seven day period ending May 31, 1996 was 4.18%. Its compound effective yield for the same period was 4.27%. For Class B shares the annualized yield and compound effective yield for the seven day period was 3.39% and 3.45%, respectively. For Class C shares the annualized yield and compound effective yield for the seven day period was 3.39% and 3.44%, respectively. The yield of the Fund is its net income expressed in annualized terms. The SEC requires by rule that a yield quotation set forth in an advertisement for a "money market" fund be computed by a standardized method based on a historical seven calendar day period. The standardized yield is computed by determining the net change (exclusive of realized gains and losses and unrealized appreciation and depreciation) in the value of an hypothetical pre-existing account having a balance of one share at the beginning of the period, dividing the net change in account value by the value of the account at the beginning of the base period to obtain the base period return, and multiplying the base period return by (365/7). The determination of net change in account value reflects the value of additional shares purchased with dividends from the original share, dividends declared on both the original share and such additional shares, and all fees that are charged to all shareholder accounts, in proportion to the length of the base period and the Fund's average account size. The Fund may also calculate its annualized yield by compounding the unannualized base period return (calculated as described above) by adding 1 to the base period return, raising the sum to a power equal to 365 divided by 7, and subtracting one. B-21 61 The yield quoted at any time represents the amount being earned on a current basis for the indicated period and is a function of the types of instruments in the Fund's portfolio, their quality and length of maturity, and the Fund's operating expenses. At May 31, 1996, 48% of the Fund's portfolio was invested in obligations of U.S. Government Agencies', 37% was invested in commercial paper of which 100% was rated A-1 or Prime-1, 5% was invested in U.S. Treasury obligations and the remaining 15% was invested in repurchase agreements. See "Investment Policies -- Commercial Paper," and the Appendix hereto. The length of maturity for the portfolio is the average dollar weighted maturity of the portfolio. This means that the portfolio has an average maturity of a stated number of days for all of its issues. The calculation is weighted by the relative value of the investment. At May 31, 1996 the average dollar weighted maturity of the portfolio was 34 days. The yield fluctuates daily as the income earned on the investments of the Fund fluctuates. Accordingly, there is no assurance that the yield quoted on any given occasion will remain in effect for any period of time. It should also be emphasized that the Fund is an open-end investment company and that there is no guarantee that the net asset value will remain constant. A shareholder's investment in the Fund is not insured. Investors comparing results of the Fund with investment results and yields from other sources such as banks or savings and loan associations should understand this distinction. The yield quotation may be of limited use for comparative purposes because it does not reflect charges imposed at the Account level which, if included, would decrease the yield. Other funds of the money market type as well as banks and savings and loan associations may calculate their yield on a different basis, and the yield quoted by the Fund could vary upwards or downwards if another method of calculation or base period were used. Yield is calculated separately for Class A shares, Class B shares and Class C shares. Because of the differences in distribution fees, the yield for each of the classes will differ. From time to time marketing materials may provide a portfolio manager update, an adviser update and/or discuss general economic conditions and outlooks. The Fund's marketing materials may also show the Fund's asset class diversification, top five sectors, ten largest holdings and other Fund asset structures, such as duration, maturity, coupon, NAV, rating breakdown, AMT exposure and number of issues in the portfolio. Materials may also mention how Van Kampen American Capital believes the Fund compares relative to other Van Kampen American Capital funds. Materials may also discuss the Dalbar Financial Services study from 1984 to 1994 which studied investor cash flow into and out of all types of mutual funds. The ten year study found that investors who bought mutual fund shares and held such shares outperformed investors who bought and sold. The Dalbar study conclusions were consistent regardless of if shareholders purchased their funds in direct or sales force distribution channels. The study showed that investors working with a professional representative have tended over time to earn higher returns than those who invested directly. The Fund will also be marketed on the Internet. OTHER INFORMATION CUSTODY OF ASSETS -- All securities owned by the Fund and all cash, including proceeds from the sale of shares of the Fund and of securities in the Fund's investment portfolio, are held by State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, as Custodian. SHAREHOLDER REPORTS -- Semiannual statements are furnished to shareholders, and annually such statements are audited by the independent accountants. INDEPENDENT ACCOUNTANTS -- Price Waterhouse LLP, 1201 Louisiana, Houston, Texas 77002, the independent accountants for the Fund, performs annual audits of the Fund's financial statements. RATING CATEGORIES Description of the highest commercial paper, bond and other short-term and long-term rating categories assigned by Standard & Poor's Corporation ("S&P"), Moody's Investors Service ("Moody's"), Fitch B-22 62 Investors Service, Inc. ("Fitch"), Duff and Phelps, Inc. ("Duff") and IBCA Limited and IBCA Inc. ("IBCA"). COMMERCIAL PAPER AND SHORT-TERM RATINGS The designation A-1 by S&P indicates that the degree of safety regarding timely payment is either overwhelming or very strong. Those issues determined to possess overwhelming safety characteristics are denoted with a plus (+) designation. Capacity for timely payment on issues with an A-2 designation is strong. However, the relative degree of safety is not as high as for issues designated A-1. The rating Prime-1 (P-1) is the highest commercial paper rating assigned by Moody's. Issuers of P-1 paper must have a superior capacity for repayment of short-term promissory obligations and ordinarily well established industries, high rates of return of funds employed, conservative well established industries, high rates of return of funds employed, conservative capitalization structures with moderate reliance on debt and ample asset protection, 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 (P-2) have a strong capacity for repayment of short-term promissory obligations. This ordinarily will 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. The rating Fitch-1 (Highest Grade) is the highest commercial paper rating assigned by Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the second highest commercial paper rating assigned by Fitch which reflects an assurance of timely payment only slightly less in degree than the strongest issues. The rating Duff-1 is the highest commercial paper rating assigned by Duff, Paper rated Duff-1 is regarded as having very high certainty of timely payment with excellent liquidity factors which are supported by ample asset protection. Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty of timely payment, good access to capital markets and sound liquidity factors and company fundamentals. Risk factors small. The designation A1 by IBCA indicates that the obligation is supported by a very strong capacity for timely repayment. Those obligations rated A1+ are supported by the highest capacity for timely repayment. The designation A2 by IBCA indicates that the obligation is supported by a strong capacity for timely repayment, although such capacity may be susceptible to adverse changes in business, economic, or financial conditions. BOND AND LONG-TERM RATINGS Bonds rated AAA are considered by S&P to be the highest grade obligations and possess an extremely strong capacity to pay principal and interest. Bonds rated AA by S&P are judged by S&P to have a very strong capacity to pay principal and interest and, in the majority of instances, differ only in small degrees from issues rated AAA. Bonds which are rated Aaa by Moody's are judged to be of the best quality. Bonds are rated Aa by Moody's are judged by Moody's to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than Aaa bonds because margins of protection may not be as large or fluctuations of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger. Moody's applies numerical modifiers 1, 2 and 3 in the Aa rating category. The modifier 1 indicates a ranking for the security in the higher end of this rating category, the modifier 2 indicates a mid-range ranking, and the modifier 3 indicates a ranking in the lower end of the rating category. Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly marketable, suitable for investment by trustees and fiduciary institutions and liable to but slight market fluctuation other than through B-23 63 changes in the money rate. The prime feature of an AAA bond is a showing of earnings several times or many times interest requirements, with such stability of applicable earnings that safety is beyond reasonable question whatever changes occur in conditions. Bonds rated AA by Fitch are judged by Fitch to be of safety virtually beyond question and are readily salable, whose merits are not unlike those of the AAA class, but whose margin of safety is less strikingly broad. The issue may be the obligation of a small company, strongly secured but influenced as to rating by the lesser financial power of the enterprise and more local type of market. Bonds rated Duff-1 are judged by Duff to be of the highest credit quality with negligible risk factors; only slightly more than U.S. Treasury debt. Bonds rated Duff-2, 3 and 4 are judged by Duff to be of high credit quality with strong protection factors. Risk is modest but may vary slightly from time to time because of economic conditions. Obligations rated AAA by IBCA have the lowest expectation of investment risk. Capacity for timely repayment of principal and interest is substantial, such that adverse changes in business, economic or financial conditions are unlikely to increase investment risk significantly. Obligations rated AA have a very low expectation of investment risk. Capacity for timely repayment of principal and interest is substantial. Adverse changes in business, economic or financial conditions may increase investment risk albeit not very significantly. IBCA also assigns a rating to certain international and U.S. banks. An IBCA bank rating represents IBCA's current assessment of the strength of the bank and whether such bank would receive support should it experience difficulties. In its assessment of a bank, IBCA uses a dual rating system comprised of Legal Rating and Individual Ratings. In addition, IBCA assigns banks Long- and Short-Term Ratings as used in the corporate ratings discussed above. Legal Ratings, which range in gradation from 1 through 5, address the question of whether the bank would receive support by central banks or shareholders if it experienced difficulties, and such ratings are considered by IBCA to be a prime factor in its assessment of credit risk. Individual Ratings, which range in gradations from A through E, represent IBCA's assessment of a bank's economic merits and address the question of how the bank would be viewed if it were entirely independent and could not rely on support from state authorities or its owners. B-24 64 REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF VAN KAMPEN AMERICAN CAPITAL RESERVE 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 Reserve Fund (the "Fund") at May 31, 1996, the results of its operations, the changes in its net assets and the financial highlights for each of the fiscal periods presented, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "finan- cial statements") are the responsibility of the Fund's management; our respon- sibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and per- form the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presenta- tion. We believe that our audits, which included confirmation of securities at May 31, 1996 by correspondence with the custodian, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP Houston, Texas July 8, 1996 B-25 65 See Notes to Financial Statements PORTFOLIO OF INVESTMENTS May 31, 1996 - --------------------------------------------------------------------------------
Par Amount (000) Description Coupon Maturity Market Value - ------------------------------------------------------------------------------- UNITED STATES GOVERNMENT OBLIGATIONS 43.9% $ 6,000 Federal Farm Credit Banks............... 5.209% 07/03/96 $ 5,972,060 8,000 Federal Home Loan Banks................. 5.119 07/10/96 7,955,556 5,000 Federal Home Loan Banks................. 5.126 07/24/96 4,962,500 7,000 Federal Home Loan Banks................. 5.203 07/08/96 6,962,538 7,000 Federal Home Loan Banks................. 5.212 07/01/96 6,969,379 20,000 Federal Home Loan Banks................. 5.244 06/03/96 19,991,300 14,385 Federal Home Loan Banks................. 5.273 09/19/96 14,156,135 15,000 Federal Home Loan Banks................. 5.278 09/12/96 14,775,967 2,000 Federal Home Loan Mortgage Corp......... 5.206 06/06/96 1,998,267 14,500 Federal Home Loan Mortgage Corp......... 5.215 06/24/96 14,450,023 5,000 Federal Home Loan Mortgage Corp......... 5.391 06/03/96 4,997,812 5,000 Federal National Mortgage Association... 4.873 08/09/96 4,953,722 40,000 Federal National Mortgage Association... 5.249 07/03/96 39,809,333 20,000 Federal National Mortgage Association... 5.258 07/24/96 19,844,300 18,000 Federal National Mortgage Association... 5.286 10/22/96 17,629,200 7,000 Federal National Mortgage Association... 5.384 06/13/96 6,986,754 22,710 Federal National Mortgage Association... 5.394 11/05/96 22,188,134 14,000 Federal National Mortgage Association... 5.417 06/14/96 13,971,308 5,000 Federal National Mortgage Association... 5.436 08/16/96 4,943,961 ------------ TOTAL UNITED STATES GOVERNMENT OBLIGATIONS (Cost $233,518,249)................................... 233,518,249 ------------ COMMERCIAL PAPER 33.6% 23,000 Associates Corp. of North America....... 5.337 07/15/96 22,847,913 10,000 Chevron Oil Finance Co.................. 5.128 07/16/96 9,936,111 20,000 Chevron Oil Finance Co.................. 5.296 06/11/96 19,967,794 25,000 General Electric Capital Corp........... 5.331 07/22/96 24,810,056 15,000 General Electric Co..................... 5.314 06/28/96 14,939,567 6,500 Lilly (Eli) & Co........................ 5.309 06/12/96 6,488,582 28,000 MetLife Funding Inc..................... 5.317 06/18/96 27,926,080 25,000 Pitney Bowes Credit Corp................ 5.314 07/29/96 24,784,486 27,000 Toronto Dominion Holdings............... 5.326 07/15/96 26,821,462 ------------ TOTAL COMMERCIAL PAPER (Cost $178,522,051)............ 178,522,051 ------------ REPURCHASE AGREEMENTS* 13.3% 60,000 BA Securities, repurchase proceeds $60,026,750 .......................... 5.350 06/03/96 60,000,000 10,425 SBC Capital Markets, Inc., repurchase proceeds $10,429,630 ................. 5.330 06/03/96 10,425,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $70,425,000)................................... 70,425,000 ------------ TOTAL INVESTMENTS (Cost $482,465,300) 90.8%...................... 482,465,300 OTHER ASSETS AND LIABILITIES, NET 9.2%........................... 49,023,953 ------------ NET ASSETS 100%.................................................. $531,489,253 ------------
* dated 05/31/96, collateralized by U.S. Government obligations in a pool cash account B-26 66 See Notes to Financial Statements STATEMENT OF ASSETS AND LIABILITIES May 31, 1996 - -------------------------------------------------------------------------------- ASSETS Investments, at amortized cost................................... $482,465,300 Cash............................................................. 48,466 Receivable for Fund shares sold.................................. 52,938,143 Other assets and receivables..................................... 44,588 ------------ Total Assets................................................ ------------ LIABILITIES Payable for Fund shares redeemed................................. 3,160,942 Due to Adviser................................................... 223,306 Dividends payable................................................ 175,732 Due to shareholder service agent................................. 157,356 Due to Distributor............................................... 104,404 Deferred Trustees' compensation.................................. 68,650 Accrued expenses and other payables.............................. 116,854 ------------ Total Liabilities........................................... 4,007,244 ------------ NET ASSETS, equivalent to $1.00 per share for Class A, B, and C shares........................................................... $531,489,253 ------------ NET ASSETS WERE COMPRISED OF: Shares of beneficial interest at par; 440,344,423 Class A, 81,469,679 Class B and 9,710,786 Class C shares outstanding.... $ 5,315,249 Capital surplus.................................................. 526,216,025 Accumulated net realized loss on securities...................... (53,843) Undistributed net investment income.............................. 11,822 ------------ NET ASSETS....................................................... $531,489,253 ------------
B-27 67 See Notes to Financial Statements STATEMENT OF OPERATIONS Year Ended May 31, 1996 - -------------------------------------------------------------------------------- INVESTMENT INCOME Interest.......................................................... $23,817,971 ----------- EXPENSES Management fees................................................... 1,842,244 Shareholder service agent's fees and expenses..................... 1,583,113 Accounting services............................................... 127,090 Service fees--Class A............................................. 495,324 Distribution and service fees--Class B............................ 298,817 Distribution and service fees--Class C............................ 44,485 Trustees' fees and expenses....................................... 30,934 Audit fees........................................................ 36,703 Legal fees........................................................ 10,098 Reports to shareholders........................................... 70,813 Registration and filing fees...................................... 242,777 Insurance......................................................... 4,529 Miscellaneous..................................................... 4,360 Retirement plan expense reimbursement (see Note 3)................ (6,000) ----------- Total expenses............................................... 4,785,287 ----------- NET INVESTMENT INCOME............................................. 19,032,684 ----------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $19,032,684 -----------
B-28 68 See Notes to Financial Statements STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
Year Ended May 31 -------------------------------- 1996 1995 - ------------------------------------------------------------------------------------ NET ASSETS, beginning of period.................. $ 324,458,539 $ 463,827,313 --------------- --------------- OPERATIONS Increase from net investment income............ 19,032,684 18,614,115 --------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME Class A........................................ (17,616,820) (18,623,009) Class B........................................ (1,250,566) (15,317) Class C........................................ (188,995) (2,167) --------------- --------------- (19,056,381) (18,640,493) --------------- --------------- CAPITAL TRANSACTIONS Proceeds from shares sold Class A........................................ 5,916,701,540 3,148,142,161 Class B........................................ 402,157,689 21,754,203 Class C........................................ 99,265,824 3,049,049 --------------- --------------- 6,418,125,053 3,172,945,413 --------------- --------------- Value received for shares issued in business combination (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........................................ 17,616,820 18,623,009 Class B........................................ 1,250,566 15,317 Class C........................................ 188,995 2,167 --------------- --------------- 19,056,381 18,640,493 --------------- --------------- Cost of shares redeemed Class A........................................ (5,834,380,999) (3,310,885,859) Class B........................................ (331,779,955) (17,579,714) Class C........................................ (90,332,522) (2,462,729) --------------- --------------- (6,256,493,476) (3,330,928,302) --------------- --------------- Increase (decrease) in net assets resulting from capital transactions...................... 207,054,411 (139,342,396) --------------- --------------- INCREASE (DECREASE) IN NET ASSETS................ 207,030,714 (139,368,774) --------------- --------------- NET ASSETS, end of period (including undistributed net investment income of $11,822 and $51,874, respectively)............. $ 531,489,253 $ 324,458,539 --------------- ---------------
B-29 69 See Notes to Financial Statements FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout each of the periods indicated. - --------------------------------------------------------------------------------
Class A -------------------------------------- Year Ended May 31 -------------------------------------- 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ Income from operations Investment income.................... .0572 .0535 .0329 .0353 .052 Expenses............................. (.0107) (.0101) (.0100) (.0109) (.0105) ------ ------ ------ ------ ------ Net investment income.................. .0465 .0434 .0229 .0244 .0415 ------ ------ ------ ------ ------ Distributions from net investment income................................. (.0465) (.0434) (.0229) (.0244) (.0415) ------ ------ ------ ------ ------ Net asset value, end of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ TOTAL RETURN........................... 4.75% 4.43% 2.32% 2.44% 4.20% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions)... $440.3 $319.7 $463.8 $279.3 $329.2 Average net assets (millions).......... $381.0 $434.4 $326.8 $306.7 $377.5 Ratios to average net assets(/1/) Expenses............................. 1.07% 1.00% 1.03% 1.09% 1.05% Expense, without expense reimbursement........................ 1.07% -- -- -- -- Net investment income................ 4.62% 4.28% 2.36% 2.44% 4.19% Net investment income, without expense reimbursement.............. 4.62% -- -- -- --
(1) See Note 3. B-30 70 See Notes to Financial Statements FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for a share of beneficial interest outstanding throughout each of the periods indicated. - --------------------------------------------------------------------------------
Class B -------------------------------- Year April 18, 1995(/1/) Ended through May 31, 1996 May 31, 1995(/2/) - -------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period.............. $ 1.00 $ 1.00 ------ ------ Income from investment operations Investment income............................... .0580 .0073 Expenses........................................ (.0192) (.0026) ------ ------ Net investment income............................. .0388 .0047 ------ ------ Distributions from net investment income.......... (.0388) (.0047) ------ ------ Net asset value, end of period.................... $ 1.00 $ 1.00 ------ ------ TOTAL RETURN(/3/)................................. 3.95% .47% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions).............. $ 81.5 $ 4.2 Average net assets (millions)..................... $ 33.2 $ 2.3 Ratios to average net assets (annualized)(/4/) Expenses........................................ 1.86% 1.76% Expense, without expense reimbursement.......... 1.86% -- Net investment income........................... 3.75% 3.52% Net investment income, without expense reimbursement................................... 3.75% --
(1) Commencement of operations. (2) Based on average shares outstanding. (3) Total return for a period of less than one full year is not annualized. Total return does not consider the effect of sales charges. (4) See Note 3. B-31 71 See Notes to Financial Statements FINANCIAL HIGHLIGHTS (CONTINUED) Selected data for a share of beneficial interest outstanding throughout each of the periods indicated. - --------------------------------------------------------------------------------
Class C -------------------------------- Year April 18, 1995(/1/) Ended through May 31, 1996 May 31, 1995(/2/) - -------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period.......... $ 1.00 $ 1.00 ------ ------ Income from investment operations Investment income........................ .0577 .0076 Expenses................................. (.0190) (.0027) ------ ------ Net investment income......................... .0387 .0049 ------ ------ Distributions from net investment income...... (.0387) (.0049) ------ ------ Net asset value, end of period................ $ 1.00 $ 1.00 ------ ------ TOTAL RETURN(/3/)............................. 3.94% .49% RATIOS/SUPPLEMENTAL DATA Net assets, end of period (millions).......... $9.7 $0.6 Average net assets (millions)................. $5.0 $0.3 Ratios to average net assets (annualized)(/4/) Expenses................................. 1.87% 1.76% Expense, without expense reimbursement... 1.87% -- Net investment income.................... 3.81% 3.52% Net investment income, without expense reimbursement............................ 3.81% --
(1) Commencement of operations. (2) Based on average shares outstanding. (3) Total return for a period of less than one full year is not annualized. Total return does not consider the effect of sales charges. (4) See Note 3. B-32 72 NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- 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 Fund seeks protection of capital and high current income through investments in U.S. dollar denominated money market securities. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The prep- aration of financial statements in conformity with generally accepted account- ing principles requires management to make estimates and assumptions that affect the amounts reported. Actual amounts may differ from the estimates. A. INVESTMENT VALUATIONS-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. The net realized capital loss carryforward for federal income tax purposes of approximately $72,000 at the end of the period may be utilized to offset future capital gains until expiration in 1997 through 2004. 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. B-33 73 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- 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 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 calculated monthly, based on the average daily net assets of the Fund at an annual 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 million. Accounting services include the salaries and overhead expenses of the Fund's Chief Accounting Officer and the personnel operating under his direction. Charges are allocated among investment companies advised by the Adviser. During the period, these charges included $8,068 as the Fund's share of the employee costs attributable to the Fund's accounting officers. A portion of the accounting services expense was paid to the Adviser in reimbursement of personnel, facilities 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 $1,280,376. The Fund has been advised that Van Kampen American Capital Distributors, Inc. (the "Distributor") and Advantage Capital Corp. (the "Retail Dealer"), both affiliates of the Adviser, received $690,949 and $24,778, respectively, as their portion of the commissions on sales of Fund shares during the period. As of January 2, 1996, Advantage Capital Corp. was no longer an affiliate of the Adviser. 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 C shares pay an additional fee of up to .75% per annum of their average daily net assets to reimburse the Distributor for its distribution expenses. Actual distribution expenses incurred by the Distributor for Class B and C shares may exceed the amounts reimbursed to B-34 74 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- the Distributor by the Fund. At the end of the period, the unreimbursed expenses incurred by the Distributor under the Class B and C plans aggregated approximately $190,000 and $9,000, respectively, and may be carried forward and reimbursed through either the collection of the contingent deferred sales charges from share redemptions or, subject to the annual renewal of the plans, future Fund reimbursements of distribution fees. Legal fees were for services rendered by former counsel of the Fund, O'Melveny & Myers. A former trustee was of counsel to that firm. Certain officers and trustees of the Fund are officers and trustees of the Adviser, the Distributor and the shareholder service agent. NOTE 3-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 Committee meetings attended. During the period, such fees aggregated $22,302. The Fund has in effect a deferred compensation plan and a defined benefits retirement plan for its trustees not affiliated with the Adviser. These plans are not funded, and obligations under the plans will be paid solely out of the Fund's general accounts. The Fund will not reserve or set aside funds for the payment of its obligations under the plans by any form of trust or escrow. Under the deferred compensation plan, trustees may elect to defer all or a portion of their compensation to a later date. Each trustee covered under the plan elects to earn on the deferred balances an amount equal to the total return of the Fund or equal to the income earned by the Fund on its short-term investments. Under the retirement plan which became effective in January, 1996, benefits which are based on years of service will be received by the trustee for a ten year period. The maximum annual benefit for each trustee is $2,500. Retirement plan expenses for the period aggregated $6,000. During the calendar year 1996, the Adviser has agreed to reimburse the Fund for these plan expenses. NOTE 4-CAPITAL The Fund offers three classes of shares at their respective net asset values per share. Class B and 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 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 C shares automatically convert to Class A shares six years and ten years after purchase, respectively, subject to certain conditions. The offering of Class B B-35 75 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- and C shares commenced April 18, 1995, at which time all previously outstanding shares became Class A shares. The Fund has an unlimited number of shares of $.01 par value beneficial interest authorized. Transactions in shares of beneficial interest were as follows:
Year Ended May 31 ------------------------------ 1996 1995 - ------------------------------------------------------------------------------ Shares sold Class A...................................... 5,916,698,879 3,148,142,161 Class B...................................... 402,157,689 21,754,203 Class C...................................... 99,265,826 3,049,049 -------------- -------------- 6,418,122,394 3,172,945,413 -------------- -------------- Shares issued in business combination (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...................................... 17,616,820 18,623,009 Class B...................................... 1,250,566 15,317 Class C...................................... 188,995 2,167 -------------- -------------- 19,056,381 18,640,493 -------------- -------------- Shares redeemed Class A...................................... (5,834,380,999) (3,310,885,862) Class B...................................... (331,779,955) (17,579,714) Class C...................................... (90,332,522) (2,462,729) -------------- -------------- (6,256,493,476) (3,330,928,305) -------------- -------------- Increase (decrease) in shares outstanding.... 207,051,752 (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 exchange of 26,366,453 shares of the Fund for the 26,366,453 shares of VKMM outstanding 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. B-36 76 PART C. OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements Included in Part A of Registration Statement Financial Highlights Included in Part B of Registration Statement Investment Portfolio Statement of Assets and Liabilities Statement of Operations Statement of Changes in Net Assets Financial Highlights Notes to Financial Statements Report of Independent Accountants (b) Exhibits 1.1 -- First Amended and Restated Agreement and Declaration of Trust. 1.2 -- Certificate of Amendment. 1.3 -- Certificate of Designation. 2 -- Amended and Restated Bylaws. 3 -- Inapplicable. 4.1 -- Specimen Class A Share Certificate. 4.2 -- Specimen Class B Share Certificate. 4.3 -- Specimen Class C Share Certificate. 5 -- Investment Advisory Agreement. 6.1 -- Distribution and Service Agreement. 6.2 -- Selling Group Agreement incorporated herein by reference (Exhibit 6.2 to Form N-1A of Registrant's Registration No. 2-50870, Post-Effective Amendment No. 30, filed September 24, 1992). 6.3 -- Selling Group Agreement for banks and bank affiliated broker/dealers incorporated herein by reference (Exhibit 6.3 to Form N-1A of Registrant's Registration No. 2-50870, Post-Effective Amendment No. 30, filed September 24, 1992). 7 -- Inapplicable. 8.1 -- Custodian Contract incorporated herein by reference (Exhibit 8 to Form N-1A of Van Kampen American Capital Global Managed Assets Fund, Registration No. 33-74024, Pre-effective Amendment No. 2, filed May 6, 1994). 8.2 -- Transfer Agency and Service Agreement. 9 -- Data Access Services Agreement incorporated herein by reference (Exhibit 9.2 to Post Effective Amendment No. 1 of Registrant on Form N-1A, filed on May 19, 1994). 10 -- Opinion of Counsel. 11.1 -- Consent of Independent Accountants. 11.2 -- Consent of Trustees incorporated by reference (Exhibit 11.2 to Form N-1A of Van Kampen American Capital Reserve Fund, Registration No. 2-50870, Post-Effective Amendment No. 36, filed July 25, 1996). 12 -- Inapplicable. 13 -- Inapplicable. 14.1 -- Individual Retirement Account Brochure with Application incorporated herein by reference (Exhibit 14.1 to Form N-1A of Registrant's Registration No. 2-50870, Post Effective Amendment No. 31, filed September 24, 1993).
C-1 77 14.2 -- 403(b)(7) Custodial Account incorporated herein by reference (Exhibit 14.2 to Form N-1A of Registrant's Registration No. 2-50870, Post-Effective Amendment No. 30, filed September 24, 1992). 14.3 -- ORP 403(b)(7) Custodial Account incorporated herein by reference (Exhibit 14.3 to Form N-1A of Registrant's Registration No. 2-50870, Post-Effective Amendment No. 30, filed September 24, 1992). 14.4 -- Retirement Plans for the Small Business-Forms Package and Plan Documents incorporated herein by reference (Exhibit 14.9 for Form N-1A of Van Kampen American Capital Emerging Growth Fund, Post-Effective Amendment No. 44, Registration No. 2-33214, filed December 21, 1990). 14.5 -- Prototype Profit Sharing/Money Purchase Plan and Trust incorporated herein by reference (Exhibit 14.5 to Form N-1A of Van Kampen American Capital Growth and Income Fund, Registration No. 2-21657, Post-Effective Amendment No. 61, filed on March 26, 1991). 14.6 -- Prototype 401(k) Plan and Trust incorporated herein by reference (Exhibit 14.6 to Form N-1A of Van Kampen American Capital Growth and Income Fund, Registration No. 2-21657, Post-Effective Amendment No. 61, filed on March 26, 1991). 14.7 -- Salary Reduction Simplified Employee Pension Plan incorporated by reference (Exhibit 14.7 to Form N-1A of Van Kampen American Capital World Portfolio Series, Registration No. 33-37879, Post Effective Amendment No. 9, filed September 24, 1993). 14.8 -- Simplified Employee Pension Plan Brochure with Application incorporated herein by reference (Exhibit 14.8 to Form N-1A of Van Kampen American Capital Growth and Income Fund, Registration No. 2-21657, Post Effective Amendment No. 69, filed March 24, 1994). 15.1 -- Plan of Distribution Pursuant to Rule 12b-1. 15.2 -- Service Plan. 15.3 -- Servicing Agreement. 15.4 -- Servicing Agreement for banks and bank affiliated broker/dealers. 16 -- Computation Measure for Performance Information. 17.1 -- List of Certain Investment Companies in Response to Item 29(a). 17.2 -- List of Officers and Directors of Van Kampen American Capital Distributors, Inc. in Response to Item 29(b). 18 -- Multiple Class Plan. 19 -- Powers-of-Attorney. 27 -- Financial Data Schedule.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT. None. C-2 78 ITEM 26. NUMBER OF HOLDERS OF SECURITIES. AS OF SEPTEMBER 17, 1996
(1) (2) TITLE OF CLASS NUMBER OF RECORD HOLDERS ---------------------------------------------- ------------------------ Shares of Beneficial Interest, $0.01 par value Class A Shares 48,073 Class B Shares 4,073 Class C Shares 1,092
ITEM 27. INDEMNIFICATION. Reference is made to Article 8, Section 8.4 of the Registrant's Agreement and Declaration of Trust. Article 8; Section 8.4 of the Agreement and Declaration of Trust provides that each officer and trustee of the Registrant shall be indemnified by the Registrant against all liabilities incurred in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which the officer or trustee may be or may have been involved by reason of being or having been an officer or trustee, except that such indemnity shall not protect any such person against a liability to the Registrant or any shareholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Absent a court determination that an officer or trustee seeking indemnification was not liable on the merits or guilty of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, the decision by the Registrant to indemnify such person must be based upon the reasonable determination of independent counsel or non-party independent trustees, after review of the facts, that such officer or trustee is not guilty of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. The Registrant has purchased insurance on behalf of its officers and trustees protecting such persons from liability arising from their activities as officers or trustees of the Registrant. The insurance does not protect or purport to protect such persons from liability to the Registrant or to its shareholders to which such officers 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 Executive Officers" in the Statement of Additional Information for information regarding the business of the Adviser. For information as C-3 79 to the business, profession, vocation and employment of a substantial nature of directors and officers of the Adviser, reference is made to the Adviser's current Form ADV (File No. 801-1669) filed under the Investment Advisers Act of 1940, as amended, incorporated herein by reference. ITEM 29. PRINCIPAL UNDERWRITERS. (a) The sole principal underwriter is Van Kampen American Capital Distributors, Inc., which acts as principal underwriter for certain investment companies and unit investment trusts set forth in Exhibit 17.1 incorporated by reference herein. (b) Van Kampen American Capital Distributors, Inc. is an affiliated person of an affiliated person of Registrant and is the only principal underwriter for Registrant. The name, principal business address and positions and offices with Van Kampen American Capital Distributors, Inc. of each of the directors and officers thereof are set forth in Exhibit 17.2. Except as disclosed under the heading, "Trustees and Executive Officers" in Part B of this Registration Statement, none of such persons has any position or office with Registrant. (c) Not applicable. ITEM 30. LOCATION OF BOOKS AND RECORDS. All accounts, books and other documents required by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder to be maintained (i) by Registrant will be maintained at its offices, located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, ACCESS Investor Services, Inc., 7501 Tiffany Springs Parkway, Kansas City, Missouri 64153, or at the State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy, MA; (ii) by the Adviser, will be maintained at its offices, located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181; and (iii) by the Distributor, the principal underwriter, will be maintained at its offices located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. ITEM 31. MANAGEMENT SERVICES. There are no management related services contracts not discussed in Part A or Part B. C-4 80 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Van Kampen American Capital Reserve Fund, certifies that it meets all of the requirements for effectiveness of this Amendment to the 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 State of Illinois, on the 25th day of September, 1996. VAN KAMPEN AMERICAN CAPITAL RESERVE FUND /s/ RONALD A. NYBERG -------------------------------------- (Ronald A. Nyberg, Vice President and Secretary) Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed on September 25, 1996 by the following persons in the capacities indicated: 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 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/ DONALD C. MILLER* Trustee - --------------------------------------- (Donald C. Miller) /s/ JACK E. NELSON* Trustee - --------------------------------------- (Jack E. Nelson) /s/ JEROME L. ROBINSON* Trustee - --------------------------------------- (Jerome L. Robinson) /s/ FERNANDO SISTO* Trustee - --------------------------------------- (Fernando Sisto) /s/ WAYNE W. WHALEN* Trustee - --------------------------------------- (Wayne W. Whalen) /s/ WILLIAM S. WOODSIDE* Trustee - --------------------------------------- (William S. Woodside)
- --------------- * Signed by Ronald A. Nyberg pursuant to a power of attorney. /s/ RONALD A. NYBERG - ------------------------------------ Ronald A. Nyberg Attorney-in-Fact 81 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND INDEX OF EXHIBITS TO POST-EFFECTIVE AMENDMENT 37 ON FORM N-1A AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1996
EXHIBIT NO. DESCRIPTION OF EXHIBIT - -------------------- ------------------------------------------------------------------------ 1.1 -- First Amended and Restated Agreement and Declaration of Trust. 1.2 -- Certificate of Amendment. 1.3 -- Certificate of Designation. 2 -- Amended and Restated Bylaws. 4.1 -- Specimen Class A Share Certificate. 4.2 -- Specimen Class B Share Certificate. 4.3 -- Specimen Class C Share Certificate. 5 -- Investment Advisory Agreement. 6.1 -- Distribution and Service Agreement. 6.2 -- Dealer Agreement. 6.3 -- Broker Fully Disclosed Clearing Agreement. 6.4 -- Bank Fully Disclosed Clearing Agreement. 8.2 -- Transfer Agency and Service Agreement. 10 -- Opinion of Counsel. 11 -- Consent of Independent Accountants. 15.1 -- Plan of Distribution Pursuant to Rule 12b-1. 15.2 -- Service Plan. 16 -- Calculation of Yield. 17.1 -- List of Certain Investment Companies in Response to Item 29(a). 17.2 -- List of Officers and Directors of Van Kampen American Capital Distributors, Inc. in Response to Item 29(b). 18 -- Multi-Class Plan. 19 -- Power of Attorney. 27 -- Financial Data Schedules.
EX-99.B1.1 2 AGREEMENT AND DECLARATION OF TRUST 1 EXHIBIT 1.1 FIRST AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST OF VAN KAMPEN AMERICAN CAPITAL RESERVE FUND Dated: June 21, 1995 FIRST AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST 2 Index RECITALS ........................................................... 1 ARTICLE I THE TRUST ................................................. 2 SECTION 1.1 Name ...................................................... 2 SECTION 1.2. Location .................................................. 2 SECTION 1.3. Nature of Trust ........................................... 2 SECTION 1.4. Definitions ............................................... 2 SECTION 1.5. Real Property to be Converted into Personal Property ...... 5 ARTICLE 2 PURPOSE OF THE TRUST ...................................... 5 ARTICLE 3 POWERS OF THE TRUSTEES .................................... 6 SECTION 3.1. Powers in General ......................................... 6 (a) Investments ....................................................... 7 (b) Disposition of Assets ............................................. 7 (c) Ownership Powers .................................................. 7 (d) Form of Holding ................................................... 7 (e) Reorganization, etc. .............................................. 7 (f) Voting Trusts, etc. ............................................... 7 (g) Contracts, etc. ................................................... 8 (h) Guarantees, etc. .................................................. 8 (i) Partnerships, etc. ................................................ 8 (j) Insurance ......................................................... 8 (k) Pensions, etc. .................................................... 8 (I) Power of Collection and Litigation ................................ 8 (m) Issuance and Repurchase of Shares ................................. 9 (n) Offices ........................................................... 9 (o) Expenses .......................................................... 9 (p) Agents, etc. ...................................................... 9 (q) Accounts .......................................................... 9 (r) Valuation ......................................................... 9 (s) Indemnification ................................................... 9 (t) General ........................................................... 9 SECTION 3.2. Borrowings; Financings; Issuance of Securities ............ 10 i 3 SECTION 3.3. Deposits ................................................... 10 SECTION 3.4. Allocations ................................................ 10 SECTION 3.5. Further Powers; Limitations ................................ 10 ARTICLE 4 TRUSTEES AND OFFICERS ...................................... 11 SECTION 4.1. Number, Designation, Election, Term, etc. .................. 11 (a) Initial Trustee .................................................... 11 (b) Number ............................................................. 11 (c) Election and Term .................................................. 11 (d) Resignation and Retirement ......................................... 12 (e) Removal ............................................................ 12 (f) Vacancies .......................................................... 12 (g) Acceptance of Trusts ............................................... 12 (h) Effect of Death, Resignation, etc. ................................. 12 (i) Conveyance ......................................................... 12 (j) No Accounting ...................................................... 13 SECTION 4.2. Trustees' Meetings; Participation by Telephone, etc. ....... 13 SECTION 4.3. Committees; Delegation ..................................... 13 SECTION 4.4. Officers ................................................... 13 SECTION 4.5. Compensation of Trustees and Officers ...................... 13 SECTION 4.6. Ownership of Shares and Securities of the Trust ............ 14 SECTION 4.7. Right of Trustees and Officers to Own Property or to Engage in Business; Authority of Trustees to Permit Others to Do Likewise ........................................................... 14 SECTION 4.8. Reliance on Experts ........................................ 14 SECTION 4.9. Surety Bonds ............................................... 15 SECTION 4.10. Apparent Authority of Trustees and Officers ................ 15 SECTION 4.11. Other Relationships Not Prohibited ......................... 15 SECTION 4.12. Payment of Trust Expenses .................................. 15 SECTION 4.13. 0wnership of the Trust Property ............................ 16 ii 4 SECTION 4.14. By-Laws .................................................... 16 ARTICLE 5 DELEGATION OF MANAGERIAL RESPONSIBILITIES .................. 16 SECTION 5.1. Appointment; Action by Less than All Trustees .............. 16 SECTION 5.2. Certain Contracts .......................................... 16 (a) Advisory ........................................................... 17 (b) Administration ..................................................... 17 (c) Underwriting ....................................................... 17 (d) Custodian .......................................................... 17 (e) Transfer and Dividend Disbursing Agent ............................. 18 (f) Shareholder Servicing .............................................. 18 (g) Accounting ......................................................... 18 Section 5.3. Distribution Arrangements .................................. 18 Section 5.4. Service Arrangements ....................................... 18 ARTICLE 6 SERIES AND SHARES .......................................... 18 SECTION 6.1. Description of Series and Shares ........................... 18 (a) General ............................................................ 18 (b) Establishment, etc. of Series; Authorization of Shares ............. 19 (c) Character of Separate Series and Shares Thereof .................... 19 (d) Consideration for Shares ........................................... 19 (e) Assets Belonging to Series ......................................... 20 (f) Liabilities of Series .............................................. 20 (g) Dividends .......................................................... 20 (h) Liquidation ........................................................ 21 (i) Voting ............................................................. 21 (j) Redemption by Shareholder .......................................... 21 (k) Redemption at the Option of the Trust .............................. 22 (I) Net Asset Value .................................................... 22 (m) Transfer ........................................................... 22 (n) Equality ........................................................... 23 (o) Rights of Fractional Shares ........................................ 23 (p) Conversion Rights .................................................. 23 SECTION 6.2. Ownership of Shares .......................................... 24 SECTION 6.3. Investments in the Trust ..................................... 24 SECTION 6.4. No Pre-emptive Rights ........................................ 24 iii 5 SECTION 6.5. Status of Shares ........................................... 24 ARTICLE 7 SHAREHOLDERS' VOTING POWERS AND MEETINGS ................... 24 SECTION 7.1. Voting Powers .............................................. 24 SECTION 7.2. Number of Votes and Manner of Voting; Proxies .............. 25 SECTION 7.3. Meetings ................................................... 25 SECTION 7.4. Record Dates ............................................... 26 SECTION 7.5. Quorum and Required Vote ................................... 26 SECTION 7.6. Action by Written Consent .................................. 26 SECTION 7.7. Inspection of Records ...................................... 27 SECTION 7.8. Additional Provisions ...................................... 27 ARTICLE 8 LIMITATION OF LIABILITY; INDEMNIFICATION ................... 27 SECTION 8.1. Trustees, Shareholders, etc. Not Personally Liable; Notice.. 27 SECTION 8.2. Trustees' Good Faith Action; Expert Advice; No Bond or Surety ........................................................ 27 SECTION 8.3. Indemnification of Shareholders ............................ 28 SECTION 8.4. Indemnification of Trustees, Officers, etc. ................ 28 SECTION 8.5. Compromise Payment ......................................... 29 SECTION 8.6. Indemnification Not Exclusive, etc. ........................ 29 SECTION 8.7. Liability of Third Persons Dealing with Trustees ........... 29 ARTICLE 9 DURATION; REORGANIZATION; INCORPORATION; AMENDMENTS ........ 30 SECTION 9.1. Duration of Trust .......................................... 30 SECTION 9.2. Termination of Trust ....................................... 30 SECTION 9.3. Reorganization ............................................. 30 SECTION 9.4. Incorporation ............................................. 31 iv 6 SECTION 9.5. Amendments; etc. ........................................... 31 SECTION 9.6. Filing of Copies of Declaration and Amendments ............. 31 ARTICLE 10 MISCELLANEOUS .............................................. 32 SECTION 10.1. Notices .................................................... 32 SECTION 10.2. Governing Law .............................................. 32 SECTION 10.3. Counterparts .............................................. 32 SECTION 10.4. Reliance by Third Parties .................................. 32 SECTION 10.5. References; Headings ....................................... 32 SECTION 10.6. Provisions in Conflict With Law or Regulation .............. 32 SECTION 10.7. Use of the Name "Van Kampen American Capital" .............. 33 Signature ............................................................... 34 Acknowledgments ......................................................... 35 v 7 AGREEMENT AND DECLARATION OF TRUST OF VAN KAMPEN AMERICAN CAPITAL RESERVE FUND As amended and restated as of June 21, 1995 This CONSENT TO AMENDMENT AND RESTATEMENT, made as of this 21st day of June, 1995, by the Trustees whose signatures are set forth below: W I T N E S S E T H T H A T: WHEREAS, the AGREEMENT AND DECLARATION OF TRUST of Van Kampen American Capital Reserve Fund, a trust organized as a business trust under Delaware law (the "Trust"), was signed and delivered on May 10, 1995, by Van Kampen American Capital, Inc. as Settlor (the "Settlor"), and Ronald A. Nyberg as trustee (the "Initial Trustee"), in the city of Oakbrook Terrace, Illinois; and WHEREAS, a Certificate of Trust relating to the Trust was thereafter filed in the offices of the Secretary of State of the State of Delaware; and WHEREAS, Article IX, Sections 9.5 and 9.6 of the Declaration provide certain procedures for the amendment and restatement thereof; and WHEREAS, the Trustees have determined that it is desirable and in the best interests of the Trust and the Shareholders that the Declaration be amended and restated as herein provided. NOW, THEREFORE, the undersigned, being at least a Majority of the Trustees, do hereby consent, pursuant to Section 9.5 of the Declaration, to the first amendment and restatement of the Agreement and Declaration of Trust, and hereby declare, for the benefit of all Persons who shall hereafter become holders of Shares of the Trust (or of any Series thereof), that the Trustees will hold the sum delivered to the Initial Trustee upon his execution of the Declaration, and all other and further cash, securities and other property of every type and description which they may in any way acquire in their capacity as such Trustees, together with the income therefrom and the proceeds thereof, IN TRUST NEVERTHELESS, to manage and dispose of the same for the benefit of the holders from time to time of the Shares being issued and to be issued hereunder and in the manner and subject to the provisions hereof, to wit: 1 8 ARTICLE I THE TRUST SECTION 1.1 Name. The name of the Trust shall be "VAN KAMPEN AMERICAN CAPITAL RESERVE FUND" and so far as may be practicable, the Trustees shall conduct the Trust's activities, execute all documents and sue or be sued under that name, which name (and the word "Trust" wherever used in this Agreement and Declaration of Trust, except where the context otherwise requires) shall refer to the Trustees in their capacity as Trustees, and not individually or personally, and shall not refer to the officers, agents or employees of the Trust or of such Trustees, or to the holders of the Shares of the Trust or any Series. If the Trustees determine that the use of such name is not practicable, legal or convenient at any time or in any jurisdiction, or if the Trust is required to discontinue the use of such name pursuant to Section 10.7 hereof, then subject to that Section, the Trustees may use such other designation, or they may adopt such other name for the Trust as they deem proper, and the Trust may hold property and conduct its activities under such designation or name. SECTION 1.2. Location. The Trust shall maintain a registered office in the State of Delaware and may have such other offices or places of business as the Trustees may from time to time determine to be necessary or expedient. SECTION 1.3. Nature of Trust. The Trust shall be a trust with transferable shares under the laws of The State of Delaware, of the type defined in Title 12, Chapter 38, Section 3801 of the Delaware Code as a business trust. The Trust is not intended to be, shall not be deemed to be, and shall not be treated as, a general partnership, limited partnership, joint venture, corporation or joint stock company. The Shareholders shall be beneficiaries and their relationship to the Trustees shall be solely in that capacity in accordance with the rights conferred upon them hereunder. SECTION 1.4. Definitions. As used in this Agreement and Declaration of Trust, the following terms shall have the meanings set forth below unless the context thereof otherwise requires: "Accounting Agent" shall have the meaning designated in Section 5.2(g) hereof. "Administrator" shall have the meaning designated in Section 5.2(b) hereof. "Affiliated Person" shall have the meaning assigned to it in the 1940 Act. "By-Laws" shall mean the By-Laws of the Trust, as amended from time to time. "Certificate of Designation" shall have the meaning designated in Section 6.1 hereof. "Certificate of Termination" shall have the meaning designated in Section 6.1 hereof. "Class" or "Classes" shall mean, with respect to the Trust (of any Series thereof), any unissued Shares of the Trust (or such Series) in respect of which the Trustees shall from time to time fix and determine any special provisions relating to sales charges, any rights of redemption and the price, terms and manner of redemption, special and relative rights as to dividends and other distributions and on 2 9 liquidation, sinking or purchase fund provisions, conversion rights, and conditions under which the Shareholders of such Class shall have separate voting rights or no voting rights. "Commission" shall have the same meaning as in the 1940 Act. "Contracting Party" shall have the meaning designated in the preamble to Section 5.2 hereof. "Conversion Date" shall mean with respect to Shares of any Class that are convertible automatically into Shares of any other Class of the Trust (or Series thereof) the date fixed by the Trustees for such conversion. "Covered Person" shall have the meaning designated in Section 8.4 hereof. "Custodian" shall have the meaning designated in Section 5.2(d) hereof. "Declaration" and "Declaration of Trust" shall mean this Agreement and Declaration of Trust and all amendments or modifications thereof as from time to time in effect. This Agreement and Declaration of Trust is the "governing instrument" of the Trust within the meaning of the laws of the State of Delaware with respect to Delaware Business Trusts. References in this Agreement and Declaration of Trust to "hereof", "herein" and "hereunder" shall be deemed to refer to the Declaration of Trust generally, and shall not be limited to the particular text, Article or Section in which such words appear. "Disabling Conduct" shall have the meaning designated in Section 8.4 hereof. "Distributor" shall have the meaning designated in Section 5.2(c) hereof. "Dividend Disbursing Agent" shall have the meaning designated in Section 5.2(e) hereof. "General Items" shall have the meaning defined in Section 6.2(a) hereof. "Initial Trustee" shall have the meaning defined in the preamble hereto. "Investment Advisor" shall have the meaning defined in Section 5.2(a) hereof. "Majority of the Trustees" shall mean a majority of the Trustees in office at the time in question. At any time at which there shall be only one (1) Trustee in office, such term shall mean such Trustee. "Majority Shareholder Vote," as used with respect to (a) the election of any Trustee at a meeting of Shareholders, shall mean the vote for the election of such Trustee of a plurality of all outstanding Shares of the Trust, without regard to Series, represented in person or by proxy and entitled to vote thereon, provided that a quorum (as determined in accordance with the By-Laws) is present, (b) any other action required or permitted to be taken by Shareholders, shall mean the vote for such action of the holders of that majority of all outstanding Shares (or, where a separate vote of Shares of any particular Series is to be taken, the affirmative vote of that majority of the outstanding Shares of that Series) of the Trust which consists of: (i) a majority of all Shares (or of Shares of the particular Series) represented in person or by proxy and entitled to vote on such action at the meeting of Shareholders at which such action is to be taken, provided that a quorum (as determined in accordance with the By-Laws) is present; or (ii) if such action is to be taken by written consent of Shareholders, a majority of all Shares (or of Shares of the particular Series) issued and outstanding and entitled to vote on such action; provided that (iii) as used 3 10 with respect to any action requiring the affirmative vote of "a majority of the outstanding voting securities," as the quoted phrase is defined in the 1940 Act, of the Trust or of any Series, "Majority Shareholder Vote" means the vote for such action at a meeting of Shareholders of the smallest majority of all outstanding Shares of the Trust (or of Shares of the particular Series) entitled to vote on such action which satisfies such 1940 Act voting requirement. "1940 Act" shall mean the provisions of the Investment Company Act of 1940 and the rules and regulations thereunder, both as amended from time to time, and any order or orders thereunder which may from time to time be applicable to the Trust. "Person" shall mean and include individuals, as well as corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, banks, trust companies, land trusts, business trusts or other organizations established under the laws of any jurisdiction, whether or not considered to be legal entities, and governments and agencies and political subdivisions thereof. "Principal Underwriter" shall have the meaning designated in Section 5.2(c) hereof. "Prospectus," as used with respect to the Trust (or the Shares of a particular Series), shall mean the prospectus relating to the Trust (or such Series) which constitutes part of the currently effective Registration Statement of the Trust under the Securities Act of 1933, as such prospectus may be amended or supplemented from time to time. "Securities" shall have the same meaning ascribed to that term in the Securities Act of 1993. "Series" shall mean one or more of the series of Shares authorized by the Trustees to represent the beneficial interest in one or more separate components of the assets of the Trust which are now or hereafter established and designated under or in accordance with the provisions of Article 6 hereof. "Settlor" shall have the meaning defined in the preamble hereto. "Shareholder" shall mean as of any particular time any Person shown of record at such time on the books of the Trust as a holder of outstanding Shares of any Series, and shall include a pledgee into whose name any such Shares are transferred in pledge. "Shareholder Servicing Agent" shall have the meaning designated in Section 5.2(f) hereof. "Shares" shall mean the transferable units into which the beneficial interest in the Trust and each Series of the Trust (as the context may require) shall be divided from time to time, and includes fractions of Shares as well as whole Shares. All references herein to "Shares" which are not accompanied by a reference to any particular Series or Class shall be deemed to apply to outstanding Shares without regard to Series or Class. "Single Class Voting," as used with respect to any matter to be acted upon at a meeting or by written consent of Shareholders, shall mean a style of voting in which each holder of one or more Shares shall be entitled to one vote on the matter in question for each Share standing in his name on the records of the Trust, irrespective of Series or Class of a Series, and all outstanding Shares of all Series vote as a single class. 4 11 "Statement of Additional Information," as used with respect to the Trust (or any Series), shall mean the statement of additional information relating to the Trust (or such Series) which constitutes part of the currently effective Registration Statement of the Trust under the Securities Act of 1933, as such statement of additional information may be amended or supplemented from time to time. "Transfer Agent" shall have the meaning defined in Section 5.2(e) hereof. "Trust" shall mean the trust named in Section 1.1 hereof. "Trust Property" shall mean, as of any particular time, any and all property which shall have been transferred, conveyed or paid to the Trust or the Trustees, and all interest, dividends, income, earnings, profits and gains therefrom, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation thereof, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, and which at such time is owned or held by, or for the account of, the Trust or the Trustees, without regard to the Series to which such property is allocated. "Trustees" shall mean, collectively, the Initial Trustee, so long as he shall continue in office, and all other individuals who at the time in question have been duly elected or appointed as Trustees of the Trust in accordance with the provisions hereof and who have qualified and are then in office. At any time at which there shall be only one (I) Trustee in office, such term shall mean such single Trustee. SECTION 1.5. Real Property to be Converted into Personal Property. Notwithstanding any other provision hereof, any real property at any time forming part of the Trust Property shall be held in trust for sale and conversion into personal property at such time or times and in such manner and upon such terms as the Trustees shall approve, but the Trustees shall have power until the termination of this Trust to postpone such conversion as long as they in their uncontrolled discretion shall think fit, and for the purpose of determining the nature of the interest of the Shareholders therein, all such real property shall at all times be considered as personal property. ARTICLE 2 PURPOSE OF THE TRUST The purpose of the Trust shall be to (a) manage, conduct, operate and carry on the business of an investment company; (b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or otherwise deal in or dispose of any and all sorts of property, tangible or intangible, including but not limited to Securities of any type whatsoever, whether equity or nonequity, of any issuer, evidences of indebtedness of any person and any other rights, interest, instruments or property of any sort to exercise any and all rights, powers and privileges of ownership or interest in respect of any and all such investment of every kind and description, including without limitation, the right to consent and otherwise act with respect thereto, with power to designate one or more Persons to exercise any of said rights, powers and privileges in respect of any of said investments. The Trustees shall not be limited by any law limiting the investments which may be made by fiduciaries. 5 12 ARTICLE 3 POWERS OF THE TRUSTEES SECTION 3.1. Powers in General. The Trustees shall have, without other or further authorization, full, entire, exclusive and absolute power, control and authority over, and management of, the business of the Trust and over the Trust Property, to the same extent as if the Trustees were the sole owners of the business and property of the Trust in their own right, and with such powers of delegation as may be permitted by this Declaration, subject only to such limitations as may be expressly imposed by this Declaration of Trust or by applicable law. The enumeration of any specific power or authority herein shall not be construed as limiting the aforesaid power or authority or any specific power or authority. Without limiting the foregoing; they may select, and from time to time change, the fiscal year of the Trust; they may adopt and use a seal for the Trust, provided that unless otherwise required by the Trustees, it shall not be necessary to place the seal upon, and its absence shall not impair the validity of, any document, instrument or other paper executed and delivered by or on behalf of the Trust; they may from time to time in accordance with the provisions of Section 6.1 hereof establish one or more Series to which they may allocate such of the Trust Property, subject to such liabilities, as they shall deem appropriate, each such Series to be operated by the Trustees as a separate and distinct investment medium and with separately defined investment objectives and policies and distinct investment purposes, all as established by the Trustees, or from time to time changed by them; they may as they consider appropriate elect and remove officers and appoint and terminate agents and consultants and hire and terminate employees, any one or more of the foregoing of whom may be a Trustee; they may appoint from their own number, and terminate, any one or more committees consisting of one or more Trustees, including without implied limitation an Executive Committee, which may, when the Trustees are not in session and subject to the 1940 Act, exercise some or all of the power and authority of the Trustees as the Trustees may determine; in accordance with Section 5.2 they may employ one or more Investment Advisers, Administrators and Custodians and may authorize any such service provider to employ one or more other or service providers and to deposit all or any part of such assets in a system or systems for the central handling of Securities, retain Transfer, Dividend Disbursing, Accounting or Shareholder Servicing Agents or any of the foregoing, provide for the distribution of Shares by the Trust through one or more Distributors, Principal Underwriters or otherwise, set record dates or times for the determination of Shareholders entitled to participate in, benefit from or act with respect to various matters; and in general they may delegate to any officer of the Trust, to any Committee of the Trustees and to any employee, Investment Adviser, Administrator, Distributor, Custodian, Transfer Agent, Dividend Disbursing Agent, or any other agent or consultant of the Trust, such authority, powers, functions and duties as they consider desirable or appropriate for the conduct of the business and affairs of the Trust, including without implied limitation the power and authority to act in the name of the Trust and of the Trustees, to sign documents and to act as attorney-in-fact for the Trustees. Without limiting the foregoing and to the extent not inconsistent with the 1940 Act or other applicable law, the Trustees shall have power and authority: (a) Investments. To subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute or otherwise deal in or dispose of any and all sorts of property, tangible or intangible, including but not limited to Securities of any type whatsoever, whether equity or nonequity, of any issuer, evidences of indebtedness of any person and any other rights, interest, instruments or property of any sort, to exercise any and all rights, powers and privileges of ownership or 6 13 interest in respect of any and all such investments of every kind and description, including without limitation the right to consent and otherwise act with respect thereto, with power to designate one or more Persons to exercise any of said rights, powers and privileges in respect of any of said investments, in every case without being limited by any law limiting the investments which may be made by fiduciaries; (b) Disposition of Assets. Upon such terms and conditions as they deem best, to lend, sell, exchange, mortgage, pledge, hypothecate, grant security interests in, encumber, negotiate, convey, transfer or otherwise dispose of, and to trade in, any and all of the Trust Property, free and clear of all trusts, for cash or on terms, with or without advertisement, and on such terms as to payment, security or otherwise, all as they shall deem necessary or expedient; (c) Ownership Powers. To vote or give assent, or exercise any and all other rights, powers and privileges of ownership with respect to, and to perform any and all duties and obligations as owners of, any Securities or other property forming part of the Trust Property, the same as any individual might do; to exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of Securities, and to receive powers of attorney from, and to execute and deliver proxies or powers of attorney to, such Person or Persons as the Trustees shall deem proper, receiving from or granting to such Person or Persons such power and discretion with relation to Securities or other property of the Trust, all as the Trustees shall deem proper; (d) Form of Holding. To hold any Security or other property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust, or of the Series to which such Securities or property belong, or in the name of a Custodian, subcustodian or other nominee or nominees, or otherwise, upon such terms, in such manner or with such powers, as the Trustees may determine, and with or without indicating any trust or the interest of the Trustees therein; (e) Reorganizations etc. To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer, any Security of which is or was held in the Trust or any Series; to consent to any contract, lease, mortgage, purchase or sale of property by such corporation or issuer, and to pay calls or subscriptions with respect to any Security forming part of the Trust Property; (f) Voting Trusts, etc. To join with other holders of any Securities in acting through a committee, depository, voting trustee or otherwise, and in that connection to deposit any Security with, or transfer any Security to, any such committee, depository or trustee, and to delegate to them such power and authority with relation to any Security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depository or trustee as the Trustees shall deem proper; (g) Contracts. etc. To enter into, make and perform all such obligations, contracts, agreements and undertakings of every kind and description, with any Person or Persons, as the Trustees shall in their discretion deem expedient in the conduct of the business of the Trust, for such terms as they shall see fit, whether or not extending beyond the term of office of the Trustees, or beyond the possible expiration of the Trust; to amend, extend, release or cancel any such obligations, contracts, agreements or understandings; and to execute, acknowledge, deliver and record all written instruments which they may deem necessary or expedient in the exercise of their powers; (h) Guarantees. etc. To endorse or guarantee the payment of any notes or other obligations of any Person; to make contracts of guaranty or suretyship, or otherwise assume liability for payment thereof; 7 14 and to mortgage and pledge the Trust Property or any part thereof to secure any of or all such obligations; (i) Partnerships, etc. To enter into joint ventures, general or limited partnerships and any other combinations or association; (j) Insurance. To purchase and pay for entirely out of Trust Property such insurance as they may deem necessary or appropriate for the conduct of the business, including, without limitation, insurance policies insuring the assets of the Trust and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, consultants, Investment Advisers, managers, Administrators, Distributors, Principal Underwriters, or other independent contractors, or any thereof (or any Person connected therewith), of the Trust, individually, against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such Person in any such capacity, whether or not the Trust would have the power to indemnify such Person against such liability; (k) Pensions, etc. To pay pensions for faithful service, as deemed appropriate by the Trustees, and to adopt, establish and carry out pension, profit sharing, share bonus, share purchase, savings, thrift, deferred compensation and other retirement, incentive and benefit plans, trusts and provisions, including the purchasing of life insurance and annuity contracts as a means of providing such retirement and other benefits, for any or all of the Trustees, officers, employees and agents of the Trust; (l) Power of Collection and Litigation. To collect, sue for and receive all sums of money coming due to the Trust, to employ counsel, and to commence, engage in, prosecute, intervene in, join, defend, compound, compromise, adjust or abandon, in the name of the Trust, any and all actions, suits, proceedings, disputes, claims, controversies, demands or other litigation or legal proceedings relating to the Trust, the business of the Trust, the Trust Property, or the Trustees, officers, employees, agents and other independent contractors of the Trust, in their capacity as such, at law or in equity, or before any other bodies or tribunals, and to compromise, arbitrate or otherwise adjust any dispute to which the Trust may be a party, whether or not any suit is commenced or any claim shall have been made or asserted. Except to the extent required for a Delaware Business Trust, the Shareholders shall have no power to vote as to whether or not a court action, legal proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders. (m) Issuance and Repurchase of Shares. To authorize, issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares of any Series, and, subject to Article 6 hereof, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares of any Series, any of the assets belonging to the Series to which such Shares relate, whether constituting capital or surplus or otherwise, to the full extent now or hereafter permitted by applicable law; provided that any Shares belonging to the Trust shall not be voted, directly or indirectly; (n) Offices. To have one or more offices, and to carry on all or any of the operations and business of the Trust, in any of the States, Districts or Territories of the United States, and in any and all foreign countries, subject to the laws of such State, District, Territory or country; 8 15 (o) Expenses. To incur and pay any and all such expenses and charges as they may deem advisable (including without limitation appropriate fees to themselves as Trustees), and to pay all such sums of money for which they may be held liable by way of damages, penalty, fine or otherwise; (p) Agents, etc. To retain and employ any and all such servants, agents, employees, attorneys, brokers, Investment Advisers, accountants, architects, engineers, builders, escrow agents, depositories, consultants, ancillary trustees, custodians, agents for collection, insurers, banks and officers, as they think best for the business of the Trust or any Series, to supervise and direct the acts of any of the same, and to fix and pay their compensation and define their duties; (q) Accounts. To determine, and from time to time change, the method or form in which the accounts of the Trust or any Series shall be kept; (r) Valuation. Subject to the requirements of the 1940 Act, to determine from time to time the value of all or any part of the Trust Property and of any services, Securities, property or other consideration to be furnished to or acquired by the Trust, and from time to time to revalue all or any part of the Trust Property in accordance with such appraisals or other information as is, in the Trustees' sole judgment, necessary and satisfactory; (s) Indemnification. In addition to the mandatory indemnification provided for in Article 8 hereof and to the extent permitted by law, to indemnify or enter into agreements with respect to indemnification with any Person with whom this Trust has dealings, including, without limitation, any independent contractor, to such extent as the Trustees shall determine; and (t) General. Subject to the fundamental policies in effect from time to time with respect to the Trust, to do all such other acts and things and to conduct, operate, carry on and engage in such other lawful businesses or business activities as they shall in their sole and absolute discretion consider to be incidental to the business of the Trust or any Series as an investment company, and to exercise all powers which they shall in their discretion consider necessary, useful or appropriate to carry on the business of the Trust or any Series, to promote any of the purposes for which the Trust is formed, whether or not such things are specifically mentioned herein, in order to protect or promote the interests of the Trust or any Series, or otherwise to carry out the provisions of this Declaration. SECTION 3.2. Borrowings; Financings: Issuance of Securities. The Trustees have power, subject to the fundamental policies in effect from time to time with respect to the Trust, to borrow or in any other manner raise such sum or sums of money, and to incur such other indebtedness for goods or services, or for or in connection with the purchase or other acquisition of property, as they shall deem advisable for the purposes of the Trust, in any manner and on any terms, and to evidence the same by negotiable or nonnegotiable Securities which may mature at any time or times, even beyond the possible date of termination of the Trust; to issue Securities of any type for such cash, property, services or other considerations, and at such time or times and upon such terms, as they may deem advisable; and to reacquire any such Securities. Any such Securities of the Trust may, at the discretion of the Trustees, be made convertible into Shares of any Series, or may evidence the right to purchase, subscribe for or otherwise acquire Shares of any Series, at such times and on such terms as the Trustees may prescribe. SECTION 3.3. Deposits. Subject to the requirements of the 1940 Act, the Trustees shall have power to deposit any moneys or Securities included in the Trust Property with any one or more banks, trust companies or other banking institutions, whether or not such deposits will draw interest. Such deposits 9 16 are to be subject to withdrawal in such manner as the Trustees may determine, and the Trustees shall have no responsibility for any loss which may occur by reason of the failure of the bank, trust company or other banking institution with which any such moneys or Securities have been deposited, except as provided in Section 8.2 hereof. SECTION 3.4. Allocations. The Trustees shall have power to determine whether moneys or other assets received by the Trust shall be charged or credited to income or capital, or allocated between income and capital, including the power to amortize or fail to amortize any part or all of any premium or discount, to treat any part or all of the profit resulting from the maturity or sale of any asset, whether purchased at a premium or at a discount, as income or capital, or to apportion the same between income and capital, to apportion the sale price of any asset between income and capital, and to determine in what manner any expenses or disbursements are to be borne as between income and capital, whether or not in the absence of the power and authority conferred by this Section 3.4 such assets would be regarded as income or as capital or such expense or disbursement would be charged to income or to capital; to treat any dividend or other distribution on any investment as income or capital, or to apportion the same between income and capital; to provide or fail to provide reserves, including reserves for depreciation, amortization or obsolescence in respect of any Trust Property in such amounts and by such methods as they shall determine; to allocate less than all of the consideration paid for Shares of any Series to surplus with respect to the Series to which such Shares relate and to allocate the balance thereof to paid-in capital of that Series, and to reallocate such amounts from time to time; all as the Trustees may reasonably deem proper. SECTION 3.5. Further Powers: Limitations. The Trustees shall have power to do all such other matters and things, and to execute all such instruments, as they deem necessary, proper or desirable in order to carry out, promote or advance the interests of the Trust, although such matters or things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Declaration of Trust, the presumption shall be in favor of a grant of power to the Trustees. The Trustees shall not be required to obtain any court order to deal with the Trust Property. The Trustees may limit their right to exercise any of their powers through express restrictive provisions in the instruments evidencing or providing the terms for any Securities of the Trust or in other contractual instruments adopted on behalf of the Trust. ARTICLE 4 TRUSTEES AND OFFICERS SECTION 4.1. Number. Designation, Election. Term, etc. (a) Initial Trustee. Upon his execution of this Agreement and Declaration of Trust dated May 10, 1995 or a counterpart hereof or some other writing in which he accepted such Trusteeship and agreed to the provisions hereof, the individual whose signature is affixed thereto as Initial Trustee became the Initial Trustee thereof. (b) Number. The Trustees serving as such, whether named above or hereafter becoming Trustees, may increase (to not more than fourteen (14)) or decrease the number of Trustees to a number other than the number theretofore determined by a written instrument signed by a Majority 10 17 (or a supermajority if required by the By-Laws) of the Trustees). No decrease in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his term, but the number of Trustees may be decreased in conjunction with the removal of a Trustee pursuant to subsection (e) of this Section 4.1. (c) Election and Term. The Trustees shall be elected by the Shareholders of the Trust at the first meeting of Shareholders immediately prior to the initial issuance of shares of the Trust in a public offering and the term of office of any Trustees in office before such election shall terminate at the time of such election. Subject to Section 16(a) of the 1940 Act and to the preceding sentence of this subsection (c) and to any requirements specified in the By-Laws, the Trustees shall have the power to set and alter the terms of office of the Trustees, and at any time to lengthen or shorten their own terms or make their terms of unlimited duration, to elect their own successors and, pursuant to subsection (f) of this Section 4.1, to appoint Trustees to fill vacancies; provided that Trustees shall be elected by a Majority Shareholder Vote at any such time or times as the Trustees shall determine that such action is required under Section 16(a) of the 1940 Act or, if not so required, that such action is advisable; and further provided that, after the initial election of Trustees by the Shareholders, the term of office of any incumbent Trustee shall continue until the termination of this Trust or his earlier death, resignation, retirement, bankruptcy, adjudicated incompetency or other incapacity or removal, or if not so terminated, until the election of such Trustee's successor in office has become effective in accordance with this subsection (c). (d) Resignation and Retirement. Any Trustee may resign his trust or retire as a Trustee, by a written instrument signed by him and delivered to the other Trustees or to any officer of the Trust, and such resignation or retirement shall take effect upon such delivery or upon such later date as is specified in such instrument. (e) Removal. Any Trustee may be removed: (i) with cause at any time by written instrument, signed by at least two thirds (2/3) of the number of Trustees prior to such removal, specifying the date upon which such removal shall become effective; or (ii) by vote of Shareholders holding a majority of the Shares of the Trust then outstanding, cast in person or by proxy at any meeting called for the purpose; or (iii) by a written declaration signed by Shareholders holding not less than a majority of the Shares of the Trust then outstanding. Notwithstanding any other provisions set forth in this Declaration of Trust, this Section 4.1(e) may not be amended (either directly or indirectly through a reorganization) without the approval of (i) 80% of the Trustees then in office or (ii) by vote of Shareholders holding a majority of the Shares of the Trust then outstanding. (f) Vacancies. Any vacancy or anticipated vacancy resulting from any reason, including an increase in the number of Trustees, may (but need not unless required by the 1940 Act) be filled by a Majority (or a supermajority if required by the By-Laws) of the Trustees, subject to the provisions of Section 16(a) of the 1940 Act, through the appointment in writing of such other individual as such remaining Trustees in their discretion shall determine; provided that if there shall be no Trustees in office, such vacancy or vacancies shall be filled by Majority Shareholders Vote. Any such appointment or election shall be effective upon such individual's written acceptance of his appointment as a Trustee and his agreement to be bound by the provisions of this Declaration of Trust, except that any such appointment in anticipation of a vacancy to occur by reason of retirement, resignation or increase in the number of Trustees to be effective at a later date shall become effective only at or after the effective date of said retirement, resignation or increase in the number of Trustees. 11 18 (g) Acceptance of Trusts. Whenever any conditions to the appointment or election of any individual as a Trustee hereunder who was not, immediately prior to such appointment or election, acting as a Trustee shall have been satisfied, such individual shall become a Trustee and the Trust estate shall vest in the new Trustee, together with the continuing Trustees, without any further act or conveyance. Such new Trustee shall accept such appointment or election in writing and agree in such writing to be bound by the provisions hereof, but the execution of such writing shall not be requisite to the effectiveness of the appointment or election of a new Trustee. (h) Effect of Death. Resignation, etc. No vacancy, whether resulting from the death, resignation, retirement, bankruptcy, adjudicated incompetency, incapacity, or removal of any Trustee, an increase in the number of Trustees or otherwise, shall operate to annul or terminate the Trust hereunder or to revoke or terminate any existing agency or contract created or entered into pursuant to the terms of this Declaration of Trust. Until such vacancy is filled as provided in this Section 4.1, the Trustees in office (if any), regardless of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration. Upon incapacity or death of any Trustee, his legal representative shall execute and deliver on his behalf such documents as the remaining Trustees shall require in order to effect the purpose of this Paragraph. (i) Convevance. In the event of the resignation or removal of a Trustee or his otherwise ceasing to be a Trustee, such former Trustee or his legal representative shall, upon request of the continuing Trustees, execute and deliver such documents as may be required for the purpose of consummating or evidencing the conveyance to the Trust or the remaining Trustees of any Trust Property held in such former Trustee's name, but the execution and delivery of such documents shall not be requisite to the vesting of title to the Trust Property in the remaining Trustees, as provided in subsection (g) of this Section 4.1 and in Section 4.13 hereof. (j) No Accounting. Except to the extent required by the 1940 Act or under circumstances which would justify his removal for cause, no Person ceasing to be a Trustee (nor the estate of any such Person) shall be required to make an accounting to the Shareholders or remaining Trustees upon such cessation. SECTION 4.2. Trustees' Meetings: Participation by Telephone. etc. Annual and special meetings may be held from time to time, in each case, upon the call of such officers as may be thereunto authorized by the By-Laws or vote of the Trustees, or by any three (3) Trustees, or pursuant to a vote of the Trustees adopted at a duly constituted meeting of the Trustees, and upon such notice as shall be provided in the By-Laws. Any such meeting may be held within or without the state of Delaware. The Trustees may act with or without a meeting, and a written consent to any matter, signed by all of the Trustees, shall be equivalent to action duly taken at a meeting of the Trustees, duly called and held. Except as otherwise provided by the 1940 Act or other applicable law, or by this Declaration of Trust or the By-Laws, any action to be taken by the Trustees may be taken by a majority of the Trustees present at a meeting of Trustees (a quorum, consisting of at least a Majority of the Trustees, being present), within or without Delaware. If authorized by the By-Laws, all or any one or more Trustees may participate in a meeting of the Trustees or any Committee thereof by means of conference telephone or similar means of communication by means of which all Persons participating in the meeting can hear each other, and participation in a meeting pursuant to such means of communication shall constitute presence in person at such meeting. The minutes of any meeting thus held shall be prepared in the same manner as a meeting at which all participants were present in person. 12 19 SECTION 4.3. Committees; Delegation. The Trustees shall have power, consistent with their ultimate responsibility to supervise the affairs of the Trust, to delegate from time to time to one or more other Committees, or to any single Trustee, the doing of such things and the execution of such deeds or other instruments, either in the name of the Trust or the names of the Trustees or as their attorney or attorneys in fact, or otherwise as the Trustees may from time to time deem expedient, and any agreement, deed, mortgage, lease or other instrument or writing executed by the Trustee or Trustees or other Person to whom such delegation was made shall be valid and binding upon the Trustees and upon the Trust. SECTION 4.4. Officers. The Trustees shall annually elect such officers or agents, who shall have such powers, duties and responsibilities as the Trustees may deem to be advisable, and as they shall specify by resolution or in the By-Laws. Except as may be provided in the By-Laws, any officer elected by the Trustees may be removed at any time with or without cause. Any two (2) or more offices may be held by the same individual. SECTION 4.5. Compensation of Trustees and Officers. The Trustees shall fix the compensation of all officers and Trustees. Without limiting the generality of any of the provisions hereof, the Trustees shall be entitled to receive reasonable compensation for their general services as such, and to fix the amount of such compensation, and to pay themselves or any one or more of themselves such compensation for special services, including legal, accounting, or other professional services, as they in good faith may deem reasonable. No Trustee or officer resigning (except where a right to receive compensation for a definite future period shall be expressly provided in a written agreement with the Trust, duly approved by the Trustees) and no Trustee or officer removed shall have any right to any compensation as such Trustee or officer for any period following his resignation or removal, or any right to damages on account of his removal, whether his compensation be by the month, or the year or otherwise. SECTION 4.6. Ownership of Shares and Securities of the Trust. Any Trustee, and any officer, employee or agent of the Trust, and any organization in which any such Person is interested, may acquire, own, hold and dispose of Shares of any Series and other Securities of the Trust for his or its individual account, and may exercise all rights of a holder of such Shares or Securities to the same extent and in the same manner as if such Person were not such a Trustee, officer, employee or agent of the Trust; subject, in the case of Trustees and officers, to the same limitations as directors or officers (as the case may be) of a Delaware business corporation; and the Trust may issue and sell or cause to be issued and sold and may purchase any such Shares or other Securities from any such Person or any such organization, subject only to the general limitations, restrictions or other provisions applicable to the sale or purchase of Shares of such Series or other Securities of the Trust generally. SECTION 4.7. Right of Trustees and Officers to Own Property or to Engage in Business; Authority of Trustees to Permit Others to Do Likewise. The Trustees, in their capacity as Trustees, and (unless otherwise specifically directed by vote of the Trustees) the officers of the Trust in their capacity as such, shall not be required to devote their entire time to the business and affairs of the Trust. Except as otherwise specifically provided by vote of the Trustees, or by agreement in any particular case, any Trustee or officer of the Trust may acquire, own, hold and dispose of, for his own individual account, any property, and acquire, own, hold, carry on and dispose of, for his own individual account, any business entity or business activity, whether similar or dissimilar to any property or business entity or business activity invested in or carried on by the Trust, and without first offering the same as an investment opportunity to the Trust, and may exercise all rights in respect thereof as if he were not a Trustee or officer of the Trust. The Trustees shall also have power, generally or in specific cases, to permit 13 20 employees or agents of the Trust to have the same rights (or lesser rights) to acquire, hold, own and dispose of property and businesses, to carry on businesses, and to accept investment opportunities without offering them to the Trust, as the Trustees have by virtue of this Section 4.7. SECTION 4.8. Reliance on Experts. The Trustees and officers may consult with counsel, engineers, brokers, appraisers, auctioneers, accountants, investment bankers, securities analysts or other Persons (any of which may be a firm in which one or more of the Trustees or officers is or are members or otherwise interested) whose profession gives authority to a statement made by them on the subject in question, and who are reasonably deemed by the Trustees or officers in question to be competent, and the advice or opinion of such Persons shall be full and complete personal protection to all of the Trustees and officers in respect of any action taken or suffered by them in good faith and in reliance on or in accordance with such advice or opinion. In discharging their duties, Trustees and officers, when acting in good faith, may rely upon financial statements of the Trust represented to them to be correct by any officer of the Trust having charge of its books of account, or stated in a written report by an independent certified public accountant fairly to present the financial position of the Trust. The Trustees and officers may rely, and shall be personally protected in acting, upon any instrument or other document believed by them to be genuine. SECTION 4.9. Surety Bonds. No Trustee, officer, employee or agent of the Trust shall, as such, be obligated to give any bond or surety or other security for the performance of any of his duties, unless required by applicable law or regulation, or unless the Trustees shall otherwise determine in any particular case. SECTION 4.10. Apparent Authority of Trustees and Officers. No purchaser, lender, transfer agent or other Person dealing with the Trustees or any officer of the Trust shall be bound to make any inquiry concerning the validity of any transaction purporting to be made by the Trustees or by such officer, or to make inquiry concerning or be liable for the application of money or property paid, loaned or delivered to or on the order of the Trustees or of such officer. SECTION 4.11. Other Relationships Not Prohibited. The fact that: (i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, manager, adviser, principal underwriter or distributor or agent of or for any Contracting Party (as defined in Section 5.2 hereof), or of or for any parent or affiliate of any Contracting Party, or that the Contracting Party or any parent or affiliate thereof is a Shareholder or has an interest in the Trust or any Series, or that (ii) any Contracting Party may have a contract providing for the rendering of any similar services to one or more other corporations, trusts, associations, partnerships, limited partnerships or other organizations, or have other business or interests, shall not affect the validity of any contract for the performance and assumption of services, duties and responsibilities to, for or of the Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same or create any liability or accountability to the Trust or to the holders of Shares of any Series; provided that, in the case of any relationship or interest referred to in the preceding clause (i) on the part of any Trustee or officer of the Trust, either (x) the material facts as to such relationship or interest have been disclosed to or are known by the Trustees not having any such relationship or interest and the contract involved is approved in good faith by a majority 14 21 of such Trustees not having any such relationship or interest (even though such unrelated or disinterested Trustees are less than a quorum of all of the Trustees), (y) the material facts as to such relationship or interest and as to the contract have been disclosed to or are known by the Shareholders entitled to vote thereon and the contract involved is specifically approved in good faith by vote of the Shareholders, or (z) the specific contract involved is fair to the Trust as of the time it is authorized, approved or ratified by the Trustees or by the Shareholders. SECTION 4.12. Payment of Trust Expenses. The Trustees are authorized to pay or to cause to be paid out of the principal or income of the Trust, or partly out of principal and partly out of income, and according to any allocation to a particular Series and Class made by them pursuant to Section 6.1(f) hereof, all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the business and affairs of the Trust or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers, employees, Investment Adviser, Administrator, Distributor, Principal Underwriter, auditor, counsel, Custodian, Transfer Agent, Dividend Disbursing Agent, Accounting Agent, Shareholder Servicing Agent, and such other agents, consultants, and independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur. SECTION 4.13. Ownership of the Trust Property. Legal title to all the Trust Property shall be vested in the Trustees as joint tenants, except that the Trustees shall have power to cause legal title to any Trust Property to be held by or in the name of one or more of the Trustees, or in the name of the Trust, or of any particular Series, or in the name of any other Person as nominee, on such terms as the Trustees may determine; provided that the interest of the Trust and of the respective Series therein is appropriately protected. The right, title and interest of the Trustees in the Trust Property shall vest automatically in each Person who may hereafter become a Trustee. Upon the termination of the term of office of a Trustee as provided in Section 4.1(c), (d) or (e) hereof, such Trustee shall automatically cease to have any right, title or interest in any of the Trust Property, and the right, title and interest of such Trustee in the Trust Property shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to Section 4.1(i) hereof. SECTION 4.14. By-Laws. The Trustees may adopt and from time to time amend or repeal By-Laws for the conduct of the business of the Trust. ARTICLE 5 DELEGATION OF MANAGERIAL RESPONSIBILITIES SECTION 5.1. Appointment; Action by Less than All Trustees. The Trustees shall be responsible for the general operating policy of the Trust and for the general supervision of the business of the Trust conducted by officers, agents, employees or advisers of the Trust or by independent contractors, but the Trustees shall not be required personally to conduct all the business of the Trust and, consistent with their ultimate responsibility as stated herein, the Trustees may appoint, employ or contract with one or more officers, employees and agents to conduct, manage and/or supervise the operations of the Trust, and may grant or delegate such authority to such officers, employees and/or agents as the Trustees may, in their sole discretion, deem to be necessary or desirable, without regard to whether such authority is normally granted or delegated by trustees. With respect to those matters of the operation and business of 15 22 the Trust which they shall elect to conduct themselves, except as otherwise provided by this Declaration or the By-Laws, if any, the Trustees may authorize any single Trustee or defined group of Trustees, or any committee consisting of a number of Trustees less than the whole number of Trustees then in office without specification of the particular Trustees required to be included therein, to act for and to bind the Trust, to the same extent as the whole number of Trustees could do, either with respect to one or more particular matters or classes of matters, or generally. SECTION 5.2. Certain Contracts. Subject to compliance with the provisions of the 1940 Act, but notwithstanding any limitations of present and future law or custom in regard to delegation of powers by trustees generally, the Trustees may, at any time and from time to time in their discretion and without limiting the generality of their powers and authority otherwise set forth herein, enter into one or more contracts with any one or more corporations, trusts, associations, partnerships, limited partnerships or other types of organizations, or individuals ("Contracting Party"), to provide for the performance and assumption of some or all of the following services, duties and responsibilities to, for or on behalf of the Trust and/or any Series, and/or the Trustees, and to provide for the performance and assumption of such other services, duties and responsibilities in addition to those set forth below, as the Trustees may deem appropriate: (a) Advisory. An investment advisory or management agreement whereby the agent shall undertake to furnish the Trust (or any Series thereof) such management, investment advisory or supervisory, statistical and research facilities and services, and such other facilities and services, if any, as the Trustees shall from time to time consider desirable, all upon such terms and conditions as the Trustees may in their discretion determine to be not inconsistent with this Declaration, the applicable provisions of the 1940 Act or any applicable provisions of the By-Laws (any such agent being herein referred to as an "Investment Adviser"). To the extent required by the 1940 Act, any such advisory or management agreement and any amendment thereto shall be subject to approval by a Majority Shareholder Vote at a meeting of the Shareholders of the Trust (or applicable Series). Notwithstanding any provisions of this Declaration, the Trustees may authorize the Investment Adviser (subject to such general or specific instructions as the Trustees may from time to time adopt) to effect purchases, sales, loans or exchanges of securities of the Trust on behalf of the Trustees or may authorize any officer or employee of the Trust or any Trustee to effect such purchases, sales, loans or exchanges pursuant to recommendations of the Investment Adviser (and all without further action by the Trustees). Any such purchases, sales, loans and exchanges shall be deemed to have been authorized by all of the Trustees. The Trustees may, in their sole discretion, call a meeting of Shareholders in order to submit to a vote of Shareholders of the Trust (or applicable Series) at such meeting the approval of continuance of any such investment advisory or management agreement. (b) Administration. An agreement whereby the agent, subject to the general supervision of the Trustees and in conformity with any policies of the Trustees with respect to the operations of the Trust and each Series thereof, will supervise all or any part of the operations of the Trust (or any Series thereof), and will provide all or any part of the administrative and clerical personnel, office space and office equipment and services appropriate for the efficient administration and operations of the Trust (or any Series thereof) (any such agent being herein referred to as an "Administrator"). (c) Underwriting. An agreement providing for the sale of Shares of the Trust (or any Series thereof) to net the Trust not less than the net asset value per Share (as described in Section 6.1(l) hereof) and pursuant to which the Trust may appoint the other party to such agreement as its principal underwriter or sales agent for the distribution of such Shares. The agreement shall contain such terms and 16 23 conditions as the Trustees may in their discretion determine to be not inconsistent with this Declaration, the applicable provisions of the 1940 Act and any applicable provisions of the By-Laws (any such agent being herein referred to as a "Distributor" or a "Principal Underwriter," as the case may be). (d) Custodian. The appointment of an agent meeting the requirements for a custodian for the assets of Investment Companies contained in the 1940 Act as custodian of the Securities and cash of the Trust (or any Series thereof) and of the accounting records in connection therewith (any such agent being herein referred to as a "Custodian"). (e) Transfer and Dividend Disbursing Agent. An agreement with an agent to maintain records of the ownership of outstanding Shares, the issuance and redemption and the transfer thereof (any such agent being herein referred to as a "Transfer Agent"), and to disburse any dividends declared by the Trustees and in accordance with the policies of the Trustees and/or the instructions of any particular Shareholder to reinvest any such dividends (any such agent being herein referred to as a "Dividend Disbursing Agent"). (f) Shareholder Servicing. An agreement with an agent to provide service with respect to the relationship of the Trust and its Shareholders, records with respect to Shareholders and their Shares, and similar matters (any such agent being herein referred to as a "Shareholder Servicing Agent"). (g) Accounting. An agreement with an agent to handle all or any part of the accounting responsibilities, whether with respect to the Trust's properties, Shareholders or otherwise (any such agent being herein referred to as an "Accounting Agent"). In addition, the Trustees may from time to time cause the Trust (or any Series thereof) to enter into agreements with respect to such other services and upon such other terms and conditions as they may deem necessary, appropriate or desirable. The same Person may be the Contracting Party for some or all of the services, duties and responsibilities to, for and of the Trust and/or the Trustees, and the contracts with respect thereto may contain such terms interpretive of or in addition to the delineation of the services, duties and responsibilities provided for, including provisions that are not inconsistent with the 1940 Act relating to the standard of duty of and the rights to indemnification of the Contracting Party and others, as the Trustees may determine. Nothing herein shall preclude, prevent or limit the Trust or a Contracting Party from entering into subcontractual arrangements relative to any of the matters referred to in subsections (a) through (g) of this Section 5.2. Section 5.3. Distribution Arrangements. Subject to compliance with the 1940 Act, the Trustees may adopt and amend or repeal from time to time and implement one or more plans of distribution pursuant to Rule 12b-1 of the 1940 Act which plan(s) will provide for the payment of specified marketing, distribution and shareholder relations expenses of the Trust and any or all Series and their agents and the agents of such agents. Section 5.4. Service Arrangements. Subject to compliance with the 1940 Act, the Trustees may adopt and amend or repeal from time to time and implement one or more service plans which plans will provide for the payment of ongoing services to holders of the shares of such Trust (or any Series thereof) and in connection with the maintenance of such shareholders' accounts. 17 24 ARTICLE 6 SERIES AND SHARES SECTION 6.1. Description of Series and Shares. (a) General. The beneficial interest in the Trust shall be divided into Shares (either full or fractional) with $.01 par value per Share, of which an unlimited number may be issued. The Trustees shall have the authority from time to time to establish and designate one or more separate, distinct and independent Series of Shares (each of which Series shall represent interests only in the asset attributed by the Trustees to such Series), and to authorize separate Classes of Shares of the Trust (or any such Series), as they deem necessary or desirable. All Shares shall be of one class, provided that the Trustees shall have the power to classify or reclassify any unissued Shares of any Series into any number of additional Classes of such Series. (b) Establishment. etc. of Series and Classes; Authorization of Shares. The establishment and designation of any Series and the authorization of the Shares thereof shall be effective upon the execution by a Majority of the Trustees (or by an officer of the Trust pursuant to the vote of a Majority of the Trustees) of an instrument setting forth such establishment and designation and the relative rights and preferences of the Shares of such Series or Class and the manner in which the same may be amended (a "Certificate of Designation"), and may provide that the number of Shares of such Series or Class which may be issued is unlimited, or may limit the number issuable. At any time that there are no Shares outstanding of any particular Series or Class previously established and designated, the Trustees may by an instrument executed by a Majority of the Trustees (or by an officer of the Trust pursuant to the vote of a Majority of the Trustees) terminate such Series or Class and the establishment and designation thereof and the authorization of its Shares (a "Certificate of Termination"). Each Certificate of Designation, Certificate of Termination and any instrument amending a Certificate of Designation shall have the status of an amendment to this Declaration of Trust. (c) Character of Separate Series and Shares Thereof. Each Series established hereunder shall represent beneficial interests in a separate component of the assets of the Trust. Holders of Shares of a Series shall be considered Shareholders of such Series, but such Shareholders shall also be considered Shareholders of the Trust for purposes of receiving reports and notices and, except as otherwise provided herein or in the Certificate of Designation of a particular Series, or as required by the 1940 Act or other applicable law, the right to vote, all without distinction by Series. The Trustees shall have exclusive power without the requirement of Shareholder approval to establish and designate such separate and distinct Series, and to fix and determine the relative rights and preferences as between the shares of the respective Series, and as between the Classes of the Trust (or any Series thereof), as to rights of redemption and the price, terms and manner of redemption, special and relative rights as to dividends and other distributions and on liquidation, sinking or purchase fund provisions, conversion rights, and conditions under which the Shareholders of the several Series or the several Classes of any Series of Shares shall have separate voting rights or no voting rights. Except as otherwise provided as to a particular Series herein, or in the Certificate of Designation therefor, the Trustees shall have all the rights and powers, and be subject to all the duties and obligations, with respect to each such Series and the assets and affairs thereof as they have under this Declaration with respect to the Trust and the Trust Property in general. Separate and distinct records shall be maintained for each Series of Shares and the assets and liabilities attributable thereto. 18 25 (d) Consideration for Shares. The Trustees may issue Shares of the Trust (or any Series thereof) for such consideration (which may include property subject to, or acquired in connection with the assumption of, liabilities) and on such terms as they may determine (or for no consideration if pursuant to a Share dividend or split-up), all without action or approval of the Shareholders. All Shares when so issued on the terms determined by the Trustees shall be fully paid and nonassessable (but may be subject to mandatory contribution back to the Trust (or applicable Series) as provided in Section 6.1(l) hereof. The Trustees may classify or reclassify any unissued Shares, or any Shares of the Trust (or any Series thereof) previously issued and reacquired by the Trust, into Shares of the Trust or one or more other Series that may be established and designated from time to time. (e) Assets Belonging to Series. Any portion of the Trust Property allocated to a particular Series, and all consideration received by the Trust for the issue or sale of Shares of such Series, together with all assets in which such consideration is invested or reinvested, all interest, dividends, income, earnings, profits and gains therefrom, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held by the Trustees in trust for the benefit of the holders of Shares of that Series and shall irrevocably belong to that Series for all purposes, and shall be so recorded upon the books of account of the Trust, and the Shareholders of such Series shall not have, and shall be conclusively deemed to have waived, any claims to the assets of any Series of which they are not Shareholders. Such consideration, assets, interest, dividends, income, earnings, profits, gains and proceeds, together with any General Items allocated to that Series as provided in the following sentence, are herein referred to collectively as assets "belonging to" that Series. In the event that there are any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular Series (collectively, "General Items"), the Trustees shall allocate such General Items to and among any one or more of the Series established and designated from time to time in such manner and on such basis as they, in their sole discretion, deem fair and equitable; and any General Items so allocated to a particular Series shall belong to and be part of the assets belonging to that Series. Each such allocation by the Trustees shall be conclusive and binding upon the Shareholders of all Series for all purposes. (f) Liabilities of Series. The assets belonging to each particular Series shall be charged with the liabilities in respect of that Series and all expenses, costs, charges and reserves attributable to that Series, and any general liabilities, expenses, costs, charges or reserves of the Trust which are not readily identifiable as pertaining to any particular Series shall be allocated and charged by the Trustees to and among any one or more of the Series established and designated from time to time in such manner and on such basis as the Trustees in their sole discretion deem fair and equitable. The indebtedness, expenses, costs, charges and reserves allocated and so charged to a particular Series are herein referred to as "liabilities of" that Series. Each allocation of liabilities, expenses, costs, charges and reserves by the Trustees shall be conclusive and binding upon the Shareholders of all Series for all purposes. Any creditor of any Series may look only to the assets belonging to that Series to satisfy such creditor's debt. (g) Dividends. Dividends and distributions on Shares of a particular Series may be paid with such frequency as the Trustees may determine, which may be daily or otherwise pursuant to a standing resolution or resolutions adopted only once or with such frequency as the Trustees may determine, to the Shareholders of that Series, from such of the income, accrued or realized, and capital gains, 19 26 realized or unrealized, and out of the assets belonging to that Series, as the Trustees may determine, after providing for actual and accrued liabilities of that Series. All dividends and distributions on Shares of a particular Series shall be distributed pro rata to the Shareholders of that Series in proportion to the number of such Shares held by such holders at the date and time of record established for the payment of such dividends or distributions, except that the dividends and distributions of investment income and capital gains with respect to each Class of Shares of a particular Series shall be in such amount as may be declared from time to time by the Trustees, and such dividends and distributions may vary as between such Classes to reflect differing allocations of the expenses of the Series between the Shareholders of such several Classes and any resultant differences between the net asset value of such several Classes to such extent and for such purposes as the Trustees may deem appropriate and further except that, in connection with any dividend or distribution program or procedure, the Trustees may determine that no dividend or distribution shall be payable on Shares as to which the Shareholder's purchase order and/or payment have not been received by the time or times established by the Trustees under such program or procedure, or that dividends or distributions shall be payable on Shares which have been tendered by the holder thereof for redemption or repurchase, but the redemption or repurchase proceeds of which have not yet been paid to such Shareholder. Such dividends and distributions may be made in cash, property or Shares of any Class of that Series or a combination thereof as determined by the Trustees, or pursuant to any program that the Trustees may have in effect at the time for the election by each Shareholder of the mode of the making of such dividend or distribution to that Shareholder. Any such dividend or distribution paid in Shares will be paid at the net asset value thereof as determined in accordance with subsection (l) of this Section 6.1. (h) Liquidation. In the event of the liquidation or dissolution of the Trust (or any particular Series), the Shareholders of the Trust (or that Series) shall be entitled to receive, when and as declared by the Trustees, the excess of the assets belonging to the Trust (or that Series) over the liabilities of such Series. The assets so distributable to the Shareholders of the Trust (or that Series) shall be distributed among such Shareholders in proportion to the number of Shares of the Trust (or that Series) held by them and recorded on the books of the Trust. The liquidation of the Trust (or any particular Series) may be authorized by vote of a Majority of the Trustees, subject to the affirmative vote of "a majority of the outstanding voting securities" of that Series, as the quoted phrase is defined in the 1940 Act, determined in accordance with clause (iii) of the definition of "Majority Shareholder Vote" in Section 1.4 hereof. (i) Voting. The Shareholders shall have the voting rights set forth in or determined under Article 7 hereof. (j) Redemption by Shareholder. Each holder of Shares of the Trust (or a particular Series thereof) shall have the right at such times as may be permitted by the Trust, but no less frequently than required by the 1940 Act, to require the Trust (or such Series) to redeem all or any part of his Shares of the Trust (or such Series) at a redemption price equal to the net asset value per Share of the Trust (or Series) next determined in accordance with subsection (l) of this Section 6.1 after the Shares are properly tendered for redemption; provided, that the Trustees may from time to time, in their discretion, determine and impose a fee for such redemption and that the proceeds of the redemption of Shares (including a fractional Share) of any Class of the Trust (or any Series thereof) shall be reduced by the amount of any applicable contingent deferred sales charge or other sales charge, if any, payable on such redemption to the distributor of Shares of such Class pursuant to the terms of 20 27 the initial issuance of the Shares of such Class (to the extent consistent with the 1940 Act or regulations or exemptions thereunder) and the Trust shall promptly pay to such distributor the amount of such deferred sales charge. Payment of the redemption price shall be in cash; provided, however, that if the Trustees determine, which determination shall be conclusive, that conditions exist which make payment wholly in cash unwise or undesirable, the Trust may make payment wholly or partly in Securities or other assets belonging to such Series at the value of such Securities or assets used in such determination of net asset value. Notwithstanding the foregoing, the Trust may postpone payment of the redemption price and may suspend the right of the holders of Shares of the Trust (or any Series thereof) to require the Trust to redeem Shares of the Trust (or such Series) during any period or at any time when and to the extent permissible under the 1940 Act. (k) Redemption at the Option of the Trust. The Trustees shall have the power to redeem Shares of the Trust (or any Series thereof) at a redemption price determined in accordance with Section 6.1(j), if at any time (i) the total investment in such account does not have a value of at least such minimum amount as may be specified in the Prospectus for the Trust (or such Series) from time to time (ii) the number of Shares held in such account is equal to or in excess of a specified percentage of Shares of the Trust or any Series as set forth from time to time in the applicable Prospectus. In the event the Trustees determine to exercise their power to redeem Shares provided in this Section 6.1(k), the Shareholder shall be notified that the value of his account is less than the applicable minimum amount and shall be allowed 30 days to make an appropriate investment before redemption is processed. (l) Net Asset Value. The net asset value per Share of the Trust (or any Series or Class) at any time shall be the quotient obtained by dividing the value of the net assets of the Trust (or such Series or Class) at such time (being the current value of the assets belonging to the Trust (or such Series or Class), less its then existing liabilities) by the total number of Shares of the Trust (or such Series) then outstanding, all determined in accordance with the methods and procedures, including without limitation those with respect to rounding, established by the Trustees from time to time in accordance with the requirements of the 1940 Act. The net asset value of the several Classes of the Trust (or a particular Series) shall be separately computed, and may vary from one another. The Trustees shall establish procedures for the allocation of investment income or capital gains and expenses and liabilities of a particular Series between the several Classes of the Trust (or such Series). The Trustees may determine to maintain the net asset value per Share of the Trust or any Series or Class at a designated constant dollar amount and in connection therewith may adopt procedures not inconsistent with the 1940 Act for the continuing declaration of income attributable to the Trust or such Series or Class as dividends payable in additional Shares of the Trust or such Series or Class at the designated constant dollar amount and for the handling of any losses attributable to the Trust or such Series or Class. Such procedures may provide that in the event of any loss each Shareholder shall be deemed to have contributed to the shares of beneficial interest account of the Trust or such Series or Class his pro rata portion of the total number of Shares required to be canceled in order to permit the net asset value per Share of the Trust or such Series or Class to be maintained, after reflecting such loss, at the designated constant dollar amount. Each Shareholder of the Trust shall be deemed to have expressly agreed, by his investment in the Trust (or any Series thereof) with respect to which the Trustees shall have adopted any such procedure, to make the contribution referred to in the preceding sentence in the event of any such loss. (m) Transfer. All Shares of the Trust and each Series shall be transferable, but transfers of Shares of the Trust or a particular Series will be recorded on the Share transfer records of the Trust 21 28 applicable to the Trust or such Series only at such times as Shareholders shall have the right to require the Trust to redeem Shares of the Trust or such Series and at such other times as may be permitted by the Trustees. (n) Equality. All Shares of each particular Series shall represent an equal proportionate interest in the assets belonging to that Series (subject to the liabilities of that Series), and each Share of any particular Series shall be equal to each other Share thereof; but the provisions of this sentence shall not restrict any distinctions between the several Classes of a Series permissible under this Section 6.1 or under Section 7. 1 hereof nor any distinctions permissible under subsection (g) of this Section 6.1 that may exist with respect to dividends and distributions on Shares of the same Series. The Trustees may from time to time divide or combine the Shares of any class of particular Series into a greater or lesser number of Shares of that class of a Series without thereby changing the proportionate beneficial interest in the assets belonging to that Series or in any way affecting the rights of the holders of Shares of any other Series. (o) Rights of Fractional Shares. Any fractional Share of the Trust (or any Series thereof) shall carry proportionately all the rights and obligations of a whole Share of the Trust (or such Series), including rights and obligations with respect to voting, receipt of dividends and distributions, redemption of Shares, and liquidation of the Trust or of the Series to which they pertain. (p) Conversion Rights. (i) Subject to compliance with the requirements of the 1940 Act, the Trustees shall have the authority to provide that holders of Shares of any Series shall have the right to convert said Shares into Shares of one or more other Series, that holders of any Class of the Trust or a Series of Shares shall have the right to convert said Shares of such Class into Shares of one or more other Classes of the Trust or such Series, and that Shares of any Class of the Trust or a Series shall be automatically converted into Shares of another Class of the Trust or such Series, in each case in accordance with such requirements and procedures as the Trustees may establish. (ii) The number of Shares of into which a convertible Share shall convert shall equal the number (including for this purpose fractions of a Share) obtained by dividing the net asset value per Share for purposes of sales and redemptions of the converting Share on the Conversion Date by the net asset value per Share for purposes of sales and redemptions of the Class of Shares into which it is converting on the Conversion Date. (iii) On the Conversion Date, the Share converting into another share will cease to accrue dividends and will no longer be deemed outstanding and the rights of the holders thereof (except the right to receive the number of target Shares into which the converting Shares have been converted and declared but unpaid dividends to the Conversion Date) will cease. Certificates representing Shares resulting from the conversion need not be issued until certificates representing Shares converted, if issued, have been received by the Trust or its agent duly endorsed for transfer. (vi) The Trust will appropriately reflect the conversion of Shares of one Class of the Trust (or a Series thereof) into Shares of another Class of the Trust (or such Series) on the first periodic statements of account sent to Shareholders of record affected which provide account information with respect to a reporting period which includes the date such conversion occurred. SECTION 6.2. Ownership of Shares. The ownership of Shares shall be recorded on the books of the Trust or of a Transfer Agent or similar agent for the Trust, which books shall be maintained 22 29 separately for the Shares of each Series that has been authorized. Certificates evidencing the ownership of Shares need not be issued except as the Trustees may otherwise determine from time to time, and the Trustees shall have power to call outstanding Share certificates and to replace them with book entries. The Trustees may make such rules as they consider appropriate for the issuance of Share certificates, the use of facsimile signatures, the transfer of Shares and similar matters. The record books of the Trust as kept by the Trust or any Transfer Agent or similar agent, as the case may be, shall be conclusive as to who are the Shareholders and as to the number of Shares of the Trust and, if designated, each Series thereof held from time to time by each such Shareholder. The holders of Shares of the Trust and, if designated, each Series thereof shall upon demand disclose to the Trustees in writing such information with respect to their direct and indirect ownership of Shares of the Trust or, if designated, such Series as the Trustees deem necessary to comply with the provisions of the Internal Revenue Code, or to comply with the requirements of any other authority. SECTION 6.3. Investments in the Trust. The Trustees may accept investments in any Series of the Trust from such Persons and on such terms and for such consideration, not inconsistent with the provisions of the 1940 Act, as they from time to time authorize. The Trustees may authorize any Distributor, Principal Underwriter, Custodian, Transfer Agent or other Person to accept orders for the purchase of Shares that conform to such authorized terms and to reject any purchase orders for Shares, whether or not conforming to such authorized terms. SECTION 6.4. No Preemptive Rights. No Shareholder, by virtue of holding Shares of the Trust or, if designated, any Series thereof, shall have any preemptive or other right to subscribe to any additional Shares of the Trust or such Series, or to any shares of any other Series, or any other Securities issued by the Trust. SECTION 6.5. Status of Shares. Every Shareholder, by virtue of having become a Shareholder, shall be held to have expressly assented and agreed to the terms hereof and to have become a party hereto. Shares shall be deemed to be personal property, giving only the rights provided herein. Ownership of Shares shall not entitle the Shareholder to any title in or to the whole or any part of the Trust Property or right to call for a partition or division of the same or for an accounting, nor shall the ownership of Shares constitute the Shareholders partners. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the Trust or any Series, nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but only to the rights of said decedent under this Declaration of Trust. ARTICLE 7 SHAREHOLDERS' VOTING POWERS AND MEETINGS SECTION 7.1. Voting Powers. The Shareholders shall have power to vote only (i) for the election or removal of Trustees as provided in Sections 4.1(c) and (e) hereof, (ii) with respect to the approval or termination in accordance with the 1940 Act of any contract with a Contracting Party as provided in Section 5.2 hereof as to which Shareholder approval is required by the 1940 Act, (iii) with respect to any termination or reorganization of the Trust or any Series to the extent and as provided in Sections 9.2, 9.3 and 9.4 hereof, (iv) with respect to any amendment of this Declaration of Trust to the extent and as provided in Section 9.5 hereof, (v) to the same extent as the stockholders of a Delaware business 23 30 corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or any Series, or the Shareholders of any of them (provided. however, that a Shareholder of a particular Series shall not in any event be entitled to maintain a derivative or class action on behalf of any other Series or the Shareholders thereof), and (vi) with respect to such additional matters relating to the Trust as may be required by the 1940 Act, this Declaration of Trust, the By-Laws or any registration of the Trust with the Commission (or any successor agency) or any State, or as the Trustees may consider necessary or desirable. If and to the extent that the Trustees shall determine that such action is required by law or by this Declaration, they shall cause each matter required or permitted to be voted upon at a meeting or by written consent of Shareholders to be submitted to a separate vote of the outstanding Shares of each Series entitled to vote thereon; provided, that (i) when expressly required by the 1940 Act or by other law, actions of Shareholders shall be taken by Single Class Voting of all outstanding Shares whose holders are entitled to vote thereon; and (ii) when the Trustees determine that any matter to be submitted to a vote of Shareholders affects only the rights or interests of Shareholders of one or more but not all Series or of one or more but not all Classes of the Trust or a single Series (including without limitation any distribution plan pursuant to Rule 12b-1 of the 1940 Act applicable to such Class), then only the Shareholders of the Series or Classes so affected shall be entitled to vote thereon. Any matter required to be submitted to shareholders and affecting one or more Series shall require separate approval by the required vote of Shareholders of the Trust or each affected Series; provided, however, that to the extent required by the 1940 Act, there shall be no separate Series votes on the election or removal of Trustees, the selection of auditors for the Trust and its Series or approval of any agreement or contract entered into by the Trust or any Series. Shareholders of a particular Series shall not be entitled to vote on any matter that affects only one or more other Series. SECTION 7.2. Number of Votes and Manner of Voting: Proxies. On each matter submitted to a vote of the Shareholders, each holder of Shares of the Trust or, if applicable, any Series shall be entitled to a number of votes equal to the number of Shares of the Trust or such Series standing in his name on the books of the Trust. There shall be no cumulative voting in the election or removal of Trustees. Shares may be voted in person or by proxy. A proxy with respect to Shares held in the name of two (2) or more Persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, this Declaration of Trust or the By-Laws to be taken by Shareholders. SECTION 7.3. Meetings. Meetings of Shareholders may be called by the Trustees from time to time for the purpose of taking action upon any matter requiring the vote or authority of the Shareholders as herein provided, or upon any other matter deemed by the Trustees to be necessary or desirable. Written notice of any meeting of Shareholders shall be given or caused to be given by the Trustees by mailing such notice at least seven (7) days before such meeting, postage prepaid, stating the time, place and purpose of the meeting, to each Shareholder at the Shareholder's address as it appears on the records of the Trust. The Trustees shall promptly call and give notice of a meeting of Shareholders for the purpose of voting upon removal of any Trustee of the Trust when requested to do so in writing by Shareholders holding not less than ten percent (10%) of the Shares then outstanding. If the Trustees shall fail to call or give notice of any meeting of Shareholders for a period of thirty (30) days after written application by Shareholders holding at least ten percent (10%) of the Shares then outstanding requesting that a 24 31 meeting be called for any other purpose requiring action by the Shareholders as provided herein or in the By-Laws, then Shareholders holding at least ten percent (10%) of the Shares then outstanding may call and give notice of such meeting, and thereupon the meeting shall be held in the manner provided for herein in case of call thereof by the Trustees. Any meetings may be held within or without The State of Delaware. Shareholders may only act with respect to matters set forth in the notice to Shareholders. SECTION 7.4. Record Dates. For the purpose of determining the Shareholders who are entitled to vote or act at any meeting or any adjournment thereof, or who are entitled to participate in any dividend or distribution, or for the purpose of any other action, the Trustees may from time to time close the transfer books for such period, not exceeding thirty (30) days (except at or in connection with the termination of the Trust), as the Trustees may determine; or without closing the transfer books the Trustees may fix a date and time not more than ninety (90) days prior to the date of any meeting of Shareholders or other action as the date and time of record for the determination of Shareholders entitled to vote at such meeting or any adjournment thereof or to be treated as Shareholders of record for purposes of such other action, and any Shareholder who was a Shareholder at the date and time so fixed shall be entitled to vote at such meeting or any adjournment thereof or to be treated as a Shareholder of record for purposes of such other action, even though he has since that date and time disposed of his Shares, and no Shareholder becoming such after that date and time shall be so entitled to vote at such meeting or any adjournment thereof or to be treated as a Shareholder of record for purposes of such other action. SECTION 7.5. Quorum and Required Vote. A majority of the Shares entitled to vote shall be a quorum for the transaction of business at a Shareholders' meeting, but any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held within a reasonable time after the date set for the original meeting without the necessity of further notice. A Majority Shareholder Vote at a meeting of which a quorum is present shall decide any question, except when a different vote is required or permitted by any provision of the 1940 Act or other applicable law or by this Declaration of Trust or the By-Laws, or when the Trustees shall in their discretion require a larger vote or the vote of a majority or larger fraction of the Shares of one or more particular Series. SECTION 7.6. Action By Written Consent. Subject to the provisions of the 1940 Act and other applicable law, any action taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof or of the Shares of any particular Series as shall be required by the 1940 Act or by any express provision of this Declaration of Trust or the By-Laws or as shall be permitted by the Trustees) consent to the action in writing and if the writings in which such consent is given are filed with the records of the meetings of Shareholders, to the same extent and for the same period as proxies given in connection with a Shareholders' meeting. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders. SECTION 7.7. Inspection of Records. The records of the Trust shall be open to inspection by Shareholders to the same extent as is permitted stockholders of a Delaware business corporation under the Delaware business corporation law. SECTION 7.8. Additional Provisions. The By-Laws may include further provisions for Shareholders' votes and meetings and related matters not inconsistent with the provisions hereof. 25 32 ARTICLE 8 LIMITATION OF LIABILITY: INDEMNIFICATION SECTION 8.1. Trustees. Shareholders. etc. Not Personally Liable; Notice. The Trustees, officers, employees and agents of the Trust, in incurring any debts, liabilities or obligations, or in limiting or omitting any other actions for or in connection with the Trust, are or shall be deemed to be acting as Trustees, officers, employees or agents of the Trust and not in their own capacities. No Shareholder shall be subject to any personal liability whatsoever in tort, contract or otherwise to any other Person or Persons in connection with the assets or the affairs of the Trust or of any Series, and subject to Section 8.4 hereof, no Trustee, officer, employee or agent of the Trust shall be subject to any personal liability whatsoever in tort, contract, or otherwise, to any other Person or Persons in connection with the assets or affairs of the Trust or of any Series, save only that arising from his own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office or the discharge of his functions. The Trust (or if the matter relates only to a particular Series, that Series) shall be solely liable for any and all debts, claims, demands, judgments, decrees, liabilities or obligations of any and every kind, against or with respect to the Trust or such Series in tort, contract or otherwise in connection with the assets or the affairs of the Trust or such Series, and all Persons dealing with the Trust or any Series shall be deemed to have agreed that resort shall be had solely to the Trust Property of the Trust or the Series Assets of such Series, as the case may be, for the payment or performance thereof. The Trustees shall use their best efforts to ensure that every note, bond, contract, instrument, certificate or undertaking made or issued by the Trustees or by any officers or officer shall give notice that a Certificate of Trust in respect of the Trust is on file with the Secretary of the state of Delaware and shall recite to the effect that the same was executed or made by or on behalf of the Trust or by them as Trustees or Trustee or as officers or officer, and not individually, and that the obligations of such instrument are not binding upon any of them or the Shareholders individually but are binding only upon the assets and property of the Trust, or the particular Series in question, as the case may be, but the omission thereof shall not operate to bind any Trustees or Trustee or officers or officer or Shareholders or Shareholder individually, or to subject the Series Assets of any Series to the obligations of any other Series. SECTION 8.2. Trustees' Good Faith Action; Expert Advice: No Bond or Surety. The exercise by the Trustees of their powers and discretions hereunder shall be binding upon everyone interested. Subject to Section 8.4 hereof, a Trustee shall be liable for his own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. Subject to the foregoing, (i) the Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, consultant, Investment Adviser, Administrator, Distributor or Principal Underwriter, Custodian or Transfer Agent, Dividend Disbursing Agent, Shareholder Servicing Agent or Accounting Agent of the Trust, nor shall any Trustee be responsible for the act or omission of any other Trustee; (ii) the Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust and their duties as Trustees, and shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice; and (iii) in discharging their duties, the Trustees, when acting in good faith, shall be entitled to rely upon the books of account of the Trust and upon written reports made to the Trustees by any officer appointed by them, any independent public accountant, and (with respect to the subject matter of the contract involved) any officer, partner or 26 33 responsible employee of a Contracting Party appointed by the Trustees pursuant to Section 5.2 hereof. The Trustees as such shall not be required to give any bond or surety or any other security for the performance of their duties. SECTION 8.3. Indemnification of Shareholders. If any Shareholder (or former Shareholder) of the Trust shall be charged or held to be personally liable for any obligation or liability of the Trust solely by reason of being or having been a Shareholder and not because of such Shareholder's acts or omissions or for some other reason, the Trust (upon proper and timely request by the Shareholder) may assume the defense against such charge and satisfy any judgment thereon or may reimburse the Shareholders for expenses, and the Shareholder or former Shareholder (or the heirs, executors, administrators or other legal representatives thereof, or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled (but solely out of the assets of the Series of which such Shareholder or former Shareholder is or was the holder of Shares) to be held harmless from and indemnified against all loss and expense arising from such liability. SECTION 8.4. Indemnification of Trustees. Officers, etc. Subject to the limitations, if applicable, hereinafter set forth in this Section 8.4, the Trust shall indemnify (from the assets of one or more Series to which the conduct in question relates) each of its Trustees, officers, employees and agents (including Persons who serve at the Trust's request as directors, officers or trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise (hereinafter, together with such Person's heirs, executors, administrators or personal representative, referred to as a "Covered Person")) against all liabilities, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and expenses, including reasonable accountants' and counsel fees, incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such Covered Person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Trustee or officer, director or trustee, except with respect to any matter as to which it has been determined that such Covered Person (i) did not act in good faith in the reasonable belief that such Covered Person's action was in or not opposed to the best interests of the Trust; (ii) had acted with willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office (iii) for a criminal proceeding, had reasonable cause to believe that his conduct was unlawful (the conduct described in (i), (ii) and (iii) being referred to hereafter as "Disabling Conduct"). A determination that the Covered Person is entitled to indemnification may be made by (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Covered Person to be indemnified was not liable by reason of Disabling Conduct, (ii) dismissal of a court action or an administrative proceeding against a Covered Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable determination, based upon a review of the facts, that the indemnitee was not liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of Trustees who are neither "interested persons" of the Trust as defined in Section 2(a)(19) of the 1940 Act nor parties to the proceeding (the "Disinterested Trustees"), or (b) an independent legal counsel in a written opinion. Expenses, including accountants' and counsel fees so incurred by any such Covered Person (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), may be paid from time to time by one or more Series to which the conduct in question related in advance of the final disposition of any such action, suit or proceeding; provided that the Covered Person shall have undertaken to repay the amounts so paid to such Series if it is ultimately determined that indemnification of such expenses is not authorized under this Article 8 and (i) the Covered Person shall 27 34 have provided security for such undertaking, (ii) the Trust shall be insured against losses arising by reason of any lawful advances, or (iii) a majority of a quorum of the Disinterested Trustees, or an independent legal counsel in a written opinion, shall have determined, based on a review of readily available facts (as opposed to a full trial type inquiry), that there is reason to believe that the Covered Person ultimately will be found entitled to indemnification. SECTION 8.5. Compromise Payment. As to any matter disposed of by a compromise payment by any such Covered Person referred to in Section 8.4 hereof, pursuant to a consent decree or otherwise, no such indemnification either for said payment or for any other expenses shall be provided unless such indemnification shall be approved (i) by a majority of a quorum of the Disinterested Trustees or (ii) by an independent legal counsel in a written opinion. Approval by the Trustees pursuant to clause (i) or by independent legal counsel pursuant to clause (ii) shall not prevent the recovery from any Covered Person of any amount paid to such Covered Person in accordance with either of such clauses as indemnification if such Covered Person is subsequently adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that such Covered Person's action was in or not opposed to the best interests of the Trust or to have been liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the Covered Person's office. SECTION 8.6. Indemnification Not Exclusive, etc. The right of indemnification provided by this Article 8 shall not be exclusive of or affect any other rights to which any such Covered Person or shareholder may be entitled. As used in this Article 8, a "disinterested" Person is one against whom none of the actions, suits or other proceedings in question, and no other action, suit or other proceeding on the same or similar grounds is then or has been pending or threatened. Nothing contained in this Article 8 shall affect any rights to indemnification to which personnel of the Trust, other than Trustees and officers, and other Persons may be entitled by contract or otherwise under law, nor the power of the Trust to purchase and maintain liability insurance on behalf of any such Person. SECTION 8.7. Liability of Third Persons Dealing with Trustees. No person dealing with the Trustees shall be bound to make any inquiry concerning the validity of any transaction made or to be made by the Trustees or to see to the application of any payments made or property transferred to the Trust or upon its order. ARTICLE 9 DURATION: REORGANIZATION: INCORPORATION; AMENDMENTS SECTION 9.1. Duration of Trust. Unless terminated as provided herein, the Trust shall have perpetual existence. SECTION 9.2. Termination of Trust. The Trust may be terminated at any time by a Majority of the Trustees, subject to the favorable vote of the holders of not less than a majority of the Shares outstanding and entitled to vote of each Series of the Trust, or by an instrument or instruments in writing without a meeting, consented to by the holders of not less than a majority of such Shares, or by such greater or different vote of Shareholders of any Series as may be established by the Certificate of Designation by which such Series was authorized. Upon termination, after paying or otherwise providing for all charges, taxes, expenses and liabilities, whether due or accrued or anticipated as may be 28 35 determined by the Trustees, the Trust shall in accordance with such procedures as the Trustees consider appropriate reduce the remaining assets to distributable form in cash, Securities or other property, or any combination thereof, and distribute the proceeds to the Shareholders, in conformity with the provisions of Section 6.1(h) hereof. After termination of the Trust or any Series and distribution to the Shareholders as herein provided, a majority of the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination. Upon termination of the Trust, the Trustees shall thereupon be discharged from all further liabilities and duties hereunder, and the rights and interests of all Shareholders shall thereupon cease. Upon termination of any Series, the Trustees shall thereupon be discharged from all further liabilities and duties with respect to such Series, and the rights and interests of all Shareholders of such Series shall thereupon cease. SECTION 9.3. Reorganization. The Trustees may sell, convey and transfer all or substantially all of the assets of the Trust, or the assets belonging to any one or more Series, to another trust, partnership, association, corporation or other entity organized under the laws of any state of the United States, or may transfer such assets to another Series of the Trust, in exchange for cash, Shares or other Securities (including, in the case of a transfer to another Series of the Trust, Shares of such other Series), or to the extent permitted by law then in effect may merge or consolidate the Trust or any Series with any other Trust or any corporation, partnership, or association organized under the laws of any state of the United States, all upon such terms and conditions and for such consideration when and as authorized by vote or written consent of a Majority of the Trustees and approved by the affirmative vote of the holders of not less than a majority of the Shares outstanding and entitled to vote of each Series whose assets are affected by such transaction, or by an instrument or instruments in writing without a meeting, consented to by the holders of not less than a majority of such Shares, and/or by such other vote of any Series as may be established by the Certificate of Designation with respect to such Series. Following such transfer, the Trustees shall distribute the cash, Shares or other Securities or other consideration received in such transaction (giving due effect to the assets belonging to and indebtedness of, and any other differences among, the various Series of which the assets have so been transferred) among the Shareholders of the Series of which the assets have been so transferred; and if all of the assets of the Trust have been so transferred, the Trust shall be terminated. Nothing in this Section 9.3 shall be construed as requiring approval of Shareholders for the Trustees to organize or assist in organizing one or more corporations, trusts, partnerships, associations or other organizations, and to sell, convey or transfer less than substantially all of the Trust Property or the assets belonging to any Series to such organizations or entities. SECTION 9.4. Incorporation. Upon approval by Majority Shareholder Vote, the Trustees may cause to be organized or assist in organizing a corporation or corporations under the laws of any jurisdiction or any other trust, partnership, association or other organization to take over all of the Trust Property or to carry on any business in which the Trust shall directly or indirectly have any interest, and to sell, convey and transfer the Trust Property to any such corporation, trust, association or organization, in exchange for the shares or securities thereof, or otherwise, and to lend money to, subscribe for the shares of securities of, and enter into any contracts with any such corporation, trust, partnership, association or organization in which the Trust holds or is about to acquire shares or any other interests. The Trustees may also cause a merger or consolidation between the Trust or any successor thereto and any such corporation, trust, partnership, association or other organization if and to the extent permitted by law, as provided under the law then in effect. Nothing contained herein shall be construed as requiring approval of Shareholders for the Trustees to organize or assist in organizing one or more corporation, trusts, 29 36 partnerships, associations or other organizations and selling, conveying or transferring a portion of the Trust Property to such organizations or entities. SECTION 9.5. Amendments; etc. All rights granted to the Shareholders under this Declaration of Trust are granted subject to the reservation of the right to amend this Declaration of Trust as herein provided, except that no amendment shall repeal the limitations on personal liability of any Shareholder or Trustee or the prohibition of assessment upon the Shareholders (otherwise than as permitted under Section 6.1(l)) without the express consent of each Shareholder or Trustee involved. Subject to the foregoing, the provisions of this Declaration of Trust (whether or not related to the rights of Shareholders) may be amended at any time, so long as such amendment does not adversely affect the rights of any Shareholder with respect to which such amendment is or purports to be applicable and so long as such amendment is not in contravention of applicable law, including the 1940 Act, by an instrument in writing signed by a Majority of the Trustees (or by an officer of the Trust pursuant to the vote of a Majority of the Trustees). Any amendment to this Declaration of Trust that adversely affects the rights of all Shareholders may be adopted at any time by an instrument in writing signed by a Majority of the Trustees (or by an officer of the Trust pursuant to a vote of a Majority of the Trustees) when authorized to do so by the vote in accordance with Section 7.I hereof of Shareholders holding a majority of all the Shares outstanding and entitled to vote, without regard to Series, or if said amendment adversely affects the rights of the Shareholders of less than all of the Series, by the vote of the holders of a majority of all the Shares entitled to vote of each Series so affected. Notwithstanding any other provisions set forth in this Declaration of Trust, a provision in this Declaration of Trust requiring shareholder approval of any action may be amended only with like shareholder approval. SECTION 9.6. Filing of Copies of Declaration and Amendments. The original or a copy of this Declaration and of each amendment hereto (including each Certificate of Designation and Certificate of Termination) shall be kept at the office of the Trust where it may be inspected by any Shareholder. A restated Declaration, integrating into a single instrument all of the provisions of this Declaration which are then in effect and operative, may be executed from time to time by a Majority of the Trustees and shall, upon execution, be conclusive evidence of all amendments contained therein and may thereafter be referred to in lieu of the original Declaration and the various amendments thereto. A Certificate of Trust shall be filed in the office of the Secretary of State of the State of Delaware. ARTICLE 10 MISCELLANEOUS SECTION 10.1. Notices. Any and all notices to which any Shareholder hereunder may be entitled and any and all communications shall be deemed duly served or given if mailed, postage prepaid, addressed to any Shareholder of record at his last known address as recorded on the applicable register of the Trust. SECTION 10.2. Governing Law. This Declaration of Trust is, with reference to the laws thereof, and the rights of all parties and the construction and effect of every provision hereof shall be, subject to and construed according to the laws of said The State of Delaware. SECTION 10.3. Counterparts. This Declaration of Trust and any amendment thereto may be simultaneously executed in several counterparts, each of which so executed shall be deemed to be an 30 37 original, and such counterparts, together, shall constitute but one and the same instrument, which shall be sufficiently evidenced by any such original counterpart. SECTION 10.4. Reliance by Third Parties. Any certificate executed by an individual who, according to the records of the Trust is a Trustee hereunder, certifying to: (a) the number or identity of Trustees or Shareholders, (b) the due authorization of the execution of any instrument or writing, (c) the form of any vote passed at a meeting of Trustees or Shareholders, (d) the fact that the number of Trustees or Shareholders present at any meeting or executing any written instrument satisfies the requirements of this Declaration of Trust, (e) the form of any By-Law adopted, or the identity of any officers elected, by the Trustees, (f) the existence or nonexistence of any fact or facts which in any manner relate to the affairs of the Trust, or (g) the name of the Trust or the establishment of a Series shall be conclusive evidence as to the matters so certified in favor of any Person dealing with the Trustees, or any of them, and the successors of such Person. SECTION 10.5. References; Headings. The masculine gender shall include the feminine and neuter genders. Headings are placed herein for convenience of reference only and shall not be taken as a part of this Declaration or control or affect the meaning, construction or effect hereof. SECTION 10.6. Provisions in Conflict With Law or Regulation. (a) The provisions of this Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with the 1940 Act, the regulated investment company provisions of the Internal Revenue Code of 1986 or with other applicable laws and regulations, the conflicting provision shall be deemed never to have constituted a part of this Declaration; provided, however, that such determination shall not affect any of the remaining provisions of this Declaration or render invalid or improper any action taken or omitted prior to such determination. (b) If any provision of this Declaration shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of this Declaration in any jurisdiction. SECTION 10.7. Use of the Name "Van Kampen American Capital". Van Kampen American Capital, Inc. ("Van Kampen American Capital") has consented to the use by the Trust and by each Series and each Series thereof to the identifying words "Van Kampen" or "Van Kampen Merritt" or any combination thereof in the name of the Trust and of each Series and Series thereof. Such consent is conditioned upon the Trust's employment of Van Kampen American Capital, its successors or a subsidiary or affiliate thereof as investment adviser to the Trust and to each Series and each Series thereof. As between Van Kampen American Capital and the Trust, Van Kampen American Capital shall control the use of such name insofar as such name contains the identifying words "Van Kampen" or "Van Kampen Merritt". Van Kampen American Capital may from time to time use the identifying words "American Capital,"Van Kampen" or "Van Kampen Merritt" in other connections and for other purposes, including without limitation in the names of other investment companies, corporations or businesses that it may manage, advise, sponsor or own or in which it may have a financial interest. Van Kampen American Capital may require the Trust or any Series or Series thereof to cease using the identifying words "Van Kampen" or "Van Kampen Merritt" in the name of the Trust or any Series or any Series thereof if the Trust or any Series or Series thereof ceases to employ Van Kampen American Capital, its successors or a subsidiary or affiliate thereof as investment adviser. 31 38 IN WITNESS WHEREOF, the undersigned, being at least a majority of the Trustees of the Trust, have set their hands and seal, for themselves and their assigns, unto this First Amended and Restated Agreement and Declaration of Trust of Van Kampen American Capital Reserve Fund, as of the day and year first above written. /s/ J. MILES BRANAGAN /s/ RICHARD E. CARUSO - ------------------------------------ ----------------------------------- J. Miles Branagan Richard E. Caruso /s/ ROGER HILSMAN /s/ DON G. POWELL - ------------------------------------ ----------------------------------- Roger Hilsman Don G. Powell /s/ DAVID REES /s/ LAWRENCE J. SHEEHAN - ------------------------------------ ----------------------------------- David Rees Lawrence J. Sheehan /s/ FERNANDO SISTO /s/ WILLIAM S. WOODSIDE - ------------------------------------ ----------------------------------- Fernando Sisto William S. Woodside 32 EX-99.B1.2 3 CERTIFICATE OF AMENDMENT 1 EXHIBIT 1.2 CERTIFICATE OF AMENDMENT DATED SEPTEMBER 7, 1995 TO FIRST AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST DATED JUNE 21, 1995 WHEREAS, the Trustees of Van Kampen American Capital Reserve Fund, a Delaware business trust (the "Trust") have approved the amendment of the Trust's First Amended and Restated Agreement and Declaration of Trust dated June 21, 1995 ("Declaration of Trust") in accordance with Section 9.5 thereof; WHEREAS, the Trustees have authorized the proper officers of the Trust, including the officer whose name appears below, to effect such amendment; NOW, THEREFORE, the Declaration of Trust is amended as follows: 1. The first sentence of Section 4.1(b) is amended and restated in its entirety to read as follows: (b) Number. The Trustees serving as such, whether named above or hereafter becoming Trustees, may increase (to not more than fifteen (15)) or decrease the number of Trustees to a number other than the number theretofore determined by a written instrument signed by a Majority (or a supermajority if required by the By-Laws) of the Trustees (or by an officer of the Trust pursuant to the vote of a Majority (or a supermajority if required by the By-Laws) of the Trustees). 2. Section 4.1(e) is amended and restated in its entirety to read as follows: (e) Removal. Any Trustee may be removed: (i) with cause at any time by written instrument, signed by at least two-thirds (2/3) of the number of Trustees prior to such removal, specifying the date upon which such removal shall become effective; or (ii) without cause at any time by written instrument, signed by at least two-thirds (2/3) of the number of Trustees prior to such removal, specifying the date upon which such removal shall become effective; or (iii) by vote of shareholders holding a majority of the Shares of the Trust then outstanding, cast in person or by proxy at any meeting called for the purpose; or (iv) by a written declaration signed by Shareholders holding not less than a majority of the Shares of the Trust then outstanding. Notwithstanding any other provisions set forth in this Declaration of Trust, this Section 4.1(e) may not be amended (either directly or indirectly through a reorganization) without the approval of (i) two-thirds (2/3) of the Trustees then in office or (ii) by vote of Shareholders holding a majority of the Shares of the Trust then outstanding. EXECUTED, to be effective as of September 7, 1995 /s/ NORI L. GABERT ------------------------ Nori L. Gabert, Secretary EX-99.B1.3 4 CERTIFICATE OF DESIGNATION 1 EXHIBIT 1.3 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND Certificate of Designation of Van Kampen American Capital Reserve Fund The undersigned, being the Secretary of Van Kampen American Capital Reserve 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 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 EX-99.B2 5 BYLAWS 1 EXHIBIT 2 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND AMENDED AND RESTATED BYLAWS (AS AMENDED NOVEMBER 17, 1995) 2 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND Amended and Restated Bylaws (As Amended November 17, 1995) Index ARTICLE 1 SHAREHOLDERS AND SHAREHOLDERS' MEETINGS . . . . . . . . . . . 1 Section 1.1. Meetings . . . . . . . . . . . . . . . . . . . . . . . 1 Section 1.2. Presiding Officer; Secretary . . . . . . . . . . . . . 1 Section 1.3. Authority of Chairman of Meeting to Interpret Declaration and Bylaws . . . . . . . . . . . . . . . 1 Section 1.4. Voting; Quorum . . . . . . . . . . . . . . . . . . . . 2 Section 1.5. Inspectors . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.6 Records at Shareholder Meetings . . . . . . . . . . . 2 Section 1.7. Shareholders Action in Writing . . . . . . . . . . . . 2 ARTICLE 2 TRUSTEES AND TRUSTEES' MEETINGS . . . . . . . . . . . . . . 2 Section 2.1. Number of Trustees . . . . . . . . . . . . . . . . . . 2 Section 2.2. Regular Meetings of Trustees . . . . . . . . . . . . . 2 Section 2.3. Special Meetings of Trustees . . . . . . . . . . . . . 3 Section 2.4. Notice of Meetings . . . . . . . . . . . . . . . . . . 3 Section 2.5. Quorum; Presiding Trustee . . . . . . . . . . . . . . 3 Section 2.6. Participation by Telephone . . . . . . . . . . . . . . 3 Section 2.7. Location of Meetings . . . . . . . . . . . . . . . . . 3 Section 2.8. Actions by Trustees . . . . . . . . . . . . . . . . . 3 Section 2.9. Rulings of Presiding Trustee . . . . . . . . . . . . . 4 Section 2.10. Trustees' Action in Writing . . . . . . . . . . . . . 4 Section 2.11. Resignations . . . . . . . . . . . . . . . . . . . . . 4 Section 2.12. Tenure of Trustees . . . . . . . . . . . . . . . . . . 4 3 ARTICLE 3 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 3.1. Officers of the Trust . . . . . . . . . . . . . . . . 4 Section 3.2. Time and Terms of Election . . . . . . . . . . . . . . 5 Section 3.3. Resignation and Removal . . . . . . . . . . . . . . . 5 Section 3.4. Fidelity Bond . . . . . . . . . . . . . . . . . . . . 5 Section 3.5. President . . . . . . . . . . . . . . . . . . . . . . 5 Section 3.6. Vice Presidents . . . . . . . . . . . . . . . . . . . 5 Section 3.7. Treasurer and Assistant Treasurers . . . . . . . . . . 5 Section 3.8. Controller and Assistant Controllers . . . . . . . . . 6 Section 3.9. Secretary and Assistant Secretaries . . . . . . . . . 6 Section 3.10. Substitutions . . . . . . . . . . . . . . . . . . . . 6 Section 3.11. Execution of Deeds, etc. . . . . . . . . . . . . . . . 6 Section 3.12. Power to Vote Securities . . . . . . . . . . . . . . . 6 ARTICLE 4 COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 4.1. Power of Trustees to Designate Committees . . . . . . 7 Section 4.2. Rules for Conduct of Committee Affairs . . . . . . . 7 Section 4.3. Trustees May Alter, Abolish, etc., Committees . . . . 7 Section 4.4. Minutes; Review by Trustees . . . . . . . . . . . . . 7 ARTICLE 5 SEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE 6 SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 6.1. Issuance of Shares . . . . . . . . . . . . . . . . . . 8 Section 6.2. Uncertificated Shares . . . . . . . . . . . . . . . . 8 Section 6.3. Share Certificates . . . . . . . . . . . . . . . . . . 8 Section 6.4. Lost, Stolen, etc., Certificates . . . . . . . . . . 8 4 ARTICLE 7 STOCK TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . 9 Section 7.1. Transfer Agents, Registrars, etc. . . . . . . . . . . 9 Section 7.2. Transfer of Shares . . . . . . . . . . . . . . . . . . 9 Section 7.3. Registered Shareholders . . . . . . . . . . . . . . . 9 ARTICLE 8 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 8.1. Bylaws Subject to Amendment . . . . . . . . . . . . 9 Section 8.2. Notice of Proposal to Amend Bylaws Required . . . . . 9 5 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND AMENDED AND RESTATED BYLAWS (AS AMENDED NOVEMBER 17, 1995) These are the Bylaws of Van Kampen American Capital Reserve Fund, a trust with transferable shares established under the laws of The State of Delaware (the "Trust"), pursuant to an Agreement and Declaration of Trust of the Trust (the "Declaration") made the 10th day of May, 1995, as amended, and a Certificate of Trust filed in the office of the Secretary of State pursuant to Section 3810 of The Delaware Business Trust Act, Title 12, Chapter 38 of the Delaware Code. These Bylaws have been adopted by the Trustees pursuant to the authority granted by Section 4.14 of the Declaration. All words and terms capitalized in these Bylaws, unless otherwise defined herein, shall have the same meanings as they have in the Declaration. ARTICLE 1 SHAREHOLDERS AND SHAREHOLDERS' MEETINGS SECTION 1.1. Meetings. A meeting of the Shareholders of the Trust shall be held whenever called by the Chairman, the President or a majority of the Trustees and whenever election of a Trustee or Trustees by Shareholders is required by the provisions of the 1940 Act. Meetings of Shareholders shall also be called by the Trustees when requested in writing by Shareholders holding at least ten percent (10%) of the Shares then outstanding for the purpose of voting upon removal of any Trustee, or if the Trustees shall fail to call or give notice of any such meeting of Shareholders for a period of thirty (30) days after such application, then Shareholders holding at least ten percent (10%) of the Shares then outstanding may call and give notice of such meeting. Notice of Shareholders' meetings shall be given as provided in the Declaration. SECTION 1.2. Presiding Officer; Secretary. The President shall preside at each Shareholders' meeting as chairman of the meeting, or in the absence of the President, the Trustees present at the meeting shall elect one of their number as chairman of the meeting. Unless otherwise provided for by the Trustees, the Secretary of the Trust shall be the secretary of all meetings of Shareholders and shall record the minutes thereof. SECTION 1.3. Authority of Chairman of Meeting to Interpret Declaration and Bylaws. At any Shareholders' meeting the chairman of the meeting shall be empowered to determine the construction or interpretation of the Declaration or these Bylaws, or any part thereof or hereof, and their ruling shall be final. SECTION 1.4. Voting; Quorum. At each meeting of Shareholders, except as otherwise provided by the Declaration, every holder of record of Shares entitled to vote shall be entitled to a number of votes equal to the number of Shares standing in his name on the Share register of the Trust on the record date of the meeting. Shareholders may vote by proxy and the form of any such proxy may be prescribed from time to time by the Trustees. A quorum shall exist if the holders of a majority of the outstanding Shares of the Trust entitled to vote are present in person or by proxy, but any lesser 1 6 number shall be sufficient for adjournments. At all meetings of the Shareholders, votes shall be taken by ballot for all matters which may be binding upon the Trustees pursuant to Section 7.1 of the Declaration. On other matters, votes of Shareholders need not be taken by ballot unless otherwise provided for by the Declaration or by vote of the Trustees, or as required by the 1940 Act, but the chairman of the meeting may in his discretion authorize any matter to be voted upon by ballot. SECTION 1.5. Inspectors. At any meeting of Shareholders, the chairman of the meeting may appoint one or more Inspectors of Election or Balloting to supervise the voting at such meeting or any adjournment thereof. If Inspectors are not so appointed, the chairman of the meeting may, and on the request of any Shareholder present or represented and entitled to vote shall, appoint one or more Inspectors for such purpose. Each Inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of Inspector of Election or Balloting, as the case may be, at such meeting with strict impartiality and according to the best of his ability. If appointed, Inspectors shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law. SECTION 1.6. Records at Shareholder Meetings. At each meeting of the Shareholders there shall be open for inspection the minutes of the last previous Meeting of Shareholders of the Trust and a list of the Shareholders of the Trust, certified to be true and correct by the Secretary or other proper agent of the Trust, as of the record date of the meeting or the date of closing of transfer books, as the case may be. Such list of Shareholders shall contain the name of each Shareholder. Shareholders shall have such other rights and procedures of inspection of the books and records of the Trust as are granted to shareholders of a Delaware corporation. SECTION 1.7. Shareholders' Action in Writing. Nothing in this Article 1 shall limit the power of the Shareholders to take any action by means of written instruments without a meeting, as permitted by Section 7.6 of the Declaration. ARTICLE 2 TRUSTEES AND TRUSTEES' MEETINGS SECTION 2.1. Number of Trustees. The number of Trustees shall be fifteen (15), provided that such number shall be reduced upon the death, resignation or retirement of any Trustee until the number of Trustees is eight (8), unless the Trustees shall find by a majority vote that such reduction is not in the best interest of the Fund's shareholders, in which case the number of Trustees shall not be reduced and a vacancy shall be created upon such death, resignation or retirement of such Trustees. SECTION 2.2. Regular Meetings of Trustees. Regular meetings of the Trustees may be held without call or notice at such places and at such times as the Trustees may from time to time determine; provided, that notice of such determination, and of the time and place of the first regular meeting thereafter, shall be given to each absent Trustee in accordance with Section 2.4 hereof. SECTION 2.3. Special Meetings of Trustees. Special meetings of the Trustees may be held at any time and at any place when called by the President or the Treasurer or by three (3) or more 2 7 Trustees, or if there shall be less than three (3) Trustees, by any Trustee; provided, that notice of the time and place thereof is given to each Trustee in accordance with Section 2.4 hereof by the Secretary or an Assistant Secretary or by the officer or the Trustees calling the meeting. SECTION 2.4. Notice of Meetings. Notice of any regular or special meeting of the Trustees shall be sufficient if given in writing to each Trustee, and if sent by mail at least five (5) days, by a nationally recognized overnight delivery service at least two (2) days or by facsimile at least twenty-four (24) hours, before the meeting, addressed to his usual or last known business or residence address, or if delivered to him in person at least twenty-four (24) hours before the meeting. Notice of a special meeting need not be given to any Trustee who was present at an earlier meeting, not more than thirty-one (31) days prior to the subsequent meeting, at which the subsequent meeting was called. Unless statute, these bylaws or a resolution of the Trustees might otherwise dictate, notice need not state the business to be transacted at or the purpose of any meeting of the Board of Trustees. Notice of a meeting may be waived by any Trustee by written waiver of notice, executed by him or her before or after the meeting, and such waiver shall be filed with the records of the meeting. Attendance by a Trustee at a meeting shall constitute a waiver of notice, except where a Trustee attends a meeting for the purpose of protesting prior thereto or at its commencement the lack of notice. No notice need be given of action proposed to be taken by unanimous written consent. SECTION 2.5. Quorum: Presiding Trustee. At any meeting of the Trustees, a Majority of the Trustees shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. Unless the Trustees shall otherwise elect, generally or in a particular case, the Chairman shall be the presiding Trustee at each meeting of the Trustees or in the absence of the Chairman, the President shall preside over the meeting. In the absence of both the Chairman and the President, the Trustees present at the meeting shall elect one of their number as presiding Trustee of the meeting. SECTION 2.6. Participation by Telephone. One or more of the Trustees may participate in a meeting thereof or of any Committee of the Trustees by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. SECTION 2.7. Location of Meetings. Trustees' meetings may be held at any place, within or without the State of Delaware. SECTION 2.8. Actions by Trustees. Unless statute, the charter or By-laws requires a greater proportion, action of a majority of the Trustees present at a meeting at which a quorum is present is action of the Board of Trustees. The results of all voting shall be recorded by the Secretary in the minute book. 3 8 SECTION 2.9. Rulings of Presiding Trustee. All other rules of conduct adopted and used at any Trustees' meeting shall be determined by the presiding Trustee of such meeting, whose ruling on all procedural matters shall be final. SECTION 2.10. Trustees' Action in Writing. Nothing in this Article 2 shall limit the power of the Trustees to take action by means of a written instrument without a meeting, as provided in Section 4.2 of the Declaration. SECTION 2.11. Resignations. Any Trustee may resign at any time by written instrument signed by him and delivered to the Chairman, the President or the Secretary or to a meeting of the Trustees. Such resignation shall be effective upon receipt unless specified to be effective at some other time. SECTION 2.12. Tenure of Trustees. Notwithstanding any other provision herein to the contrary, the term of office of each Trustee shall end on December 31st of the year such Trustee reaches the age of seventy-two (72); provided that the term of office of each Trustee shall end on December 31, 1996 for each Trustee who had been elected before January 1, 1987 as a trustee or director of any open-end investment company managed by Van Kampen American Capital Asset Management, Inc. (formerly American Capital Asset Management, Inc. and, prior thereto, American General Capital Management, Inc.) if such Trustee reaches the age of seventy-two (72) or more by December 31, 1995: provided the term of office of each Trustee shall end on December 31st of the year such Trustee reaches the age of seventy-six (76) for each Trustee who had been elected before January 1, 1987 as a trustee or director of any open-end investment company managed by Van Kampen American Capital Asset Management, Inc. if such Trustee is less than the age of seventy-two (72) by December 31, 1995; provided that the term of office of each Trustee shall end on December 31st of the year such Trustee reaches the age of seventy-five (75) for each Trustee first elected on or after July 1, 1995 and prior to December 1, 1995 who was over the age of seventy-two and one-half (72 1/2) and under the age of seventy-five (75) at the time of such election; and further provided that the term of office of each Trustee shall end on December 31st of the year such Trustee reaches the age of seventy-six (76) for each Trustee first elected on or after July 1, 1995 and prior to December 1, 1995 who was the age of seventy-five (75) or older at the time of such election. SECTION 2.13. Chairman of the Board. The Trustees shall from time to time elect one of the Trustees to serve as Chairman of the Board of Trustees, provided that the chairman shall be a Trustee who is not an "interested person" of the Trust or the Trust's investment adviser, within the meaning of the 1940 Act. ARTICLE 3 OFFICERS SECTION 3.1. Officers of the Trust. The officers of the Trust shall consist of a President, a Treasurer and a Secretary, and may include a Controller and one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries, and such other officers as the Trustees may designate. Any person may hold more than one office. SECTION 3.2. Time and Terms of Election. The President, the Treasurer and the Secretary shall be elected by the Trustees at their first meeting and thereafter at the annual meeting of the Trustees, as provided in Section 4.2 of the Declaration. Such officers shall hold office until the next 4 9 annual meeting of the Trustees and until their successors shall have been duly elected and qualified, and may be removed at any meeting by the affirmative vote of a Majority of the Trustees. All other officers of the Trust may be elected or appointed at any meeting of the Trustees. Such officers shall hold office for any term, or indefinitely, as determined by the Trustees, and shall be subject to removal, with or without cause, at any time by the Trustees. SECTION 3.3. Resignation and Removal. Any officer may resign at any time by giving written notice to the Trustees. Such resignation shall take effect at the time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. If the office of any officer or agent becomes vacant by reason of death, resignation, retirement, disqualification, removal from office or otherwise, the Trustees may choose a successor, who shall hold office for the unexpired term in respect of which such vacancy occurred. Except to the extent expressly provided in a written agreement with the Trust, no officer resigning or removed shall have any right to any compensation for any period following such resignation or removal, or any right to damage on account of such removal. SECTION 3.4. Fidelity Bond. The Trustees may, in their discretion, direct any officer appointed by them to furnish at the expense of the Trust a fidelity bond approved by the Trustees, in such amount as the Trustees may prescribe. SECTION 3.5. President. The President shall be the chief executive officer of the Trust and, subject to the supervision of the Trustees, shall have general charge and supervision of the business, property and affairs of the Trust and such other powers and duties as the Trustees may prescribe. SECTION 3.6. Vice Presidents. In the absence or disability of the President, the Vice President or, if there shall be more than one, the Vice Presidents in the order of their seniority or as otherwise designated by the Trustees, shall exercise all of the powers and duties of the President. The Vice Presidents shall have the power to execute bonds, notes, mortgages and other contracts, agreements and instruments in the name of the Trust, and shall do and perform such other duties as the Trustees or the President shall direct. SECTION 3.7. Treasurer and Assistant Treasurers. The Treasurer shall be the chief financial officer of the Trust, and shall have the custody of the Trust's funds and Securities, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Trust and shall deposit all moneys, and other valuable effects in the name and to the credit of the Trust, in such depositories as may be designated by the Trustees, taking proper vouchers for such disbursements, shall have such other duties and powers as may be prescribed from time to time by the Trustees, and shall render to the Trustees, whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the Trust. If no Controller is elected, the Treasurer shall also have the duties and powers of the Controller, as provided in these Bylaws. Any Assistant Treasurer shall have such duties and powers as shall be prescribed from time to time by the Trustees or the Treasurer, and shall be responsible to and shall report to the Treasurer. In the absence or disability of the Treasurer, the Controller shall have the powers and duties of the Treasurer. If no Controller is elected, the Assistant Treasurer or, if there shall be more than one, the Assistant Treasurers in the order of their seniority or as otherwise designated by the Trustees or the Chairman, shall have the powers and duties of the Treasurer. 5 10 SECTION 3.8. Controller and Assistant Controllers. If a Controller is elected, the Controller shall be the chief accounting officer of the Trust and shall be in charge of its books of account and accounting records and of its accounting procedures, and shall have such duties and powers as are commonly incident to the office of a controller, and such other duties and powers as may be prescribed from time to time by the Trustees. The Controller shall be responsible to and shall report to the Trustees, but in the ordinary conduct of the Trust's business, shall be under the supervision of the Treasurer. Any Assistant Controller shall have such duties and powers as shall be prescribed from time to time by the Trustees or the Controller, and shall be responsible to and shall report to the Controller. In the absence or disability of the Controller, the Assistant Controller or, if there shall be more than one, the Assistant Controllers in the order of their seniority or as otherwise designated by the Trustees, shall have the powers and duties of the Controller. SECTION 3.9. Secretary and Assistant Secretaries. The Secretary shall, if and to the extent requested by the Trustees, attend all meetings of the Trustees, any Committee of the Trustees and/or the Shareholders and record all votes and the minutes of proceedings in a book to be kept for that purpose, shall give or cause to be given notice of all meetings of the Trustees, any Committee of the Trustees, and of the Shareholders and shall perform such other duties as may be prescribed by the Trustees. The Secretary, or in his absence any Assistant Secretary, shall affix the Trust's seal to any instrument requiring it, and when so affixed, it shall be attested by the signature of the Secretary or an Assistant Secretary. The Secretary shall be the custodian of the Share records and all other books, records and papers of the Trust (other than financial) and shall see that all books, reports, statements, certificates and other documents and records required by law are properly kept and filed. In the absence or disability of the Secretary, the Assistant Secretary or, if there shall be more than one, the Assistant Secretaries in the order of their seniority or as otherwise designated by the Trustees, shall have the powers and duties of the Secretary. SECTION 3.10. Substitutions. In case of the absence or disability of any officer of the Trust, or for any other reason that the Trustees may deem sufficient, the Trustees may delegate, for the time being, the powers or duties, or any of them, of such officer to any other officer, or to any Trustee. SECTION 3.11. Execution of Deeds, etc. Except as the Trustees may generally or in particular cases otherwise authorize or direct, all deeds, leases, transfers, contracts, proposals, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the Trust shall be signed or endorsed on behalf of the Trust by its properly authorized officers or agents as provided in the Declaration. SECTION 3.12. Power to Vote Securities. Unless otherwise ordered by the Trustees, the Treasurer shall have full power and authority on behalf of the Trust to give proxies for, and/or to attend and to act and to vote at, any meeting of stockholders of any corporation in which the Trust may hold stock, and at any such meeting the Treasurer or his proxy shall possess and may exercise any and all rights and powers incident to the ownership of such stock which, as the owner thereof, the Trust might have possessed and exercised if present. The Trustees, by resolution from time to time, or, in the absence thereof, the Treasurer, may confer like powers upon any other person or persons as attorneys and proxies of the Trust. 6 11 ARTICLE 4 COMMITTEES SECTION 4.1. Power of Trustees to Designate Committees. The Trustees, by vote of a Majority of the Trustees, may elect from their number an Executive Committee and any other Committees and may delegate thereto some or all of their powers except those which by law, by the Declaration or by these Bylaws may not be delegated; provided, that an Executive Committee shall not be empowered to elect the President, the Treasurer or the Secretary, to amend the Bylaws, to exercise the powers of the Trustees under this Section 4.1 or under Section 4.3 hereof, or to perform any act for which the action of a Majority of the Trustees is required by law, by the Declaration or by these Bylaws. The members of any such Committee shall serve at the pleasure of the Trustees. SECTION 4.2. Rules for Conduct of Committee Affairs. Except as otherwise provided by the Trustees, each Committee elected or appointed pursuant to this Article 4 may adopt such standing rules and regulations for the conduct of its affairs as it may deem desirable, subject to review and approval of such rules and regulations by the Trustees at the next succeeding meeting of the Trustees, but in the absence of any such action or any contrary provisions by the Trustees, the business of each Committee shall be conducted, so far as practicable, in the same manner as provided herein and in the Declaration for the Trustees. SECTION 4.3. Trustees May Alter, Abolish, etc., Committees Trustees may at any time alter or abolish any Committee, change membership of any Committee, or revoke, rescind, waive or modify action of any Committee or the authority of any Committee with respect to any matter or class of matters; provided, that no such action shall impair the rights of any third parties. SECTION 4.4. Minutes: Review by Trustees. Any Committee to which the Trustees delegate any of their powers or duties shall keep records of its meetings and shall report its actions to the Trustees. ARTICLE 5 SEAL The seal of the Trust, if any, may be affixed to any instrument, and the seal and its attestation may be lithographed, engraved or otherwise printed on any document with the same force and effect as if had been imprinted and affixed manually in the same manner and with the same force and effect as if done by a Delaware corporation. Unless otherwise required by the Trustees, the seal shall not be necessary to be placed on, and its absence shall not impair the validity of, any document, instrument or other paper executed and delivered by or on behalf of the Trust. ARTICLE 6 SHARES SECTION 6.1. Issuance of Shares. The Trustees may issue an unlimited number of Classes of Shares of any or all Series either in certificated or uncertificated form, they may issue certificates to the 7 12 holders of a Class of Shares of a Series which was originally issued in uncertificated form, and if they have issued Shares of any Series in certificated form, they may at any time discontinue the issuance of Share certificates for such Series and may, by written notice to such Shareholders of such Series require the surrender of their Share certificates to the Trust for cancellation, which surrender and cancellation shall not affect the ownership of Shares for such Series. SECTION 6.2. Uncertificated Shares. For any Class of Shares for which the Trustees issue Shares without certificates, the Trust or the Transfer Agent may either issue receipts therefor or may keep accounts upon the books of the Trust for the record holders of such Shares, who shall in either case be deemed, for all purposes hereunder, to be the holders of such Shares as if they had received certificates therefor and shall be held to have expressly assented and agreed to the terms hereof and of the Declaration. SECTION 6.3. Share Certificates. For any Class of Shares for which the Trustees shall issue Share certificates, each Shareholder of such Class shall be entitled to a certificate stating the number of Shares owned by him in such form as shall be prescribed from time to time by the Trustees. Such certificate shall be signed by the President or a Vice President, and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Trust. Such signatures may be facsimiles if the certificate is countersigned by a Transfer Agent, or by a Registrar, other than a Trustee, officer or employee of the Trust. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall cease to be such officer before such certificate is issued, it may be issued by the Trust with the same effect as if he were such officer at the time of its issue. SECTION 6.4. Lost, Stolen, etc., Certificates. If any certificate for certificated Shares shall be lost, stolen, destroyed or mutilated, the Trustees may authorize the issuance of a new certificate of the same tenor and for the same number of Shares in lieu thereof. The Trustees shall require the surrender of any mutilated certificate in respect of which a new certificate is issued, and may, in their discretion, before the issuance of a new certificate, require the owner of a lost, stolen or destroyed certificate, or the owner's legal representative, to make an affidavit or affirmation setting forth such facts as to the loss, theft or destruction as they deem necessary, and to give the Trust a bond in such reasonable sum as the Trustees direct, in order to indemnify the Trust. ARTICLE 7 TRANSFER OF SHARES SECTION 7.1. Transfer Agents, Registrars, etc. As approved in Section 5.2(e) of the Declaration, the Trustees shall have the authority to employ and compensate such transfer agents and registrars with respect to the Shares of the Trust as the Trustees shall deem necessary or desirable. In addition, the Trustees shall have the power to employ and compensate such dividend dispersing agents, warrant agents and agents for reinvestment of dividends as they shall deem necessary or desirable. Any of such agents shall have such power and authority as is delegated to any of them by the Trustees. SECTION 7.2 Transfer of Shares. The Shares of the Trust shall be transferable on the books of the Trust only upon delivery to the Trustees or a transfer agent of the Trust of proper documentation as provided in Section 6.1(m) of the Declaration. The Trust, or its transfer agents, shall be authorized to 8 13 refuse any transfer unless and until presentation of such evidence as may be reasonably required to show that the requested transfer is proper. SECTION 7.3 Registered Shareholders. The Trust may deem and treat the holder of record of any Shares the absolute owner thereof for all purposes and shall not be required to take any notice of any right or claim of right of any other person. ARTICLE 8 AMENDMENTS SECTION 8.1. Bylaws Subject to Amendment. These Bylaws may be altered, amended or repealed, in whole or in part, at any time by vote of the holders of a majority of the Shares issued, outstanding and entitled to vote. The Trustees, by vote of a Majority of the Trustees (unless a greater vote is required by Section 2.8 hereof), may alter, amend or repeal these Bylaws, in whole or in part, including Bylaws adopted by the Shareholders, except with respect to any provision hereof which by law, the Declaration or these Bylaws requires action by the Shareholders. Bylaws adopted by the Trustees may be altered, amended or repealed by the Shareholders. SECTION 8.2. Notice of Proposal to Amend Bylaws Required. No proposal to amend or repeal these Bylaws or to adopt new Bylaws shall be acted upon at a meeting unless either (i) such proposal is stated in the notice or in the waiver of notice, as the case may be, of the meeting of the Trustees or Shareholders at which such action is taken, or (ii) all of the Trustees or Shareholders, as the case may be, are present at such meeting and all agree to consider such proposal without protesting the lack of notice. 9 EX-99.B4.1 6 CLASS A CERTIFICATE 1 EXHIBIT 4.1 NUMBER SHARES __________ __________ VAN KAMPEN AMERICAN CAPITAL RESERVE 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 92113Q103 _________________ fully paid and nonassessable shares of beneficial interest of the par value of $0.01 per share of Van Kampen American Capital Reserve 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 RESERVE 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 RESERVE 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 ---------------------------------------- ---------------------------------------- ---------------------------------------- 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 EX-99.B4.2 7 CLASS B CERTIFICATE 1 EXHIBIT 4.2 NUMBER SHARES __________ __________ VAN KAMPEN AMERICAN CAPITAL RESERVE 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 92113Q202 _________________ fully paid and nonassessable shares of beneficial interest of the par value of $0.01 per share of Van Kampen American Capital Reserve 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 RESERVE 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 RESERVE 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 ---------------------------------------- ---------------------------------------- ---------------------------------------- 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 EX-99.B4.3 8 CLASS C CERTIFICATE 1 EXHIBIT 4.3 NUMBER SHARES __________ __________ VAN KAMPEN AMERICAN CAPITAL RESERVE 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 92113Q301 _________________ fully paid and nonassessable shares of beneficial interest of the par value of $0.01 per share of Van Kampen American Capital Reserve 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 RESERVE 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 RESERVE 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 ---------------------------------------- ---------------------------------------- ---------------------------------------- 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 EX-99.B5 9 INVESTMENT ADVISORY AGREEMENT 1 EXHIBIT 5 INVESTMENT ADVISORY AGREEMENT AGREEMENT (herein so called) made this 31st day of July, 1995, by and between VAN KAMPEN AMERICAN CAPITAL RESERVE 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 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 2 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 expenses; (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 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 2 3 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 computed at the following annual rate(s): .50% on the first $150 million of the Fund's average daily net assets, .45% on the next $100 million, .40% on the next $100 million and .35% over $350 million 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 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 1% of average daily net assets, the compensation due the ADVISER for such fiscal year shall be reduced 3 4 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 Trustees pursuant to Rule 12b-1 under the Investment Company Act of 1940. If the ADVISER shall serve for less than the whole of any month, the foregoing compensation shall be prorated. (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 have an initial term of 2 years from the date hereof, and shall continue in force from year to year thereafter, but only so long as such continuance is approved at least annually by the vote of a majority of the FUND's Trustees who are not parties to this Agreement or interested persons of any such parties, cast in person at a meeting called for the purpose of voting on such approval, and by a vote of a majority of the FUND's Trustees or a majority of the FUND's outstanding voting securities. This Agreement shall terminate automatically in the event of its assignment. The Agreement may be terminated at any time by the FUND's Trustees, by vote of a majority of the FUND's outstanding voting securities, or by the ADVISER, on 60 days' written notice, or upon such shorter notice as may be mutually agreed upon. Such termination shall be without payment of any penalty. 4 5 (6.) 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 RESERVE FUND By: /s/ NORI L. GABART ------------------------- Name: Nori L. Gabart ------------------------- Its: Vice President ------------------------- VAN KAMPEN AMERICAN CAPITAL ASSET MANAGEMENT, INC. By: /s/ HUEY P. FALGOUT, JR. ------------------------- Name: Huey P. Falgout, Jr. ------------------------- Its: Vice President ------------------------- 5 EX-99.B6.1 10 DISTRIBUTION AND SERVICE AGREEMENT 1 EXHIBIT 6.1 DISTRIBUTION AND SERVICE AGREEMENT THIS DISTRIBUTION AND SERVICE AGREEMENT dated as of July 26, 1996 (the "Agreement") by and between VAN KAMPEN AMERICAN CAPITAL RESERVE FUND (the "Fund"), and VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC., a Delaware corporation (the "Distributor"). 1. Appointment of Distributor. The Fund appoints the Distributor as a principal underwriter and exclusive distributor of each class of its shares of beneficial interest (the "Shares") offered for sale from time to time pursuant to the then current prospectus of the Fund, subject to different combinations of front-end sales charges, distribution fees, service fees and contingent deferred sales charges. Classes of shares, if any, subject to a front-end sales charge and a distribution and/or service fee are referred to herein as "FESC Classes" and the Shares of such classes are referred to herein as "FESC Shares." Classes of shares, if any, subject to a contingent-deferred sales charge and a distribution and/or a service fee are referred to herein as "CDSC Classes" and Shares of such classes are referred to herein as "CDSC Shares." Classes of shares, if any, subject to a front-end sales charge, a contingent-deferred sales charge and a distribution and/or service fee are referred to herein as "Combination Classes" and Shares of such class are referred to herein as "Combination Shares." The Fund reserves the right to refuse at any time or times to sell Shares hereunder for any reason deemed adequate by the Board of Trustees of the Fund. The Distributor will use its best efforts to sell, through its organization and through other dealers and agents, the Shares which the Distributor has the right to purchase under Section 2 hereof, but the Distributor does not undertake to sell any specific number of Shares. The Distributor agrees that it will not take any long or short positions in the Shares, except for long positions in those Shares purchased by the Distributor in accordance with any systematic sales plan described in the then current Prospectus of the Fund and except as permitted by Section 2 hereof, and that so far as it can control the situation, it will prevent any of its trustees, officers or shareholders from taking any long or short positions in the Shares, except for legitimate investment purposes. 2. Sale of Shares to Distributor. The Fund hereby grants to the Distributor the exclusive right, except as herein otherwise provided, to purchase Shares directly from the Fund upon the terms herein set forth. Such exclusive right hereby granted shall not apply to Shares issued or transferred or sold at net asset value: (a) in connection with the merger or consolidation of the Fund with any other investment company or the acquisition by the Fund of all or substantially all of the assets of or the outstanding Shares of any investment company; (b) in connection with a pro rata distribution directly to the holders of Fund Shares in the nature of a stock dividend or stock split or in connection with any other recapitalization approved by the Board of Trustees; (c) upon the exercise of purchase or subscription rights granted to the holders of Shares on a pro rata basis; (d) in connection with the automatic reinvestment of dividends and distributions from the Fund; or (e) in connection with the issue and sale of Shares to trustees, officers and employees of the Fund; to directors, officers and employees of the investment adviser of the Fund or any principal underwriter (including the Distributor) of the Fund; to retirees of the Distributor that purchased shares of any mutual fund distributed by the Distributor prior to retirement; to directors, officers and employees of Van Kampen American Capital, Inc. (formerly The Van Kampen Merritt Companies, Inc.) (the parent of the Distributor), VK/AC Holding, Inc. (formerly VKM Holdings, Inc.)(the parent of The Van Kampen Merritt Companies, Inc.) and to the subsidiaries of VK/AC Holding, Inc.; and to any trust, pension, profit-sharing or other benefit plan for any of the aforesaid persons as permitted by Rule 22d-1 under the Investment Company Act of 1940 (the "1940 Act"). The Distributor shall have the right to buy from the Fund the Shares needed, but not more than the Shares needed (except for reasonable allowances for clerical errors, delays and errors of transmission and cancellation of orders) to fill unconditional orders for Shares received by the Distributor from dealers, agents and investors during each period when particular net asset values and public offering prices are in 1 2 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. 2 3 5. Expenses. (a) The Fund will pay or cause to be paid: (i) all expenses in connection with the registration of Shares under the federal securities laws, and the Fund will exercise its best efforts to obtain said registration and qualification; (ii) all expenses in connection with the printing of any notices of shareholders' meetings, proxy and proxy statements and enclosures therewith, as well as any other notice or communication sent to shareholders in connection with any meeting of the shareholders or otherwise, any annual, semiannual or other reports or communications sent to the shareholders, and the expenses of sending prospectuses relating to the Shares to existing shareholders; (iii) all expenses of any federal or state original-issue tax or transfer tax payable upon the issuance, transfer or delivery of Shares from the Fund to the Distributor; and (iv) the cost of preparing and issuing any Share certificates which may be issued to represent Shares. (b) The Distributor will also permit its officers and employees to serve without compensation as trustees and officers of the Fund if duly elected to such positions. (c) The Fund shall reimburse the Distributor for out-of-pocket costs and expenses actually incurred by it in connection with distribution of each class of Shares respectively in accordance with the terms of a plan (the "12b-1 Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act as such 12b-1 Plan may be in effect from time to time; provided, however, that no payments shall be due or paid to the Distributor hereunder with respect to a class of Shares unless and until this Agreement shall have been approved for each such class by a majority of the Board of Trustees of the Fund and by a majority of the "Disinterested Trustees" (as such term is defined in such 12b-1 Plan) by vote cast in person at a meeting called for the purpose of voting on this Agreement. A copy of such 12b-1 Plan as in effect on the date of this Agreement is attached as Exhibit I hereto. The Fund reserves the right to terminate such 12b-1 Plan with respect to a class of Shares at any time, as specified in the Plan. The persons authorized to direct the payment of funds pursuant to this Agreement and the 12b-1 Plan shall provide to the Fund's Board of Trustees, and the Trustees shall review, at least quarterly, a written report with respect to each of the classes of Shares of the amounts so paid and the purposes for which such expenditures were made for each such class of Shares. (d) The Fund shall compensate the Distributor for providing services to, and the maintenance of, shareholder accounts in the Fund (including prepaying service fees to eligible brokers, dealers and financial intermediaries and expenses incurred in connection therewith) and the Distributor may pay as agent for and on behalf of the Fund a service fee with respect to each class of Shares to brokers, dealers and financial intermediaries for the provision of shareholder services and the maintenance of shareholder accounts in the Fund in the amount with respect to each class of Shares set forth from time to time in the Fund's prospectus. The Fund shall compensate the Distributor for such expenses in accordance with the terms of a service plan (the "Service Plan"), as such Service Plan may be in effect from time to time; provided, however, that no service fee payments shall be due or paid to the Distributor hereunder with respect to a class of Shares unless and until this Agreement shall have been approved for each such class by a majority of the Board of Trustees of the Fund and by a majority of the Disinterested Trustees by vote cast in person at a meeting called for the purpose of voting on this Agreement. A copy of such Service Plan as in effect on the date of this Agreement is attached as Exhibit II hereto. The Fund reserves the right to terminate such Service Plan with respect to a class of Shares at any time, as specified in the Plan. The persons authorized to direct the payment of funds pursuant to this Agreement and the Service Plan shall provide to the Fund's Board of Trustees, and the Trustees shall 3 4 review, at least quarterly, a written report with respect to each of the classes of Shares of the amounts paid as service fees for each such class of Shares. 6. Redemption of Shares. In connection with the Fund's redemption of its Shares, the Fund hereby authorizes the Distributor to repurchase, upon the terms and conditions hereinafter set forth, as the Fund's agent and for the Fund's account, such Shares as may be offered for sale to the Fund from time to time by holders of such Shares or their agents. (a) Subject to and in conformity with all applicable federal and state legislation, any applicable rules of the National Association of Securities Dealers, Inc., and any applicable rules and regulations of the Securities and Exchange Commission under the 1940 Act, the Distributor may accept offers of holders of Shares to resell such Shares to the Fund on such terms and conditions and at such prices as described and provided for in the then current Prospectus of the Fund. (b) The Distributor agrees to notify the Fund at such times as the Fund may specify of the number of each class of Shares, respectively, repurchased for the Fund's account and the time or times of such repurchases, and the Fund shall notify the Distributor of the prices and, in the case of a class of CDSC Shares or Combination Shares, of the deferred sales charge as described below, if any, applicable to repurchases of Shares of such class. (c) The Fund shall have the right to suspend or revoke the foregoing authorization at any time; unless otherwise stated, any such suspension or revocation shall be effective forthwith upon receipt of notice thereof by telegraph or by written instrument from any of the Fund's officers. In the event that the Distributor's authorization is, by the terms of such notice, suspended for more than twenty-four hours or until further notice, the authorization given by this Section 6 shall not be revived except by vote of the Board of Trustees of the Fund. (d) The Distributor agrees that all repurchases of Shares made by the Distributor shall be made only as agent for the Fund's account and pursuant to the terms and conditions herein set forth. (e) The Fund agrees to authorize and direct its Custodian to pay, for the Fund's account, the repurchase price (together with any applicable contingent deferred sales charge) of any Shares so repurchased for the Fund against the authorized transfer of book shares from an open account and against delivery of any other documentation required by the Board of Trustees of the Fund or, in the case of certificated Shares, against delivery of the certificates representing such Shares in proper form for transfer to the Fund. (f) The Distributor shall receive no commissions or other compensation in respect of any repurchases of FESC Shares for the Fund under the foregoing authorization and appointment as agent. With respect to any repurchase of CDSC Shares or Combination Shares, the Distributor shall receive the deferred sales charge, if any, applicable to the respective class of Shares that have been held for less than a specified period of time with respect to such class as set forth from time to time in the Fund's Prospectus. The Distributor shall receive no other commission or other compensation in respect of any repurchases of CDSC Shares or Combination Shares for the Fund under the foregoing authorization and appointment as agent. (g) If any FESC Shares sold to the Distributor under the terms of this Agreement are redeemed or repurchased by the Fund or by the Distributor as agent or are tendered for redemption within seven business days after the date of the Distributor's confirmation of the original purchase by the Distributor, the Distributor shall forfeit the amount above the net asset value received by it in respect of such Shares, provided that the portion, if any, of such amount re-allowed by the Distributor to dealers or agents shall be repayable to the Fund only to the extent recovered by the Distributor from the dealer or agent concerned. The Distributor shall include in agreements with such dealers and agents a corresponding provision for the forfeiture by them of their concession with respect to FESC Shares 4 5 purchased by them or their principals and redeemed or repurchased by the Fund or by the Distributor as agent within seven business days after the date of the Distributor's confirmation of such initial purchases. 7. Indemnification. The Fund agrees to indemnify and hold harmless the Distributor and each of its trustees and officers and each person, if any, who controls the Distributor within the meaning of Section 15 of the 1933 Act against any loss, liability, claim, damage or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damage, or expense and reasonable counsel fees incurred in connection therewith), arising by reason of any person acquiring any Shares, based upon the ground that the registration statement, Prospectus, shareholder reports or other information filed or made public by the Fund (as from time to time amended) included an untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading under the 1933 Act or any other statute or the common law. However, the Fund does not agree to indemnify the Distributor or hold it harmless to the extent that the statement or omission was made in reliance upon, and in conformity with, information furnished to the Fund by or on behalf of the Distributor. In no case (i) is the indemnity of the Fund in favor of the Distributor or any person indemnified to be deemed to protect the Distributor or any person against any liability to the Fund or its securityholders to which the Distributor or such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligations and duties under this Agreement, or (ii) is the Fund to be liable under its indemnity agreement contained in this Section with respect to any claim made against the Distributor or any person indemnified unless the Distributor or any such person shall have notified the Fund in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the Distributor or any such person (or after the Distributor or the person shall have received notice of service on any designated agent). However, failure to notify the Fund of any claim shall not relieve the Fund from any liability which it may have to the Distributor or any person against whom such action is brought otherwise than on account of its indemnity agreement contained in this paragraph. The Fund shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense, of any suit brought to enforce any claims, but if the Fund elects to assume the defense, the defense shall be conducted by counsel chosen by it and satisfactory to the Distributor or person or persons, defendant or defendants in the suit. In the event the Fund elects to assume the defense of any suit and retain counsel, the Distributor, officers or trustees or controlling person or persons, defendant or defendants in the suit, shall bear the fees and expenses of any additional counsel retained by them. If the Fund does not elect to assume the defense of any suit, it will reimburse the Distributor, officers or trustees or controlling person or persons, defendant or defendants in the suit for the reasonable fees and expenses of any counsel retained by them. The Fund agrees to notify the Distributor promptly of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of any of the Shares. The Distributor also covenants and agrees that it will indemnify and hold harmless the Fund and each of its trustees and officers and each person, if any, who controls the Fund within the meaning of Section 15 of the 1933 Act against any loss, liability, damage, claim or expense (including the reasonable cost of investigating or defending any alleged loss, liability, damage, claim or expense and reasonable counsel fees incurred in connection therewith) arising by reason of any person acquiring any Shares, based upon the 1933 Act or any other statute or common law, alleging any wrongful act of the Distributor or any of its employees or alleging that the registration statement, Prospectus, shareholder reports or other information filed or made public by the Fund (as from time to time amended) included an untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, insofar as the statement or omission was made in reliance upon, and in conformity with, information furnished to the Fund by or on behalf of the Distributor. In no case (i) is the indemnity of the Distributor in favor of the Fund or any person indemnified to be deemed to protect the Fund or any such person against any liability to which the Fund or such person would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its obligation and duties under this Amended Agreement, or (ii) is the Distributor to be liable under its 5 6 indemnity agreement contained in this paragraph with respect to any claim made against the Fund or any person indemnified unless the Fund or person, as the case may be, shall have notified the Distributor in writing of the claim within a reasonable time after the summons or other first written notification giving information of the nature of the claim shall have been served upon the Fund or person (or after the Fund or such person shall have received notice of service on any designated agent). However, failure to notify the Distributor of any claim shall not relieve the Distributor from any liability which it may have to the Fund or any person against whom the action is brought otherwise than on account of its indemnity agreement contained in this paragraph. In the case of any notice to the Distributor, it shall be entitled to participate, at its own expense, in the defense, or, if it so elects, to assume the defense, of any suit brought to enforce the claim, but if the Distributor elects to assume the defense, the defense shall be conducted by counsel chosen by it and satisfactory to the Fund, to its officers and trustees and to any controlling person or persons, defendant or defendants in the suit. In the event that the Distributor elects to assume the defense of any suit and retain counsel, the Fund or controlling persons, defendants in the suit, shall bear the fees and expenses of any additional counsel retained by them. If the Distributor does not elect to assume the defense of any suit, it will reimburse the Fund, officers and trustees or controlling person or persons, defendant or defendants in the suit, for the reasonable fees and expenses of any counsel retained by them. The Distributor agrees to notify the Fund promptly of the commencement of any litigation or proceedings against it in connection with the issue and sale of any of the Shares. 8. Continuation, Amendment or Termination of This Agreement. This Agreement shall become effective on the Effective Date and thereafter shall continue in full force and effect year to year with respect to each class of Shares so long as such continuance is approved at least annually (i) by the Board of Trustees of the Fund or by a vote of a majority of the outstanding voting securities of the respective class of Shares of the Fund, and (ii) by vote of a majority of the Trustees who are not parties to this Agreement or interested persons in any such party (the "Independent Trustee") cast in person at a meeting called for the purpose of voting on such approval, provided, however, that (a) this Agreement may at any time be terminated with respect to either class of Shares of the Fund without the payment of any penalty either by vote of a majority of the Disinterested Trustees, or by vote of a majority of the outstanding voting securities of the respective class of Shares of the Fund, on written notice to the Distributor; (b) this Agreement shall immediately terminate in the event of its assignment; and (c) this Agreement may be terminated by the Distributor on ninety (90) days' written notice to the Fund. Upon termination of this Agreement with respect to either class of Shares of the Fund, the obligations of the parties hereunder shall cease and terminate with respect to such class of Shares as of the date of such termination, except for any obligation to respond for a breach of this Agreement committed prior to such termination. This Agreement may be amended with respect to either class of Shares at any time by mutual consent of the parties, provided that such consent on the part of the Fund shall have been approved (i) by the Board of Trustees of the Fund, or by a vote of the majority of the outstanding voting securities of the respective class of Shares of the Fund, and (ii) by vote of a majority of the Independent Trustees cast in person at a meeting called for the purpose of voting on such amendment. For the purpose of this section, the terms "vote of a majority of the outstanding voting securities", "interested persons" and "assignment" shall have the meanings defined in the 1940 Act, as amended. 9. Limited Liability of Shareholder. Notwithstanding anything to the contrary contained in this Agreement, you acknowledge and agree that, as provided by Section 8.1 of the Agreement and Declaration of Trust of the Trust, this Agreement is executed by the Trustees of the Trust and/or Officers of the Fund by them not individually but as such Trustees and/or Officers, and the obligations of the Fund hereunder are not binding upon any of the Trustees, Officers or Shareholders individually, but bind only the trust estate. 10. Notice. Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the other party at any office of such party or at such other address as such party shall have designated in writing. 6 7 11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below on the day and year first above written. VAN KAMPEN AMERICAN CAPITAL RESERVE FUND By: /s/ Ronald A. Nyberg -------------------------------- Name: Ronald A. Nyberg Title: Secretary VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC. By: /s/ Ronald A. Nyberg -------------------------------- Name: Ronald A. Nyberg Title: Executive Vice President 7 EX-99.B6.2 11 DEALER AGREEMENT 1 EXHIBIT 6.2 ------------------------------------------------------- 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 2 good standing of the NASD and to comply with Section 25 of such Article III as it applies to a nonmember broker or dealer in a foreign country. You and we agree to abide by all other Rules and Regulations of the NASD, including Section 26 of its Rules of Fair Practice, and all applicable state and Federal laws, rules and regulations. Your acceptance also constitutes a representation that you have been duly authorized by proper corporate or partnership action to enter into this Agreement and to perform your obligations hereunder. You will not accept any orders from any broker, dealer or financial institution who is purchasing from you with a view toward distribution unless you have obtained such person's or entity's written consent to be bound by the terms of this Agreement. 2. In all sales of shares of the Funds to the public you shall act as dealer for your own account, and you shall have no authority in any transaction to act as agent for the Fund or for VKAC. 3. Each Fund has filed with the SEC and the securities commissions of one or more states a Registration Statement (the "Registration Statement") on the SEC Form applicable to the respective Fund. The date on which the Registration Statement is declared effective by the SEC is referred to herein as the "Effective Date". Prior to the Effective Date of the Registration Statement with respect to a particular Fund, you expressly acknowledge and understand that with respect to such Fund: (a) Shares of such Fund may not be sold, nor may offers to buy be accepted, (i) in any state prior to the Effective Date of the Registration Statement with respect thereto or (ii) in any state in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of such state. (b) The Fund's Preliminary Prospectus, together with any sales material distributed for use in connection with the offering of shares of such Fund, does not constitute an offer to sell or the solicitation of an offer to buy shares of such Fund and is subject to completion and modification by the Prospectus. You agree that you will distribute to the public only (a) the Preliminary Prospectus, the Prospectus and any amendment or supplement thereto and (b) sales literature or other documents expressly authorized for such distribution by VKAC. (c) In the event that you transmit indications of interest to VKAC for accumulation prior to the Effective Date, you will be responsible for confirming such indications of interest with your customers following the Effective Date. Indications of interest with respect to shares of a class of a Fund's shares transmitted to VKAC prior to the Effective Date will be conditioned upon the occurrence of the Effective Date and the registration or qualification of the respective class of shares in the respective state. (d) Indications of interest with respect to shares of a class of a Fund's shares which are not canceled by you prior to the latter of the Effective Date and the registration or qualification of the respective class of the Fund's shares in the respective state, and accepted by VKAC will be deemed by VKAC to be orders for shares of such class of shares of the Fund. (e) All indications of interest and orders transmitted to VKAC are subject to the terms and conditions of the Prospectus and this Agreement. 4. After the Effective Date, you will not offer shares of a class of the Fund's shares for sale in any state where they are not qualified for sale under the "blue sky" laws and regulations of such state or where you are not qualified to act as a dealer, except for states in which they are exempt from qualification. 5. In the event that you offer shares of the Fund for sale outside the United States, you agree to comply with the applicable laws, rules and regulations of the foreign government having jurisdiction over such sales, including any regulations of the United States military authorities applicable to solicitations to military personnel. 2 3 6. Upon application to VKAC, VKAC will inform you as to the jurisdictions in which VKAC believes shares of a Fund have been qualified for sale under the respective securities or "blue sky" laws of such jurisdictions. VKAC understands and agrees that qualification of any shares of a Fund for sale in such jurisdictions shall be solely VKAC's responsibility and that you assume no responsibility or obligation with respect to such eligibility. You understand and agree that your compliance with the requirements of the securities or "blue sky" laws in each jurisdiction with respect to your right to sell the shares in such jurisdiction shall be solely your responsibility. 7. No person is authorized to make any representations concerning any class of shares of a Fund except those contained in the Fund's current Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares from us you shall rely solely on the representations contained in such Prospectus. VKAC will furnish additional copies of a Fund's current Prospectus and sales literature issued by VKAC in reasonable quantities upon request. 8. Orders received from you will be accepted by VKAC only at the public offering price applicable to each order as specified in the then-current Fund Prospectus. The minimum dollar purchase of any shares of each Fund by any person shall be the applicable minimum dollar amount described in the then-current Fund Prospectus for that class of shares, and no order for less than such amount will be accepted hereunder. The procedures relating to the handling of orders shall be subject to instructions that VKAC shall communicate from time to time to you. All orders are subject to acceptance or rejection by VKAC in its sole discretion. 9. Payment for Fund shares shall be made on or before the settlement date specified in the VKAC confirmation at the office of VKAC's clearing agent, by check payable to the order of the Fund which reserves VKAC's right to delay issuance or transfer of shares until such check has cleared. If such payment is not received by VKAC, VKAC reserves the right, without notice, forthwith either to cancel the sale or, at its option, to sell the shares ordered back to the Fund, and in either case, VKAC may hold you responsible for any loss suffered by the Fund. You agree that in transmitting investors' funds, you will comply with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended. 10. You shall not withhold placing orders with VKAC from your customers so as to profit yourself as a result of such withholding; e.g., by a change in the net asset value from that used in determining the public offering price to your customers. 11. VKAC will not accept from you any conditioned orders for shares, except at a definite, specified price. 12. You represent that you are familiar with Release No. 4968 under the Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities Exchange Act of 1934, as amended, as it relates to the distribution of Preliminary Prospectuses (and not Statements of Additional Information) and Prospectuses (and not Statements of Additional Information) for each Fund and agree that you will comply therewith. You agree that if an investor or potential investor places a request with you to receive a Statement of Additional Information, you will (i) provide such person with a Statement of Additional Information without charge and notify the Fund that you have done so, (ii) notify the Fund of the request so that the Fund can fulfill the request or (iii) tell such person to request a Statement of Additional Information by telephoning the Fund at the number set forth on the cover of the current Prospectus or Preliminary Prospectus. You also agree to keep an accurate record of your distribution (including dates, number of copies and persons to whom sent) of copies of any Preliminary Prospectus (and any Statement of Additional Information) and/or Prospectus (and any Statement of Additional Information) for each Fund (or any amendment or supplement to either) and, promptly upon request by VKAC, to bring all subsequent changes to such Preliminary Prospectus or Prospectus to the attention of anyone to whom such material shall have been distributed. You further agree to furnish to persons who receive a confirmation of sale of shares of any Fund a copy of the Prospectus (and not the Statement of Additional Information) for such Fund filed pursuant to Rule 497 under the Securities Act of 1933, as amended. 3 4 13. Unless otherwise indicated in a Fund's Prospectus, stock certificates for shares of Funds sold to you shall be issued only if specifically requested. 14. VKAC will have no liability to you, except for lack of good faith and for obligations expressly assumed by VKAC in this Agreement. 15. All communications to VKAC shall be sent to One Parkview Plaza, Oakbrook Terrace, Illinois 60181, Attention: Mutual Fund Department. Any notice to you shall be duly given if sent to you at the address specified by you below or such other address as you may designate to VKAC in writing. 16. Neither this Agreement nor the performance of the services hereunder shall be considered to create a joint venture or partnership between VKAC and you. 17. This Agreement shall be construed in accordance with the laws of the State of Illinois without reference to the choice-of-law principles thereof. 18. The Fund reserves the right in its discretion and VKAC reserves the right in its discretion, without notice, to suspend or withdraw the offering of any shares of a Fund entirely. VKAC reserves the right, without notice, to amend, modify or cancel the Agreement. The Agreement may not be assigned by either party without prior written consent of the other party. 19. This Agreement may be terminated at any time by either party. TERMS AND CONDITIONS APPLICABLE ONLY TO OPEN-END FUNDS 20. Each of the Open-End Fund's is subject to an alternative distribution plan (the "Alternative Distribution Plan") as described in such Fund's then-current Prospectus pursuant to which the Open-End Fund may sell multiple classes of its shares with varying combinations of front-end service charges (each a "FESC"), distributions fees, service fees, contingent deferred sales charges (each a "CDSC"), exchange features, conversion rights, voting rights, expenses allocations and investment requirements. As used herein, classes of shares of a Fund subject to a FESC will be referred to as FESC Shares, and classes of shares of a Fund subject to a CDSC will be referred to as CDSC Shares. 21.(a) With respect to any shares of a class of FESC Shares of an Open-End Fund, the public offering price for such shares shall be the net asset value per share plus a FESC, expressed as a percentage of the applicable public offering price, as determined and effective as of the time specified in the then-current Prospectus of such Open-End Fund. The dealer discount applicable to any sale of shares of a class of FESC Shares of an Open-End Fund shall be a percentage of the applicable public offering price for such shares as provided for in the then-current Prospectus of such Open-End Fund or, if not so provided, as provided to you from time to time in writing by VKAC. (b) With respect to any shares of a class of CDSC Shares of an Open-End Fund, the public offering price for such shares shall be the net asset value per share as determined and effective as of the time specified in the then-current Prospectus of such Open-End Fund. The dealer sales compensation payable by VKAC applicable to any sale of shares of a class of CDSC Shares of an Open-End Fund shall be the percentage of the applicable public offering price for such shares as provided for in the then-current Prospectus of such Open-End Fund or, if not so provided, as provided to you from time to time in writing by VKAC. 22. Should you wish to participate in the Distribution Plan with respect to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule 12b-1 Plan") under the Investment Company Act of 1940, as amended, or the Service Plan with respect to a class of shares, it is understood that you must be approved by the Board of Directors of such Open-End Fund and execute a Distribution Assistance Agreement. 4 5 23. With respect to the Open-End Funds, your acceptance of this Agreement constitutes a representation that you will adopt policies and procedures to comply with Rule 18f-3 under the Investment Company Act of 1940, with respect to when you may appropriately sell the various classes of shares of the Open-End Funds to investors and that you will sell such shares only in accordance therewith. 24.(a) You agree to purchase shares of an Open-End Fund only from VKAC or from your customers. If you purchase shares of an Open-End Fund from VKAC, you agree that all such purchases shall be made only: (i) to cover orders already received by you from your customers or (ii) for your own bona fide investment. If you purchase shares of an Open-End Fund from your customers, you agree to pay such customers not less than the applicable repurchase price for such shares as established by the then-current Prospectus for such Open-End Fund. VKAC in turn agrees that it will not purchase any shares from an Open-End Fund except for the purpose of covering purchase orders that it has already received. (b) With respect to shares of a class of CDSC Shares of an Open-End Fund purchased from your customers, you additionally agree to resell such shares only to VKAC as agent for the Fund at the repurchase price for such shares as established by the then-current Prospectus of such Open-End Fund. You acknowledge and understand that shares of a class of CDSC Shares of an Open-End Fund may be subject to a CDSC payable to VKAC as set forth in the Prospectus for such Open-End Fund in effect at the time of the original purchase of such shares from the Open-End Fund and that the repurchase price for such shares that will be paid by VKAC will reflect the imposition of any applicable CDSC. 25.(a) You shall sell shares of a class of shares of an Open-End Fund only: (i) to customers at the applicable public offering price or (ii) to VKAC as agent for the Open-End Fund at the repurchase price in the then-current Prospectus of such Open-End Fund. In such a sale to VKAC, you may act either as principal for your own account or as agent for your customer. If you act as principal for your own account in purchasing shares of a class of shares of an Open-End Fund for resale to VKAC, you agree to pay your customer not less than the price that you receive from VKAC. If you act as agent for your customer in selling shares of a class of shares of an Open-End Fund to VKAC, you agree not to charge your customer more than a fair commission for handling the transaction. You acknowledge and understand that CDSC Shares of an Open-End Fund may be subject to a CDSC payable to VKAC as set forth in the Prospectus of such Open-End Fund in effect at the time of the original purchase of such CDSC Shares and that the repurchase price that will be paid by VKAC for such CDSC Shares will reflect the imposition of any such CDSC. 26. If any shares of a class of FESC Shares of an Open-End Fund sold to or by you under the terms of this Agreement are repurchased by the Fund or by VKAC as agent for the Fund or are tendered for redemption within seven business days after the date of VKAC's confirmation of the original purchase, it is agreed that you shall forfeit your right to any dealer discount received by you on such FESC Shares. VKAC will notify you of any such repurchase or redemption within ten business days from the date on which the repurchase or redemption order in proper form is delivered to VKAC or to the Fund, and you shall forthwith refund to VKAC the full dealer discount allowed to you on such sale. VKAC agrees, in the event of any such repurchase or redemption, to refund to the Fund its share of any discount allowed to VKAC and, upon receipt from you of the refund of the discount allowed to you, to pay such refund forthwith to the Fund. TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS 27. No Closed-End Fund will issue fractional shares. 28. VKAC may, in its sole discretion, allocate shares of a Closed-End Fund among brokers and dealers participating in the Initial Offering Period or among brokers, dealers and banks in the Continuous Offering Period, as the case may be, on other than a pro rata basis, which may result in 5 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. 6 7 34. Unlike the other Closed-End Funds, the Continuous Offering period with respect to the Van Kampen American Capital Prime Rate Income Trust (the "Prime Rate Fund") may continue indefinitely. The offer to sell shares of the Prime Rate Fund is subject to further terms and conditions in addition to those set forth above as follows: (a) You expressly acknowledge and understand that shares of the Prime Rate Fund will not be repurchased by either the Prime Rate Fund (other than through tender offers from time to time, if any) or VKAC, and that no secondary market for the shares of the Prime Rate Fund exists currently, or is expected to develop. You also expressly acknowledge and agree that, in the event your customer cancels their order for shares after confirmation, such shares may not be repurchased, remarketed or otherwise disposed of by or through VKAC. (b) You acknowledge and understand that, while the Board of Trustees of the Prime Rate Fund intends to consider tendering for all or a portion of the Prime Rate Fund's shares on a quarterly basis, there is no assurance the Prime Rate Fund will tender for shares at any time or, following such a tender offer, that shares so tendered will be repurchased by the Prime Rate Fund. You acknowledge and understand that an early withdrawal charge payable to VKAC will be imposed on most shares accepted for tender by the Prime Rate Fund which have been held for less than five years, as set forth in the Prime Rate Fund's Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY THE PRIME RATE FUND, OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S CURRENT PROSPECTUS IS EXPRESSLY PROHIBITED. Please accept the foregoing by signing this Dealer Agreement, keeping a copy for your files and returning the original to us. Accepted and Agreed to: (PRINT OR TYPE) Dated: ________________________________________ By: Its: ________________________________________ Broker-Dealer Name ________________________________________ Broker-Dealer Taxpayer ID Number VAN KAMPEN AMERICAN CAPITAL ________________________________________ DISTRIBUTORS, INC. Address ________________________________________ City, State, Zip By: ________________________________________ Signature ________________________________________ Name ________________________________________ Title _________________________________________ Phone 7 8 EXHIBIT A POLICIES AND PROCEDURES WITH RESPECT TO SALES UNDER THE ALTERNATIVE DISTRIBUTION PLAN As certain Van Kampen American Capital open-end investment companies (the "funds") offer multiple classes of shares subject to either front-end sales charges ("FESC Shares") or contingent deferred sales charges ("CDSC Shares"), it is important for an investor not only to choose the Fund that best suits his or her investment objectives, but also to choose the alternative distribution method that best suits his or her particular situation. To assist investors in these decisions, we (the selling firm) are instituting the following policy. 1. Any purchase order for $1 million or more must be for Class A Shares. 2. Any purchase order for $100,000 but less than $1 million is subject to approval by [appropriate selling firm supervisor], who must approve the purchase order ticket for the appropriate class of shares in light of the relevant facts and circumstances, including: (a) the specific purchase order dollar amount; (b) the length of time the investor expects to hold his shares; and (c) any other relevant circumstances, such as the availability of purchase price discounts under a Letter of Intent or a Quantity Discount. There are instances when one financing method may be more appropriate than the other. For example, investors who would qualify for a significant purchase price discount from the maximum sales charge on shares of a class of FESC Shares that has such purchase price discounts may determine that payment of such a reduced front-end sales charge is superior to electing to purchase shares of a class of CDSC Shares with no front-end service charge but subject to a higher aggregate distribution and service fee. On the other hand, an investor whose order would not qualify for such purchase price discounts and intends to remain invested until after the expiration of the applicable CDSC may wish to defer the sales charge and have all his funds invested in Class B Shares initially. In addition if such investor anticipates that he or she will redeem such shares prior to the expiration of the CDSC period applicable to Class B Shares the investor may, depending on the amount of his purchase, wish to acquire Class C Shares. However, investors who intend to hold their shares for a significantly long time may not wish to continue to bear the ongoing distribution and service expenses of shares of Class C Shares, irrespective of the fact that a contingent deferred sales charge would eventually not apply to a redemption of such shares. [The appropriate selling firm supervisor] must ensure that all employees receiving investor inquiries about the purchase of shares from funds subject to Van Kampen American Capital Distributors, Inc.'s alternative distribution plan advise the investor of the available alternative distribution methods offered by such funds and the impact of choosing one method over another. It may be appropriate for [the appropriate selling firm supervisor] to discuss the purchase with the investor. This policy is effective immediately with respect to any order for the purchase of shares from a fund subject to Van Kampen American Capital Distributors, Inc.'s alternative distribution plan. Questions relating to this policy should be directed to [appropriate selling firm supervisor]. 8 EX-99.B6.3 12 BROKER CLEARING AGREEMENT 1 EXHIBIT 6.3 --------------------------------------------------------- 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. 1 2 2. For the purposes of the Securities and Exchange Commission's Financial Responsibility Rules and the Securities Investor's Protection Act, your customers will be considered customers of VKAC and not of your firm. VKAC has been granted an exemption from the NASD rules of Fair Practice, Article III Section 45 requirements to send customer statements and thus will not due so. Customer statements showing account activity and balances will be mailed to the customer by the Funds each time a financial transaction occurs in their account and on a monthly basis. Nothing herein shall cause your firm's customers to be interpreted as customers of VKAC for any other purpose, or to negate the intent of any other section of this agreement, including, but not limited to, the delineation of responsibilities as set forth elsewhere in this agreement. 3. In transactions where you make available shares of the Funds to the public, you shall have no authority to act as agent for the Fund or for VKAC. 4. Each Fund has filed with the SEC and the securities commissions of one or more states a Registration Statement (the "Registration Statement") on the SEC form applicable to the respective Fund. The date on which the Registration Statement is declared effective by the SEC is referred to herein as the "Effective Date". Prior to the Effective Date of the Registration Statement with respect to a particular Fund, you expressly acknowledge and understand that with respect to such Fund: (a) Shares of such Fund may not be sold, nor may offers to buy be accepted, (i) prior to the Effective Date of the Registration Statement or (ii) in any state in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of such state. (b) The Fund's Preliminary Prospectus, together with any sales material distributed for use in connection with the offering of shares of such Fund, does not constitute an offer to sell or the solicitation of an offer to buy shares of such Fund and is subject to completion and modification by the Prospectus. (c) In the event that you transmit indications of interest to VKAC for accumulation prior to the Effective Date, upon your instruction VKAC will send confirmation of such indications of interest directly to your customers in writing, together with copies of the Preliminary Prospectus for the Fund, and send copies of the confirmations to you. Indications of interest with respect to shares of a class of a Fund's shares transmitted to VKAC prior to the Effective Date are subject to acceptance or rejection by VKAC in its sole discretion and are conditioned upon the occurrence of (i) the Effective Date and (ii) the registration or qualification of the respective class of shares in the respective state. (d) Indications of interest with respect to shares of a class of a Fund's shares not cancelled by you prior to or on the later of (i) the Effective Date and (ii) the registration or qualification of the respective class of shares in the respective state, and accepted by VKAC will be deemed by VKAC to be orders for Shares. (e) Upon your instruction, VKAC will send confirmations of orders accepted by VKAC (including indications of interest deemed orders) directly to your customers in writing, together with copies of the Prospectus for the Fund, and send copies of the confirmations to you. (f) Upon receipt of duplicate confirmations you will examine the same and promptly notify VKAC of any errors or discrepancies that you discover and will promptly bring to VKAC's attention any errors in such confirmations claimed by your customers. All confirmations to your customers will indicate that orders were placed on a fully disclosed basis. (g) All indications of interest and orders transmitted to VKAC are subject to the terms and conditions of the Fund's Prospectus and this Agreement and are subject to acceptance or rejection by VKAC in its sole discretion. 5. After the Effective Date, you will not make shares of a class of the Fund's shares available in any state where they are not qualified for sale under the "blue sky" laws and regulations of such state, except for states in which they are exempt from qualification. 2 3 6. In the event that you make shares of the Fund available outside the United States, you agree to comply with the applicable laws, rules and regulations of the foreign government having jurisdiction over such sales, including any regulations of the United States military authorities applicable to solicitations to military personnel. 7. Upon application to VKAC, VKAC will inform you as to the jurisdictions in which VKAC believes shares of a Fund have been qualified for sale under the respective securities or "blue sky" laws of such jurisdictions. VKAC understands and agrees that qualification of any shares of a Fund for sale in such jurisdictions shall be solely VKAC's responsibility and that you assume no responsibility or obligation with respect to such eligibility. You understand and agree that your compliance with the requirements of the securities or "blue sky" laws in each jurisdiction with respect to your right to make the shares available in such jurisdiction shall be solely your responsibility. 8. No person is authorized to make any representations concerning any class of shares of a Fund except those contained in the Fund's current Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares from us you shall rely solely on the representations contained in such Prospectus. VKAC will furnish additional copies of a Fund's current Prospectus and sales literature issued by VKAC in reasonable quantities upon request. 9. You agree that you will distribute to the public only (a) the Preliminary Prospectus, the Prospectus and any amendment or supplement thereto and (b) sales literature or other documents expressly authorized for such distribution by VKAC. 10. Orders received from you will be accepted by VKAC only at the public offering price applicable to each order as specified in the then-current Fund Prospectus. The minimum dollar purchase of any shares of each Fund by any person shall be the applicable minimum dollar amount described in the then-current Fund Prospectus for that class of shares, and no order for less than such amount will be accepted hereunder. The procedures relating to the handling of orders shall be subject to instructions that VKAC shall communicate from time to time to you. All orders are subject to acceptance or rejection by VKAC in its sole discretion. Upon acceptance of an order, we shall confirm directly to the customer in writing upon your instruction and send a copy of the confirmation to you. In addition, we will send a Fund Prospectus with the confirmation. You agree that upon receipt of duplicate confirmations you will examine the same and promptly notify VKAC of any errors or discrepancies that you discover and shall promptly bring to VKAC's attention any errors in such confirmations claimed by your customers. All confirmations to your customers will indicate that orders were placed on a fully disclosed basis. 11. Payment for Fund shares shall be made on or before the settlement date specified in the VKAC confirmation at the office of VKAC's clearing agent, by check payable to the order of the Fund which reserves VKAC's right to delay issuance of transfer of shares until such check has cleared. If such payment is not received by VKAC, VKAC reserves the right, without notice, forthwith either to cancel the trade at our option or as required by the provisions of Regulation T, and in either case, VKAC may hold you responsible for any loss suffered by the Fund. You agree that in transmitting investors' funds, you will comply with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended. 12. You shall not withhold placing orders with VKAC from your customers so as to profit yourself as a result of such withholding; e.g., by a change in the net asset value from that used in determining the public offering price to your customers. 13. VKAC will not accept from you any conditioned orders for shares, except at a definite, specified price. 14. You represent that you are familiar with Release No. 4968 under the Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities Exchange Act of 1934, as amended, as it relates to the distribution of Preliminary Prospectuses (and not Statements of Additional Information) and Prospectuses (and not Statements of Additional Information) for each Fund and agree that you will comply therewith. You agree that if an investor or potential investor places a request with you to receive a Statement of Additional Information, you will (i) provide such person with a Statement of Additional Information without charge and notify the Fund that you have done so, (ii) notify the Fund of the request so that the Fund can fulfill the request or (iii) tell such person to request a Statement of Additional Information by telephoning the Fund at the number set forth on the cover of the current Prospectus or Preliminary Prospectus. You also agree to keep an accurate record of your distribution (including dates, 3 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 4 5 provided for in the then-current Prospectus of such Open-End Fund or, if not so provided, as provided to you from time to time in writing by VKAC. 25. Should you wish to participate in the Distribution Plan with respect to a class of shares adopted by an Open-End Fund pursuant to Rule 12b-1 ("Rule 12b-1 Plan") under the Investment Company Act of 1940, as amended, or the Service Plan with respect to a class of shares, it is understood that you must be approved by the Board of Directors of such Open-End Fund and execute a Distribution Assistance Agreement. 26. With respect to the Open-End Funds, your acceptance of this Agreement constitutes a representation that you will adopt policies and procedures to comply with Rule 18f-3 under the Investment Company Act of 1940, with respect to when you may appropriately make available the various classes of shares of the Open-End Funds to investors and that you will make available such shares only in accordance therewith. 27. You agree to make shares of an Open-End Fund available to your customers only: (i) at the applicable public offering price, (ii) from VKAC and (iii) to cover orders already received by you from your customers. VKAC in turn agrees that it will not purchase any shares from an Open-End Fund except for the purpose of covering purchase orders that it has already received. 28.(a) If any shares of a class of FESC Shares of an Open-End Fund sold to your customers under the terms of this Agreement are repurchased by the Fund or by VKAC as agent for the Fund or are tendered for redemption within seven business days after the date of VKAC's confirmation of the original purchase, it is agreed that you shall forfeit your right to any agency commission received by you on such FESC Shares. VKAC will notify you of any such repurchase or redemption within ten business days from the date on which the repurchase or redemption order in proper form is delivered to VKAC or to the Fund, and you shall forthwith refund to VKAC the full agency commission allowed to you on such sale. VKAC agrees, in the event of any such repurchase or redemption, to refund to the Fund its share of any discount allowed to VKAC and, upon receipt from you of the refund of the agency commission allowed to you, to pay such refund forthwith to the Fund. (b) If any shares of a class of CDSC Shares sold to your customers under the terms of this Agreement are repurchased by the Fund or by VKAC as agent for the Fund or are tendered for redemption within seven business days after the date of VKAC's confirmation of the original purchase, it is agreed that you shall forfeit your right to any sales compensation received by you on such CDSC Shares. We will notify you of any such repurchase or redemption within ten business days from the date on which the repurchase or redemption order in proper form is delivered to VKAC or to the Fund, and you shall forthwith refund to VKAC the full sales compensation paid to you. TERMS AND CONDITIONS APPLICABLE TO CLOSED END-FUNDS 29. No Closed-End Fund will issue fractional shares. 30. VKAC may, in its sole discretion, allocate shares of a Closed-End Fund among brokers, dealers and, if permitted by applicable laws, banks participating in the Initial Offering Period or among brokers, dealers and banks in the Continuous Offering Period, as the case may be, on other than a pro rata basis, which may result in certain brokers, dealers and banks not being allocated the full amount of shares of such Fund sold by them while certain other brokers, dealers and banks may receive their full allocation. 31. You agree that with respect to orders for shares of a Closed-End Fund, you will transmit such orders received during the Initial Offering Period to VKAC within the time period as specified in such Closed-End Fund's Prospectus (or in the time period as extended by VKAC in writing). You also agree to transmit any customer order received during the Continuous Offering Period to VKAC prior to the time that the public offering price for such Closed-End Fund is next determined after your receipt of such order, as set forth in the Closed-End Fund's Prospectus. There is no assurance that each Closed-End Fund will engage in a continuous offering of shares. 32. On each order accepted by VKAC for shares of a Closed-End Fund, you will be entitled to receive a concession paid out of VKAC's own assets as set forth in the then-current Prospectus of such Closed-End Fund (exclusive of additional compensation that may be payable pursuant to sales programs, if any, that may be established from time to time as described in the Prospectus for such Closed-End Fund, which will be payable only as and to the extent the requirements 5 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 6 7 THE PRIME RATE FUND, OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S CURRENT PROSPECTUS, IS EXPRESSLY PROHIBITED. Please accept the foregoing by signing this Broker Fully Disclosed Clearing Agreement, keeping a copy for your files and returning the original to us. Accepted and Agreed to: (PRINT OR TYPE) Dated: ___________________________________________ By: ___________________________________________ Its: VAN KAMPEN AMERICAN CAPITAL __________________________________________ DISTRIBUTORS, INC. Broker-Dealer Name ________________________________________ Broker-Dealer Taxpayer ID Number ________________________________________ Address ________________________________________ City, State, Zip By: ________________________________________ Signature ________________________________________ Name ________________________________________ Title ________________________________________ Phone 7 8 EXHIBIT A POLICIES AND PROCEDURES WITH RESPECT TO SALES UNDER THE ALTERNATIVE DISTRIBUTION PLAN As certain Van Kampen American Capital open-end investment companies (the "funds") offer multiple classes of shares subject to either front-end sales charges ("FESC Shares") or contingent deferred sales charges ("CDSC Shares"), it is important for an investor not only to choose the Fund that best suits his or her investment objectives, but also to choose the alternative distribution method that best suits his or her particular situation. To assist investors in these decisions, we (the selling firm) are instituting the following policy. 1. Any purchase order for $1 million or more must be for Class A Shares. 2. Any purchase order for $100,000 but less than $1 million is subject to approval by [appropriate selling firm supervisor], who must approve the purchase order ticket for the appropriate class of shares in light of the relevant facts and circumstances, including: (a) the specific purchase order dollar amount; (b) the length of time the investor expects to hold his shares; and (c) any other relevant circumstances, such as the availability of purchase price discounts under a Letter of Intent or a Quantity Discount. There are instances when one financing method may be more appropriate than the other. For example, investors who would qualify for a significant purchase price discount from the maximum sales charge on shares of a class of FESC Shares that has such purchase price discounts may determine that payment of such a reduced front-end sales charge is superior to electing to purchase shares of a class of CDSC Shares with no front-end service charge but subject to a higher aggregate distribution and service fee. On the other hand, an investor whose order would not qualify for such purchase price discounts and intends to remain invested until after the expiration of the applicable CDSC may wish to defer the sales charge and have all his funds invested in Class B Shares initially. In addition if such investor anticipates that he or she will redeem such shares prior to the expiration of the CDSC period applicable to Class B Shares the investor may, depending on the amount of his purchase, wish to acquire Class C Shares. However, investors who intend to hold their shares for a significantly long time may not wish to continue to bear the ongoing distribution and service expenses of shares of Class C Shares, irrespective of the fact that a contingent deferred sales charge would eventually not apply to a redemption of such shares. [The appropriate selling firm supervisor] must ensure that all employees receiving investor inquiries about the purchase of shares from funds subject to Van Kampen American Capital Distributors, Inc.'s alternative distribution plan advise the investor of the available alternative distribution methods offered by such funds and the impact of choosing one method over another. It may be appropriate for [the appropriate selling firm supervisor] to discuss the purchase with the investor. This policy is effective immediately with respect to any order for the purchase of shares from a fund subject to Van Kampen American Capital Distributors, Inc.'s alternative distribution plan. Questions relating to this policy should be directed to [appropriate selling firm supervisor]. 8 EX-99.B6.4 13 BANK CLEARING AGREEMENT 1 EXHIBIT 6.4 ---------------------------------------------------------------------- BANK FULLY DISCLOSED CLEARING AGREEMENT WITH VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC. REGARDING VAN KAMPEN AMERICAN CAPITAL OPEN-END AND CLOSED-END INVESTMENT COMPANIES ----------------------------------------------------------------------- Ladies and Gentlemen: As dealer for our own account, we offer to make available to you shares of any of the Van Kampen American Capital open-end investment companies (the "Open-End Funds" or, individually, an "Open-End Fund") and Van Kampen American Capital closed-end investment companies (the "Closed-End Funds" or, individually, a "Closed-End Fund") distributed by Van Kampen American Capital Distributors, Inc. ("VKAC") pursuant to the terms and conditions contained herein. Collectively, the Open-End Funds and Closed-End Funds sometimes are referred to herein as the "Funds" or, individually, as a "Fund". You are a bank that desires to make available shares of such Funds to your customers on a fully disclosed basis wherein VKAC would confirm transactions of your customers in a Fund directly to them. You agree not to make available shares of such Funds during any fixed price offering of such shares. VKAC acts as the principal underwriter (as such term is defined in the Investment Company Act of 1940, as amended) for each Fund with respect to its offering of one or more classes of shares as described in each Fund's Prospectus. Pursuant to this Agreement, VKAC offers to make available to you shares of each Open-End Fund and each Closed-End Fund prior to the Effective Date (as defined herein) of each Fund's Registration Statement (as defined herein) (the "Initial Offering Period"), to the extent permitted by applicable law, and after the Effective Date of each Fund's Registration Statement (the "Continuous Offering Period") (if any) as described in such Closed-End Fund's Prospectus. As used herein unless otherwise indicated, the term "Prospectus" means the final prospectus and Statement of Additional Information included in the Registration Statement for the Fund on the Effective Date and as from time to time thereafter amended or supplemented. As used herein unless otherwise indicated, the term "Preliminary Prospectus" means any preliminary prospectus and any Statement of Additional Information included at any time as a part of the Registration Statement for any Fund prior to the Effective Date and that is authorized by VKAC for use in connection with the offering of shares. In consideration of the mutual obligations contained herein, the sufficiency of which is hereby acknowledged by you, the terms of the Agreement are as follows: GENERAL TERMS AND CONDITIONS 1. Your acceptance of this Agreement constitutes a representation that you are a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, as amended, and have been duly authorized to enter into this Agreement and perform your obligations hereunder. This Agreement as well as your authority to make shares available to your customers will automatically terminate if you shall cease to be a bank as defined above. You agree not to offer or sell shares of any Fund except through VKAC. You will not accept any orders from any broker, dealer or financial institution who is purchasing from you with a view toward distribution unless you have obtained such person's or entity's written consent to be bound by the terms of this Agreement. 2. For the purposes of the Securities and Exchange Commission's Financial Responsibility Rules and the Securities Investor's Protection Act, your customers will be considered customers of VKAC and not of your firm. VKAC has been granted an exemption from the NASD rules of Fair Practice, Article III Section 45 requirements to send customer statements and thus will not due so. Customer statements showing account activity and balances will be mailed to the customer by the Funds each time a financial transaction occurs in their account and on a monthly basis. Nothing herein shall cause your firm's customers to be interpreted as customers of VKAC for any other purpose, or to negate 1 2 the intent of any other section of this agreement, including, but not limited to, the delineation of responsibilities as set forth elsewhere in this agreement. 3. In transactions where you make available shares of the Funds to the public, you shall have no authority to act as agent for the Fund or for VKAC. The customers in question are for all purposes your customers and not customers of VKAC. We will clear transactions for each of your customers only upon your authorization, it being understood in all cases that (a) you are acting as the agent for the customer; (b) the transactions are without recourse against you by the customer except to the extent that your failure to transmit orders in a timely fashion results in a loss to your customer; (c) as between you and the customer, the customer will have full beneficial ownership of the Fund shares; (d) each transaction is initiated solely upon the order of the customer; and (e) each transaction is for the account of the customer and not for your account. 4. Each Fund has filed with the Securities and Exchange Commission (the "SEC") and the securities commissions of one or more states a Registration Statement (the "Registration Statement") on the SEC form applicable to the respective Fund. The date on which the Registration Statement is declared effective by the SEC is hereinafter referred to as the "Effective Date". Prior to the Effective Date of the Registration Statement with respect to a particular Fund, you expressly acknowledge and understand that with respect to such Fund: (a) Shares of such Fund may not be sold, nor may offers to buy be accepted, (i) prior to the Effective Date of the Registration Statement or (ii) in any state in which such offer or sale would be unlawful prior to registration or qualification under the securities laws of such state. (b) Except to the extent permitted by law, you will not solicit or transmit to VKAC any indications of interest to purchase shares during any fixed-price offering. (c) The Fund's Preliminary Prospectus, together with any sales material distributed for use in connection with the offering of shares of such Fund, does not constitute an offer to sell or the solicitation of an offer to buy shares of such Fund and is subject to completion and modification by the Prospectus. (d) In the event and to the extent permitted by applicable law you transmit indications of interest to VKAC for accumulation prior to the Effective Date, upon your instruction VKAC will send confirmation of such indications of interest directly to your customers in writing, together with copies of the Preliminary Prospectus for the Fund, and send copies of the confirmations to you. Indications of interest with respect to shares of a class of a Fund's shares transmitted to VKAC prior to the Effective Date are subject to acceptance or rejection by VKAC in its sole discretion and are conditioned upon the occurrence of (i) the Effective Date and (ii) the registration or qualification of the respective class of shares in the respective state. (e) Indications of interest with respect to shares of a class of a Fund's shares not canceled by you prior to or on the later of (i) the Effective Date and (ii) the registration or qualification of the respective class of shares in the respective state, and accepted by VKAC will be deemed by VKAC to be orders for Shares solely to the extent permitted by applicable law. (f) Upon your instruction, VKAC will send confirmations of orders accepted by VKAC (including indications of interest deemed orders) directly to your customers in writing, together with copies of the Prospectus for the Fund, and send copies of the confirmations to you. (g) Upon receipt of duplicate confirmations you will examine the same and promptly notify VKAC of any errors or discrepancies that you discover and will promptly bring to VKAC's attention any errors in such confirmations claimed by your customers. All confirmations to your customers will indicate that orders were placed on a fully disclosed basis. (h) All indications of interest and orders transmitted to VKAC are subject to the terms and conditions of the Fund's Prospectus and this Agreement and are subject to acceptance or rejection by VKAC in its sole discretion. 2 3 5. After the Effective Date, you will not make shares of a class of the Fund's shares available in any state where they are not qualified for sale under the "blue sky" laws and regulations of such state, except for states in which they are exempt from qualification. 6. In the event that you make shares of the Fund available outside the United States, you agree to comply with the applicable laws, rules and regulations of the foreign government having jurisdiction over such sales, including any regulations of the United States military authorities applicable to solicitations to military personnel. 7. Upon application to VKAC, VKAC will inform you as to the jurisdictions in which VKAC believes shares of a Fund have been qualified for sale under the respective securities or "blue sky" laws of such jurisdictions. VKAC understands and agrees that qualification of any shares of a Fund for sale in such jurisdictions shall be solely VKAC's responsibility and that you assume no responsibility or obligation with respect to such eligibility. You understand and agree that your compliance with the requirements of the securities or "blue sky" laws in each jurisdiction with respect to your right to make the shares available in such jurisdiction shall be solely your responsibility. 8. No person is authorized to make any representations concerning any class of shares of a Fund except those contained in the Fund's current Preliminary Prospectus or Prospectus, as the case may be. In purchasing shares from us you shall rely solely on the representations contained in such Prospectus. VKAC will furnish additional copies of a Fund's current Prospectus and sales literature issued by VKAC in reasonable quantities upon request. 9. You agree that you will distribute to the public only (i) the Prospectus and any amendment or supplement thereto and (ii) sales literature or other documents expressly authorized for such distribution by VKAC. 10. Orders received from you will be accepted by VKAC only at the public offering price applicable to each order as specified in the then-current Fund Prospectus. The minimum dollar purchase of any shares of each Fund by any person shall be the applicable minimum dollar amount described in the then-current Fund Prospectus for that class of shares, and no order for less than such amount will be accepted hereunder. The procedures relating to the handling of orders shall be subject to instructions that VKAC shall communicate from time to time to you. All orders are subject to acceptance or rejection by VKAC in its sole discretion. Upon acceptance of an order, we shall confirm directly to the customer in writing upon your instruction and send a copy of the confirmation to you. In addition, we will send a Fund Prospectus with the confirmation. You agree that upon receipt of duplicate confirmations you will examine the same and promptly notify VKAC of any errors or discrepancies that you discover and shall promptly bring to VKAC's attention any errors in such confirmations claimed by your customers. All confirmations to your customers will indicate that orders were placed on a fully disclosed basis. 11. Payment for Fund shares shall be made on or before the settlement date specified in the VKAC confirmation at the office of VKAC's clearing agent, by check payable to the order of the Fund which reserves VKAC's right to delay issuance or transfer of shares until such check has cleared. If such payment is not received by VKAC, VKAC reserves the right, without notice, forthwith either to cancel the trade at our option or as required by the provisions of Regulation T, and in either case, VKAC may hold you responsible for any loss suffered by the Fund. You agree that in transmitting investors' funds, you will comply with Rule 15c2-4 under the Securities Exchange Act of 1934, as amended. 12. You shall not withhold placing orders with VKAC from your customers so as to profit yourself as a result of such withholding; e.g., by a change in the net asset value from that used in determining the public offering price to your customers. 13. VKAC will not accept from you any conditioned orders for shares, except at a definite, specified price. 14. You represent that you are familiar with Release No. 4968 under the Securities Act of 1933, as amended, and Rule 15c2-8 under the Securities Exchange Act of 1934, as amended, as it relates to the distribution of Preliminary Prospectuses (and not Statements of Additional Information) and Prospectuses (and not Statements of Additional Information) for each Fund and agree that you will comply therewith. You agree that if an investor or potential investor places a request with you to receive 3 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. 4 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 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 7 customer cancels their order for shares after confirmation, such shares may not be repurchased, remarketed or otherwise disposed of by or through VKAC. (b) You acknowledge and understand that, while the Board of Trustees of the Prime Rate Fund intends to consider tendering for all or a portion of the Prime Rate Fund's shares on a quarterly basis, there is no assurance the Prime Rate Fund will tender for shares at any time or, following such a tender offer, that shares so tendered will be repurchased by the Prime Rate Fund. You acknowledge and understand that an early withdrawal charge payable to VKAC will be imposed on most shares accepted for tender by the Prime Rate Fund that have been held for less than five years, as set forth in the Prime Rate Fund's Prospectus. ANY REPRESENTATION AS TO A TENDER OFFER BY THE PRIME RATE FUND, OTHER THAN THAT WHICH IS SET FORTH IN THE PRIME RATE FUND'S CURRENT PROSPECTUS, IS EXPRESSLY PROHIBITED. Please accept the foregoing by signing this Bank Fully Disclosed Clearing Agreement, keeping a copy for your files and returning the original to us. Accepted and Agreed to: (PRINT OR TYPE) Dated: ________________________________________ By: Its: ________________________________________ Bank Name VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC. ________________________________________ Bank Taxpayer ID Number ________________________________________ Address ________________________________________ City, State, Zip ________________________________________ Phone ________________________________________ Signature ________________________________________ Name ________________________________________ Title 7 8 EXHIBIT A POLICIES AND PROCEDURES WITH RESPECT TO SALES UNDER THE ALTERNATIVE DISTRIBUTION PLAN As certain Van Kampen American Capital open-end investment companies (the "funds") offer multiple classes of shares subject to either front-end sales charges ("FESC Shares") or contingent deferred sales charges ("CDSC Shares"), it is important for an investor not only to choose the Fund that best suits his or her investment objectives, but also to choose the alternative distribution method that best suits his or her particular situation. To assist investors in these decisions, we (the selling firm) are instituting the following policy. 1. Any purchase order for $1 million or more must be for Class A Shares. 2. Any purchase order for $100,000 but less than $1 million is subject to approval by [appropriate selling firm supervisor], who must approve the purchase order ticket for the appropriate class of shares in light of the relevant facts and circumstances, including: (a) the specific purchase order dollar amount; (b) the length of time the investor expects to hold his shares; and (c) any other relevant circumstances, such as the availability of purchase price discounts under a Letter of Intent or a Quantity Discount. There are instances when one financing method may be more appropriate than the other. For example, investors who would qualify for a significant purchase price discount from the maximum sales charge on shares of a class of FESC Shares that has such purchase price discounts may determine that payment of such a reduced front-end sales charge is superior to electing to purchase shares of a class of CDSC Shares with no front-end service charge but subject to a higher aggregate distribution and service fee. On the other hand, an investor whose order would not qualify for such purchase price discounts and intends to remain invested until after the expiration of the applicable CDSC may wish to defer the sales charge and have all his funds invested in Class B Shares initially. In addition if such investor anticipates that he or she will redeem such shares prior to the expiration of the CDSC period applicable to Class B Shares the investor may, depending on the amount of his purchase, wish to acquire Class C Shares. However, investors who intend to hold their shares for a significantly long time may not wish to continue to bear the ongoing distribution and service expenses of shares of Class C Shares, irrespective of the fact that a contingent deferred sales charge would eventually not apply to a redemption of such shares. [The appropriate selling firm supervisor] must ensure that all employees receiving investor inquiries about the purchase of shares from funds subject to Van Kampen American Capital Distributors, Inc.'s alternative distribution plan advise the investor of the available alternative distribution methods offered by such funds and the impact of choosing one method over another. It may be appropriate for [the appropriate selling firm supervisor] to discuss the purchase with the investor. This policy is effective immediately with respect to any order for the purchase of shares from a fund subject to Van Kampen American Capital Distributors, Inc.'s alternative distribution plan. Questions relating to this policy should be directed to [appropriate selling firm supervisor]. 8 EX-99.B8.2 14 TRANSFER AGENCY AND SERVICE AGREEMENT 1 EXHIBIT 8.2 TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of the 31st day of July, 1995 by and between each of the VAN KAMPEN AMERICAN CAPITAL OPEN END FUNDS set forth on Schedule "A" hereto, which are organized under the laws of the state and as the entities set forth in Schedule "A" hereto, having their principal office and place of business at Houston, Texas (collectively, the "Funds"), and ACCESS INVESTOR SERVICES, INC., a Delaware corporation, having its principal office at Houston, Texas, and its principal place of business at Kansas City, Missouri ("ACCESS"). R E C I T A L: WHEREAS, each of the Funds desires to appoint ACCESS as its transfer agent, dividend disbursing agent and shareholder service agent, and ACCESS desires to accept such appointments; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE 1. TERMS OF APPOINTMENT; DUTIES OF ACCESS. 1.01 Subject to the terms and conditions set forth in this Agreement, each of the Funds hereby employs and appoints ACCESS as its transfer agent, dividend disbursing agent and shareholder service agent. 1.02 ACCESS hereby accepts such employment and appointments and agrees that on and after the effective date of this Agreement it will act as the transfer agent, dividend disbursing agent and shareholder service agent for each of the Funds on the terms and conditions set forth herein. 1.03 ACCESS agrees that its duties and obligations hereunder will be performed in a competent, efficient and workmanlike manner with due diligence in accordance with reasonable industry practice, and that the necessary facilities, equipment and personnel for such performance will be provided. 1.04 In order to assure compliance with section 1.03 and to implement a cooperative effort to improve the quality of transfer agency and shareholder services received by each of the Funds and its shareholders, 1 2 ACCESS agrees to provide and maintain quantitative performance objectives, including maximum target turn-around times and maximum target error rates, for the various services provided hereunder. ACCESS also agrees to provide a reporting system designed to provide the Board of Trustees or Board of Directors of each of the Funds (the "Board") on a quarterly basis with quantitative data comparing actual performance for the period with the performance objectives. The foregoing procedures are designed to provide a basis for continuing monitoring by the Board of the quality of services rendered hereunder. ARTICLE 2. FEES AND EXPENSES. 2.01 For the services to be performed by ACCESS pursuant to this Agreement, each of the Funds agrees to pay ACCESS the fees provided in the fee schedules agreed upon from time to time by each of the Funds and ACCESS. 2.02 In addition to the amounts paid under section 2.01 above, each of the Funds agrees to reimburse ACCESS promptly for such Fund's reasonable out-of-pocket expenses or advances paid on its behalf by ACCESS in connection with its performance under this Agreement for postage, freight, envelopes, checks, drafts, continuous forms, reports and statements, telephone, telegraph, costs of outside mailing firms, necessary outside record storage costs, media for storage of records (e.g., microfilm, microfiche and computer tapes) and printing costs incurred due to special requirements of such Fund. In addition, any other special out-of-pocket expenses paid by ACCESS at the specific request of any of the Funds will be promptly reimbursed by the requesting Fund. Postage for mailings of dividends, proxies, Fund reports and other mailings to all shareholder accounts shall be advanced to ACCESS by the concerned Fund three business days prior to the mailing date of such materials. ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF ACCESS. ACCESS represents and warrants to each of the Funds that: 3.01 It is a corporation duly organized and existing and in good standing under the laws of the State of Delaware. 3.02 It is duly qualified to carry on its business in the states of Texas and Missouri. 3.03 It is empowered under applicable laws and by its charter and bylaws to enter into and perform this Agreement. 2 3 3.04 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. 3.05 It has and will continue to have during the term of this Agreement access to the necessary facilities, equipment and personnel to perform its duties and obligations hereunder. 3.06 It will maintain a system regarding "as of" transactions as follows: (a) Each "as of" transaction effected at a price other than that in effect on the day of processing for which an estimate has not been given to any of the affected Funds and which is necessitated by ACCESS' error, or delay for which ACCESS is responsible or which could have been avoided through the exercise of reasonable care, will be identified, and the net effect of such transactions determined, on a daily basis for each such Fund. (b) The cumulative net effect of the transactions included in paragraph (a) above will be determined each day throughout each month. If, on any day during the month, the cumulative net effect upon any Fund is negative and exceeds an amount equivalent to 1/2 of 1 cent per share of such Fund, ACCESS shall promptly make a payment to such Fund (in cash or through use of a credit as described in paragraph (c) below) in such amount as necessary to reduce the negative cumulative net effect to less than 1/2 of 1 cent per share of such Fund. If on the last business day of the month the cumulative net effect (adjusted by the amount of any payments pursuant to the preceding sentence) upon any Fund is negative, such Fund shall be entitled to a reduction in the monthly transfer agency fee next payable by an equivalent amount, except as provided in paragraph (c) below. If on the last business day of the month the cumulative net effect (similarly adjusted) upon any Fund is positive, ACCESS shall be entitled to recover certain past payments and reductions in fees, and to a credit against all future payments and fee reductions made under this paragraph to such Fund, as described in paragraph (c) below. (c) At the end of each month, any positive cumulative net effect upon any Fund shall be deemed to be a credit to ACCESS which shall first be applied to recover any payments and fee reductions made by ACCESS to such Fund under paragraph (b) above during the calendar year by increasing the amount of the monthly transfer agency fee next payable in an amount equal to prior payments and fee 3 4 of the monthly transfer agency fee next payable in an amount equal to prior payments and fee reductions made during such year, but not exceeding the sum of that month's credit and credits arising in prior months during such year to the extent such prior credits have not previously been utilized as contemplated by this paragraph (c). Any portion of a credit to ACCESS not so used shall remain as a credit to be used as payment against the amount of any future negative cumulative net effects that would otherwise require a payment or fee reduction to such Fund pursuant to paragraph (b) above. ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE FUNDS. Each of the Funds hereby represents and warrants on behalf of itself only and not any other Funds that are a party to this Agreement that: 4.01 It is duly organized and existing and in good standing under the laws of the Commonwealth of Massachusetts. 4.02 It is empowered under applicable laws and regulations and by its Declaration of Trust or Articles of Incorporation and by-laws to enter into and perform this Agreement. 4.03 All requisite proceedings have been taken by its Board to authorize it to enter into and perform this Agreement. 4.04 It is an open-end, diversified, management investment company registered under the Investment Company Act of 1940, as amended. 4.05 A registration statement under the Securities Act of 1933, as amended, is currently effective and will remain effective, and appropriate state securities laws filings have been made and will continue to be made, with respect to all of its shares being offered for sale. ARTICLE 5. INDEMNIFICATION. 5.01 ACCESS shall not be responsible for and each of the Funds shall indemnify and hold ACCESS harmless from and against any and all losses, damages, costs, charges, reasonable counsel fees, payments, expenses and liabilities arising out of or attributable to: 4 5 (a) All actions of ACCESS required to be taken by ACCESS for the benefit of such Fund pursuant to this Agreement, provided ACCESS has acted in good faith with due diligence and without negligence or willful misconduct. (b) The reasonable reliance by ACCESS on, or reasonable use by ACCESS of, information, records and documents which have been prepared or maintained by or on behalf of such Fund or have been furnished to ACCESS by or on behalf of such Fund. (c) The reasonable reliance by ACCESS on, or the carrying out by ACCESS of, any instructions or requests of such Fund. (d) The offer or sale of such Fund's shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such shares in such state unless such violation results from any failure by ACCESS to comply with written instructions of such Fund that no offers or sales of such Fund's shares be made in general or to the residents of a particular state. (e) Such Fund's refusal or failure to comply with the terms of this Agreement, or such Fund's lack of good faith, negligence or willful misconduct or the breach of any representation or warranty of such Fund hereunder. 5.02 ACCESS shall indemnify and hold each of the Funds harmless from and against any and all losses, damages, costs, charges, reasonable counsel fees, payments, expenses and liability arising out of or attributable to ACCESS' refusal or failure to comply with the terms of this Agreement, or ACCESS' lack of good faith, negligence or willful misconduct, or the breach of any representation or warranty of ACCESS hereunder. 5.03 At any time ACCESS may apply to any authorized officer of any of the Funds for instructions, and may consult with any of the Funds' legal counsel, at the expense of such concerned Fund, with respect to any matter arising in connection with the services to be performed by ACCESS under this Agreement, and ACCESS shall not be liable and shall be indemnified by such concerned Fund for any action taken or omitted by it in good faith in reasonable reliance upon such instructions or upon the opinion of such counsel. ACCESS shall be protected and 5 6 indemnified in acting upon any paper or document reasonably believed by ACCESS to be genuine and to have been signed by the proper person or persons and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the concerned Fund. ACCESS shall also be protected and indemnified in recognizing stock certificates which ACCESS reasonably believes to bear the proper manual or facsimile signatures of the officers of the concerned Fund, and the proper countersignature of any former transfer agent or registrar, or of a co-transfer agent or co-registrar. 5.04 In the event any party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 5.05 In no event and under no circumstances shall any party to this Agreement be liable to another party for consequential damages under any provision of this Agreement or for any act or failure to act hereunder. 5.06 In order that the indemnification provisions contained in this Article 5 shall apply, upon the assertion of a claim for which one party may be required to indemnify another, the party seeking indemnification shall promptly notify the other party of such assertion, and shall keep the other party advised with respect to all developments concerning such claim. The party who may be required to indemnify shall have the option to participate with the party seeking indemnification in the defense of such claim. The party seeking indemnification shall in no case confess any claim or make any compromise in any case in which the other party may be required to indemnify it except with the other party's prior written consent. ARTICLE 6. COVENANTS OF EACH OF THE FUNDS AND ACCESS. 6.01 Each of the Funds shall promptly furnish to ACCESS the following: (a) Certified copies of the resolution of its Board authorizing the appointment of ACCESS and the execution and delivery of this Agreement. (b) Certified copies of its Declaration of Trust or Articles of Incorporation and by-laws and all amendments thereto. 6 7 6.02 ACCESS hereby agrees to maintain facilities and procedures reasonably acceptable to each of the Funds for safekeeping of share certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. 6.03 ACCESS shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable; provided, however, that all accounts, books and other records of each of the Funds (hereinafter referred to as "Fund Records") prepared or maintained by ACCESS hereunder shall be maintained and kept current in compliance with Section 31 of the Investment Company Act of 1940 and the Rules thereunder (such Section and Rules being hereinafter referred to as the "1940 Act Requirements"). To the extent required by the 1940 Act Requirements, ACCESS agrees that all Fund Records prepared or maintained by ACCESS hereunder are the property of the concerned Fund and shall be preserved and made available in accordance with the 1940 Act Requirements, and shall be surrendered promptly to the concerned Fund on its request. ACCESS agrees at such reasonable times as may be requested by the Board and at least quarterly to provide (i) written confirmation to the Board that all Fund Records are maintained and kept current in accordance with the 1940 Act Requirements, and (ii) such other reports regarding its performance hereunder as may be reasonably requested by the Board. 6.04 ACCESS and each of the Funds agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law. 6.05 In case of any requests or demands for the inspection of any of the Fund Records, ACCESS will endeavor to notify each of the concerned Funds and to secure instructions from an authorized officer of each of the concerned Funds as to such inspection. ACCESS reserves the right, however, to exhibit such Fund Records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit such Fund Records to such person. ARTICLE 7. TERM AND TERMINATION OF AGREEMENT. 7.01 This Agreement shall remain in effect from the date hereof through December 31, 1996; provided, however, that this Agreement may be terminated by any party with respect to that party for good and reasonable 7 8 cause at any time by giving written notice to the other party at least 120 days prior to the date on which such termination is to be effective. Any unpaid fees or reimbursable expenses payable to ACCESS shall be due on any such termination date. ACCESS agrees to use its best efforts to cooperate with each of the Funds and the successor transfer agent or agents in accomplishing an orderly transition. 7.02 Subject to the prior approval of the Board, this Agreement shall be renewed and extended for periods of not more than one year each, unless and until this Agreement is terminated in accordance with section 7.01 above. ARTICLE 8. MISCELLANEOUS. 8.01 Except as provided in section 8.03 below, neither this Agreement nor any rights or obligations hereunder may be assigned by any party without the written consent of ACCESS or the concerned Fund, as the case may be; provided, however, that no consent shall be required for any merger of any of the Funds with, or any sale of all or substantially all the assets of any of the Funds to, another investment company. 8.02 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 8.03 ACCESS may, without further consent on the part of any of the Funds, subcontract with DST, Inc., a Missouri corporation, or any other qualified servicer, for the performance of data processing activities; provided, however, that ACCESS shall be as fully responsible to each of the Funds for the acts and omissions of DST, Inc., or other qualified servicer as it is for its own acts and omissions. 8.04 ACCESS may, without further consent on the part of any of the Fund, provide services to its affiliated companies. Such services may be provided at cost. 8.05 This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes any prior agreement with respect thereto, whether oral or written, and this Agreement may not be modified except be written instrument executed by the affected parties. 8.06 The execution of this Agreement has been authorized by the Funds' Trustees. This Plan is executed on behalf of the Funds or the Trustees of the Funds as Trustees and not individually and that the obligations of this Agreement are not binding upon any of 8 9 the Trustees, officers or shareholders of the Funds individually but are binding only upon the assets and property of the Funds. A Certificate of Trust in respect of each of the Funds is on file with the Secretary of the State of Delaware. 8.07 For each of those Funds that have one or more portfolios as set forth in Schedule "A" hereto, all obligations of those Funds under this Agreement shall apply only on a portfolio-by-portfolio basis and the assets of one portfolio shall not be liable for the obligations of any other. 8.08 In the event of a change in the business or regulatory environment affecting all or any portion of this Agreement, the parties hereto agree to renegotiate such affected portions in good faith. 9 10 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf and through their duly authorized officers, as of the date first above written. EACH OF THE VAN KAMPEN AMERICAN CAPITAL OPEN END FUNDS LISTED ON SCHEDULE "A" HERETO BY: /s/ Nori L. Gabert ------------------------------------ Vice President ATTEST: /s/ Huey Falgout - ------------------------------------ Assistant Secretary ACCESS INVESTOR SERVICES, INC. BY: /s/ Nori L. Gabert ------------------------------------ Vice President ATTEST: /s/ Huey Falgout - ------------------------------------ Assistant Secretary 10 11 SCHEDULE "A" VAN KAMPEN AMERICAN CAPITAL OPEN END FUNDS NOTE: All of the entities listed below are organized as Delaware business trusts FUND NAME (INCLUDING PORTFOLIOS) =============================================================================== Van Kampen American Capital Comstock Fund Van Kampen American Capital Corporate Bond Fund Van Kampen American Capital Emerging Growth Fund Van Kampen American Capital Enterprise Fund Van Kampen American Capital Equity Income Fund Van Kampen American Capital Limited Maturity Government Fund Van Kampen American Capital Global Managed Assets Fund Van Kampen American Capital Government Securities Fund Van Kampen American Capital Government Target Fund Van Kampen American Capital Growth and Income Fund Van Kampen American Capital Harbor Fund Van Kampen American Capital High Income Corporate Bond Fund Van Kampen American Capital Life Investment Trust Common Stock Fund Domestic Strategic Income Fund Emerging Growth Fund Global Equity Fund Government Fund Money Market Fund Multiple Strategy Fund Real Estate Securities Fund Van Kampen American Capital Municipal Bond Fund Van Kampen American Capital Pace Fund Van Kampen American Capital Real Estate Securities Fund Van Kampen American Capital Reserve Fund Van Kampen American Capital Small Capitalization Fund Van Kampen American Capital Tax-Exempt Trust Van Kampen American Capital High Yield Municipal Fund Van Kampen American Capital Insured Municipal Fund Van Kampen American Capital Texas Tax Free Income Fund Van Kampen American Capital U.S. Government Trust For Income Van Kampen American Capital Utilities Income Fund Van Kampen American Capital World Portfolio Series Trust Van Kampen American Capital Global Equity Fund Van Kampen American Capital Global Government Securities Fund 11 EX-99.B10 15 OPINION OF COUNSEL 1 [LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM] EXHIBIT 10 September 27, 1996 Van Kampen American Capital Reserve Fund One Parkview Plaza Oakbrook Terrace, IL 60181 Re: Van Kampen American Capital Reserve Fund -- Registration Statement on Form N-1A (File Nos. 2-50870 and 811-2482) Ladies and Gentlemen: We have acted as counsel to Van Kampen American Capital Reserve Fund (the "Trust"), a Delaware business trust, in connection with the preparation of Post-Effective Amendment No. 37 to the Trust's Registration Statement on Form N-1A (as amended, the "Registration Statement") to be filed under the Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company Act of 1940, as amended (the "1940 Act"), with the Securities and Exchange Commission (the "Commission") on September 27, 1996. The Registration Statement relates to the registration under the 1933 Act and 1940 Act of an indefinite number of each of Class A Shares of beneficial interest, par value $.01 per share, Class B Shares of beneficial interest, par value $.01 per share, and Class C Shares of beneficial interest, par value $.01 per share, of the 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) 2 Van Kampen American Capital Reserve Fund September 27, 1996 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 classes of the Trust, (iv) the resolutions adopted by the Board of Trustees of the Trust relating to the authorization, issuance and sale of the Shares, the filing of the Registration Statement and any amendments or supplements thereto and related matters and (v) such other documents as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In such examination we have assumed the legal capacity of natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed, photostatic, or other copies and the authenticity of the originals of such latter documents. As to any facts material to such opinion which were not independently established, we have relied on statements or representations of officers and other representatives of the Trust or others. Members of this firm are admitted to the practice of law in the State of Delaware and we express no opinion as to the law of any other jurisdiction. Based upon and subject to the foregoing, we are of the opinion that the issuance and sale of Shares by the Trust have been validly authorized and, assuming certificates therefor have been duly executed, countersigned, registered and delivered or the shareholders' accounts have been duly credited and the Shares represented thereby have been fully paid for, such Shares will be validly issued, fully paid and nonassessable. 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 3 Van Kampen American Capital Reserve Fund September 27, 1996 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 EX-99.B11 16 CONSENT OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 11 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in the Statement of Additional Information constituting part of this Post-Effective Amendment No. 37, Amendment No. 22, to the Registration Statement on Form N-1A (the "Registration Statement") of our report dated July 8, 1996, relating to the financial statements and financial highlights of Van Kampen American Capital Reserve 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 such Prospectus and to the reference to us under the heading "Independent Accountants" in such Statement of Additional Information. PRICE WATERHOUSE LLP Houston, Texas September 26, 1996 EX-99.B15.1 17 PLAN OF DISTRIBUTION 1 Exhibit 15.1 PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1 VAN KAMPEN AMERICAN CAPITAL RESERVE 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 RESERVE 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 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: a. 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 0.15% 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) 0.15% 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. b. 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 0.90% 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. c. 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 0.90% 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. 3. 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. 4. 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 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. 5. 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. 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. 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. 7. 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. 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 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. 9. 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. 10. 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. 11. 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. 12. 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 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. 13. 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. 14. The Trustees of the Trust have adopted this Distribution Plan as trustees under the Declaration of Trust of the Fund and the policies of the Fund adopted hereby are not binding upon any of the Trustees or shareholders of the Fund individually, but bind only the trust estate. 4 EX-99.B15.2 18 SERVICE PLAN 1 Exhibit 15.2 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND SERVICE PLAN The plan set forth below (the "Service Plan") for the VAN KAMPEN AMERICAN CAPITAL RESERVE 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 0.15% 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 0.15% 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 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 Fund 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. 2 3 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 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. 13. The Trustees of the Fund have adopted this Service Plan as trustees under the Declaration of Fund of the Fund and the policies of the Fund adopted hereby are not binding upon any of the Trustees or shareholders of the Fund individually, but bind only the trust estate. 3 EX-99.B16 19 CALCULATION OF YIELD 1 EXHIBIT 16 CALCULATION OF YIELD The Fund calculates its annualized current yield quotations based on the seven days ended on the date of the most recent balance sheet included in the registration statement, computed by determining the net change, exclusive of capital charges, in the value of a hypothetical pre-existing account having a balance of one share at the beginning of the period, subtracting a hypothetical charge reflecting deductions from shareholder accounts, and dividing the difference by the value of the account at the beginning of the base period to obtain the base period return, and then multiplying the base period by (365/7). The Fund calculates its effective yield based on the seven days ended on the date of the most recent balance sheet included in the registration statement, computed by determining the net change, exclusive of capital charges, in the value of a hypothetical pre-existing account having a balance of one share at the beginning of the period, according to the following formula: Effective Yield = [(Base Period Return + 1) 365/7]-1 EX-99.B17.1 20 INVESTMENT COMPANIES 1 EXHIBIT 17.1 INVESTMENT COMPANIES FOR WHICH VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS INC. ACTS AS PRINCIPAL UNDERWRITER OR DEPOSITOR SEPTEMBER 23, 1996 Van Kampen American Capital U.S. Government Trust Van Kampen American Capital U.S. Government Fund Van Kampen American Capital Tax Free Trust Van Kampen American Capital Insured Tax Free Income Fund Van Kampen American Capital Tax Free High Income Fund Van Kampen American Capital California Insured Tax Free Fund Van Kampen American Capital Municipal Income Fund Van Kampen American Capital Limited Term Municipal Income Fund Van Kampen American Capital Florida Insured Tax Free Income Fund Van Kampen American Capital New Jersey Tax Free Income Fund Van Kampen American Capital New York Tax Free Income Fund Van Kampen American Capital Trust Van Kampen American Capital High Yield Fund Van Kampen American Capital Short-Term Global Income Fund Van Kampen American Capital Strategic Income Fund Van Kampen American Capital Emerging Markets Income Fund Van Kampen American Capital Equity Trust Van Kampen American Capital Utility Fund Van Kampen American Capital Balanced Fund Van Kampen American Capital Pennsylvania Tax Free Income Fund Van Kampen American Capital Tax Free Money Fund Van Kampen American Capital Prime Rate Income Trust Van Kampen Merritt Series Trust Van Kampen American Capital Quality Income Portfolio Van Kampen American Capital High Yield Portfolio Van Kampen American Capital Growth and Income Portfolio Van Kampen American Capital Money Market Portfolio Van Kampen American Capital Stock Index Portfolio Van Kampen American Capital Comstock Fund Van Kampen American Capital Corporate Bond Fund Van Kampen American Capital Emerging Growth Fund Van Kampen American Capital Enterprise Fund Van Kampen American Capital Equity Income Fund Van Kampen American Capital Limited Maturity Government Fund Van Kampen American Capital Global Managed Assets Fund Van Kampen American Capital Government Securities Fund Van Kampen American Capital Government Target Fund Van Kampen American Capital Growth and Income Fund Van Kampen American Capital Harbor Fund Van Kampen American Capital High Income Corporate Bond Fund Van Kampen American Capital Life Investment Trust Van Kampen American Capital Common Stock Fund Van Kampen American Capital Domestic Strategic Income Fund Van Kampen American Capital Emerging Growth Fund Van Kampen American Capital Global Equity Fund Van Kampen American Capital Government Fund Van Kampen American Capital Money Market Fund Van Kampen American Capital Multiple Strategy Fund Van Kampen American Capital Real Estate Securities Fund 2 Van Kampen American Capital Pace Fund Van Kampen American Capital Real Estate Securities Fund Van Kampen American Capital Reserve Fund Van Kampen American Capital Tax -Exempt Trust Van Kampen American Capital High Yield Municipal Fund Van Kampen American Capital Texas Tax Free Income Fund Van Kampen American Capital U.S. Government Trust for Income Van Kampen American Capital World Portfolio Series Trust Van Kampen American Capital Global Equity Fund Van Kampen American Capital Global Government Securities Fund Internet Trust Michigan Real Estate Income and Growth Trust Van Kampen American Capital Insured Income Trust Van Kampen American Capital Insured Income Trust (Intermediate) Strategic Ten Trust, United States Strategic Ten Trust, United Kingdom Strategic Ten Trust, Hong Kong Strategic Five Trust, United States Van Kampen American Capital Equity Opportunity Trust Great International Firms Trust Gruntal & Co. Incorporated Undervalued Growth Opportunities Trust Principal Trust Princor Emerging Growth and Treasury International Assets Advisory Corporation Global Blue Chip Trust Renaissance Trust Mississippi Insured Municipal Trust Blue Chip Opportunity and Treasury Trust Wheat First Butcher Singer Wheat First Strategic Opportunity Unit Trust Baby Boomer Opportunity Trust Van Kampen American Capital Utility Income Trust Global Energy Trust Michigan Select Trust 3
Emerging Markets Municipal Income Trust................................................................. Series 1 Insured Municipals Income Trust......................................................................... Series 1 through 378 Insured Municipals Income Trust (Discount).............................................................. Series 5 through 13 Insured Municipals Income Trust (Short Intermediate Term)............................................... Series 1 through 104 1009 Insured Municipals Income Trust (Intermediate Term)................................................ Series 5 through 88 Insured Municipals Income Trust (Limited Term).......................................................... Series 9 through 85 Insured Municipals Income Trust (Premium Bond Series)................................................... Series 1 through 3 Insured Municipals Income Trust (Intermediate Laddered Maturity)........................................ Series 1 and 2 Insured Tax Free Bond Trust............................................................................. Series 1 through 6 Insured Tax Free Bond Trust (Limited Term).............................................................. Series 1 Investors' Quality Tax-Exempt Trust..................................................................... Series 1 through 93 Investors' Quality Tax-Exempt Trust-Intermediate........................................................ Series 1 Investors' Corporate Income Trust....................................................................... Series 1 through 12 Investors' Governmental Securities Income Trust......................................................... Series 1 through 7 Van Kampen Merritt International Bond Income Trust...................................................... Series 1 through 21 Alabama Investors' Quality Tax-Exempt Trust............................................................. Series 1 Alabama Insured Municipals Income Trust................................................................. Series 1 through 9 Arizona Investors' Quality Tax-Exempt Trust............................................................. Series 1 through 16 Arizona Insured Municipals Income Trust................................................................. Series 1 through 17 Arkansas Insured Municipals Income Trust................................................................ Series 1 through 2 Arkansas Investors' Quality Tax-Exempt Trust............................................................ Series 1 California Insured Municipals Income Trust.............................................................. Series 1 through 158 California Insured Municipals Income Trust (Premium Bond Series)........................................ Series 1 California Insured Municipals Income Trust (1st Intermediate Series).................................... Series 1 through 3 California Investors' Quality Tax-Exempt Trust.......................................................... Series 1 through 21 California Insured Municipals Income Trust (Intermediate Laddered)...................................... Series 1 through 22 Colorado Insured Municipals Income Trust................................................................ Series 1 through 81 Colorado Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 18 Connecticut Insured Municipals Income Trust ............................................................ Series 1 through 31 Connecticut Investors' Quality Tax-Exempt Trust......................................................... Series 1 Delaware Investor's Quality Tax-Exempt Trust............................................................ Series 1 and 2 Florida Insured Municipal Income Trust - Intermediate................................................... Series 1 and 2 Florida Insured Municipals Income Trust................................................................. Series 1 through 107 Florida Investors' Quality Tax-Exempt Trust............................................................. Series 1 and 2 Florida Insured Municipals Income Trust (Intermediate Laddered)......................................... Series 1 through 13 Georgia Insured Municipals Income Trust................................................................. Series 1 through 80 Georgia Investors' Quality Tax-Exempt Trust............................................................. Series 1 through 16 Hawaii Investors' Quality Tax-Exempt Trust.............................................................. Series 1 Investors' Quality Municipals Trust (AMT)............................................................... Series 1 through 9 Kansas Investors'Quality Tax-Exempt Trust .............................................................. Series 1 through 11 Kentucky Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 58 Louisiana Insured Municipals Income Trust............................................................... Series 1 through 17 Maine Investor's Quality Tax-Exempt Trust............................................................... Series 1 Maryland Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 79 Massachusetts Insured Municipals Income Trust........................................................... Series 1 through 34 Massachusetts Insured Municipals Income Trust (Premium Bond Series)..................................... Series 1 Michigan Financial Institutions Trust................................................................... Series 1 Michigan Insured Municipals Income Trust................................................................ Series 1 through 140 Michigan Insured Municipals Income Trust (Premium Bond Series).......................................... Series 1 Michigan Insured Municipals Income Trust (1st Intermediate Series)...................................... Series 1 through 3 Michigan Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 30 Michigan Select Trust................................................................................... Series 1 Minnesota Insured Municipals Income Trust............................................................... Series 1 through 59 Minnesota Investors' Quality Tax-Exempt Trust........................................................... Series 1 through 21 Mississippi Insured Municipals Income Trust............................................................. Series 1 Missouri Insured Municipals Income Trust................................................................ Series 1 through 98 Missouri Insured Municipals Income Trust (Premium Bond Series).......................................... Series 1 Missouri Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 15 Missouri Insured Municipals Income Trust
4
(Intermediate Laddered Maturity)....................................................................... Series 1 Nebraska Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 9 New Mexico Insured Municipals Income Trust.............................................................. Series 1 through 18 New Jersey Insured Municipals Income Trust.............................................................. Series 1 through 114 New Jersey Investors' Quality Tax-Exempt Trust.......................................................... Series 1 through 22 New Jersey Insured Municipals Income Trust (Intermediate Laddered Maturity)....................................................................... Series 1 and 4 New York Insured Municipals Income Trust-Intermediate................................................... Series 1 through 6 New York Insured Municipals Income Trust (Limited Term)................................................. Series 1 New York Insured Municipals Income Trust................................................................ Series 1 through 136 New York Insured Tax-Free Bond Trust.................................................................... Series 1 New York Insured Municipals Income Trust (Intermediate Laddered Maturity)....................................................................... Series 1 through 17 New York Investors' Quality Tax-Exempt Trust............................................................ Series 1 North Carolina Investors' Quality Tax-Exempt Trust...................................................... Series 1 through 88 Ohio Insured Municipals Income Trust.................................................................... Series 1 through 104 Ohio Insured Municipals Income Trust (Premium Bond Series).............................................. Series 1 and 2 Ohio Insured Municipals Income Trust (Intermediate Term)................................................ Series 1 Ohio Insured Municipals Income Trust (Intermediate Laddered Maturity)....................................................................... Series 3 through 6 Ohio Investors' Quality Tax-Exempt Trust................................................................ Series 1 through 16 Oklahoma Insured Municipal Income Trust................................................................. Series 1 through 17 Oregon Investors' Quality Tax-Exempt Trust.............................................................. Series 1 through 53 Pennsylvania Insured Municipals Income Trust - Intermediate............................................. Series 1 through 6 Pennsylvania Insured Municipals Income Trust............................................................ Series 1 through 223 Pennsylvania Insured Municipals Income Trust (Premium Bond Series)...................................... Series 1 Pennsylvania Investors' Quality Tax-Exempt Trust........................................................ Series 1 through 14 South Carolina Investors' Quality Tax-Exempt Trust...................................................... Series 1 through 84 Stepstone Growth Equity and Treasury Securities Trust................................................... Series 1 Tennessee Insured Municipals Income Trust............................................................... Series 1-3 and 5-37 Texas Insured Municipals Income Trust................................................................... Series 1 through 40 Texas Insured Municipal Income Trust (Intermediate Ladder).............................................. Series 1 Virginia Investors' Quality Tax-Exempt Trust............................................................ Series 1 through 73 Van Kampen American Capital Equity Opportunity Trust.................................................... Series 1 through 41 Van Kampen American Capital Utility Income Trust........................................................ Series 1 through 8 Van Kampen American Capital Insured Income Trust........................................................ Series 1 through 61 Van Kampen American Capital Insured Income Trust (Intermediate Term).................................... Series 1 through 60 Van Kampen Merritt Select Equity Trust.................................................................. Series 1 Van Kampen Merritt Select Equity and Treasury Trust..................................................... Series 1 Washington Insured Municipals Income Trust.............................................................. Series 1 West Virginia Insured Municipals Income Trust........................................................... Series 1 through 7 Principal Financial Institutions Trust.................................................................. Series 1 Internet Trust.......................................................................................... Series 1 through 3 Michigan Real Estate Income and Growth Trust............................................................ Series 1 Strategic Ten Trust, United States...................................................................... Series 1 through 10 Strategic Ten Trust, United Kingdom..................................................................... Series 1 through 10 Strategic Ten Trust, Hong Kong ......................................................................... Series 1 through 10 Strategic Five Trust, United States..................................................................... Series 1 through 4 Equity Opportunity Trust................................................................................ Series 1 through 42 Great International Firms Trust......................................................................... Series 1 Undervalued Growth Opportunities Trust.................................................................. Series 1 Emerging Growth and Treasury............................................................................ Series 1 Global Blue Chip Trust.................................................................................. Series 1 Renaissance Trust....................................................................................... Series 1 Blue Chip Opportunity and Treasury Trust................................................................ Series 1 through 4 Wheat First Strategic Opportunity Unit Trust............................................................ Series 1 Baby Boomer Opportunity Trust........................................................................... Series 1 Global Energy Trust..................................................................................... Series 1 through 2
EX-99.B17.2 21 OFFICERS AND DIRECTORS 1 EXHIBIT 17.2 OFFICERS VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
NAME OFFICE LOCATION - ----------------------- ---------------------------------- -------------------- Don G. Powell Chairman & Chief Executive Officer Houston, TX William R. Molinari President & Chief Operating Oakbrook Terrace, IL Officer Ronald A. Nyberg Executive Vice President & General Oakbrook Terrace, IL Counsel William R. Rybak Executive Vice President & Chief Oakbrook Terrace, IL Financial Officer Paul R. Wolkenberg Executive Vice President Houston, TX Robert A. Broman Sr. Vice President Oakbrook Terrace, IL Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL Keith K. Furlong Sr. Vice President Oakbrook Terrace, IL Douglas B. Gehrman Sr. Vice President Houston, TX Richard D. Humphrey Sr. Vice President Houston, TX Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL Counsel & Secretary Debra A. Nichols Sr. Vice President Houston, TX Charles G. Millington Sr. Vice President & Treasurer Oakbrook Terrace, IL Robert S. West Sr. Vice President Oakbrook Terrace, IL John H. Zimmermann, III Sr. Vice President Oakbrook Terrace, IL Timothy K. Brown 1st Vice President Laguna Niguel, CA James S. Fosdick 1st Vice President Oakbrook Terrace, IL Edward F. Lynch 1st Vice President Oakbrook Terrace, IL Dominic C. Martellaro 1st Vice President San Francisco, CA Mark R. McClure 1st Vice President Oakbrook Terrace, IL Mark T. McGannon 1st Vice President Oakbrook Terrace, IL James J. Ryan 1st Vice President Oakbrook Terrace, IL Michael L. Stallard 1st Vice President Oakbrook Terrace, IL David M. Swanson 1st Vice President Oakbrook Terrace, IL Patrick J. Woelfel 1st Vice President Oakbrook Terrace, IL Laurence J. Althoff Vice President & Controller Oakbrook Terrace, IL James K. Ambrosio Vice President Massapequa, NY Patricia A. Bettlach Vice President St. Louis, MO Carol S. Biegel Vice President Oakbrook Terrace, IL James J. Boyne Vice President and Assistant Oakbrook Terrace, IL Secretary Linda Mae Brown Vice President Oakbrook Terrace, IL William F. Burke, Jr. Vice President Mendham, NJ Loren Burket Vice President Plymouth, MN Thomas M. Byron Vice President Oakbrook Terrace, IL
2 Glenn M. Cackovic Vice President Laguna Niguel, CA Joseph N. Caggiano Vice President New York, NY Richard J. Charlino Vice President Oakbrook Terrace, IL Eleanor M. Cloud Vice President Oakbrook Terrace, IL Dominick Cogliandro Vice President & Asst. Treasurer New York, NY Michael Colston Vice President Louisville, KY Suzanne Cummings Vice President Houston, TX Tracey M. DeLusant Vice President Lynbrook, NY David B. Dibo Vice President Oakbrook Terrace, IL Howard A. Doss Vice President Tampa, FL Charles Edward Fisher Vice President Oakbrook Terrace, IL William J. Fow Vice President Redding, CT Nicholas J. Foxhaven Vice President Denver, CO Charles Friday Vice President Gibsonia, PA Nori L. Gabert Vice President, Assoc. General Houston, TX Counsel & Asst. Secretary Erich P. Gerth Vice President Dallas, TX Daniel Hamilton Vice President Houston, TX John A. Hanhauser Vice President Philadelphia, PA Eric J. Hargens Vice President Orlando, FL Susan J. Hill Vice President Oakbrook Terrace, IL J. Christopher Jackson Vice President, Assoc. General Oakbrook Terrace, IL Counsel & Asst. Secretary Lowell Jackson Vice President Norcross, GA Dana R. Klein Vice President Oakbrook Terrace, IL Ann Marie Klingenhagen Vice President Oakbrook Terrace, IL Frederick Kohly Vice President Miami, FL David R. Kowalski Vice President & Director Oakbrook Terrace, IL of Compliance S. William Lehew III Vice President Charlotte, NC Robert C. Lodge Vice President Philadelphia, PA Walter Lynn Vice President Flower Mound, TX Michele L. Manley Vice President Oakbrook Terrace, IL Kevin S. Marsh Vice President Bellevue, WA Carl Mayfield Vice President Lakewood, CO Ruth L. McKeel Vice President Oakbrook Terrace, IL John Mills Vice President Kenner, LA Robert Muller, Jr. Vice President Houston, TX Ronald E. Pratt Vice President Marietta, GA Craig S. Prichard Vice President Oakbrook Terrace, IL Walter E. Rein Vice President Oakbrook Terrace, IL Michael W. Rohr Vice President Oakbrook Terrace, IL James B. Ross Vice President Oakbrook Terrace, IL Heather R. Sabo Vice President Richmond, VA Stephanie Scarlata Vice President Lynbrook, NY Lisa A. Schomer Vice President Oakbrook Terrace, IL Ronald J. Schuster Vice President Tampa, FL Jeffrey C. Shirk Vice President Boston, MA Kimberly M. Spangler Vice President Atlanta, GA Darren D. Stabler Vice President Phoenix, AZ Christopher J. Staniforth Vice President Leawood, KS William C. Strafford Vice President Granger, IN David A. Tabone Vice President Phoenix, AZ James C. Taylor Vice President Oakbrook Terrace, IL John F. Tierney Vice President Oakbrook Terrace, IL Curtis L. Ulvestad Vice President Red Wing, MN
3 Jeff Warland Vice President Oakbrook Terrace, IL Sandra A. Waterworth Vice President and Assistant Oakbrook Terrace, IL Secretary Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL Counsel & Asst. Secretary James R. Yount Vice President Seattle, WA Patrick M. Zacchea Vice President New York, NY Richard P. Zgonina Vice President Oakbrook Terrace, IL Brian P. Arcara Asst. Vice President Philadelphia, PA Christopher M. Bisaillon Asst. Vice President Oakbrook Terrace, IL Eric J. Bridges Asst. Vice President Oakbrook Terrace, IL Billie J. Bronaugh Asst. Vice President Houston, TX Robert C. Brooks Asst. Vice President Manchester, MA Richard B. Callaghan Asst. Vice President Oakbrook Terrace, IL Stephen M. Cutka Asst. Vice President Oakbrook Terrace, IL Nicholas Dalmaso Asst. Vice President & Asst. Oakbrook Terrace, IL Secretary Gerald A. Davis Asst. Vice President Oakbrook Terrace, IL Daniel R. DeJong Asst. Vice President Oakbrook Terrace, IL Jerome M. Dybzinski Asst. Vice President Oakbrook Terrace, IL Melissa B. Epstein Asst. Vice President Houston, TX Huey P. Falgout, Jr. Asst. Vice President & Asst. Secretary Houston, TX Walter C. Gray Asst. Vice President Oakbrook Terrace, IL Joseph Hays Asst. Vice President Philadelphia, PA Scott F. Heyer Asst. Vice President Tampa, FL Jeffrey S. Kinney Asst. Vice President Oakbrook Terrace, IL Hunter Knapp Asst. Vice President Laguna, CA Michael B. Kollins Asst. Vice President Oakbrook Terrace, IL Natalie N. Hurdle Asst. Vice President New York, NY Laurie L. Jones Asst. Vice President Houston, TX Patricia D. Lathrop Asst. Vice President Tampa, FL Tony E. Leal Asst. Vice President Houston, TX Ivan R. Lowe Asst. Vice President Houston, TX Linda S. MacAyeal Asst. Vice President Oakbrook Terrace, IL Ann Therese McGrath Asst. Vice President Laguna, CA Stuart R. Moehlman Asst. Vice President Houston, TX Peggy E. Moro Asst. Vice President Oakbrook Terrace, IL Gregory S. Parker Asst. Vice President Houston, TX David B. Partain Asst. Vice President Oakbrook Terrace, IL Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL Michael Quinn Asst. Vice President Oakbrook Terrace, IL David P. Robbins Asst. Vice President Oakbrook Terrace, IL Jeffrey S. Rourke Asst. Vice President Oakbrook Terrace, IL Thomas J. Sauerborn Asst. Vice President New York, NY Bruce Saxon Asst. Vice President Oakbrook Terrace, IL Andrew J. Scherer Asst. Vice President Oakbrook Terrace, IL Traci T. Sorensen Asst. Vice President Oakbrook Terrace, IL Gary Steele Asst. Vice President Philadelphia, PA David H. Villarreal Asst. Vice President Oakbrook Terrace, IL Robert A. Watson Asst. Vice President Oakbrook Terrace, IL Kathleen M. Wennerstrum Asst. Vice President Oakbrook Terrace, IL Barbara A. Withers Asst. Vice President Oakbrook Terrace, IL David C. Goodwin Asst. Secretary Oakbrook Terrace, IL Gina M. Scumaci Asst. Secretary Oakbrook Terrace, IL
4 Elizabeth M. Brown Officer Houston, TX John Browning Officer Oakbrook Terrace, IL Leticia George Officer Houston, TX Gina Grippo Officer Houston, TX Sarah Kessler Officer Oakbrook Terrace, IL Francis McGarvey Officer Houston, TX William D. McLaughlin Officer Houston, TX Becky Newman Officer Houston, TX Rosemary Pretty Officer Houston, TX Colette Saucedo Officer Houston, TX Frederick Shepherd Officer Houston, TX Larry Vickrey Officer Houston, TX John Yovanovic Officer Houston, TX
5 DIRECTORS VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
NAME OFFICE LOCATION - ------------------- ------------------------ --------------------------------- Don G. Powell Chairman & CEO 2800 Post Oak Blvd.Houston, TX 77056 William R. Molinari President & COO One Parkview Plaza Oakbrook Terrace, IL 60181 Ronald A. Nyberg Executive Vice President One Parkview Plaza & General Counsel Oakbrook Terrace, IL 60181 William R. Rybak Executive Vice President One Parkview Plaza & CFO Oakbrook Terrace, IL 60181
EX-99.B18 22 MULTI-CLASS PLAN 1 EXHIBIT 18 MULTI-CLASS PLAN FOR VAN KAMPEN AMERICAN CAPITAL FAMILY OF FUNDS This Plan is adopted pursuant to Rule 18f-3 under the Act to provide for the issuance and distribution of multiple classes of shares by each of the Funds in accordance with the terms, procedures and conditions set forth below. A majority of the Trustees of the Funds, including a majority of the Trustees who are not interested persons of the Funds within the meaning of the Act, found this Multi-Class Plan, including the expense allocations, to be in the best interest of each Fund and each Class of Shares of each Fund and adopted this Plan on January 26, 1996. A. Definitions. As used herein, the terms set forth below shall have the meanings ascribed to them below. 1. The Act - Investment Company Act of 1940, as amended. 2. CDSC - contingent deferred sales charge. 3. CDSC Period - the period of years following acquisition during which Shares are assessed a CDSC upon redemption. 4. Class - a class of Shares of a Fund. 5. Class A Shares - shall have the meaning ascribed in Section B. 1. 6. Class B Shares - shall have the meaning ascribed in Section B. 1. 7. Class C Shares - shall have the meaning ascribed in Section B. 1. 8. Distribution Expenses - expenses incurred in activities which are primarily intended to result in the distribution and sale of Shares as defined in a Plan of Distribution and/or board resolutions. 9. Distribution Fee - a fee paid by a Fund to the Distributor in reimbursement of Distribution Expenses. 10. Distributor - Van Kampen American Capital Distributors, Inc. 11. Fund - an investment company listed on Exhibit A hereto and each series thereof. 12. Money Market Fund - Van Kampen American Capital Reserve Fund or Van Kampen American Capital Tax Free Money Market Fund. 2 13. Plan of Distribution - Any plan adopted under Rule 12b-1 under the Act with respect to payment of a Distribution Fee. 14. Service Fee - a fee paid to financial intermediaries for the ongoing provision of personal services to Fund shareholders and/or the maintenance of shareholder accounts. 15. Share - a share of beneficial interest in a Fund. 16. Trustees - the trustees of a Fund. B. Classes. Each Fund may offer three Classes as follows: 1. Class A Shares. Class A Shares shall be offered at net asset value plus a front-end sales charge as approved from time to time by the Trustees and set forth in the Funds' prospectus, which may be reduced or eliminated for Money Market Funds, larger purchases, under a combined purchase privilege, under a right of accumulation, under a letter of intent or for certain categories of purchasers as permitted by Rule 22(d) of the Act and as set forth in the Fund's prospectus. Class A Shares that are not subject to a front-end sales charge as a result of the foregoing, may be subject to a CDSC for the CDSC Period set forth in Section D.1. The offering price of Shares subject to a front-end sales charge shall be computed in accordance with Rule 22c-1 and Section 22(d) of the Act and the rules and regulations thereunder. Class A Shares shall be subject to ongoing Service Fees approved from time to time by the Trustees and set forth in the Funds' prospectus. Although shares of Van Kampen American Capital Tax Free Money Market Fund are not designated as "Class A" they are substantially similar to Class A Shares as defined herein and shall be treated as Class A shares for the purposes of this Plan. 2. Class B Shares. Class B Shares shall be (1) offered at net asset value, (2) subject to a CDSC for the CDSC Period set forth in Section D. 1, (3) subject to ongoing Service Fees and Distribution Fees approved from time to time by the Trustees and set forth in the Funds' prospectus and (4) converted to Class A Shares three to ten years after the calendar month in which the shareholder's order to purchase was accepted, which number of years shall be as approved from time to time by the Trustees and set forth in the respective Fund's prospectus. 3. Class C Shares. Class C Shares shall be (1) offered at net asset value, (2) subject to a CDSC for the CDSC Period set forth in Section D. 1. , (3) subject to ongoing Service Fees and Distribution Fees approved from time to time by the Trustees and set forth in the Funds' prospectus and (4) converted to Class A Shares eight to fifteen years after the calendar month in which the shareholder's order to purchase was accepted, which number of years shall be as approved from time to time by the Trustees and set forth in the respective Fund's prospectus. 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 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. 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 d. If any amendment is proposed to the plan under which Service Fees are paid with respect to Class A Shares of a Fund that would increase materially the amount to be borne by Class A Shares under that plan, then no Class B Shares or Class C Shares shall convert into Class A Shares of that Fund until the holders of Class B Shares and Class C Shares of that Fund have also approved the proposed amendment. 6 e. If the holders of either the Class B Shares and/or Class C Shares referred to in subparagraph a. do not approve the proposed amendment, the Trustees of the Fund and the Distributor shall take such action as is necessary to ensure that the Class voting against the amendment shall convert into another Class identical in all material respects to Class A Shares of the Fund as constituted prior to the amendment. 2. Shareholders shall have separate voting rights on any matter submitted to shareholders in which the interest of one Class differs from the interests of any other Class. J. Dividends. Dividends paid by a Fund with respect to each Class, to the extent any dividends are paid, will be calculated in the same manner at the same time on the same day and will be in substantially the same amount, except any Distribution Fees,Service Fees or incremental expenses relating to a particular Class will be borne exclusively by that Class. K. Reports to Trustees. The Distributor shall provide to the Trustees of each Fund quarterly and annual statements concerning distribution and Shareholder servicing expenditures complying with paragraph (b)(3)(ii) of Rule 12b-1 of the Act, as it may be amended from time to time. The Distributors also shall provide the Trustees such information as the Trustees may from time to time deem to be reasonably necessary to evaluate this Plan. L. Amendment. Any material amendment to this Plan shall be approved by the affirmative vote of a majority of the Trustees of a Fund, including the affirmative vote of the trustees of the Fund who are not interested persons of the Fund, except that any amendment that increases the CDSC rate schedule or CDSC Period must also be approved by the affirmative vote of a majority of the Shares of the affected Class. The Distributor shall provide the Trustees such information as may be reasonably necessary to evaluate any amendment to this Plan. 7 EXHIBIT A VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND VAN KAMPEN AMERICAN CAPITAL EMERGING GROWTH FUND VAN KAMPEN AMERICAN CAPITAL ENTERPRISE FUND VAN KAMPEN AMERICAN CAPITAL EQUITY INCOME FUND VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND VAN KAMPEN AMERICAN CAPITAL GOVERNMENT SECURITIES FUND VAN KAMPEN AMERICAN CAPITAL GROWTH AND INCOME FUND VAN KAMPEN AMERICAN CAPITAL HARBOR FUND VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND VAN KAMPEN AMERICAN CAPITAL LIMITED MATURITY GOVERNMENT FUND VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND VAN KAMPEN AMERICAN CAPITAL PACE FUND VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND VAN KAMPEN AMERICAN CAPITAL RESERVE FUND VAN KAMPEN AMERICAN CAPITAL TAX-EXEMPT TRUST VAN KAMPEN AMERICAN CAPITAL TEXAS TAX FREE INCOME FUND VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST VAN KAMPEN AMERICAN CAPITAL TRUST EX-99.B19 23 POWER OF ATTORNEY 1 POWER OF ATTORNEY EXHIBIT 19 The undersigned, being officers and trustees of each of the Van Kampen American Capital Open-End Trusts, as indicated on Schedule 1 attached hereto and incorporated by reference, each a Delaware business trust, except for the Van Kampen American Capital Pennsylvania Tax Free Income Fund, being a Pennsylvania business trust (individually, a "Trust"), do hereby, in the capacities shown below, individually appoint Dennis J. McDonnell and Ronald A. Nyberg, each of Oakbrook Terrace, Illinois, and each of them, as the agents and attorneys-in-fact with full power of substitution and resubstitution, for each of the undersigned, to execute and deliver, for and on behalf of the undersigned, any and all amendments to the Registration Statement filed by each Trust with the Securities and Exchange Commission pursuant to the provisions of the Securities Act of 1933 and the Investment Company Act of 1940. This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken together shall constitute one instrument. Dated: March 1, 1996
Signature Title --------- ----- / s / Fernando Sisto, Sc.D Trustee - ---------------------------------------------- Fernando Sisto, Sc.D. / s / Donald C. Miller Trustee - ---------------------------------------------- Donald C. Miller / s / Don G. Powell Trustee - ---------------------------------------------- Don G. Powell / s / Dennis J. McDonnell Trustee - ---------------------------------------------- Dennis J. McDonnell / s / J. Miles Branagan Trustee - ---------------------------------------------- J. Miles Branagan / s / Linda Hutton Heagy Trustee - ---------------------------------------------- Linda Hutton Heagy / s / Roger Hilsman, Ph.D. Trustee - ---------------------------------------------- Roger Hilsman, Ph.D. / s / William Stewart Woodside Trustee - ---------------------------------------------- William Stewart Woodside / s / R. Craig Kennedy Trustee - ---------------------------------------------- R. Craig Kennedy / s / Jack E. Nelson Trustee - ---------------------------------------------- Jack E. Nelson / s / Wayne W. Whalen Trustee - ---------------------------------------------- Wayne W. Whalen / s / Jerome L. Robinson Trustee - ---------------------------------------------- Jerome L. Robinson / s / Edward C. Wood III Vice President and - ---------------------------------------------- Edward C. Wood III Chief Financial Officer
2 SCHEDULE 1 1. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST 2. VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST 3. VAN KAMPEN AMERICAN CAPITAL TRUST 4. VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST 5. VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND 6. VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND 7. VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND 8. VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND 9. VAN KAMPEN AMERICAN CAPITAL EMERGING GROWTH FUND 10. VAN KAMPEN AMERICAN CAPITAL ENTERPRISE FUND 11. VAN KAMPEN AMERICAN CAPITAL EQUITY INCOME FUND 12. VAN KAMPEN AMERICAN CAPITAL LIMITED MATURITY GOVERNMENT FUND 13. VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND 14. VAN KAMPEN AMERICAN CAPITAL GOVERNMENT SECURITIES FUND 15. VAN KAMPEN AMERICAN CAPITAL GOVERNMENT TARGET FUND 16. VAN KAMPEN AMERICAN CAPITAL GROWTH AND INCOME FUND 17. VAN KAMPEN AMERICAN CAPITAL HARBOR FUND 18. VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND 19. VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST 20. VAN KAMPEN AMERICAN CAPITAL PACE FUND 21. VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND 22. VAN KAMPEN AMERICAN CAPITAL RESERVE FUND 23. VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND 24. VAN KAMPEN AMERICAN CAPITAL TAX-EXEMPT TRUST 25. VAN KAMPEN AMERICAN CAPITAL TEXAS TAX FREE INCOME FUND 26. VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME 27. VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST EX-27.1A 24 FINANCIAL DATA SCHEDULE
6 0000005114 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND 001 CLASS A YEAR MAY-31-1996 JUN-01-1995 MAY-31-1996 482,465,300 482,465,300 52,975,378 7,353 48,466 535,496,497 0 0 4,007,244 4,007,244 5,315,249 526,216,025 440,344,423 319,694,843 11,822 0 (53,843) 0 0 531,489,253 0 23,817,971 0 (4,785,287) 19,032,684 0 0 19,032,684 0 (17,616,820) 0 0 5,937,413,759 (5,834,380,999) 17,616,820 207,030,714 51,874 0 0 0 1,842,244 0 4,791,287 381,018,119 1.00 .047 0 (.047) 0 0 1.00 1.07 0 0
EX-27.1B 25 FINANCIAL DATA SCHEDULE
6 0000005114 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND 002 CLASS B YEAR MAY-31-1996 JUN-01-1995 MAY-31-1996 0 0 0 0 0 0 0 0 0 0 0 0 81,469,679 4,189,806 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (1,250,566) 0 0 407,809,262 (331,779,955) 1,250,566 0 0 0 0 0 0 0 0 33,245,948 1.00 .039 0 (.039) 0 0 1.00 1.86 0 0
EX-27.1C 26 FINANCIAL DATA SCHEDULE
6 0000005114 VAN KAMPEN AMERICAN CAPITAL RESERVE FUND 003 CLASS C YEAR MAY-31-1996 JUN-01-1995 MAY-31-1996 0 0 0 0 0 0 0 0 0 0 0 0 9,710,786 588,487 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (188,995) 0 0 99,265,826 (90,332,522) 188,995 0 0 0 0 0 0 0 0 4,948,621 1.00 .039 0 (.039) 0 0 1.00 1.87 0 0
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