-----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, SeLYAOCMNmcRI0sQxq6t1jZHyNzC0TqqXgckfpNAsU6FRMGVaug2CRVDYh6KWjwY xmyEvA6w+s1l8Yijoen7Iw== 0000950124-96-004563.txt : 19961031 0000950124-96-004563.hdr.sgml : 19961031 ACCESSION NUMBER: 0000950124-96-004563 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19961030 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VAN KAMPEN AMERICAN CAPITAL GOVERNMENT TARGET FUND CENTRAL INDEX KEY: 0000865441 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 760315855 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-57474 FILM NUMBER: 96650521 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06127 FILM NUMBER: 96650446 BUSINESS ADDRESS: STREET 1: 2800 POST OAK BLVD STREET 2: 46TH FL CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7139930500 MAIL ADDRESS: STREET 1: 2800 POST OAK BLVD STREET 2: 46TH FL CITY: HOUSTON STATE: TX ZIP: 77056 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CAPITAL GOVERNMENT TARGET SERIES DATE OF NAME CHANGE: 19920703 485APOS 1 FORM N-1A 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1996. REGISTRATION NO. 811-6127 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 11 [X]
VAN KAMPEN AMERICAN CAPITAL GOVERNMENT TARGET FUND (EXACT NAME OF REGISTRANT AS SPECIFIED IN DECLARATION OF TRUST) ONE PARKVIEW PLAZA, OAKBROOK TERRACE, ILLINOIS, 60181 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (630) 684-6000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) RONALD A. NYBERG, ESQ. EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY VAN KAMPEN AMERICAN CAPITAL, INC. ONE PARKVIEW PLAZA OAKBROOK TERRACE, IL 60181 (NAME AND ADDRESS OF AGENT FOR SERVICE) --------------------- Copy to: WAYNE W. WHALEN, ESQ. THOMAS A. HALE, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 WEST WACKER DRIVE CHICAGO, ILLINOIS, 60606 (312) 407-0700 It is proposed that this filing will become effective: (check appropriate box) [ ] immediately upon filing pursuant to paragraph (b) [ ] on (date) pursuant to paragraph (b) [X] 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. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. AN AMENDMENT TO THE REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME SUCH AMENDMENT TO THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED OCTOBER 30, 1996 PART A INFORMATION REQUIRED IN A PROSPECTUS ITEMS 1, 2, 3 AND 5A OF PART A ARE OMITTED PURSUANT TO ITEM F.4. OF THE GENERAL INSTRUCTIONS TO FORM N-1A. ITEM 4. GENERAL DESCRIPTION OF REGISTRANT. (a) (i) Van Kampen American Capital Government Target Fund, formerly known as American Capital Government Target Series (the "Fund"), is a diversified open-end investment company registered under the Investment Company Act of 1940 (the "1940 Act"). The Fund was originally organized under the laws of the Commonwealth of Massachusetts as a Massachusetts business trust on June 14, 1990 and reorganized as a trust under the laws of Delaware on August 25, 1995. The Fund will liquidate December 16, 1997 and proceeds will be distributed to shareholders on a pro rata basis. (ii) The Fund seeks to provide shareholders the highest rate of return on their investments consistent with safety and liquidity by investing at least 80% of its assets in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. The Fund invests primarily in debt securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities, including mortgage-related securities issued by instrumentalities of the U.S. Government. Under normal circumstances, at least 80% of the assets of the Fund are invested in such securities. The Fund may invest up to 20% of its assets in repurchase agreements fully collateralized by U.S. Government securities and in certain debt securities which are not U.S. Government securities but which are rated at the time of purchase within the two highest grades assigned by Moody's Investors Service ("Moody's") or Standard & Poor's Corporation ("S&P") or any non-rated debt security considered by the Adviser to be of comparable quality and in commercial paper rated at the time of purchase in the highest grade assigned by Moody's or S&P. The Fund may also purchase or sell U.S. Government securities and mortgage-related securities on a forward commitment basis. The Fund may invest in private and government mortgage-related securities, including private mortgage pass-through securities. The Fund may also invest in the interest only ("IO") or principal only ("PO") components of such debt securities described above. This includes "zero coupon" Treasury securities and stripped securities. Currently the principal U. S. Treasury security issued without coupons is the Treasury bill. The Treasury has also recently made wire transferable "zero coupon" Treasury securities available. However, in the last few years a number of banks and brokerage firms have separated ("stripped") the principal portions ("corpus") from the coupon portions of the U.S. Treasury bonds and notes and sold them separately in the form of receipts or certificates representing undivided interests in these instruments (which instruments are generally held by a bank in a custodial or trust account). Such custodial receipts or certificates are not considered by the Fund to be U.S. Government securities. Stripped mortgage-related securities (hereinafter referred to as "Stripped Mortgage Securities") are derivative multiclass mortgage securities. Stripped Mortgage Securities may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose subsidiaries of the foregoing. Stripped Mortgage Securities are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of Stripped Mortgage Securities will have one class receiving some of the interest and most 3 of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest-only or "IO" class), while the other class will receive all of the principal (the principal-only or "PO" class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the securities' yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to fully recoup their initial investments in these securities even if the security is rated AAA or Aaa. Holders of PO securities are not entitled to any periodic payments of interest prior to maturity. Accordingly, such securities usually trade at a deep discount from their face or par value and are subject to greater fluctuations of market value in response to changing interest rates than debt obligations of comparable maturities which make current distributions of interest. Current federal tax law requires that holders (such as the Fund) of such securities accrue a portion of the discount at which the security was purchased as income each year even though the holders receive no interest payment in cash on the certificate during the year. Such securities may involve greater risk than securities issued directly by the U.S. Government, its agencies or instrumentalities. Although the market for government-issued IO and PO securities backed by fixed-rate mortgages is increasingly liquid, certain of such securities may not be readily marketable and will be considered illiquid for purposes of the Fund's limitations on investments in illiquid securities. The Trustees of the Fund will establish guidelines and standards for determining whether a particular government-issued IO or PO backed by fixed-rate mortgages is liquid. Generally, such a security may be deemed liquid if it can be disposed of promptly in the ordinary course of business at a value reasonably close to that used in the calculation of the net asset value per share. Stripped Mortgage Securities, other than government-issued IO and PO securities backed by fixed-rate mortgages, are presently considered by the staff of the Securities and Exchange Commission ("SEC") to be illiquid securities and thus subject to the Fund's limitation on investment in illiquid securities. The Fund may also invest in other mortgage-backed securities. A mortgage-backed security is a general obligation of the issuer, which is additionally secured by mortgage collateral. The Fund may also invest in "zero coupon" Treasury securities which are U.S. Treasury bills, notes and bonds which have been stripped of their unmatured interest coupons and receipts or certificates representing interests in such stripped debt obligations and coupons. "Zero coupon" Treasury securities do not entitle the holder to any periodic payments of interest prior to maturity. Accordingly, such securities usually trade at a deep discount from their face or par value and will be subject to greater fluctuations of market value in response to changing interest rates than debt obligations of comparable maturities which make periodic distributions of interest. On the other hand, because there are no periodic interest payments to be reinvested prior to maturity, zero coupon securities eliminate the reinvestment risk and lock in a rate of return to maturity. The Fund may enter into repurchase agreements with domestic banks or broker-dealers in order to earn a return on temporarily available cash. The Fund will not invest in repurchase agreements maturing in more than seven days if any such investment, together with any other illiquid securities held by the Fund, exceeds 10% of the value of its net assets. The Fund may lend its portfolio securities to broker-dealers and other financial institutions in an amount up to 50% of the total assets, provided that such loans are callable at any time by the Fund, and are at all times secured by cash collateral that is at least equal to the market value, determined daily, of the loaned securities. During the period of the loan, the Fund receives the income on both the loaned securities and the collateral and thereby increases its yield after payment of lending fees. 2 4 Loans of portfolio securities will only be made to borrowers considered by the Adviser to be creditworthy. 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 than would be available to the Fund investing separately. The manner in which the joint account is managed is subject to conditions set forth in the SEC 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. (b) INAPPLICABLE (c) Since the value of debt securities owned by the Fund will fluctuate depending upon market factors and inversely with prevailing interest rate levels, the net asset value of shares of the Fund will fluctuate. Debt securities with longer maturities generally tend to produce higher yields and are subject to greater market fluctuation as a result of changes in interest rates than debt securities with shorter maturities. Both non-government and government mortgage-related securities are characterized by monthly payments to the holder, reflecting the monthly payments made by the borrowers who received the underlying mortgage loans. The payments to the security holders (such as the Fund), like the payments on the underlying loans, represent both principal and interest. Although the underlying mortgage loans are for specified periods of time, such as twenty or thirty years, the borrowers can, and typically do, pay them off sooner. Thus, the security holders frequently receive prepayments of principal, in addition to the principal which is part of the regular monthly payment. A borrower is more likely to prepay a mortgage which bears a relatively high rate of interest. In times of declining interest rates, some of the Fund's higher yielding securities might be converted to cash, and the Fund will be forced to accept lower interest rates when that cash is used to purchase additional securities. The increased likelihood of prepayment when interest rates decline also limits market price appreciation of mortgage-related securities. If the Fund buys mortgage-related securities at a premium, mortgage foreclosures or mortgage prepayments may result in a loss to the Fund of up to the amount of the premium paid since only timely payment of principal and interest is guaranteed. Collateralized mortgage obligations ("CMOs") are issued in a number of classes or series with different maturities. The classes or series are retired in sequence as the underlying mortgages are repaid. Prepayment may shorten the stated maturity of the obligation and can result in a loss of premium, if any has been paid. Although the securities underlying CMOs may be subject to a guarantee or third party support, the CMO, itself, is not so guaranteed. Therefore, if the collateral securing the CMO is insufficient to make payment, a holder could sustain a loss. The Fund intends to invest in privately issued CMOs and real estate mortgage investment conduits ("REMICs") only if they are rated at the time of purchase in the two highest grades by a nationally-recognized rating agency or in any non-rated CMO or REMIC considered by the Adviser to be of comparable quality. The Fund understands that the staff of the SEC considers certain issuers of CMOs and REMICs to be investment companies for purposes of Section 12(d)(1) of the 1940 Act. Absent exemption order relief from the SEC, the Fund may not invest in securities of issuers which are investment companies in excess of the limits set forth in Section 12(d)(1) of the 1940 Act. 3 5 ITEM 5. MANAGEMENT OF THE FUND. (a) The business of the Fund is managed under the direction of eleven Trustees. The Adviser determines the investment of the Fund's assets, provides administrative services and manages the Fund's business and affairs. (b) Van Kampen American Capital Asset Management, Inc. (the "Adviser"), One Parkview Plaza, Oakbrook Terrace, Illinois 60181 serves as investment adviser to the Fund. 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, 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 is a wholly owned subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly-owned subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly-owned subsidiary of Morgan Stanley Group Inc. The Adviser's principal office is located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Morgan Stanley Group Inc. and various of its directly or indirectly owned subsidiaries, including Morgan Stanley & Co. Incorporated, a registered broker-dealer and investment manager adviser, and Morgan Stanley International, are engaged in a wide range of financial services. Their principal businesses include securities underwriting, distribution and trading; merger, acquisition, restructuring and other corporate finance advisory activities; merchant banking; stock brokerage and research services; asset management; trading of futures, options, foreign exchange, commodities and swaps (involving foreign exchange, commodities, indices and interest rates); real estate advice, financing and investing; and global custody, securities clearance services and securities lending. 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 at the annual rate of 0.50% of the Fund's average daily net assets. Under the Advisory Agreement the Fund also reimburses the Adviser on a monthly basis for the cost of the Fund's accounting services, which include maintaining its financial books and records and calculating its daily net asset value. From time to time as the Adviser and/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. (c) John R. Reynoldson is primarily responsible for the day-to-day management of the Fund's investment portfolio. Mr. Reynoldson is Vice President of the Fund and Senior Vice President of the Adviser. He has served as Senior Vice President of the Adviser since July, 1991. He was previously an investment vice president with the Adviser. Mr. Reynoldson has been primarily responsible for managing the Fund's investment portfolio since its inception. (d) INAPPLICABLE (e) ACCESS Investor Services, Inc. ("ACCESS"), P.O. Box 418256, Kansas City, Missouri 64141-9256, serves as shareholder service agent for the Fund. ACCESS, a wholly owned subsidiary of the Adviser's parent, provides these services at cost plus a profit. (f) The Fund's total expenses for its most recent fiscal year as a percentage of average net assets is %. 4 6 (g) (i) INAPPLICABLE (ii) The Adviser is authorized to place portfolio transactions with broker-dealers participating in the distribution of shares of other Van Kampen American Capital mutual funds if it reasonably believes that the quality of the execution is comparable to that available from other qualified firms. ITEM 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE. Information contained in Annual Report. ITEM 6. CAPITAL STOCK AND OTHER SECURITIES. (a) The Fund is authorized to issue an unlimited number of shares of beneficial interest of $0.01 par value, in one or more series as may be established from time to time in accordance with the provisions of the Fund's Declaration of Trust. Shares issued are fully paid, non-assessable and have no preemptive or conversion rights. Shareholders are entitled to one vote for each full share held and to fractional votes for fractional shares held in the election of Trustees and on other matters submitted to the vote of shareholders. All shares have equal voting rights. A shareholder meeting seeking shareholder approval to liquidate the Fund will be held within three months prior to the target termination date unless no such meeting is then required under the 1940 Act as confirmed by written interpretation by the staff of the SEC or an exemptive order issued by the SEC. Shareholders will be notified of the impending liquidation and the other investment choices available in the Van Kampen American Capital mutual funds. The shareholders will be asked to notify the Fund if they wish to receive payment of the liquidation proceeds in cash, or to exchange their shares for shares of any fund that the Fund has the capability to exchange into without payment of any additional sales charge. The Fund will liquidate its portfolio and pay a liquidating distribution in cash -- or effect exchanges, subject to obtaining any necessary shareholder approval for the liquidation. (b) [As of December 6, 1995, Amivest Corporation, 767 5th Avenue, 50th Floor, New York, New York 10153, serving as investment adviser to a number of pension and trust funds that hold shares of the Fund and for which Amalgamated Bank of New York, P.O. Box 370, Cooper Station, New York, New York 10003-0281, serves as custodian, held 48.55% of the outstanding shares of the Fund, and, therefore, could be deemed to control the Fund.] (c) INAPPLICABLE (d) INAPPLICABLE (e) Inquiries regarding the Fund or its shares should be made to the Fund at 2800 Post Oak Boulevard, Houston, Texas 77056. (f) The Fund declares annual distributions prior to the end of the year in the amount of its net investment income. A distribution of net realized capital gains, if any, is declared at the same time. Dividends and capital gains distributions are automatically applied to purchase additional shares of the Fund at the next determined net asset value unless the shareholder instructs otherwise. The Fund's Trustees are authorized to declare pro rata share splits at its discretion. The Trustees currently intend to declare a reverse share split immediately after the payment of each annual dividend and any other distribution. (g) The Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As such, the Fund will distribute all of its net income and capital gains to its shareholders and such distributions will be taxable as such to its 5 7 shareholders; while shareholders may be proportionately liable for taxes on income and gains of the Fund, shareholders not subject to tax on their income will not be required to pay tax on amounts distributed to them; the Fund will inform its shareholders of the amount and nature of such income and gains distributed. ITEM 7. PURCHASE OF SECURITIES BEING OFFERED. (a) Van Kampen American Capital Distributors, Inc. (the "Distributor"), One Parkview Plaza, Oakbrook Terrace, Illinois 60181, acts as the principal underwriter of the Fund's shares pursuant to a written agreement (the "Underwriting Agreement"). (b) Shares of the Fund are available only to current shareholders through dividend reinvestments. Shares are offered at the next determined net asset value per share, plus a sales charge as described below. Net asset value per share is determined once daily as of the close of trading (currently 4:00 p.m., New York time) each day the New York Stock Exchange is open. Net asset value per share is determined by dividing the value of the Fund's securities, cash and other assets (including accrued interest) less all liabilities (including accrued expenses) by the total number of shares outstanding. The price paid for shares purchased is based on the next calculation of net asset value plus a sales charge after an order is received by a dealer provided such order is transmitted to the Distributor prior to its close of business on such day. Orders received by dealers after the close of the Exchange are priced based on the next close provided they are received by the Distributor prior to the close of its business day on the day of such next close. It is the responsibility of dealers to transmit orders received by them to the Distributor so they will be received prior to such time. U.S. Government securities and other debt securities in which the Fund invests are traded in the over-the-counter market and are valued at the last available bid price. Such valuations are based on quotations of one or more dealers that make markets in the securities as obtained from such dealers or from a pricing service. Securities with a remaining maturity of 60 days or less are valued on an amortized cost basis, which approximates market value. Securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Trustees of the Fund. Such valuations and procedures are reviewed periodically by the Trustees. (c) Shares of the Fund are available only to current shareholders through dividend reinvestments. The Fund may make additional sales of its shares either on a continuous basis or by periodic offerings of a limited number of shares, but the Fund is not obligated to make any such future offerings. (d) INAPPLICABLE. (e) INAPPLICABLE. (f) The Fund has adopted a Distribution Plan (the "Plan") under which it will pay up to 0.25% per annum of its average daily net assets to the Distributor to reimburse the Distributor for service fees paid by it to service organizations ("Service Organizations"). Payments by the Fund under the Plan are to reimburse the Distributor for its payments to Service Organizations for personal service and/or maintenance of shareholder accounts for the Fund's shareholders who are also their clients. Payments are based on an annual percentage of the value of the Fund's shares held in shareholder accounts for which such Service Organizations are responsible, at the rate of 0.25% annually. The Fund is not obligated under the Plan to pay any service expense in excess of such service fee. Distribution expenses accrued by the Distributor in one fiscal year may not be paid from the service fees received from the Fund in subsequent fiscal years. Thus, if the Plan was terminated or not continued, no amounts (other than current amounts accrued but not yet paid) would be owed by the Fund to the Distributor. 6 8 ITEM 8. REDEMPTION OR REPURCHASE. (a) Shareholders may redeem shares at net asset value at any time without charge by submitting a written request in proper form to ACCESS at P.O. Box 418256, Kansas City, Missouri 64141-9256. The request for redemption must be signed by all persons in whose names the shares are registered. Signatures must conform exactly to the account registration. If the proceeds of the redemption exceed $50,000, or if the proceeds are not to be paid to the record owner at the record address, or if the record address has changed within the previous 30 days, signature(s) must be guaranteed by one of the following: a bank or trust company; a broker/dealer; a credit union; a national securities exchange, registered securities association or clearing agency; a savings and loan association; or a federal savings bank. Generally, a properly signed written request with any required signature guarantee is all that is required for a redemption. In some cases, however, other documents may be necessary. In the event the redemption is requested by a corporation, partnership, trust, fiduciary, executor or administrator, and the name and title of the individual(s) authorizing such redemption is not shown in the account registration, a copy of the corporate resolution or other legal documentation appointing the authorized signer and certified within the prior 60 days must accompany the redemption request. IRA redemption requests should be sent to the IRA custodian to be forwarded to ACCESS. Where Van Kampen American Capital Trust Company serves as IRA custodian, special IRA, 403(b)(7), or Keogh redemption forms must be obtained from and be forwarded to Van Kampen American Capital Trust Company, P.O. Box 944, Houston, TX 77001-0944. Contact the custodian for information. Although the Fund does not impose a charge for redemptions, a custodian of a retirement plan account may charge fees based on their independent fee schedules. Shareholders may also place redemption requests through an authorized investment dealer. Orders received from dealers must be at least $500 unless transmitted via the FUNDSERV network. 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 will be made by check mailed within seven days after acceptance by ACCESS of the request and any other necessary documents in proper order. Such payment may be postponed or the right of redemption suspended as provided by the rules of the SEC. If the shares to be redeemed have been recently purchased by check, ACCESS may delay mailing a redemption check until it confirms that the purchase check has cleared, usually a period of up to 15 days. Any taxable gain or loss will be recognized by the shareholder upon redemption of shares. A shareholder who has redeemed shares of the Fund may reinstate any portion or all of the net proceeds of such redemption in shares of the Fund if then offered for sale or in shares of any other fund available for purchase. Such reinstatement is made at the net asset value next determined after the order is received, which must be within 120 days after the date of the redemption. The Fund also permits shareholders and the dealer representative of record to redeem shares by telephone and to have redemption proceeds sent to the address of record for the account or to the bank account of record. 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. For redemptions authorized by telephone, amounts of $50,000 or less may be redeemed daily if the proceeds are to be paid by check and amounts of at least $1,000 up to $1 million may be redeemed daily if the proceeds are to be paid by wire. The proceeds must be payable to the shareholder(s) of record and sent to the address of record for the account or wired directly to their predesignated bank account. This privilege is not available if the address of record has been changed within 30 days prior to a telephone redemption request. The Fund reserves the right at any time to terminate, limit or otherwise modify this redemption privilege. 7 9 Investments of $1 million or more and certain qualified 401(k) retirement plans are not subject to any sales charge at the time of purchase, but a contingent deferred sales charge of up to one percent is imposed on certain redemptions made within one year of the purchase. (b) INAPPLICABLE (c) The Fund may redeem any shareholder account with a net asset value on the date of the notice of redemption less than the minimum investment as specified by the Trustees. At least 60 days advance written notice of any such involuntary redemption is required and the shareholder is given an opportunity to purchase the required value of additional shares at the next determined net asset value without sales charge. Any applicable contingent deferred sales charge will be deducted from the proceeds of this redemption. Any involuntary redemption may only occur if the shareholder account is less than the minimum initial investment due to shareholder redemptions. (d) Payment for shares redeemed may be postponed or the right of redemption suspended as provided by the rules of the SEC. If shares to be redeemed have been recently purchased by check, ACCESS may delay mailing a redemption check until it confirms that the purchase check has cleared, usually a period of up to 15 days. ITEM 9. PENDING LEGAL PROCEEDINGS. INAPPLICABLE 8 10 Information contained herein is subject to completion or amendment. An amendment to the registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time such amendment to the registration statement becomes effective. This statement of additional information shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION -- DATED OCTOBER 30, 1996 PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. ITEM 10. COVER PAGE. Van Kampen American Capital Government Target Fund, formerly known as American Capital Government Target Series (the "Fund"), is a diversified open-end management investment company. This Statement of Additional Information is not a Prospectus but contains information in addition to and more detailed than that set forth in Part A and should be read in conjunction with Part A. This Statement of Additional Information is dated December 29, 1996. ITEM 11. TABLE OF CONTENTS.
PAGE ---- General Information and History............................................... 1 Investment Objectives and Policies............................................ 1 Management of the Fund........................................................ 3 Control Persons and Principal Holders of Securities........................... 7 Investment Advisory and Other Services........................................ 8 Brokerage Allocation and Other Practices...................................... 11 Capital Stock and Other Securities............................................ 15 Purchase, Redemption and Pricing of Securities Being Offered.................. 15 Tax Status.................................................................... 15 Underwriters.................................................................. 15 Calculation of Performance Data............................................... 15 Financial Statements.......................................................... C-1
ITEM 12. GENERAL INFORMATION AND HISTORY. The Fund and Van Kampen American Capital Asset Management, Inc. (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. ITEM 13. INVESTMENT OBJECTIVES AND POLICIES. (a) See Item 4. (b)INVESTMENT RESTRICTIONS The Fund has adopted the following restrictions which may not be changed without the approval of the holders of a majority of the Fund's outstanding shares. Such majority is defined as the lesser of (i) 67% or more of the voting securities are present or represented by proxy; or (ii) more than 50% of the outstanding voting securities. The percentage limitations contained in the restrictions and policies set forth herein apply at the time of purchase of securities. These restrictions provide that the Fund shall not: 1. Invest more than five percent of its assets in the securities of any one issuer (except the U.S. Government, its agencies and instrumentalities) or purchase more than ten percent of the outstanding voting securities of any one issuer, except that the Fund may purchase securities of other investment companies to the extent permitted by (i) the 1940 Act, as amended from time to time, (ii) the rules and regulations promulgated by the Securities and Exchange Commission under the 1940 Act, as amended from time to time, or (iii) an exemption or other relief from the provisions of the 1940 Act. 11 2. Borrow in excess of five percent of the market or other fair value of its total assets, or pledge its assets to an extent greater than five percent of the market or other fair value of its total assets. Any such borrowings shall be from banks and shall be undertaken only as a temporary measure for extraordinary or emergency purposes. 3. Issue senior securities, as defined in the Investment Company Act of 1940 (the "1940 Act"). 4. Write puts, calls or combinations thereof. 5. Purchase or sell any commodity or commodity contracts. 6. Underwrite securities of other issuers, except insofar as the Fund may be deemed to be an underwriter for purposes of the Securities Act of 1933 in the resale of any unregistered securities owned by the Fund; provided, however, the Fund shall not purchase any unregistered securities if immediately after and as a result of such purchase such securities, together with any other illiquid securities held by the Fund, would constitute more than ten percent of the Fund's total assets. Illiquid securities are securities which are not readily marketable. 7. Make any investment in real estate, commodities or commodities contracts, except that the Fund may purchase or sell securities which are secured by real estate. 8. Make any investment which would cause more than 25% of the market or other fair value of its total assets to be invested in the securities of issuers all of which conduct their principal business activities in the same industry. This restriction does not apply to obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. 9. Make loans of money or securities, except that the Fund may invest (a) by investment in repurchase agreements in accordance with applicable requirements set forth in the Fund's Prospectus or (b) by lending its portfolio securities in amounts not to exceed 50% of the Fund's total assets, provided that such loans are secured by cash collateral that is at least equal to the market value. The Fund will not invest in repurchase agreements maturing in more than seven days (unless subject to a demand feature) if any such investment, together with any illiquid securities held by the Fund, exceeds 10% of the market or other fair value of its total net assets. 10. Make short sales of securities, unless at the time of the sale the Fund owns an equal amount of such securities. 11. Purchase securities on margin, except that the Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of securities. 12. Invest in warrants or rights except where acquired in units or attached to other securities. 13. Invest in securities of any company if any officer or trustee of the Fund or of the Adviser owns more than one-half of one percent of the outstanding securities of such company, and such officers and trustees own in the aggregate more than five percent of the outstanding securities of such issuer. 14. Invest in interests in oil, gas, or other mineral exploration or development programs, or invest in oil, gas or mineral leases. (c) INAPPLICABLE (d) The Fund generally experiences a high rate of portfolio turnover, which may vary from year to year. The rate of portfolio turnover is not a limiting factor when the Adviser deems it desirable to purchase or sell securities. A 100% turnover rate would occur, for example, if all the securities held by the Fund were replaced in a period of one year. Higher portfolio turnover involves correspondingly greater brokerage commissions and other transaction costs, which are borne directly by the Fund. The Fund anticipates that the turnover rate will not reach 100%. 2 12 Over the last two fiscal years, the portfolio turnover rate has dropped significantly. Given the approaching liquidation date of December 16, 1997, there has been less of a need to alter the portfolio structure. ITEM 14. MANAGEMENT OF THE FUND. (a) The Fund's Trustees and Officers and their principal occupations for the past five years are listed below. TRUSTEES AND OFFICERS The tables below list the trustees and officers of the Trust (of which the Fund is a separate series) and their principal occupations for the last five years and their affiliations, if any, with Van Kampen American Capital Investment Advisory Corp. (the "VK Adviser"), Van Kampen American Capital Asset Management, Inc. (the "AC Adviser"), Van Kampen American Capital Distributors, Inc. (the "Distributor"), Van Kampen American Capital, Inc. ("Van Kampen American Capital"), VK/AC Holding, Inc. or ACCESS Investor Services, Inc. ("ACCESS"). For purposes hereof, the terms "Van Kampen American Capital Funds" or "Fund Complex" 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 1632 Morning Mountain Road President of MDT Corporation, a company which develops Raleigh, NC 27614 manufactures, markets and services medical and scientific Date of Birth: 07/14/32 equipment. Trustee of each of the Van Kampen American Capital Funds. 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. 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. Trustee of each of the Van Lyme, CT 06371 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. Trustee of each of the Van Kampen American Capital Funds.
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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, Van Kampen American Capital Oakbrook Terrace, IL 60181 Advisors, Inc. and Van Kampen American Capital Date of Birth: 05/20/42 Management, Inc. Executive Vice President and a Director of VK/AC Holding, Inc. and Van Kampen American Capital. President and Director of Van Kampen Merritt Equity Advisors Corp. Director of Van Kampen Merritt Equity Holdings Corp. Director of McCarthy, Crisanti & Maffei, Inc. Prior to September 1996, Chief Executive Officer McCarthy, Crisanti & Maffei, Inc. and Chairman and Director of MCM Asia Pacific Company, Limited. Prior to July 1996, President, Chief Operating Officer and Trustee of VSM Inc. and VCJ Inc. President, Chief Executive Officer and Trustee of each of the Van Kampen American Capital Funds. President, Chairman of the Board and Trustee of other investment companies advised by the VK Adviser. Executive Vice President of other investment companies advised by the AC Adviser. 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. Trustee and Co-Chairman of each of the Van Kampen American Capital Funds. 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. ("SIPC"). 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. Trustee of each of the Van Kampen American Capital Funds. Fernando Sisto..................... George M. Bond Chaired Professor and, prior to 1995, Dean 155 Hickory Lane of Graduate School and Chairman, Department of Mechanical Closter, NJ 07624-2322 Engineering, Stevens Institute of Technology. Director of Date of Birth: 08/02/24 Dynalysis of Princeton, a firm engaged in engineering research. Trustee and Co-Chairman of each of the Van Kampen American Capital Funds. Wayne W. Whalen*................... Partner in the law firm of Skadden, Arps, Slate, Meagher 333 West Wacker Drive & Flom (Illinois), legal counsel to the Van Kampen Chicago, IL 60606 American Capital Funds, The Explorer Institutional Trust Date of Birth: 08/22/39 and the closed-end investment companies advised by the VK Adviser. Trustee of each of the Van Kampen American Capital Funds, The Explorer Institutional Trust and the closed-end investment companies advised by the VK Adviser.
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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. 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 VK Adviser, the AC Adviser and the Fund by reason of his positions with the VK Adviser and the AC Adviser. Mr. Whalen is an interested person of the Fund by reason of his firm acting as legal counsel to the Fund. OFFICERS The address for William N. Brown, Curtis W. Morell, Alan T. Sachtleben, Paul R. Wolkenberg, Tanya M. Loden, Huey P. Falgout, Jr. and Robert Sullivan is 2800 Post Oak Blvd., Houston, TX 77056. The address for Peter W. Hegel, Ronald A. Nyberg, Edward C. Wood III, John L. Sullivan, Nicholas Dalmaso, Scott E. Martin, Weston B. Wetherell and Steven M. Hill is One Parkview Plaza, Oakbrook Terrace, IL 60181.
POSITIONS AND PRINCIPAL OCCUPATIONS NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS - ------------------------ ----------------------- ------------------------------------------- William N. Brown........ Vice President Executive Vice President of the AC Adviser, Date of Birth: VK/AC Holding, Inc., Van Kampen American 05/26/53 Capital, and American Capital Contractual Services, Inc. Executive Vice President and Director of Van Kampen American Capital Trust Company, Van Kampen American Capital Advisors, Inc., Van Kampen American Capital Exchange Corporation, ACCESS and Van Kampen American Capital Services, Inc. Prior to September 1996, Director of American Capital Shareholders Corporation. Vice President of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and the AC Adviser. Peter W. Hegel.......... Vice President Executive Vice President of the VK Adviser, Date of Birth: AC Adviser, Van Kampen American Capital 06/25/56 Management, Inc. and Van Kampen American Capital Advisors, Inc. Prior to September 1996, Director of McCarthy, Crisanti & Maffei, Inc. Prior to July 1996, Director of VSM Inc. Vice President of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and the AC Adviser.
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POSITIONS AND PRINCIPAL OCCUPATIONS NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS - ------------------------ ----------------------- ------------------------------------------- Curtis W. Morell........ Vice President and Senior Vice President of the VK Adviser and Date of Birth: Chief Accounting the AC Adviser. Vice President and Chief 08/04/46 Officer Accounting Officer of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and AC Adviser. Ronald A. Nyberg........ Vice President and Executive Vice President, General Counsel Date of Birth: Secretary and Secretary of Van Kampen American 07/29/53 Capital and VK/AC Holding, Inc. Executive Vice President, General Counsel and a Director of the Distributor, the VK Adviser, 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, Van Kampen American Capital Services, Inc. and ACCESS. Executive Vice President, General Counsel, Assistant Secretary and Director of Van Kampen American Capital Trust Company. Director of ICI Mutual Insurance Co., a provider of insurance to members of the Investment Company Institute. Prior to September 1996, General Counsel of McCarthy, Crisanti & Maffei, Inc. Prior to July 1996, Executive Vice President and General Counsel of VSM Inc. and VCJ Inc. Vice President and Secretary of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and AC Adviser. Alan T. Sachtleben...... Vice President Executive Vice President of the VK Adviser Date of Birth: and Van Kampen American Capital Management, 04/20/42 Inc. Executive Vice President and a Director of the AC Adviser and Van Kampen American Capital Advisors, Inc. Vice President of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and AC Adviser. Paul R. Wolkenberg...... Vice President Executive Vice President of VK/AC Holding, Date of Birth: Inc., Van Kampen American Capital, the 11/10/44 Distributor and the AC Adviser. President, Chief Executive Officer and a Director of Van Kampen American Capital Trust Company and ACCESS. Director of American Capital Contractual Services, Inc. Vice President of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and AC Adviser. Edward C. Wood III...... Vice President and Senior Vice President of the VK Adviser, Date of Birth: Chief Financial Officer the AC Adviser and Van Kampen American 01/11/56 Capital Management, Inc. Vice President and Chief Financial Officer of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and the AC Adviser.
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POSITIONS AND PRINCIPAL OCCUPATIONS NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS - ------------------------ ----------------------- ------------------------------------------- John L. Sullivan........ Treasurer First Vice President of the VK Adviser and Date of Birth: the AC Adviser. Treasurer of each of the 08/20/55 Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and the AC Adviser. Tanya M. Loden.......... Controller Vice President of the VK Adviser and the AC Date of Birth: Adviser. Controller of each of the Van 11/19/59 Kampen American Capital Funds and other investment companies advised by the VK Adviser and AC Adviser. Nicholas Dalmaso........ Assistant Secretary Assistant Vice President and Senior Date of Birth: Attorney of Van Kampen American Capital. 03/01/65 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 and other investment companies advised by the VK Adviser and the AC 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: Attorney of Van Kampen American Capital. 11/15/63 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 and ACCESS. Assistant Secretary of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and AC Adviser. Scott E. Martin......... Assistant Secretary Senior Vice President, Deputy General Date of Birth: Counsel and Assistant Secretary of Van 08/20/56 Kampen American Capital and VK/AC Holding, Inc. Senior Vice President, Deputy General Counsel and Secretary of the VK Adviser, the AC Adviser, the Distributor, Van Kampen American Capital Management, Inc., Van Kampen American Capital Advisors, Inc., American Capital Contractual Services, Inc., Van Kampen American Capital Exchange Corporation, Van Kampen American Capital Services, Inc., ACCESS, Van Kampen Merritt Equity Advisors Corp. and Van Kampen Merritt Equity Holdings Corp. Prior to September 1996, Deputy General Counsel and Secretary of McCarthy, Crisanti & Maffei, Inc. Prior to July 1996, Senior Vice President, Deputy General Counsel and Secretary of VSM Inc. and VCJ Inc. Assistant Secretary of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and the AC Adviser.
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POSITIONS AND PRINCIPAL OCCUPATIONS NAME AND AGE OFFICES WITH FUND DURING PAST 5 YEARS - ------------------------ ----------------------- ------------------------------------------- Weston B. Wetherell..... Assistant Secretary Vice President, Associate General Counsel Date of Birth: and Assistant Secretary of Van Kampen 06/15/56 American Capital, the VK Adviser, the AC Adviser, the Distributor, Van Kampen American Capital Management, Inc. and Van Kampen American Capital Advisors, Inc. Assistant Secretary of each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and the AC Adviser. Steven M. Hill.......... Assistant Treasurer Assistant Vice President of the VK Adviser Date of Birth: and AC Adviser. Assistant Treasurer of each 10/16/64 of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and the AC Adviser. Robert Sullivan......... Assistant Controller Assistant Vice President of the VK Adviser Date of Birth: and the AC Adviser. Assistant Controller of 03/30/33 each of the Van Kampen American Capital Funds and other investment companies advised by the VK Adviser and the AC Adviser.
Each of the foregoing trustees and officers holds the same position with each of the funds in the Fund Complex. As of December 31, 1995, there were 50 funds in the Fund Complex. Each trustee who is not an affiliated person of the VK Adviser, the AC Adviser, the Distributor or Van Kampen American Capital (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 as more fully described below. The compensation of each Non-Affiliated Trustee includes a retainer by the funds in the Fund Complex advised by the AC Adviser (the "AC Funds") in an amount equal to $35,000 per calendar year, due in four quarterly installments on the first business day of each calendar quarter. The AC Funds pay each Non- Affiliated Trustee a per meeting fee in the amount of $2,000 per regular quarterly meeting attended by the Non-Affiliated Trustee, due on the date of such meeting, plus reasonable expenses incurred by the Non-Affiliated Trustee in connection with his or her services as a trustee. Payment of the annual retainer and the regular meeting fee is allocated among the AC Funds (i) 50% on the basis of the relative net assets of each AC Fund to the aggregate net assets of all the AC Funds and (ii) 50% equally to each AC Fund, in each case as of the last business day of the preceding calendar quarter. Each AC Fund participating in any special meeting of the trustees generally pays each Non-Affiliated Trustee a per meeting fee in the amount of $125 per special meeting attended by the Non-Affiliated Trustee, due on the date of such meeting, plus reasonable expenses incurred by the Non-Affiliated Trustee in connection with his or her services as a trustee, provided that no compensation will be paid in connection with certain telephonic special meetings. The trustees have approved an aggregate compensation cap with respect to funds in the Fund Complex of $84,000 per Non-Affiliated Trustee per year (excluding any retirement benefits) for the period July 22, 1995 through December 31, 1996, subject to the net assets and the number of funds in the Fund Complex as of July 21, 1995 and certain other exceptions. In addition, each of the VK Adviser or the AC Adviser, as the case may be, 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 8 18 return determined by reference to the return on the common shares of the Fund or other funds in the Fund Complex as selected by the respective Non-Affiliated Trustee. To the extent permitted by the 1940 Act, the Fund may invest in securities of those funds selected by the Non-Affiliated Trustees in order to match the deferred compensation obligation. The deferred compensation plan is not funded and obligations thereunder represent general unsecured claims against the general assets of the Fund. 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. Trustees retiring prior to the age of 60 or with fewer than 10 years but more than 5 years of service may receive reduced retirement benefits from a series. The retirement plan contains a Fund Complex retirement benefit cap of $60,000 per year. The AC Adviser will reimburse the Fund for expenses related to the retirement plan through December 31, 1996. Additional information regarding compensation and benefits for trustees is set forth below. The "Registrant" is the Trust, which currently consists of one operating series. As indicated in the notes accompanying the table, the amounts relate to either the Registrant's last fiscal year ended August 31, 1996 or the Fund Complex' last calendar year ended December 31, 1995. COMPENSATION TABLE
ESTIMATED TOTAL PENSION OR ANNUAL COMPENSATION AGGREGATE RETIREMENT BENEFITS BEFORE DEFERRAL COMPENSATION BENEFITS ACCRUED FROM FROM REGISTRANT BEFORE DEFERRAL AS PART OF REGISTRANT AND FUND FROM REGISTRANT UPON COMPLEX PAID TO NAME(1) REGISTRANT(2) EXPENSES(3) RETIREMENT(4) TRUSTEE(5) - --------------------------------------- ---------------- ---------------- ----------- --------------- J. Miles Branagan...................... $-0- $84,250 Dr. Richard E. Caruso.................. -0- 57,250 Philip P. Gaughan...................... -0- 76,500 Linda Hutton Heagy..................... -0- 38,417 Dr. Roger Hilsman...................... -0- 91,250 R. Craig Kennedy....................... -0- 92,625 Donald C. Miller....................... -0- 94,625 Jack E. Nelson......................... -0- 93,625 David Rees............................. -0- 83,250 Jerome L. Robinson..................... -0- 89,375 Lawrence J. Sheehan.................... -0- 91,250 Dr. Fernando Sisto..................... -0- 98,750 Wayne W. Whalen........................ -0- 93,375 William S. Woodside.................... -0- 79,125
- --------------- (1) Mr. McDonnell, a trustee of the Trust, is an affiliated person of the VK Adviser and AC 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 30, 1996. Mr. Don G. Powell resigned from the Board of Trustees on August 15, 1996, and did not receive any compensation or benefits from the Fund while a trustee because he was an affiliated person of the VK Adviser and AC 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. (2) The amounts shown in this column are aggregated from the compensation paid by each series in operation during the Registrant's fiscal year ended August 31, 1996 before deferral by the trustees under the deferred compensation plan. The following trustees deferred all or a portion of their compensation from the Registrant during the fiscal year ended August 31, 1996: Dr. Caruso, $ ; Mr. Gaughan, $ ; Ms. Heagy, $ ; Mr. Kennedy, $ ; Mr. Miller, $ ; Mr. Nelson, $ ; Mr. Rees, $ ; 9 19 Mr. Robinson, $ ; Dr. Sisto, $ ; and Mr. Whalen, $ . The cumulative deferred compensation (including interest) accrued with respect to each trustee from the Registrant as of August 31, 1996 is as follows: Dr. Caruso, $ ; Mr. Gaughan, $ ; Ms. Heagy, $ ; Mr. Kennedy, $ ; Mr. Miller, $ ; Mr. Nelson, $ ; Mr. Rees, $ ; Mr. Robinson, $ ; Dr. Sisto, $ ; and Mr. Whalen, $ . 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 funds in the Fund Complex as selected by the respective Non-Affiliated Trustee. To the extent permitted by the 1940 Act, the Fund may invest in securities of those funds selected by the Non-Affiliated Trustees in order to match the deferred compensation obligation. (3) The amounts shown in this column are zero in the Fund's fiscal year ended August 31, 1996 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 $ in its fiscal year ended August 31, 1996. The Retirement Plan is described above the Compensation Table. (4) The amounts shown in this column are the estimated annual benefits payable by the Registrant in each year of the 10-year period commencing in the year of such trustee's retirement from the Registrant (based on $2,500 per series for each series of the Registrant in operation) assuming: the trustee has 10 or more years of service on the Board of the respective series and retires at or after attaining the age of 60. The actual annual benefit may be less if the trustee is subject to the Fund Complex retirement benefit cap or if the trustee is not fully vested at the time of retirement. (5) The amounts shown in this column represent the aggregate compensation paid by all of the funds in the Fund Complex as of December 31, 1995, before deferral by the trustees under the deferred compensation plan. The following trustees deferred compensation paid by the Registrant 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 funds in the Fund Complex as selected by the respective Non-Affiliated Trustee. To the extent permitted by the 1940 Act, the Fund may invest in securities of those funds selected by the Non-Affiliated Trustees in order to match the deferred compensation obligation. The 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 VK Adviser, AC Adviser and their 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 VK Adviser, AC Adviser and their affiliates, Mr. Whalen received Total Compensation of $268,857 during the calendar year ended December 31, 1995. As of December , 1996, the trustees and officers of the Fund as a group owned less than 1% of the shares of the Fund. As of December , 1996, no trustee or officer of the Fund owns or would be able to acquire 5% or more of the common stock of VK/AC Holding, Inc. Mr. McDonnell owns, or has the opportunity to purchase, an equity interest in VK/AC Holding, Inc., the parent company of Van Kampen American Capital, and has entered into an employment contract (for a term until February 17, 1998) with Van Kampen American Capital. LEGAL COUNSEL Skadden, Arps, Slate, Meagher & Flom (Illinois). ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES. [As of December 6, 1995, Amivest Corporation, a Delaware corporation, 767 5th Avenue, 50th Floor, New York, New York 10153, serves as investment adviser to a number of pension and trust funds that hold 10 20 shares of the Fund, including those for which Amalgamated Bank serves as custodian. As a result of such relationship, Amivest may be deemed to control the Fund. In addition, Van Kampen American Capital Trust Company, acts as custodian for certain employee benefit plans and individual retirement accounts.
PERCENT NAME AND ADDRESS OF OF BENEFICIAL OWNER OWNERSHIP --------------------------------------------------------- --------- Amalgamated Bank of New York Cust. 27.58% TWU-NYC Private Bus Lines Pension Fund Amivest Corp. Discretionary Investment Manager P.O. Box 0370 Cooper Station New York, New York 10276-0370 Van Kampen American Capital Trust Company 13.72% 2800 Post Oak Boulevard Houston, Texas 77056 Amalgamated Bank of New York Cust. 8.51% Marble Industry Trust Fund P.O. Box 0370 Cooper Station New York, NY 10276-0370 Amalgamated Bank of New York Cust. 6.27% Elevator Div. Retirement Benefit Plan Amivest Corp. Discretionary Investment Manager P.O. Box 0370 New York, New York 10276-0370 Amalgamated Bank of New York Cust. 6.19% NY City Hotel Trades Council & Hotel Association Pension Fund Amivest Corp. Discretionary Investment Manager P.O. Box 0370 New York, New York 10276-0370
(c) As of December , 1996, the Trustees and Officers of the Fund as a group owned less than one percent of the outstanding shares of the Fund. No Officer or Trustee of the Fund owns or would be able to acquire five percent or more of the common stock of VK/AC Holding, Inc.] ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES. (a) (i) The Adviser, the Distributor and ACCESS are wholly owned subsidiaries of Van Kampen American Capital, Inc. ("VKAC"), which is a wholly owned subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly-owned subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly-owned subsidiary of Morgan Stanley Group Inc. The Adviser's principal office is located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Morgan Stanley Group Inc. and various of its directly or indirectly owned subsidiaries, including Morgan Stanley & Co. Incorporated, a registered broker-dealer and investment manager adviser, and Morgan Stanley International, are engaged in a wide range of financial services. Their principal businesses include securities underwriting, distribution and trading; merger, acquisition, restructuring and other corporate finance advisory activities; merchant banking; stock brokerage and research services; asset management; trading of futures, options, foreign exchange, commodities and swaps (involving foreign exchange, commodities, indices 11 21 and interest rates); real estate advice, financing and investing; and global custody, securities clearance services and securities lending. (ii) See Item 14(a). (iii) The Fund and the Adviser are parties to an investment advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the Fund pays to the Adviser as compensation for the services rendered, facilities furnished, and expenses paid by it a fee payable monthly computed on average daily net assets of the Fund at an annual rate of 0.50% on the Fund's average daily net assets. During the fiscal years ended August 31, 1994, 1995 and 1996 the Adviser received $89,343, $78,242 and $ (with expense waiver) in advisory fees from the Fund, respectively. The Fund's average net assets are determined by taking the average of all of the determinations of the net assets during a given calendar month. Such fee is payable for each calendar month as soon as practicable after the end of that month. The fee payable to the Adviser is 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 the most restrictive expense limitation applicable in the states where the Fund's shares are qualified for sale, the Adviser's monthly compensation will be reduced by the amount of such excess and that, if the amount of such excess exceeds the Adviser's monthly compensation, the Adviser will pay the Fund an amount sufficient to make up the deficiency, subject to readjustment during the Fund's fiscal year. Ordinary business expenses include the investment advisory fee and other operating costs paid by the Fund except (1) interest and taxes, (2) brokerage commissions, (3) certain litigation and indemnification expenses as described in the Advisory Agreement and (4) payments made by the Fund pursuant to the Distribution Plan. 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 most restrictive applicable limitation will be 2 1/2% of the first $30 million, 2% of the next $70 million, and 1 1/2% of the remaining average net assets. The Advisory Agreement has an initial term of two years and thereafter may be continued from year-to-year if specifically approved at least annually (a)(i) by the Fund's Trustees or (ii) by vote of a majority of the Fund's outstanding voting securities and (b) by the affirmative vote of a majority of the Trustees who are not parties to the agreement or interested persons of any such party by votes cast in person at a meeting called for such purpose. The Advisory Agreement provides that it shall terminate automatically if assigned and that it may be terminated without penalty by either party on 60 days' written notice. (b) Under the Advisory Agreement, the Fund retains the Adviser to manage the investment of its assets including the placing of orders for the purchase and sale of portfolio securities. The Adviser obtains and evaluates economic, statistical and financial information to formulate and implement the Fund's investment programs. The Adviser also furnishes the services of the Fund's President and such other executive and clerical personnel as are necessary to prepare the various reports and statements and 12 22 conduct the Fund's day-to-day operations. Under the Advisory Agreement, the Fund bears the cost of its accounting services, which include maintaining its financial books and records and calculating its net asset value. The costs of such accounting services include the salaries and overhead expenses of the Fund's Treasurer and the personnel operating under his direction. For the fiscal years ended August 31, 1994, 1995 and 1996, the Fund paid $52,629, $49,880 and $ , respectively, for accounting services. A portion of these amounts were paid to the Adviser or its parent in reimbursement of personnel, facilities and equipment costs attributable to the provision of accounting services to the Fund. The services provided by the Adviser are at cost, which is allocated among the investment companies advised or sub-advised by the Adviser. The Fund also pays shareholder service agency fees, custodian fees, legal and auditing fees, the costs of reports to shareholders, and all other ordinary business expenses not specifically assumed by the Adviser. The Advisory Agreement also provides that the Adviser shall not be liable to the Fund for any actions or omissions if it acted without bad faith, negligence or reckless disregard of its obligations. (c) INAPPLICABLE (d) INAPPLICABLE (e) INAPPLICABLE (f) The Fund has adopted a distribution plan (the "Plan") under which it may pay up to 0.25% per annum of its average daily net assets to the Distributor for the purpose of financing any activity which is primarily intended to result in the sale of the Fund's shares. Activities which could be financed under the Plan include, but are not limited to, organizing and conducting sales seminars, printing prospectuses and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature, supplemental payments to dealers under a dealer incentive program established by the Distributor and the costs of administering such a program. The Trustees have authorized payments by the Fund under the Plan to reimburse the Distributor for its payments to certain financial institutions (which may include banks), securities dealers and other industry professionals (collectively, "Service Organizations") for administration, for servicing Fund shareholders who are also their clients and/or for distribution. Such payments are based on an annual percentage of the value of Fund shares held in shareholder accounts for which such Service Organizations are responsible. Banks are currently prohibited under the Glass-Steagall Act from providing certain underwriting or distribution services. If banking firms were prohibited from acting in any capacity or providing any of the described services, the Distributor would consider what action, if any, would be appropriate. The Distributor does not believe that termination of a relationship with a bank would result in any material adverse consequences to the Fund. In addition, state securities laws on this issue may differ from the interpretations of federal law expressed herein and banks and financial institutions may be required to register as dealers pursuant to state law. As required by Rule 12b-1 under the 1940 Act, the Plan and the forms of servicing agreement were approved by the Trustees, including a majority of the Trustees who are not interested persons (as defined in the 1940 Act) of the Fund and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan ("Independent Trustees"). In approving the Plan in accordance with the requirements of Rule 12b-1, the Trustees determined that there is a reasonable likelihood that the Plan will benefit the Fund and its shareholders. The Plan requires the Distributor to provide the Fund's Trustees at least quarterly with a written report of the amounts expended pursuant to the Plan and the purposes for which such expenditures were made. Unless sooner terminated in accordance with its terms, the Plan will continue in effect so long as such continuance is specifically approved at least annually by the Trustees, including a majority of Independent Trustees. 13 23 The Plan may be terminated by vote of a majority of the Independent Trustees, or by vote of a majority of the outstanding voting securities of the Fund. Any change in the Plan that would materially increase the distribution expenses borne by the Fund requires shareholder approval; otherwise, it may be amended by a majority of the Trustees, including a majority of the Independent Trustees, by vote cast in person at a meeting called for the purpose of voting upon such amendment. So long as the Plan is in effect, the selection or nomination of the Independent Trustees is committed to the discretion of the Independent Trustees. For each fiscal year, the Distributor may be reimbursed by the Fund for payments to Service Organizations. To the extent that payments are not reimbursed for any fiscal year, the excess will not be carried over to future years. The Fund will not reimburse the Distributor for any interest or carrying charges or for any general overhead expenses. For the fiscal year ended August 31, 1996, the Fund had aggregate expenses under the Plan of $ or % of the Fund's average net assets. (g) INAPPLICABLE (h) The Custodian of all the Fund's assets is State Street Bank and Trust Company located at 225 Franklin Street, Boston, Massachusetts 02110. Price Waterhouse LLP, 1201 Louisiana, Houston, Texas 77002, are the independent accountants for the Fund. (i) During the fiscal years ended August 31, 1995 and 1996, ACCESS, shareholder service agent for the Fund, received fees aggregating $22,750 and $ , respectively. These services are provided at cost plus a profit. ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES. (a) The Adviser is responsible for the placement of orders for the purchase and sale of portfolio securities for the Fund. U.S. Government securities and other debt securities in which the Fund invests are traded in the over-the-counter market. Such securities are generally traded on a net basis with dealers acting as principal for their own accounts without a stated commission, although the prices of the securities usually include a profit to the dealers. It is the policy of the Fund to seek to obtain the best net results taking into account such factors as price (including the applicable dealer spread), the size, type and difficulty of the transaction involved, the firm's general execution and operational facilities, the firm's risk in positioning the securities involved and the provision of supplemental investment research by the firm. The information received may be used by the Adviser in managing the assets of other advisory accounts as well as in the management of the assets of the Fund. While the Fund seeks reasonably competitive dealer spreads, the Fund will not necessarily be paying the lowest spread available. 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 commissions are comparable to that available from other qualified brokerage firms. No brokerage commissions were paid by the Fund on portfolio transactions for the fiscal years ending August 31, 1994, 1995 and 1996. (b) INAPPLICABLE. (c) In selecting dealers, the Adviser considers the firm's reliability, the quality of its execution services on a continuing basis and its financial condition. When more than one firm is believed to meet these criteria, preference may be given to firms which also provide research services to the Fund or the Adviser. The Adviser 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. 14 24 In making such allocations among the Fund and other advisory accounts, 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. The Adviser's brokerage practices are monitored on a quarterly basis by the Brokerage Review Committee comprised of Fund Trustees who are not affiliated persons (as defined in the 1940 Act) of the Adviser. (d) INAPPLICABLE (e) INAPPLICABLE ITEM 18. CAPITAL STOCK AND OTHER SECURITIES. See Item 6. ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED. (a) Shares of the Fund are not currently being offered to the public. See Item 7. (b) See Item 8. (c) INAPPLICABLE ITEM 20. TAX STATUS. See Item 6(g). ITEM 21. UNDERWRITERS. (a) The Distributor acts as the principal underwriter of the Fund's shares pursuant to a written agreement (the "Underwriting Agreement"). Shares of the Fund are not currently being offered to the public. No shares of the Fund were sold during the fiscal year ended August 31, 1994, 1995 and 1996. (b) See Item 21(a). (c) INAPPLICABLE ITEM 22. CALCULATION OF PERFORMANCE DATA. The average annual total return for the Fund for the period ended August 31, 1996 was %. The average annual total return for the Fund for the period since its operations commenced was %. These results are based on historical earnings and asset value fluctuations and are not intended to indicate future performance. Such information should be considered in light of the Fund's investment objective and policies as well as the risks incurred in the Fund's investment practices. Certain additional performance information regarding the Fund is contained in the Fund's Annual Report for the fiscal year ended August 31, 1996. From time to time, in reports or other communications, or in advertising or sales materials, the Adviser may announce the results of actual tests performed by DALBAR Financial Securities, Inc., an independent research firm, as they relate to the level of services for mutual fund investors, and may refer to the Missouri Quality Award received by ACCESS, the Fund's transfer agent, in 1993. In addition, the Adviser may also refer to the Houston Awards for Quality received by Van Kampen American Capital in 1994. The Fund may, from time to time: (1) illustrate the benefits of tax-deferral by comparing taxable investments to investments made through tax-deferred retirement plans; (2) illustrate in graph or chart form, 15 25 or otherwise, the benefits of dollar cost averaging by comparing investments made pursuant to a systematic investment plan to investments made in a rising market; and (3) in reports or other communications to shareholders or in advertising material, illustrate the benefits of compounding at various assumed rates of return. Such illustrations may be in the form of charts or graphs and will not be based on historical returns experienced by the Fund. ITEM 23. FINANCIAL STATEMENTS. The attached financial statements in the form in which they appear in the Annual Report to Shareholders including the related report of Independent Accountants on the August 31, 1996 financial statements, are included in the Statement of Additional Information. 16 26 PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial Statements (to be included by further amendment) Included in the Prospectus: Financial Highlights Included in the Statement of Additional Information: Report of Independent Accountants Financial Statements Notes to Financial Statements The Statement of Sources of Net Assets and Schedules II and III are omitted because the required information is included in the financial statements filed herewith, or because the conditions requiring their filing do not exist. (b) Exhibits 1.1 -- First Amended and Restated Agreement and Declaration of Trust incorporated herein by reference (to Form N-1A of Registrant's Amendment No. 10, filed on December 21, 1995). 1.2 -- Certificate of Amendment incorporated herein by reference (to Form N-1A of Registrant's Amendment No. 10, filed on December 21, 1995). 2 -- Amended and Restated Bylaws incorporated herein by reference (to Form N-1A of Registrant's Amendment No. 10, filed on December 21, 1995). 3 -- INAPPLICABLE 4 -- Specimen Share Certificate incorporated herein by reference (to Form N-1A of Registrant's Amendment No. 10, filed on December 21, 1995). 5 -- Investment Advisory Agreement.+ 6 -- Distribution and Service Agreement.+ 7 -- INAPPLICABLE 8.1 -- Custodian Contract.+ 8.2 -- Transfer Agency and Servicing Agreement.+ 9 -- Data Access Services Agreement dated December 2, 1993 incorporated herein by reference (Exhibit 9.2 to Form N-1A of Van Kampen American Capital Utilities Income Fund, Registration No. 33-68452, Post-Effective Amendment No. 1, filed on May 19, 1994). 10 -- Opinion of Counsel.+ 11 -- Consent of Independent Accountants.+ 12 -- INAPPLICABLE 13 -- Investment Letter incorporated herein by reference (Exhibit 13 to Form N-1A of Registrant, Registration No. 33-35610, Post-Effective Amendment No. 2, filed on December 21, 1990). 14.1 -- Individual Retirement Account Brochure with Application incorporated herein by reference (Exhibit 14.2 to Form N-1A of Van Kampen American Capital Reserve Fund, Registration No. 2-50870, Post-Effective Amendment No. 31, filed on September 24, 1993).
C-1 27 14.2 -- 403(b)(7) Custodial Account incorporated herein by reference (Exhibit 14.2 to Form N-1A of Van Kampen American Capital Reserve Fund, Registration No. 2-50870, Post-Effective Amendment No. 30, filed on September 24, 1992). 14.3 -- ORP 403(b)(7) Custodial Account incorporated herein by reference (Exhibit 14.3 to Form N-1A of Van Kampen American Capital Reserve Fund, Registration No. 2-50870, Post-Effective Amendment No. 30, filed on September 24, 1992). 14.4 -- Retirement Plans for the Small Business-Forms Package and Plan Documents incorporated herein by reference (Exhibit 14.9 to Form N-1A of Van Kampen American Capital Emerging Growth Fund, Post-Effective Amendment No. 44, Registration No. 2-33214, filed on 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 herein by reference (Exhibit 14.7 to Form N-1A of Van Kampen American Capital World Portfolio Series Trust, Registration No. 33-37879, Post-Effective Amendment No. 9, filed on September 24, 1993). 15.1 -- Plan of Distribution Pursuant to Rule 12b-1. 15.2 -- Service Plan. 15.3 -- Form of Shareholder Assistance Agreement. 15.4 -- Form of Administrative Services Agreement. 16 -- Computation 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).+ 19.1 -- Powers-of-Attorney for J. Miles Branagan, Roger Hilsman, Don G. Powell, David Rees, Lawrence J. Sheehan, Fernando Sisto and William S. Woodside incorporated herein by reference (Exhibit 19.1 to Form N-1A of Registrant, Registration No. 811-6127, Amendment No. 9, filed on August 25, 1995). 19.2 -- Powers-of-Attorney for Philip P. Gaughan, R. Craig Kennedy, Donald C. Miller, Jack E. Nelson, Jerome L. Robinson and Wayne W. Whalen incorporated herein by reference (Exhibit 19.2 to Form N-1A of Registrant, Registration No. 811-6127, Amendment No. 9, filed on August 25, 1995). 27 -- Financial Data Schedule.
- ------------------------- + To be filed by further amendment. C-2 28 ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT. None. ITEM 26. NUMBER OF HOLDERS OF SECURITIES. AS OF DECEMBER , 1996
(1) (2) NUMBER OF RECORD TITLE OF CLASS HOLDERS ----------------------------------------------------- ---------------- Shares of Beneficial Interest, $0.01 par value
ITEM 27. INDEMNIFICATION. Reference is made to Article 8, Section 8.4 of the Registrant's Agreement and Declaration of Trust. Article 8; Section 8.4 of the Agreement and Declaration of Trust provides that each officer and trustee of the Registrant shall be indemnified by the Registrant against all liabilities incurred in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which the officer or trustee may be or may have been involved by reason of being or having been an officer or trustee, except that such indemnity shall not protect any such person against a liability to the Registrant or any shareholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. Absent a court determination that an officer or trustee seeking indemnification was not liable on the merits or guilty of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office, the decision by the Registrant to indemnify such person must be based upon the reasonable determination of independent counsel or non-party independent trustees, after review of the facts, that such officer or trustee is not guilty of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. The Registrant has purchased insurance on behalf of its officers and trustees protecting such persons from liability arising from their activities as officers or trustees of the Registrant. The insurance does not protect or purport to protect such persons from liability to the Registrant or to its shareholders to which such officer or trustee would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of their office. Conditional advancing of indemnification monies may be made if the trustee or officer undertakes to repay the advance unless it is ultimately determined that he or she is entitled to the indemnification and only if the following conditions are met: (1) the trustee or officer provides a security for the undertaking; (2) the Registrant is insured against losses arising from lawful advances; or (3) a majority of a quorum of the Registrant's disinterested, non-party trustees, or an independent legal counsel in a written opinion, shall determine, based upon a review of readily available facts, that a recipient of the advance ultimately will be found entitled to indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of 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. C-3 29 ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER. See "Investment Advisory Services" in Part A and "Trustees and Officers" in the Statement of Additional Information for information regarding the business of the Adviser. For information as to the business, profession, vocation and employment of a substantial nature of directors and officers of the Adviser, reference is made to the Adviser's current Form ADV (File No. 801-1669) filed under the Investment Advisers Act of 1940, as amended, incorporated herein by reference. ITEM 29. PRINCIPAL UNDERWRITERS. (a) The sole principal underwriter is Van Kampen American Capital Distributors, Inc., which acts as principal underwriter for certain investment companies and unit investment trusts set forth in Exhibit 17.1 incorporated by reference herein. (b) Van Kampen American Capital Distributors, Inc. is an affiliated person of an affiliated person of Registrant and is the only principal underwriter for Registrant. The name, principal business address and positions and offices with Van Kampen American Capital Distributors, Inc. of each of the directors and officers thereof are set forth in Exhibit 17.2. Except as disclosed under the heading, "Trustees and Officers" in Part B of this Registration Statement, none of such persons has any position or office with Registrant. (c) Not applicable. ITEM 30. LOCATION OF ACCOUNTS AND RECORDS. All accounts, books and other documents required by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder to be maintained (i) by Registrant will be maintained at its offices, located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, ACCESS Investor Services, Inc., 7501 Tiffany Springs Parkway, Kansas City, Missouri 64153, or at the State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy, MA; (ii) by the Adviser, will be maintained at its offices, located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181; and (iii) by the Distributor, the principal underwriter, will be maintained at its offices located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. ITEM 31. MANAGEMENT SERVICES. There are no management related services contracts not discussed in Part A. ITEM 32. UNDERTAKINGS. Registrant hereby undertakes to furnish to each person to whom a prospectus is delivered a copy of the Registrant's latest annual report to shareholders, upon request and without charge. C-4 30 SIGNATURES Pursuant to the requirements of the Investment Company Act of 1940, the Registrant, Van Kampen American Capital Government Target Fund, has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized in the City of Oakbrook Terrace, and State of Illinois, on the 29th day of October, 1996. VAN KAMPEN AMERICAN CAPITAL GOVERNMENT TARGET FUND By: /s/ RONALD A. NYBERG ----------------------------------- (Ronald A. Nyberg, Vice President and Secretary) 31 VAN KAMPEN AMERICAN CAPITAL GOVERNMENT TARGET FUND INDEX TO EXHIBITS TO AMENDMENT NO. 11 TO FORM N-1A AS SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1996
EXHIBIT NO. DESCRIPTION OF EXHIBIT - -------------------- -------------------------------------------------------------- 27 Financial Data Schedule
EX-27 2 FDS
6 0000865441 VKAC GOVERNMENT TARGET FUND 1 YEAR AUG-31-1996 SEP-01-1995 AUG-31-1996 15677603 15953165 51122 19511 4187 16027985 0 0 134218 134218 0 16949501 1101770 1221264 687239 0 (2018535) 0 275562 15893767 0 1125425 0 277279 848146 (168441) (186417) 493288 0 (887820) 0 0 0 (184036) 64542 (1215639) 685988 (1809169) 0 0 84429 0 285722 16885788 14.78 .765 (.379) (.740) 0 0 14.426 1.64 0 0
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